Modeling Assignment ITEM New Product Development

Kickoff meeting February 6th, 2014 !Dr.ir. Bob Walrave !

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Agenda

Introduction to assignment: Modeling New Product Development

Brief introduction to system dynamics Structure of the assignment

Deliverables & Report Structure of the instructions For the next time Questions

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Modeling New Product Development

The full assignment (incl. schedule & deadlines) is available on http://www.bobwalrave.com

Please read this document carefully! If there are any questions:

b.walrave@tue.nl

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Modeling New Product Development

Product development time is an important determinant of new product profitability

Yet, all kinds of difficult decisions have to be made with respect new products: Specifications Performance Development costs

This makes making profit maximising decisions very difficult

This is especially the case is the development project is running behind schedule (or competition is ahead)

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Modeling New Product Development

NPD project often run behind schedule: NPD entails uncertainty and complexity - and workload

is almost always underestimated Team size - and productivity - if often overestimated

! This is the situation which you are going to

investigate

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Modeling New Product Development

The goal of the assignment is to model a NPD process and develop recommendation on how to improve matters: You act as a consultant for this firm Can you come up with smart policies for NPD projects? What is the best team composition? What is the best markting strategy? etc.

It is your task to advice the CEO of company X on how to maximize his profits!

However, we will take one step at the time...

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What is a system dynamics model?

System Dynamics is a modeling method or tool, to build computer simulations of complex systems, and to use these simulations to understand the structure and behavior of systems, and to design more effective policies.

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To disclose possible side-effects we need to look at the bigger picture...

rope?snake?

pilates balancing ball?

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Why do we need Systems Thinking & System Dynamics Modeling?

Because solving real-world problems is so hard! Look at the different factors that are described in the

model assignment. Combined, they can already create such a dynamic complexity that is extremely difficult to comprehend

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Unanticipated side-effects of solutions may aggravate problems

Counterintuitive: Things work out differently than you expected

System Dynamics introduction

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Policy Resistance

System Dynamics (systems thinking) is about creating an understanding of the workings of the most important feedbacks within a system Delays Feedback loops Non-linear effects

! These factors cause for policy resistance

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Intermediair, July 30, 2009

"the bigger picture"

System Dynamics of the "Moving Sidewalk"

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System Dynamics Models are different than other simulation methods

Human decisions and behavior are explicitly modeled. Models include, besides numerical data, also a high

number of soft, hard-to-quantify factors: work pressure, product quality, market image, customer satisfaction, trust.

In operation research simulation methods, these variables are often omitted, because they are so difficult to quantify.

"To omit such variables is equivalent to saying they have zero effect probably the only value that is known to be wrong!" (Forrester, 1961, pp. 57)

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Structure of the assignment

See http://www.bobwalrave.com > 1. CLD (graphical representation of the problem which

caputures the dynamics involved) 2. Stocks and Flows diagram (mathmatical

representation of the CLD) 3. Determine equations 4. Design scenarios to investigate the situation 5. Test robustness of your results 6. Intervention study

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Structure of the instructions

Week 1: Kick off meeting Week 2: Causal loop diagramming Week 3: Vensim simulation software Week 4 -7: Group Q&A sessions

! NOTE: In order to participate in the group Q&A

session, registration is required see http://www.bobwalrave.com

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For the next time:

For this week: See if you can find some information on Causal Loop

Diagramming Try to capture the problem in dynamics terms Identify the most important feedback loops

Next week: Introduction to Systems Thinking and Causal Loop Diagramming

In two weeks: Introduction to modeling with Vensim Download Vensim PLE So also bring your laptop (with Vensim installed)

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Questions?