NYU Stern School of Business

Undergraduate College

OPMG-UB.0001.003 (C60.0001): COMPETITIVE ADVANTAGE FROM OPERATIONS

Fall 2012

Instructor Details

Pinedo, Michael

mpinedo@stern.nyu.edu

Monday 5-7 PM

8-59

 

Jorge Granados

jag775@stern.nyu.edu

TBA

TBA

 

Course Meetings

TR, 8:00am to 9:15am

Tisch T-UC04


FINAL EXAMINATION DATES:

 
OPMG-UB.0001.001:      December 20     8:00  –   9:50 AM 
OPMG-UB.0001.002:      December 18    10:00 – 11:50 AM.


Schedule exceptions
    Class will not meet on:
    Class will meet on:

 

Course Description and Learning Goals

This course serves as an introduction to Operations Management.

 

Stern Policies

HONOR CODE

 

I expect every student to be familiar with the Stern School of Business Honor Code. Some of the ways in which the code applies to this course are discussed below:

 

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 

 

Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 

 

Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.

 

Assessment Components

GRADING

 

Class Participation, Attendance, Quizzes       15% 

Homework                                                           15%

Mid-Term Examination I  (Session 10)           20%

Mid-Term Examination II  (Session 18)         20%

Final Examination (Open book)                      30%

 

Grading

At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter.  In general, students in undergraduate core courses can expect a grading distribution where: 

Note that while the School uses these ranges as a guide, the actual distribution for this course and your own grade will depend upon how well you actually perform in this course.

 

Homework & Quizzes

HOMEWORK

 

You will be assigned homework for each topic. The 8 homework assignments are due on the dates (sessions) where the assignments appear in the syllabus.  Their due dates are Sessions 2, 5, 8, 12, 15, 21, 24, 27. Only assignments that are specifically designated as SUBMIT are to be handed-in at the beginning of class. Keep a copy of all homework submitted for reference during class.

 

Homework will be graded on the scale of (0,.5,1,1.5 and 2), and will not be accepted late. They must be prepared individually in order to receive credit. Please write clearly or word process your homework.  You are allowed to discuss the general issues concerning the homework with one another.  However, the details concerning the homework and the writing up of it, you have to do by yourself (so no two homeworks should look alike).  Make sure to retain a copy of all homework submitted.

 

QUIZZES

 

A quiz might be given in any session. The quiz will relate to facts given in a case and study questions asked in the syllabus.

 

 

HOW TO PREPARE FOR CLASS DISCUSSIONS

 

Please read the cases carefully. Use the study questions supplied in the syllabus as a guide. Be prepared to be called-upon to present the facts of the case, or to carry out the analysis indicated by the study questions. Class attendance and participation will be graded on the scale of (0,2), where 1 is for attending without participating, 1.5 is for contributing some to class discussion, and 2 for a substantial contribution to class discussion.

 

 

USE OF LAPTOP COMPUTERS IN CLASS

 

 

You are only allowed to use laptop computers in class under the following conditions:

 

 

Texting and emailing during class is not allowed.

 

Course Outline

SYLLABUS

 

COMPETITIVE ADVANTAGE FROM OPERATIONS

 

FALL   2012

 

MODULE 1:   Introduction to Operating Systems:

Process Design and Analysis

 

 

Sep 4    SESSION    1:    INTRODUCTION – OPERATIONS AS A SOURCE OF

COMPETITIVE ADVANTAGE

 

  1. Introduction to Operations Management – Course Introduction and Overview.  In this lecture we will be discussing Operations at UPS.  Read the document UPS and Fedex Airhubs (available on Blackboard under Module 1)
  2. Read Analysis of Operations (available on Blackboard under Course Documents in the Case Packet)
  3. Recommended reading : The Goal by E.M. Goldratt

 

Sep 6   SESSION   2:    PROCESS DESIGN

 

  1. Read again Analysis of Operations.  Pay very special attention to Little’s Law on page 11 of this document. 
  2. Read, analyze, and be prepared to discuss the Benihana of Tokyo case.

 Use the following study questions as an aid in analyzing the case.

