Engineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 1 of 19Engineering Systems Analysis for DesignIntroductionEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 2 of 19GOOD MORNING BON JOUR ! GUTEN MORGEN ! O HAYO GOZAIMASU! G’DAY, MATES ! BUENOS DIAS ! NI HAO MA ! BOA DIA !Engineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 3 of 19 What’s with the Filming?l MIT has entered into a long-term relationshipwith Government of Malaysial Object is to work with them to set up a newUniversity…l Malaysian University of Science and Technology,known as “MUST”l This course will be part of their core curriculum,it is being filmed for their use in Januaryl There are several cameras and resulting tape willbe edited by the AV people you met coming inEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 4 of 19Let’s greet our colleagues in Malaysia... SALAMAT DATUNG !Engineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 5 of 19Welcome!l It is a pleasure to be with youl We will be covering much new materiall Looking forward to learning with youl Hope to make some long-term friendsEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 6 of 19Introduction of Teachersl Richard de Neufville– Prof. of Engineering Systems andof Civil and Environmental Engineering– Course Organizerl Dr. Frank Field– Associate Director for Education, Technology andPolicy Program; Principal Research Engineerl Tao Wang– Teaching Assistant, for 2nd time -- also web master– 3rd year TPP studentEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 7 of 19Introduction of Studentsl Please fill out sign-up sheets being passedaroundl Please indicate if you are– taking course– shopping aroundEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 8 of 19ENGINEERING SYSTEMS ANALYSISFOR DESIGNl Emphasis– Use of Analysis to Configure Engineering Systems– “Real Options” , that is, physical things that systemmanagers and designers can do to add flexibility– To avoid bad outcomes (acts like insurance)– To seize opportunities for improvement– In general to maximize performance in uncertain worldl MIT School-Wide Elective, with many numbers: ESD 71, 1.146, 2.192, 3.5613.62, 16.861, 22.821 Choose what meets your course requirementsEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 9 of 19Logic of the Coursel Engineering Systems exist in Uncertainty– Loads -- Physical and Market Size– Technical -- New Developments– Organizational -- New Regulations, Competitorsl Engineering Systems Need to Adapt– Take advantage of Opportunities– Avoid Hazards, Risksl Flexibility is Essential Part of Design– How do we value flexibility?– How much is enough?l “Real Options” provides AnswersEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 10 of 19New Materiall Brand-new Approach to Engineering Design– Use of “Real Options”l Revolutionary possibilities– Explicit consideration of flexibility, not possible earlierl Approach derived from “Options Theory”– Nobel Prize-winning development in financel Modified to fit engineering realities– Lack of historical data– Need for Approximate ProceduresEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 11 of 19Structure of Materiall 1. Engineering Systems Analysis -- Certaintyl 2. ESA for Uncertaintyl Part 1 Integrated Perspective on Basics– Evaluation over time -- Major projects– Concepts for Modeling Systems– Optimization -- Linear and Dynamic Programmingl Part 2 Systems Analysis under Uncertainty– Decision and Utility Analysis– Real Options Analysis– Examples of Actual Applications– To help you choose which method works best for youEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 12 of 19Approach to Learningl Part 1– Assumes that all participants have had some of thematerial somewhere– Aims to provide a coherent view– Moves fairly rapidlyl Part 2– Crux of course– Emphasis on Understanding Applications– Many issues subject of ongoing research– Will show recent results through examples– Gives you basis for further learningEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 13 of 19Course Materialsl Xerox of Text from Minuteman in KendallSquare -- about $20l Tree-Age Software -- get direct, about $30l Web: http//ardent.mit.edu/Real_Optionsl Bulletin Board: under web site. Will be used tomake announcements, respond to questionsl Excel capability -- sessions on advanced topics(Data Tables; What’s Best) will be arrangedEngineering Systems Analysis for Design Richard de Neufville and Frank R. FieldMassachusetts Institute of Technology Introduction Slide 14 of 19Assignmentsl See Web site for detailsl Problem Sets, Exercises throughout semesterl Best to do them as you go alongl However, only need to turn in on due datel Mid-semester
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