A simulation-based optimization framework for product development cycle time reduction

By the mid-1990s, the importance of early introduction of new products to both market share and profitability became fully understood. Thus, reducing product time-to-market became an essential requirement for continuous competition. Since product development projects (PDPs) are based on information content and their accompanying information-dominated methods, an efficient methodology for reducing PDP time initially requires developing an understanding of the information flow among different project processes. One tool that helps achieving this understanding is the design structure matrix (DSM). Because much of the time involved in a complex PDP is attributable to its expensive iterative nature, resequencing project activities for efficient execution become the next requirement. This paper presents a simulation-based optimization framework that determines the optimal sequence of activities execution within a PDP that minimizes project total iterative time given stochastic activity durations. A mathematical model representing the problem is built as an MS Excel module and Visual Basic for Applications (VBA) is used to interface this module with a metaheuristic optimization algorithm called Simulated Annealing and commercial risk analysis software ‘Crystal Ball’ to solve the model.