|
Date
|
Lecture Topic
|
Slide Show
|
Reading
|
Assignment
|
Note: FD =
Flexibility in Design text (draft
chapters)
Readers of this draft please send comments,
criticisms, suggestions to ardent@mit.edu -- Thanks
ASA =
Applied Systems Analysis text
AP = Application Portfolio exercise
|
Numbers
in italics refer to problems students should do on their own and
self-grade using posted answers
|
|
Recitation Times: Tuesdays at 1;
Wednesdays at 11
|
|
|
Part 1: Overview of
Flexibility in Design
Teaching Objective: To understand why and how flexibility in
design increases expected value
|
Sept
|
10
|
Th
|
Paradigm Shift: Focus
on Distribution of Outcomes instead of single outcome.
Effort to "move distribution to right"
Discussion of Syllabus
|
Introduction
Paradigm
Shift
|
FD
Chapter 1;
FD
Appendix A
|
ESD.70 in parallel for
4 days
Uncertainty,
AP
1: Project Definition
|
|
15
|
Tu
|
Uncertainty
|
Uncertainty*
|
FD Chapter 2
|
|
|
|
|
Recitation
|
Discussion of
Previous Application Portfolios
|
|
|
|
17
|
|
Garage Case: Concepts*
|
Intro to Flexibility
|
FD
Chapter 3
Vertical
Phasing
|
|
|
22
|
Tu
|
Garage
Case: Details*
Flaw
of Averages*
|
Blossoms
--Flaw video
|
Garage
paper
SPE
paper
|
Above due , AP 2
|
|
|
|
Recitation
|
Detailed discussion
of Garage case analysis
|
|
|
|
Part 2: Basic
Concepts for Valuation
Teaching Objective: To Establish Understanding of
basic elements needed for Valuation
Discounted Cash Flows, Alternative Valuation Measures,
Technical Efficiency; Economies of Scale; Phasing
|
|
24
|
|
DCF
and Present Value;
Measures
of Value
|
Present Value & DCF
Economic Evaluation
|
FD
Appendix B
|
13.3
|
|
29
|
Tu
|
Choice
of Discount
Rate*, Opportunity Cost, WACC*
|
Choice of Discount
Rate; WACC
|
FD
Appendix B
ASA 12
|
|
|
|
|
Recitation
|
|
|
|
| Oct |
1 |
|
Asphalt
vs. Concrete
highways; Basic System Model: production
function and Economies of Scale* |
Asphalt vs. Concrete;
Production Functions |
ASA
2 |
2.4
|
|
6
|
Tu
|
Determining EoS from cost function Constrained
Optimization* and Marginal
Analysis and EoS*
|
Constrained Optimization; Marginal
Analysis
|
ASA 4
|
AP2 due
AP3
|
|
|
|
Recitation
|
|
|
|
|
8
|
|
Optimum expansion size -- issues
|
Capacity
Expansion*
|
FD Appendix C
|
Optimal
capacity combined
|
|
13
|
Tu
|
NO CLASS (MIT FOLLOWS
MONDAY SCHEDULE)
|
|
|
|
Recitation
|
Work on Application Portfolios
|
|
|
|
Part 3: Forecasting and
Dynamic Modeling
Teaching Objective: Development and Use of Dynamic Forecasts
Simulation, Dynamic Models, Decision Analysis and
Dynamic Programming
|
|
15
|
|
Simulation -- Appendix D |
Use
of Simulation
Antamina
Mine Example
|
FD Appendix D |
AP3 due
(deferred to Tuesday)
|
|
20
|
Tu
|
Mid-Term
Review
|
Visualizing
PF etc
|
|
Optimal Capacity due
|
|
|
|
Recitation
|
Quiz Preparation
|
|
|
|
22
|
|
Mid-term Quiz
|
|
Quiz solution
|
|
|
27
|
Tu
|
Decision Analysis |
Primitive Models
Decision Analysis
DA by Folding Back |
ASA 16
Babajide
paper
DA
Examples
|
AP4
16.10, 16.11
|
|
|
|
Recitation
|
|
|
|
|
29
|
|
Lattice
Model to represent uncertainty; |
Lattice
Model;
Binomial fitting.xls |
FD Chapter 4
Binomial
lattice.xls;
Best
Fit.xls |
AP5+6
combined
|
Nov
|
3
|
Tu
|
Evaluation with Lattice
Model
|
Lattice
Valuation*
Binomial
Tree -- Options
|
FD Appendix E |
|
|
|
|
Recitation
|
|
|
|
|
5
|
|
Dynamic Programming
|
Dynamic
Programming*
|
ASA 7
|
7.5
|
|
Part 4:
Identification of Candidate Flexibilities
Teaching Objective: How to identify most valuable flexibilities
efficiently
Mid-fidelity Screening models; Extending range of
consideration
|
|
10
|
Tu
|
Lattice vs. Decision Analysis
Mid-fidelity Screening Models
|
Lattice
vs Dec. Analysis*
Screening
Models
|
FD
Chapter 5
|
AP4 due
|
|
|
|
Recitation
|
|
|
|
|
12
|
|
Extended range analysis;
Application
|
Cardin
Presentation
Yingxia presentation
|
Yingxia PhD;
Lin
paper
Wilds
thesis
|
|
|
Part 5: Evaluation
and Choice of Preferred Alternatives
Teaching Objective:
Theory and Practice of Multi-Dimensional Evaluation under Uncertainty
Multi-dimensional
measures of distribution; selection criteria; sensitivity analysis
|
|
17
|
Tu
|
Multidimensional choice theory and practice
|
Multi-Dimensional
choice theory and practice
|
FD
Chapter 6
|
AP5+6 due
|
|
|
|
Recitation
|
|
|
|
|
19
|
|
Option Theory
|
Introduction to Options in Finance and
Real Options
|
AP
completion
AP
Grading Criteria
|
Draft of
Complete AP
|
|
24
|
Tu
|
Why not "Real Options
Analysis"
|
Methods and Assumptions of RO
|
FD Appendix F
Borison
|
|
|
26
|
|
THANKSGIVING
|
|
|
|
|
Part 6: Implementation
Teaching Objective: Understanding Implementation Issues and Guidance on
their Resolution
Theory and Practice, illustrated by numerous examples
|
Dec
|
1
|
Tu
|
Implementation
Issues: Theory
|
Implementation
|
FD
Chapter 7
|
Draft AP due
|
|
3
|
|
Implementation Issues:
Cases
|
HCSC Chicago;
Houston Metro
Dartmouth
Hospital; Newcastle Hospital
|
McConnell PhD
pages 62-68; 253-256; 406-414
|
|
|
8
|
Tu |
Example Applications:
|
Bartolomei*
;
Hassan Oil Field ; Lin
Platform
|
FD Chapter 8
|
Final
AP due plus slide
set
|
|
10
|
|
Example Applications;
New Analytic Methods
|
Cardin;
Quispez-Asin
Hybrid
Case |
Greden
,
Hassan Oil
Hassan Sat
|
|
