THE SPECIALIST WITH A UNIVERSAL MINDANDREW VAZSONYI, Feature Editor, McLaren School of Business, University of San FranciscoQUANTITY BREEDS QUALITYby Andrew Vazsonyi, Feature Editor Professor Anirudh Dhebar of the Harvard Business School, in a thought-provoking article (March 26, 1995, New York Times) describes the F9-key syndrome of spreadsheets that traps students in the black hole of re-re-re-recalculations. Exhorting students not to rush to the computer but to think first, invariably fails, says Dhebar. Perhaps there is a better way to teach students. As so often, I present my ideas in parable form, because as Jesus says in Matthew 13:13:
The Production Parable The Livonia International Motor Corporation is a large manufacturer of automotive parts. One of the important product groups is the Small Units Department concerned with the manufacture of automotive rods, rings, and pistons. Ron Banning, manager of the Small Units Department, is peering over the accounting records of his department, Profit Center DA/395tu-27. Ron wants to set daily production rates for the next quarter, and, in particular, wonders if the production rates for the last quarter should be changed. The daily profit contribution, according to the accounting reports, is $2,190. Can the profit contribution be increased? A year ago, Livonia established a small Management Science Department, and Ron decides to ask them for help. The department head assigns Amy Rogo to look into the problem. Amy is a computer guru, and immediately loads her favorite creativity software to get ideas on Ron's situation. She loads Excel and develops an influence chart, her important quantitative creativity tool, to identify the variables and their interdependence. She also designs a simple Excel model for the situation. The Small Units Department makes rods, rings, and pistons. Exhibit 1 shows the production schedule, constraints, total profit and sales contributions of each of the products, total weekly profit of $2,190, and sales of $6,350. (All available labor and steel are utilized, but there is a surplus of a nickel.) She does not at all believe that the problem is to maximize profit; the real situation must be fuzzy and confusing. So she scrambles the assumption that Ron wants to maximize profit and plays around with the model to get a quantitative insight to the situation. Notwithstanding, she also quickly converts the model into a linear programming model, optimizes for profit and finds the best profit of $4,818. Amy does not try to solve the problem; she is designing a scenario manager, so she will be able to respond and archive solutions quickly to Ron's WHAT-IF questions. The Brainstorming Session Ron doesn't like Amy's solution because it involves making 10,000 pistons and nothing else. Ron says he wants a more balanced production schedule. Amy makes a mental note that profit is not Ron's only goal; he has this balancing as a hidden goal, and he probably has other goals he has never stated. Amy also finds that Ron wants to consider alternate ways to manufacture the products. So Amy brainstorms with the production people and finds several alternate ways to manufacture rods and pistons. But there is only one way to make rings. She quickly fine-tunes the model and questions Ron as to the meaning of the word þbalanced.þ Ron says he wants a floor of 2,000 on rings, 3,500 on pistons, and a ceiling of 10,000 on rods. Amy includes the modification into the model with lightning speed and finds an optimum profit of $2,030 by making 10,000 rods, 2,000 rings, and 3,500 pistons. But Ron doesn't like this scenario either. He says he likes the ceiling of 10,000 on rods, but he really wants the floors to be 20% of the total production. The floors should not be absolute, but relative. Amy gets the new optimum in no time. Now Ron gets concerned about sales. He is willing to trade off some profit for higher sales. Amy gets the maximum possible sales and generates a tradeoff curve between profit and sales. What about lobbying with management for more resources? Labor, steel or nickel? Then again, what about change aversion? Management may not accept a schedule radically different from the current solution. And so the story goes. After dozens of scenarios, all optimal and archived for recall, the fuzzy situation becomes clear and structured. Finally, Ron finds a solution he likes and implements. Conclusions The old adage Non multa sed multum, not quantity but quality, may not hold anymore. One of Amy's creativity software (IdeaFisher) says:
Perhaps Quantitas tendet ad qualitatem, that is, quantity leads to quality, is the modern version of the adage. We need to encourage our students to play with models and false solutions that scramble solutions, unscramble fuzzy situations, and generate alternate scenarios for decision makers. Focusing on the decision maker, the influence chart and spreadsheet, playing becomes purposive and proactive. Students must overcome the problem-solving syndrome caught in Calculus 101, and learn how to uncover hidden objectives in fuzzy situations. The scenario generation perspective discourages the non-functional, helter-skelter recalculation of solutions to imaginary problems.
Dr. Andrew Vazsonyi |