System Dynamics – 1ZM65 IM Case November 11, 2014

Dr.ir. Bob Walrave

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Agenda

•  Results 1ZX00/1ZX01 •  Planning & Practicalities concerning the IM case •  Introduction IM case •  Questions

1ZX00 / 1ZX01

•  On average, good results! •  In total, 144 students passed the exam with a 5.5 or

higher (163 are registered)

•  21 November results formalized and forwarded to the educational administration

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Planning and Practicalities

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Q&A Sessions

•  If you encounter a problem or want to have feedback on your work

•  Q&A handled by Bob Walrave and Mohammadreza Zolfagharian in parallel

•  15 min sessions, make sure you know what to ask! •  No ‘walk-in’ sessions: register online

•  To prevent long queues! •  Register up to 6 days before – until the start of the

session!

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Q&A Sessions

•  Per Q&A there are 14 ‘slots’. The IM case has 18 groups. First-come, first-serve.

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Poster Session

•  Share ideas and solutions! •  Develop a poster (A1 or A2) that outlines the

workings and behavior of your model (e.g., CLD and most important functions and assumptions)

•  The posters (and belonging presentations) will be graded and count for 10% of the overall grade •  (report = 40% and exam = 50%)

•  Peer competition and prices!

à See study guide for details!

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The assignment

•  The context: •  A new product development (NPD) team •  Research found that product development time is an

important determinant of new product profitability (e.g., Chen et al., 2005)

•  As such, complicated and important decisions have to be made concerning: −  Development costs (influences dev. speed) −  Product performance (attractiveness of the product) −  Influencing -> Development time, market entry

timing, and new product sales

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The assignment

•  Even more complicated in the case that the NPD team discovers that the project is behind schedule.

•  This happens more often than you might think: −  Initial workload is underestimated in NPD projects −  Customer preference uncertainty −  Rework

−  Initial project team size is overestimated −  Managers ‘forget’ about hiring/firing delays

−  Project complexity is underestimated −  Technological uncertainty

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The assignment

•  These factors result in project delays right from the start •  Such unanticipated project delays – and its underlying

causes – remain often unaddressed. •  This is also referred to as ‘escalation of commitment’

•  Escalation of commitment constitutes a serious problem in NPD projects. They prevent the team for making interventions to counteract the failing course of action

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The assignment

•  Your role: External consultant hired to analyze this situation – from a dynamic perspective – and suggest how the NPD project team should continue given different scenarios.

•  Develop a SD model for a project team that is running behind schedule that determines interventions during the project (in terms of time, costs, quality) to optimize new product profitability

•  Which intervention is best at what time? •  You can adjust: Development costs and/or product

performance

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SD Model consists of 3 main components

1.  The human resource process (rookie versus experienced engineers)

2.  The customer order process (Potential customers, Lost customers, etc.)

3.  The product development process (Undiscovered tasks, Tasks in execution, etc)

•  Determine interactions and feedback within and across this components

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Model smart

•  Start small and get the individual components working, only then make the interactions

•  Always ask yourself when assessing results: Is it a bug, or is it a feature!

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Approach and Grading

•  Follow the modeling steps as described by Sterman (2000): •  Problem articulation (Already done: 0 points) •  CLD (15 points) •  Stock and Flow structure of the described management

problem (30 points) •  Determine the equations for the ‘history-friendly’ model

(10 points) •  Design scenario’s (interventions) to examine the

problem statement (15 points) (‘history-divergent’) •  Formulate advice to the NPD project team (20 points) •  Test the robustness of your advice (10 points) Total of 100 point = a 10!

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Approach and Grading

•  Remember, there is no one correct answer. Your grade is therefore greatly determined by your assumptions (and how you translate these assumptions into equations).

•  Concerning the grade for the report: a 0.5 point bonus will be awarded to models that have a clear layout (see the slides of the tutorial). Vice versa, models with a very poor layout will result in deduction of 0.5 point.

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Questions?

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