Sunday, June 28, 2009

User Review: Risk Engine Monte Carlo for MAC

I discovered a real gem this weekend for Mac users longing for Monte Carlo simulations in either iWorks Numbers or Excel 2008. Risk Engine developed by Ian Turner earlier this year has been released and is offered for $40 ($10 academic).

I keep VM Fusion on my Mac so that I can run some programs in Windows Excel that I can't handle with the Mac. Up until now that is how I have been doing Monte Carlo simulations, unless of course the model is simple enough to just use the excel functions.

After downloading and installing Risk Engine, Ian will email the license file to you. After a quick install you are up and running. The program even generates some nice looking histograms for you. There is a tutorial available which will step you through how to use the program. Once you master this tutorial you are on your way.

The program is somewhat limited on distributions but this may improve in the future as the program matures. The distributions handled are:

  • Gamma
  • Lognormal
  • Chi-Square
  • StudentT
  • Beta
  • Normal
  • Uniform
  • Triangular
  • User Defined Discrete
Two that I use from time to time Poisson and Binomial were missing from the list but I am hopeful a future upgrade will include it.

Another limitation of the program is speed. The program will do simulations cycles from one to hundreds of thousands. If you select 10,000 cycles be prepared to wait some time for an answer as the machine analyzes and collects the data. Models of 100-3000 seem fairly realistic to wait for. So if you are dealing with relatively small models this program is a good solution.

Finally, the program is a great value and I recommend its purchase if you are planning to do small to medium sized Monte Carlo analysis and want to do it in iWorks Numbers or Excel 2008 (I tested it on Excel 2004 and it worked for me on that as well).

Ian Turner can be followed on Twitter as Iansplashturner.

Thursday, June 25, 2009

McDonald's Wins! Well not really.

The results from my Operations Management class came in and we were not able to conclude an difference in service times. Although we observed a service time 208 seconds for McDonald's and 255 seconds for Wendy's on average, our sample size was to small to conclude that this difference was significant. It was just as likely our results were from random chance as it could be that McDonald's has faster service than Wendy's. I'll continue to use this exercise in future classes and update the results as I am able to collect more data. At some point we should be able to declare a winner in the speed category for fast food.

Sunday, June 21, 2009

Is Fast Food LEAN? Wendy's vs McDonald's

The topic I am exploring with a current operations management class is quality and service at fast food restaurants. How is good service defined?

My class is in process of gathering data between Wendy's and McDonald's on the order process time. This is a good exercise to illustrate how the DMAIC process might work. If we recall M is for MEASURE. If we can understand how to measure things then we can improve them. As for the service time, it seems to vary pretty widely at this point and we have brainstormed a number of factors that affect the service time.

  • Drive Thru vs Inside Order
  • Size of Order - Large vs Small
  • Staffing Level - Over vs Under
  • Time of Day - Breakfast, Lunch and Dinner
  • Location - City and State
  • Food Preparation Processes - Process Flow
  • Variety of Menu Options - High Number of options increases complexity.
  • Training level of employees.

Even though the fast food franchises probably strive for consistency in the process their actually delivery times for your order varies widely, this impacts customer satisfaction.
Other items that have been mentioned about customer satisfaction in this industry include:
  • Accuracy of the order - did I get what I ordered
  • Wait time for tables.
I don't know if either Wendy's or McDonald's formally use LEAN processes in their operation but they do have some elements in place. Usually equipment is arranged for best process flow and tools and supplies placed at point of use. McDonald's uses standardization to the maximum to minimize taste variation between franchises. French Fries in Seattle taste the same as French Fries in Tampa and that is because of standard work procedures and processes. Standardization of work is a key element in lean manufacturing.

Sunday, June 14, 2009

What good is Twitter?

This question was posed in a Q&A session on Linkedin as an effort to help quantify what people find as valuable in Twitter. In some way, isn't twitter just the CB Radio of the 21st century? Back during the oil crisis of the 70's, truckers relied heavily on CB. It also became a phenom with the general public. Do you recall the movie "Smokey and the Bandit"? In CB even a special lingo developed..."10-4 Good Buddie, watch out for that Bear in the grass." CB provided a means of communication for travelers to find gas during shortages and location of speed traps during the mandated 55 mph speed limit of the 1970s.

