This course was taught at MIT as a half-term course. Learners can choose a learning pace based on their learning need.
[FD] = Richard de Neufville and Stefan Scholtes. Flexibility in Engineering Design, MIT Press, 2011. ISBN: 9780262016230. [Preview with Google Books]
[ASA] = Richard de Neufville. Applied Systems Analysis: Engineering Planning and Technology Management (free download). McGraw-Hill, 1990. ISBN: 9780070163720.
[XL] = Excel and @Risk boot camp material
Unit 1: Introduction
Session 1: Risk and Decision Analysis; Engineering Systems Analysis for Design
Topic: Introduction; paradigm change; Lordos example
Readings: [FD] Chapters 1 and 2
Pre-class Assignment: Self-introduction (video)
Major Assignment: HW 1 document experience out
Intended Takeaways: Paradigm change
Unit 2: The Forecast Is “Always” Wrong:
Session 2: The Forecast Is “Always” Wrong
Topic: Forecast “always wrong;” flaw of averages
Readings: [FD] Chapter 4
Pre-class Assignment: Uncertainty examples (video)
Major Assignment: n/a
Intended Takeaways: Forecast is “always” wrong’! We must deal with distribution recognizing overconfidence.
Unit 3: Discounted Cash Flow (DCF):
Session 3: DCF Analysis Introduction and DCF Mechanics
Topic: Discounted cash flow
Readings: [FD] Appendix B
Pre-class Assignment: [ASA] Chapters 12 and 13 (readings)
Major Assignment: n/a
Intended Takeaways: Time value of money; Choice of discount rate is crucial.
Unit 4: Garage Case
Session 4: Garage Case Example
Topic: Garage case
Readings: ASCE article; [XL] Review
Pre-class Assignment: videos; ASCE article (readings)
Major Assignment: HW 2 Excel out
Intended Takeaways: Flexibility as win-win
Unit 5: Simulation Mechanics
Session 5: Mechanics of Simulation
Topic: Simulation mechanics
Readings: [FD] Appendix D
Pre-class Assignment: Simulation (videos)
Major Assignment: HW 1 due
Intended Takeaways: Rapid Excel analysis of complex choices
Unit 6: Excel Template Recitation
Session 6: Excel Template Recitation
Topic: Excel Template recitation
Readings: Garage case and template
Pre-class Assignment: Pre-read questions
Major Assignment: Draft HW 2 due
Intended Takeaways: Practical use of simulation
Unit 7: Drivers of Flexibility
Session 7: Excel Template Recitation
Topic: Flexibility drivers; optimal cycle time
Readings: [FD] on learning
Pre-class Assignment: Manne images (videos)
Major Assignment: HW 3 decision analysis and EVPI out
Intended Takeaways: Discount rate and learning curve vs. Economies of Scale
Unit 8: Decision Analysis
Session 8: Decision Analysis
Topic: Decision analysis
Readings: [ASA] Chapter 16
Pre-class Assignment: Structuring decisions (videos)
Major Assignment: HW 2 due
Intended Takeaways: Structured analysis limited choice and timing
Unit 9: Value of Information
Session 9: Information Gathering as a Strategy
Topic: Value of information
Readings: [ASA] Chapter 17
Pre-class Assignment: Value of information (videos)
Major Assignment: n/a
Intended Takeaways: Waiting leads to valuable Learning.
Unit 10: Utility Analysis and Multidimensional Evaluation
Session 10-1: Evaluating and Choosing Preferred Projects
Topic: Other evaluation criteria
Readings: [FD] Chapter 3
Pre-class Assignment: Utility (videos)
Major Assignment: n/a
Intended Takeaways: Expectation vs. risk aversion, is optimum a good concept?
Session 10-2: Economic Evaluation
Topic: Utility analysis
Readings: [ASA] Chapter 18
Pre-class Assignment: Case study (videos)
Major Assignment: HW 3 due
Intended Takeaways: Group utility not meaningful
Unit 11: Review and Quiz
Session 11: Investment in Large Plants
Topic: Review for quiz
Readings: n/a
Pre-class Assignment: Pre-quiz questions
Major Assignment: n/a
Intended Takeaways: Integrated view of material
