Impact of Simulation in New Product Development - MIT
Impact of Simulation in New Product Development - MIT
Impact of Simulation in New Product Development - MIT
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Model<strong>in</strong>g impact <strong>of</strong> simulation0.300.20Us<strong>in</strong>g this k<strong>in</strong>d <strong>of</strong> model to plot sales and pr<strong>of</strong>its vs. design costs can help managersto exam<strong>in</strong>e strategic options enabled by simulation more systematicallyFirm faces strategic trade-<strong>of</strong>f betweenshort-term pr<strong>of</strong>itability andma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g long term market position1.401.20Operat<strong>in</strong>g pr<strong>of</strong>it0.100.00-0.101.000.800.60Sales (before sims = 1.00)-0.20-0.30Chart reflects impact <strong>of</strong> simulation only.Unit sales at field site approximately 15% higher,due to effective product plann<strong>in</strong>g,with correspond<strong>in</strong>g <strong>in</strong>crease <strong>in</strong> pr<strong>of</strong>itability.0.400.20-0.40Design costs (Before sims = 1.00)0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.500.00Operat<strong>in</strong>g Pr<strong>of</strong>it Unit Sales23© 2007 Robert Laubacher 23
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