University of Central Florida STARS Electronic Theses and Dissertations, 2004-2019 2010 Optimized Market Introduction Of Large Capital Products (lcp) With Long Development And Learning Cycles Antje Lembcke University of Central Florida Part of the Engineering Commons Find similar works at: https://stars.library.ucf.edu/etd University of Central Florida Libraries http://library.ucf.edu This Doctoral Dissertation (Open Access) is brought to you for free and open access by STARS. It has been accepted for inclusion in Electronic Theses and Dissertations, 2004-2019 by an authorized administrator of STARS. For more information, please contact [email protected]. STARS Citation Lembcke, Antje, "Optimized Market Introduction Of Large Capital Products (lcp) With Long Development And Learning Cycles" (2010). Electronic Theses and Dissertations, 2004-2019. 1629. https://stars.library.ucf.edu/etd/1629 OPTIMIZED MARKET INTRODUCTION OF LARGE CAPITAL PRODUCTS (LCP) WITH LONG DEVELOPMENT AND LEARNING CYCLES by ANTJE LEMBCKE Dipl. Ing. (FH) University for Applied Science Weihenstephan, Germany, 1998 MBA University of Central Florida, 2004 A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the department of Industrial Engineering and Management Systems in the College of Engineering and Computer Science at the University of Central Florida Orlando, Florida Fall Term 2010 Major Professor: Linda Malone © 2010 Antje Lembcke ii ABSTRACT Any product sold is expected to be reliable and available when the customer wants to operate it. Companies that produce large capital products (LCP), such as rockets, satellites, or large gas turbines to generate electrical energy, tend to shy away from extending their testing and validation method above the requirements by law, mainly due to the very high costs of each additional test and the uncertain return on investment. This research shows that today’s state of the art validation methods for LCP, required by law, or suggested in literature, and adapted by these industries, are not capable of capturing all significant failure modes (or even enough failure modes), with the consequence that the subsequently sold commercial product will still experience failures with significant effects on product reliability, and subsequently on the companies’ bottom line earnings projections. The research determines the type of data (significant variables) necessary to correlate a company’s validation policy to product failures after commercialization, and predicts the financial impact of the current validation policy on the company’s profitability. An optimized validation plan and testing policy is suggested, and its impact on a company’s profitability is demonstrated through simulation. A generic methodology is derived and its viability is illustrated using a specific product and a dynamic model developed with data available to the researcher. The generic method can be applied by any company to develop its own model for optimizing product reliability prior to market introduction. iii ACKNOWLEDGMENTS Foremost I would like to express my sincere gratitude to my advisor and committee chair, Dr. Linda Malone for her valuable guidance and support throughout the process of writing this thesis. Very special thanks goes to my committee member and mentor Dr. Hans-Juergen Kiesow who encouraged me all the way through my graduate study and for his invaluable advice on my research. I would like to cordially thank my committee member Dr. Tim Kotnour for all his insightful suggestions during our discussions and express my warmest appreciation to my other committee member Dr. Wilhelm Thompson, and to Dr. Konrad Vogler who devoted their time to review my work. I would like to thank Dr. Olaf Koenig for his advice in gas turbine testing and my colleague Dr. Marco Brunelli, whose very useful knowledge of statistics brought new ideas to this project. I would like to thank Joy Tatlonghari for kindly helping me go through all required administrative procedures at UCF. Finally I would like to thank Siemens AG for allowing me to access their data and last but not least my boss, Vinod Philip, for the continuous support he offered throughout this venture. iv TABLE OF CONTENTS LIST OF FIGURES .....................................................................................................................viii LIST OF TABLES.......................................................................................................................... x LIST OF ACRONYMS ................................................................................................................ xii CHAPTER ONE: INTRODUCTION AND RESEARCH SCOPE................................................ 1 Practical Need and Motivation................................................................................................... 1 Research Scope .......................................................................................................................... 4 Hypothesis One .......................................................................................................................... 5 Hypothesis Two ......................................................................................................................... 8 CHAPTER TWO: LITERATURE BASIS FOR THE PROBLEM.............................................. 10 Introduction.............................................................................................................................. 10 Typical LCP and Product Selection for Illustration................................................................. 10 New Product Development Challenges of LCP....................................................................... 13 Marketing ................................................................................................................................. 17 Current Approaches for Validating LCP.................................................................................. 20 Aircraft Engine Certification............................................................................................... 20 Space Shuttle Main Engine Testing .................................................................................... 22 Gas Turbine Testing –Approaches Across Industry............................................................ 22 Variables and Policies for Testing ........................................................................................... 23 Policies in the Gas Turbine Arena....................................................................................... 23 Cost of LCP and Test Facilities........................................................................................... 25 Approach to Derive the Generic Dynamic Model............................................................... 27 The Need to Study the Policies ........................................................................................... 28 The Need to Use Systems Dynamics ....................................................................................... 30 System Dynamics “Pros” .................................................................................................... 30 System Dynamics “Cons” ................................................................................................... 33 Summary .................................................................................................................................. 33 CHAPTER THREE: CHALLENGES AND GENERIC PROCESS............................................ 35 Challenges of Studying this Problem....................................................................................... 35 Data Availability, Accessibility and Reliance on Past Data................................................ 35 Proof of Concept.................................................................................................................. 35 The Generic Process................................................................................................................. 36 Approach to Building the Systems Dynamics Model ......................................................... 36 Verifying and Validating the Model.................................................................................... 38 v Studying the Testing Policies .............................................................................................. 39 CHAPTER FOUR: BUILDING THE CONCEPTUAL MODEL................................................ 40 Collecting and Analyzing Failure Modes ................................................................................ 40 Data Analysis ........................................................................................................................... 41 Creation of the (Simple) Baseline Model................................................................................. 43 Optimization of Testing Approach........................................................................................... 46 Modeling of Feedback Loops................................................................................................... 46 Confidence Bounds and Sensitivity Study............................................................................... 48 CHAPTER FIVE: BUILDING THE SIMULATION MODEL ................................................... 50 Approach to Test Hypothesis One ..........................................................................................