MITESD_77S10_lec21 (1)

MITESD_77S10_lec21 (1) - Lecture 21 Flexibility in...

Info iconThis preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Flexibility in Multidisciplinary Design: Theory and Experimental Validation Michel-Alexandre Cardin, PhD Candidate Prof. Olivier de Weck ESD.77/16.888 Lecture 21
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Outline Introduction Flexibility in Systems Design Emphasis on “Infrastructures” Garage Case Example Experimental Research Design of Experiment Preliminary Analysis and Results Discussion
Background image of page 2
3 Risk Categories Technical Risk Cost Risk Schedule Risk Market/Threat Change Schedule Slips Programmatic Risk
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Value at Risk Concept Value at Risk (VAR) recognizes fundamental reality: actual value of any design or project can only be known probabilistically Because of inevitable uncertainty in Future demands on system Future performance of technology Many other market, political factors
Background image of page 4
Systems that Suffered Because of Unmitigated Risk 5 B-58 Hustler (1960-70) … Originally intended to fly at high altitudes and speeds to avoid Soviet fighters, the introduction of highly accurate Soviet surface-to-air missiles forced the B-58 into a low-level penetration role that severely limited its range and strategic value . This led to a brief operational career between 1960 and 1969. Iridium Constellation (1997-) Iridium went public in 1997 with an ambitious plan to use a 66-satellite constellation of low earth orbit satellites to compete with the mobile phone companies in the market for wireless communications. But for a host of reasons there were a host of regulatory, marketing and technical complications . By 1999, the company had filed Chapter 11.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Value at Risk Definition Value at Risk (VAR) definition: A loss that will not be exceeded at some specified confidence level “We are p percent certain that we will not loose more than V dollars on this project” VAR easy to see on cumulative probability distribution (see next figure)
Background image of page 6
7 VAR Cumulative Distribution Function Look at distribution of NPV of designs A, B: 90% VAR for NPVA is -$91M 90% VAR for NPVB is $102M CDF 0% 20% 40% 60% 80% 100% -400 -200 0 200 400 600 NPV Cumulative Probability NPVA NPVB 90% VAR for NPVA 90%VAR for NPVB 10% CDF Probability
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 VAR and Flexibility VAR is a common financial concept It stresses downside losses, risks However, designers also need to look at upside potential: “Value of Gain” Flexibility in design provides value by both: Decreasing downside risk Increasing upside potential See next figure
Background image of page 8
9 Sources of Value for Flexibility Cut downside ; Expand Upside Value-at-Risk-and-Gain (VARG) Cumulative Probability Value Original distribution Distribution with flexibility Cut downside risks Expand upside potential
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10 Why Focus on Flexibility? Uncertainty affects future performance Wide- spread engineering practice is very “deterministic” Optimize to “fixed” objectives or forecasts Easy to be “sub - optimal” in the real world Sensitivity analysis done ex post Flexibility shown to improve expected value and performance significantly (10% to 80% vs. initial design)
Background image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/08/2011 for the course AERO 16.851 taught by Professor Ldavidmiller during the Fall '03 term at MIT.

Page1 / 50

MITESD_77S10_lec21 (1) - Lecture 21 Flexibility in...

This preview shows document pages 1 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online