System Design and Management

The MIT Master's Program in Engineering and Management

Systems Thinking and the Inevitability of the Dreamliner Delays

MIT SDM Systems Thinking Webinar Series

Yao Zhao, Ph.D.
Associate Professor, Rutgers University

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Date: December 2, 2013

About the Presentation

The Boeing 787 Dreamliner was the fastest-selling plane in the history of commercial aviation, but its development was a nightmare. The first flight was delayed by 26 months, and the first delivery was 40 months overdue with a cost overrun of at least $10 billion. Using the results of a comprehensive empirical study of the actual events and facts, this webinar will discuss strong evidence suggesting that the majority of delays were intentional.

Dr. Yao Zhao will:

  • Describe a mathematical modeling and analysis of economic drivers in joint development programs that showed the 787's risk-sharing arrangement forced Boeing and its partners to share the "wrong" risk. This led each partner into a "prisoner's dilemma" wherein delays were in the best interests of the firms even while they were driving themselves into disaster;
  • Discuss the reconciliation of the analysis with empirical evidence, which reveals the rationale behind many seemingly irrational behaviors that delayed this program; and
  • Suggest a new "fair sharing" partnership to share the "right" risk and greatly alleviate delays for development programs of this kind in the future.

This research was supported by National Science Foundation (NSF) Award No. 0747779.

About the Speaker

Dr. Yao Zhao is an associate professor in the department of Supply Chain Management and Marketing Sciences at Rutgers, the State University of New Jersey. He earned a B.E. in aerodynamics and holds a Ph.D. in industrial engineering and management sciences from Northwestern University. His current research interests lie in supply chain and project management interfaces with applications in the aerospace, pharmaceutical, energy, and agricultural industries.

He is a recipient of an NSF Career Award (2008-'13) for integrating supply chain and project management. He currently serves as an associate editor for Operations Research and Manufacturing & Service Operations Management.

About the Series

The MIT System Design and Management Program Systems Thinking Webinar Series features research conducted by SDM faculty, alumni, students, and industry partners. The series is designed to disseminate information on how to employ systems thinking to address engineering, management, and socio-political components of complex challenges.

Yao Zhao, Ph.D.

Yao Zhao, Ph.D.

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