Abstract: Managing production and operations with available resources have become the most challenging job of today’s software industry. This involves not only optimizing on available resources but achieving improved productivity with minimum cost of production, controlled overruns and adherence to schedule. The challenge to optimize becomes even more hard-hitting and uncompromising when the requirement changes are too frequent as in case of agile software production system. This dynamic behaviour of agile software production systems can be modelled using system dynamics (SD). The software production process can be modelled and its behaviour predicted along with consequences of managerial policies on the production system. Agile development is one of the solutions to the problem of extremely complicated methods, which is being adopted of late by various software production systems. Hence, the prime objective of this research is to investigate how the application of system dynamics can aid in the performance analysis and improvement of Agile software production systems. The paper puts forth some of the dynamic forces that affect Quality Assurance (QA) activity which are modeled using system dynamics. The feedback loops developed explain how schedule pressure in an ongoing software project, which arises when the project is behind its time schedule, leads to an increased error generation rate. With increasing number of errors committed, a major part of the available resources (man, machine, money etc.) are utilized in error correction and rework instead of development activities. This adversely affects the project's progress rate thereby leading to increase in schedule pressures and adding to greater cost of poor quality.

Keywords: Agile software development, software projects, system dynamics, change request.