Twitter has its special lingo such as RT, @wdbuck, #hashtags, #musicmonday, #followfriday and so forth. Twitter provides a means of two way text communication between users. Users are allowed "handles" or alternate names much the way CB radio users made handles for themselves.

So what good is Twitter?

Well for one, you can receive updates from your favorite celebrity. There is a service called WeFollow that allows you to create tags for yourself and categorizes you to groups. Checking WeFollow Celebrities - Ellen, Britney and Oprah appear to be the most followed. Since most celebs "push" there updates to their followers it is only one way communication.

Other "push" processes include informational updates to your cellphone for weather update, sports scores, job listings or traffic updates. One caution is to be selective with turning your device updates on because you can get deluged with text updates to your cellphone if not careful.

Online Marketers appear to be embracing Twitter as a way to spread the word about their products. Twitter has one advantage and/or disadvantage over email in that there are no spam filters. Once you start accumulating followers you will be deluged with spam for various marketers offering a variety of schemes. Affiliate and MLM marketers seem to be hoping for the 7th level and millions of dollars in revenue from Twitter. Unfortunately, none of them even mentioned that had made a single sale from twitter. Other uses for online marketers is for promotion of "deals" and events.

One respondent indicated a Roach Coach in LA has successfully used twitter to communicate their locations to customers. Look up @KogiBBQ they have 30,818 followers. Isn't the business model for sales of a roach coach limited due to the amount of food that can be carried and the number of cash registers on the truck? If they are randomly roaming the city, I guess sending out the updates helps get customers. I think for the vast majority of these types of businesses the coaches have a set schedule at businesses during break and lunch time. What does it say about you if you are following the chatter about a roach coach?

Two respondents indicated that twitter was an effective means of getting news. It is perceived more responsive than RSS feeds. I can see how news travels fast on Twitter. However, if you get it from someone who passed a link from the NYTimes, then the NYTimes had the story before the users on Twitter. So it appears to be a way of passing around old news. If you subscribe to the RSS feeds of the newswires you will most likely get stories. Using the device updates would allow you to get the news while you are on the move or traveling.

One good use of Twitter is exemplified in @ASQ. The American Society for Quality has it's own twitter account and uses it to promote professional activities within the community of quality professionals. ASQ also sends emails, has a website and most members receive information through mailings as well. Tonya Cannariato, Web Project Administrator at ASQ stated, "On the positive side, we've seen significant interest in following the ASQ brand on Twitter since we've started posting quality quotes and links to useful resources. We view this as part of our effort to be where the people who are interested in us are--outreach, engagement, customer relationship building, etc."

Spam appears to be the largest drawback to Twitter. Some respondents did indicate that they have found no good uses for Twitter. One respondent perceived it as "a giant spam machine". Another respondent quipped, "I haven't found one yet.." in response to what good is twitter? Some just indicated there is improvement needed in twitter to help weed out spam.

Finally, I am not going to pass judgment just yet on Twitter. I am still wondering if Twitter is just a fad, like the CB radios of the 70s and 80s. Will this technology stick with us and be here 20 years from now? Is it here to stay? What do you think?

Tuesday, June 09, 2009

Do you Hold Efficient Daily Meetings?

With a former employer I had the need to meet daily with my staff and exchange important information about activities at the plant. One of the best LEAN solutions that I was able to implement was the concept of a Stand Up Meeting for daily focus. This technique is particularly useful in a face paced environment.

It's exactly like it sounds. Everyone attending the meeting stands and faces each other in a circle. The agenda was simple. We did a clockwise rotation starting with me. Each reports on:

1) What I did yesterday.
2) What I plan to do today.
3) What obstacles will I face.

Three things to discuss that's it. I had an 5 minute timer and no one was allowed more than five minutes. You will be surprised how effective it is to have to organize your thoughts first thing in the morning and actually tell people what you plan to do for the day.

I had a white board near by and I would always write down the top three things from each person.

When we were done if the obstacles were important to tackle, I would help guide the staff to the solutions. I learned about his method from a post I read by Martin Fowler. I recommend you check it out. I simplified it for my situation, but his overview goes into detail on how you can set these meetings up for yourself. I thought the method was good and worth sharing. It worked well for me and provided focus to my engineers.

