Abstract
When engaging in the development of new products, the primary objective of start-up companies is to generate a specified return level quickly and with high confidence. Achieving this goal is complicated because of uncertainties in projects’ returns and durations. In the study titled, “Waterfall and Agile Product Development Approaches: Disjunctive Stochastic Programming Formulations,” Kettunen and Lejeune develop new disjunctive chance-constrained programming models that capture this goal. The first static model reflects the traditional waterfall product development process, whereas the second one is dynamic and depicts the agile product development process. Kettunen and Lejeune design a novel reformulation method and a decomposition algorithm and use them on a new product development problem encountered by a U.S.-based software start-up company. The results reveal that high confidence in reaching a certain return can be achieved by investing in projects with a longer development time and higher risk. Additionally, overlooking the capability to make dynamic decisions, as allowed by the agile approach, leads to overestimating the time needed to obtain the targeted return.
Published Version
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