(a) Describe Benihana as an operating system. (Draw a process flow diagram.) List the relevant inputs, process, and output elements in three columns.

(b) How does the operating system support the Benihana concept?

(c) Which parameters of the operating system influence the throughput of a Benihana Restaurant?

(d) How does the cost structure of a Benihana restaurant compare with that of a typical American restaurant? How does Benihana get its competitive advantage?

(e) What is the proper relationship between the number of tables in the dining room and number of seats in the bar? Assume they want the average customer to stay 20 minutes in the bar.

  1. Homework #1: Answer questions (b), (c) and (e) and submit at the beginning of class.

 

 

Sep 11SESSION   3:     OPERATING SYSTEMS – TYPES OF OPERATING

             PROCESSES

 

  1. Read again Analysis of  Operations (Available on Blackboard)
  2. Read  Operations in Financial Services (available on Blackboard)
  3.  

Sep 13  SESSION   4:    PROCESS ANALYSIS (1)

 

  1. Read, analyze and be prepared to discuss the Kristen's Cookie Company case (Harvard Case) utilizing the six key questions at the end as guides.  In particular prepare the question:   What are the cycle time, throughput time, and capacity of each operation and the whole production system?

 

 

Sep 18SESSION   5:     PROCESS ANALYSIS (2)

 

  1. Homework 2: Draw a Gantt chart for Kristen's operation assuming orders are for two-dozen cookies, orders come in every 12 minutes AND Kristen’s roommate is absent.   Draw the Gantt chart for just the first three orders.  (For an example of a Gantt chart,   see the Figure on Page 8 of the Analysis of Operations  document).                                                                                   Submit this analysis at the beginning of the class.
  2. Read the Donner Company case. Use the EXCEL spreadsheets discussed in class (Donner.xls and Donner1.xls) to analyze and understand the relationships between number of orders (set-ups) in a month, order size, and capacity

Use the following study questions as guides in analyzing the case:

  1. Describe Donner as an operating process. To simplify this task, consider only the flow of the most important output.
  2. Assume Donner has to process 60 orders in a certain month. What is the capacity (in terms of the number of boards) of each operation and of the entire system?
  3. What factors influence the capacity of the entire system? What is the current utilization of the machines?
  4. What was the efficiency of Donner?
  5. What are the causes of the major problems described at the end of the case? How would you propose to resolve them?

 

 

MODULE 2:  Optimal Resource Allocation

 

Sep 20   SESSION    6:    THE BASIC LINEAR PROGRAMMING (LP) PROBLEM

 

  1. Read   Introduction to Linear Programming  (available on Blackboard)
  2. Prepare in advance for discussion in class:   Problems to be Formulated as LPs   (available on Blackboard). 

 

 

Sep 25  SESSION     7:     SOLUTION TECHNIQUES: GRAPHICAL METHOD AND

             ENUMERATING THE CORNER POINTS

 

  1. Read
  2. Solve problems .

 

 

Sep 27  SESSION   8:    LP SOLUTION (EXCEL  INTERPRETATION)

 

  1. Solve problems
  2. Interpretation of the results
  3. Homework #3:Solve and submit Problems 1 and 2 of Homework #3 that is posted on Blackboard.

 

Oct  2    SESSION    9:     USING THE  LP  MODEL  AND   MIDTERM   REVIEW

 

  1. Read, analyze, and be prepared to discuss the Otto Development Corporation case.
  2. Review of all the material before the midterm

 

 

Oct 4  SESSION    10:         Midterm  Exam  I  

 

 

MODULE 3: Time Based Competition

 

Oct  9    SESSION 11:      TIME BASED COMPETITION

 

  1. Read  Critical Path Method by Anderson and Hales (available on Blackboard)
  2. Read FCN/Securities Demo (A) (available in the Case Packet on Blackboard).

 

 

Oct 11    SESSION   12:       PROJECT MANAGEMENT

 

  1. Read, analyze and be prepared to discuss the other four project management network cases (exercises) assigned in class: FCN (B), FCN (C) (on Blackboard), Specialty Contractors, and Aerospace Components (on Blackboard).
  2. Homework #4: Draw the networks for the projects described in the FCN/Securities Demo (A) exercise (on Blackboard).