Sunday, June 07, 2009

Book Review: Process Engineering Problem Solving by Joe M. Bonem

Process Engineering Problem Solving: Avoiding "The Problem Went Away but it Came Back" Syndrome" is an excellent book for young engineers working in the process industries. Joe M. Bonem, presents a five step problem solving and root cause analysis method that works on every problem you might encounter in the industry. He classifies problems by type - prime movers, plate processes, kinetically limited and unstable processes. Using the same fact finding and questioning techniques he teaches the reader how to get to the root cause and provide solutions to prevent problems from coming back. It is a book that I wish I would have had 20 years ago as a young process engineer.

What is particularly good about this book is the questions that are provided to attack each problem. By using a simple checklist of 8-10 questions Joe provides the reader with a solid methodically way to investigate the background on each problem. These same questions can be applied to every problem in the process industry.

Although the overall 5 step root cause process is focused on the process industry the method can be applied to any business problem. Additionally, Joe's process is unique and original. I recommend this book for anyone working in manufacturing, chemical engineering or the process industries.

Wednesday, June 03, 2009

How to Model Project Estimate Uncertainty

When faced with uncertainty about making an economic decision it is usually always best to assess the probability of the various outcomes. A recent problem came about for a project cost estimate where there was uncertainty about the level of accuracy on the estimate and also uncertainty with respect to engineering costs which were a major cost factor for the project. The cost engineer had produced a table of 6 possible outcomes representing the cost associated with each level of uncertainty. Because of the uncertainty it is difficult to determine the proper cost to communicate to management.

Management has to recognize one premise when given a project cost estimate. There is always uncertainty. In fact if things are fair then 50% of the time a project will complete on time and under budget and the other 50% of the time a project will exceed its budget or estimate value. Want to know why project manager turnover is so high. Sometimes project managers are just the recipients of bad luck and held accountable for exceeding a projects estimate even when there was nothing that could have been done differently.

What information should really be important to management with respect to the cost of a project? How many times when given an estimate does that figure lock into a managers mind when in fact there is considerable variability early on in a project about the true cost of the endeavor. These concepts apply to engineering as well as software projects. There are really two important figures that need to be communicated.

1) The expected cost of the project and the accuracy of that point estimate.
2) The risk exposure on the project. What is the cost with a 90% probability that we will be under.

The best way to answer both these questions is by using Monte Carlo simulation methods. Several manufacturers produce software that does a very good job of this. @Risk by Palisades and CrystalBall are two well known examples. It also can be done easily in Microsoft’s Excel with a little knowledge of the randomization functions. This blog entry is not to teach you how but to let you know it’s possible.

The output of a typical simulation looks as above. Here we rolled the dice on 5000 parallel imaginary project universes. As it turned out the median result on this project was P(50) of $97.5M and a P(90) value of $109M dollars.

These two numbers provide a great framework for communicating the cost of a project. The expected cost is $97.5M and we can say we are 90% confident that the project should complete for less than $109M dollars. This gives management a good idea about their financial risk with regard to the capital expenditure.

Tuesday, June 02, 2009

How BING will surpass Google!

If you haven't tried the new search engine BING you need to give it a spin. I think already I see improvements over Google on just some short use this afternoon.

1) The related search offerings which come up on the left hand side of the screen are all relevant and offer logical branching opportunities to new areas. To be fair Google has related search but they are at the bottom of the screen and I seldom noticed it.

2) I tried a simple search on Houston Astros and compared it to the offerings of Google. Wow! what a difference. BING not only came up with the key sites but presented current data as well. Recent game performance, record, standings, and streak were easy to see. The format is well organized.

3) One thing I noticed is Google does seem to retrieve more overall hits and does present the time of search. Time of search is lacking in the BING screen.

4) Color - Wow! BING gives color to the screen which makes it enjoyable compared to Google.

5) Speed - I could not and didn't have means to measure it but I have to say that BING seems as fast as Google if not faster. Maybe someone else will take the time to post data on this sometime soon.

6) Image searches are also very good. Once in an image page the thumbnails jump at you when you roll the mouse over them. To the left there is a variety of options to change size, layout, etc.

Overall, my initial impressions of BING are that it is going to be a great competitor for Google and maybe will knock Google off the top of the search engine pyramid. Check out the chart at the bottom of the page as I will be tracking the Technorati posts on Google vs Bing. I think Bing will grow exponentially in popularity!