FLEXIBILITY IN DESIGN - Title Page - MIT

de Neufville + Scholtes D R A F T September 30, 20091 Inventory theory falls into this trap, too. Standard practice is to pick a level of service (percent ofacceptable stock out) and then determine how much inventory to keep on hand in order to meetit. In practice, managers do more than just rely on safety stock – they expedite goods, cross shipthem from a different location, etc. Inventory theory can therefore lead to excessively highinventory levels that do not make sense in practice.2 de Weck et al (2004) discuss in detail how the Iridium satellite deployment could have beenbetter managed.3 Babajide et al (2009) discuss the standard design for oil field development and its alternatives.4 Savage coined the “flaw of averages” term. He describes the concept in detail in Savage (2009).Yang (2009) provides an extended example for the case of capacity planning in the auto industry.Appendix A discusses the mathematics.5 Gessner and Jardim (1998) provide technical details on this double-decking process.6 Hassan et al (2005) describe the analysis for the satellite example.7 Guma et al (2009) describe the case. Guma (2008) and Wittels and Pearson (2008) providemore details.Part 1: Chapters 1 to 3 Page 19 of 69