Courses:

Engineering Systems Analysis for Design >> Content Detail



Study Materials



Readings


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The primary text for the class consists of draft chapters from the new text that Prof. de Neufville is preparing in collaboration with Prof. Stephan Scholtes, his collaborator at the University of Cambridge. These chapters are not available on MIT OpenCourseWare, but some can be found — along with other readings not included here — on Professor de Neufville's ESD.71 Web site.

This material is supplemented by chapters from:

Amazon logo de Neufville, Richard. Applied Systems Analysis. New York, NY: McGraw-Hill, 1990. ISBN: 9780070163720.

Textbook chapters from Applied Systems Analysis can also be found here.



Readings by Session


The following table shows the schedule of readings from Applied Systems Analysis.


SES #TOPICSREADINGS
Introduction to course
L1Motivation: paradigm shift from best outcome to moving distribution of outcomes to right
Part 1: basics, recognition of uncertainty, valuation fundamentals, and timing issues
Conventional valuation and recognition of uncertainty
L2

Discounted cash flow and present value

Criteria for valuation

Chapters 10, 11, 13
L3Uncertainty recognition
L4

Choice of discount rate

Opportunity cost, weighted average cost of capital, capital asset pricing model

Chapter 12
Timing of development
Basic issue: build now or later?
L5

Asphalt vs. concrete highways

Basic system model: production function, economies of scale

Chapter 2
L6Optimum expansion size deterministic case
L7

Determining economies of scale from cost function

Constrained optimization and marginal analysis

L8

Sources of flexibility

"On" systems-timing

"In" systems-timing and function

Case examples

Part 2: uncertainty modeling and flexibility valuation methods
Decision analysis
L9Uncertainty assessmentChapter 15
L10

Primitive models

Introduction to decision analysis

Chapter 16
L11

Practical issues

Solutions by "folding back"

Flaw of averages

L12

Distribution of outcomes for decision analysis

Value at risk and gain, multiple value metrics

L13Benefits of waiting: value of informationChapter 17
L14Decision analysis examples: oil platform, wind energy, silicon wafer plant, Tokyo/Haneda runway
L15Mid-semester review
L16Midterm exam
Lattice analysis
L17

Lattice model to represent uncertainty

Regression to determine trend and variability (μ and σ)

L18Dynamic programming: systematic solution by "folding back"Chapter 7
L19

Valuation of lattice by dynamic programming

Satellite case study

L20

Combining lattice and decision analysis

Case studies: aqua line tunnel

L21Conceptual valuation and application
L22Comparing decision analysis and lattice analysis
L23

Definition and analysis of "hotspots" using change propagation analysis

Path dependency

Comments on draft application portfolio

Case studies: car platforms, hydroelectric dam, mini unmanned aerial vehicle

L24Perspective on flexibility in design and real options analysis (Part 1)
L25Perspective on flexibility in design and real options analysis (Part 2)
L26Review for final exam

 








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