Western Research Application Center (WESRAC) Ken Dozier & David Chang Western Research Application Center HICSS 2015 Knowledge Systems Track January 7, 2015 Kaua’i Hawaii A Collaborative Manufacturing Collective

Western Research Application Center (WESRAC) Dr. David Chang Semiotics, Syntax & Plasma Physics

Western Research Application Center (WESRAC) Introduction Used a Design Research Framework to create a Learning Object Game Immersed in Complex Systems (LOGICS) process and product artifact. Used the NetLogo “Hubnet” capability to immerse a human agents into the simulate the dynamics of the classic Sterman “Beer Game”. Create a persuasive experience that nudged players abandon heuristics and invest in IT rationality to improve economic performance in a counter-intuitive dynamic business system.

Western Research Application Center (WESRAC) Background Observations –Cyclic phenomena in complex dynamic business systems Ubiquitous & Disruptive Wild oscillations in supply chain inventories Results of Observations and Simulations –Negative Feedback Systems with Delays Oscillate –Phase dependence of oscillations on position in chain –Understanding of Managements Personality Impact –Commitment to Rationality Dramatically Increases Financial Performance MIT Sterman “ Beer Game” Simulation –Single Customer, Single Product, 4 Tier Supply Chain –Published Suboptimal Performance 1 Order of Magnitude –Experimental Suboptimal Performance 2 Orders of Magnitude

Western Research Application Center (WESRAC) Model Developed by Dr. Nathan B. Forrester of A.T. Kearney, Atlanta, rd Order Differential Equation Beer Game

Western Research Application Center (WESRAC) Sterman’s Single Repetition Teaching Takes Off: Flight Simulators for Management Education, Sterman (1992)

Western Research Application Center (WESRAC) NetLogo Demonstration Steady state at 4 cases per order. Beer Game Demo Densmore, O. June 2004 Wilensky, U. (1999). NetLogo. Center for Connected Learning and Computer-Based Modeling. Northwestern University, Evanston, IL

Western Research Application Center (WESRAC) A Single Change A 4 Unit Constant Demand is Changed to an 8 Unit Constant Demand Wilensky, U. (1999). NetLogo. Center for Connected Learning and Computer-Based Modeling. Northwestern University, Evanston, IL Beer Game Demo Densmore, O. June 2004

Western Research Application Center (WESRAC) Analytical Models Efficiency Direction Proficiency Competition Concentration Innovation Cooperation Source: “The Effective Organization: Forces and Form”, Sloan Management Review, Henry Mintzberg, McGill University 1991

Western Research Application Center (WESRAC) Conflicting Temporal Layers Source: Gus Koehler, University of Southern California Department of Policy and Planning, 2002

Western Research Application Center (WESRAC) Layers of Communication Source: Gus Koehler, University of Southern California Department of Policy and Planning, 2002

Western Research Application Center (WESRAC) Government Dynamics Source: Gus Koehler, University of Southern California Department of Policy and Planning, 2002

Western Research Application Center (WESRAC) High Level of Complexity Source: Gus Koehler, University of Southern California Department of Policy and Planning, 2002

Western Research Application Center (WESRAC) Bureaucratic Factor Seven Organizational Change Propositions Framework, “Framing the Domains of IT Management” Zmud 2002 Business Process Improvement Business Process Redesign Business Model Refinement Business Model Redefinition Supply-chain Discovery Supply-chain Expansion Market Redefinition High β Low β

Western Research Application Center (WESRAC) Plasma Theories Advanced plasma theories are extremely important when one tries to explain the various waves and instabilities found in the plasma environment. Since plasma consist of a very large number of interacting particles, in order to provide a macroscopic description of plasma phenomena it is appropriate to adopt a statistical approach. This leads to a great reduction in the amount of information to be handled. In the kinetic theory it is necessary to know only the distribution function for the system of particles. Source: University of Oulu, FInland

Western Research Application Center (WESRAC) Previous Publications Investigated the β bureaucratic factor and it’s inverse organizational temperature T (dispersion) in the 5 metropolitan service areas surrounding Los Angeles. Investigated the ability of Stratification to Differentiate impact of IT Investment on output and job creation –Large firms invest in IT to increase output and eliminate jobs –Small firms invest in IT to increase output and expand workforce Investigate Partition Function Z, Cumulative Distribution Function opened the linkage to Statistical Physics –Dozier-Chang (06) Journal of Information Technology Theory and Application Math Intensive Solution Ideal for Cloud Architectures –Marginal Cost on a per transaction basis –“Give them a Browser (Razor), sell them Transaction (Blades)” –Accommodates Both Large and Small Firms

Western Research Application Center (WESRAC) Comparison of U.S. economic census cumulative number of companies vs shipments/company (blue diamond points) in Los Angeles County Metropolitan Service Area in 1992 and the statistical physics cumulative distribution curve (square pink points) with β = per $106 Maxwell-Boltzmann Distribution

Western Research Application Center (WESRAC) Advantages This model does allow examination of the optimal timing for interventions of these propagations and parametric forces. Something not possible in simulation models to date The most effective paramedic interventions will be those that use information technologies to harmonize with naturally occurring Normal Modes of the system. Disturbances from non optimal interventions move up and down the supply chain.

Western Research Application Center (WESRAC) Learning Object Game Takeda, Veerkamp, Tomiyama, Yoshikawa (AI) Purao (IS&T) Dasgupta (IS&T) Vaishnavi & Kuechler, Design Science Research Methods and Patterns (2008) Design Science Framework

Western Research Application Center (WESRAC) Kernel Theories

Western Research Application Center (WESRAC) Integrated Development Environment LOGICS Behavior Space Generator Participatory ABMSAnalysis Space

Western Research Application Center (WESRAC) Player Interface

Western Research Application Center (WESRAC) Instructor’s Console

Western Research Application Center (WESRAC) Results of Five Designs (measuring total system cost)

Western Research Application Center (WESRAC) Design 1 vs. Design 5 Design 1 Normally Distributed Design 5 Highly Skewed

Western Research Application Center (WESRAC) Design 5 Data Total System Cost per Trial

Western Research Application Center (WESRAC) Binomial Distribution Results can be interpreted in a self consistent manner since each trial can be considered independent. A “success” occurs when the total cost is less that some target Binomial Distribution is Appropriate for a Modest Sample Size There is a 7 fold improvement in target teaching costs in only five trials This is a dramatic improvement in past experience with reinforced learning for the Beer Game problem Teaching Target Costs from Box Plots N=3 p=1/7

Western Research Application Center (WESRAC) Someone is Getting Rich on the Waste

Western Research Application Center (WESRAC) Findings Game 1: Manual ordering with repetition. Control group average 10 times larger than Sterman. Game 2: Manual ordering using Senge’s “Do nothing strategy” Retail absorbs the bulk of the costs Game 3: Local computing enables Wal-Mart's to kill supplier factories Game 4: Any technical solution is better than intuition Game 5: If we cooperate we make 100 times more money The Optimal to Average performance ratio of 100 to 1

Western Research Application Center (WESRAC) Collaborative Manufacturing Much room for improvement –Asynchronous interaction between tiers. –Realistic demand time-series –Realistic normal modes and associated optimal values –Machine Learning Agents to be incorporated –Cloud computing platforms for implementation of collaboration –Approach is applicable to more complex adaptive manufacturing networks where efficiency is achieved by cloud-mediated feedback to individual firms.

Western Research Application Center (WESRAC) Video Demo – Instructor’s Console

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