MS&E 201, Dynamic Systems Handout #1, Page 1 of 3

Professor Edison Tse March 30, 2005

Spring Quarter, 2004-2005
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Introduction to Dynamic Systems

One major objective of this course is to train students to understand and model the
dynamics of change. Differential equations are used as a mathematical language to facilitate
discussions on dynamic phenomena. A good fraction of the time in this course is spent in
developing some mathematical tools to analyze the dynamic models. However, the focus is
not on the tools but on how such tools can help us to think about the dynamics of change as
well as on how to deal with such change.

The analytical part of the course will be on mathematical analysis of linear and
nonlinear dynamic systems. The notions of equilibrium, stability, growth and limit cycle will
be introduced and discussed in terms of some classic examples in ecology, economics and
competition. The course will also give an introduction to Catastrophe Theory, which provides
a mathematical model for certain discontinuous phenomena like the crash of the stock market
and the extinction of species.

The class will also get involved in real case discussions on new product introduction,
technology innovation and industry competition. In these discussions, students learn how to
use the mathematical model to help them to derive a qualitative but analytical argument on
how to shape a dynamic environment by asserting influence on the formation of the dynamic
structure that governs the changes. This skill is the foundation for formulating and
implementing dynamic strategy.

The course concludes with an introduction of optimal control theory. Optimal

economic growth model is used to illustrate how the theory is applied to economic modeling
analysis.

Prerequisites
Math 103 Matrix Theory and Its Applications or equivalent.
Required Textbook
• Luenberger, Introduction to Dynamic Systems: Theory Models and
Applications, John Wiley & Sons, Inc., ISBN: 0-471-02594-1
Most of the mathematical material is covered in the book. Supplementary class notes will
cover many examples and case studies that are not found in the book.

Teaching Staff and Office Hours

Instructor: Professor Edison Tse etse@stanford.edu Terman 412, 723-4777, OH: After class
TA: Kai Chen kchen04@stanford.edu Terman 479, OH:Thursday 2-4pm
MS&E 201, Dynamic Systems Handout #1, Page 2 of 3
Professor Edison Tse March 30, 2005
Spring Quarter, 2004-2005
Administrative Support: Roz Morf rozm@stanford.edu Terman 405

Class Hours
MW 2:45-4:00 pm in Thornton 102 (Televised)
Problem Sessions
Thursday 4:15-5:05pm in Skilling 193 (Televised)
Homework Sets and Take-Home Quizzes
Problem Sets will be distributed prior to each quiz; they will include questions on
topics that will be covered in the corresponding quiz. Problem sets will NOT be
graded or handed in, but solution sets will be distributed. Quizzes will be due in Roz
Morf's office (Terman 405) twenty-four hours after they are handed out.
Mid-term
Mid-term (in-class exam) will be taken on April 25.
Final
TBD
Grading Policy
20% Two take-home quizzes (10% each)
20% Mid-term
20% Group Project
40% Final Exam
Project and Groups
For the project, you will be working in groups, which you are encouraged to form very
early in the quarter. Recommended group size is 4-5. The projects will focus on your
ability to provide a model that helps understand the dynamics of a certain system,
usually related to current world issues (in business, high-tech industry, ecology, or
other topics). Please feel free to use our discussion forum at class website to start or
look for a group.

More Information
Please visit our class website at http://coursework.stanford.edu.
MS&E 201, Dynamic Systems Handout #1, Page 3 of 3
Professor Edison Tse March 30, 2005
Spring Quarter, 2004-2005

Course Outline and Schedule

3/30 Introduction, State Space Model (Chapter 1, 2.1, 2.5, 2.8, 4.1, 4.3)

4/4 Solution of Linear Dynamic Systems (4.4, 4.5, 4.6, 4.7)

4/6 A Simple Grabber-Holder Model (Notes)

4/11 McDonald’s System and VCR War (Notes)

4/13 Substitution Model (Notes)

4/18 Macro-behavior of a Linear Dynamic System (5.7, 5.9, 5.10)

4/20 Nonlinear Dynamic Systems: (9.1-9.5)

4/25 Mid-term

4/27 Linearization and Liapunov Theorem (9.6-9.8, 9.11)

5/2 Predictor-prey Model, Crowding Model, Ecological System (10.3)

5/4 Catastrophe: Fast and Slow Dynamics (Notes)

5/9 Stock Trading Model, Insects and Trees Model (Notes)

5/11 Competition: Creating New Game (Notes)

5/16 Dynamics of a Business Service Network (Notes)

5/18 Optimal Control Theory

5/23 Maximum Principal

5/25 Optimal Economic Growth

6/1 Project Presentation