System Dynamics 1ZM65

IM Case
November 11, 2014

Dr.ir. Bob Walrave

Agenda

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

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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!

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 scenarios (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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