 

Oct 16  Tuesday      No Stern Classes

 

MODULE 4: Managing Quality as a Strategic Issue

 

Oct 18   SESSION    13:    QUALITY – ITS DEFINITION AND BASIS FOR

               COMPETITION

 

  1. Preview of the next half of the course.
  2. Read  Statistical Process Control  by Nelson Fraiman (available on Blackboard)

 

 

 

 

 

Oct  23   SESSION   14:      STATISTICAL QUALITY CONTROL

 

  1. Read Statistical Process Control by Nelson Fraiman (available on blackboard)
  2. Read the Ritz-Carlton Case (available on Blackboard)

 

Oct 25   SESSION    15:    QUALITY IMPROVEMENT

 

  1. Read, analyze and be prepared to discuss the quality control issues concerning Ritz-Carlton.
  2. Homework #5:   Consider the Ritz-Carlton case. The Excel file ritz.xls contains a listing of subset of all defects reported in the DQPR for the Ritz-Carlton Buckhead over a given period. The subset contains all defects for twelve categories of defects that directly impact the customer and are identified as causes for customer dissatisfaction.  Analyze this data file and answer the following questions in at most 2 pages due at the start of class:
    1.  What is Ritz-Carlton’s business strategy, e.g. who are their primary customers?
    2. How is quality defined at R-C?  Does the data in the file ritz.xls indicate any significant quality problems?
    3. If you were to select a category of defect to address from the DQPR data, which category would you address? Why?
    4. For whatever defect category you selected, construct a P-chart to help identify days on which some “assignable cause” of added defects arose.
    5. Using the results of your analysis and any other relevant tools of quality, as well as your common-sense knowledge of hotel operations, generate hypotheses about the possible root causes of the defect category that you selected.

 

Oct 30  SESSION    16:    QUALITY ANALYSIS,   MEASUREMENT AND

              IMPROVEMENT

 

  1. Read the Smith-Thompson case (available on Blackboard).
  2. Prepare for discussion in class Exercises 1 and 2 of the Smith-Thompson case.  Which factor(s) have the largest effect on the total expected losses?

  

 

Nov 1   SESSION 17:       Midterm  Review

 

Nov 6   SESSION 18:      Midterm Exam  II  

 

 

 

MODULE 5: Inventory Concepts and Models

 

 

Nov 8   SESSION 19:     INVENTORY / LOGISTICS

 

  1. Read   Economic Order Quantity Model   by Schwarz  (available on Blackboard)

 

Nov 13   SESSION 20:     THE ROLE OF INVENTORY - THE TRADITIONAL VIEW

 

  1. Read, analyze and be prepared to discuss the Xenon case (on Blackboard).

 

Nov 15   SESSION 21:     INVENTORY MANAGEMENT UNDER UNCERTAINTY

 

  1. Homework # 6:  Consider the Xenon Case.  Consider the setting with 4 regional warehouses.   Compute the reorder point for one of the warehouses when the lead time L is 4 weeks. 
  2. Read, analyze and be prepared to discuss the L.L. Bean Inc. case.

 

Nov 20   SESSION 22:     INVENTORY IN ACTION: THE BEER GAME

 

            ROOM: TBA

 

Nov 22    No Classes  Thanksgiving Break

 

 

Nov 27   SESSION 23:    SUPPLY CHAIN MANAGEMENT

 

  1. Debrief of the Beer Game
  2. Read the Dell Direct Case (available on Blackboard). 

 

Nov 29   SESSION 24:    PERISHABLE INVENTORIES -- REVENUE MANAGEMENT

 

  1. Homework #7:  The excel file LLBean.xls (download) contains demand and forecast data for 84 items. Suppose that these are the data that L.L. Bean will use to plan their next season.  Consider an item that retails for $46 and costs LL Bean $26.  The liquidation price for this item is estimated to be $17.   The sales forecast for this item is 12,500 units.  What order quantity should L.L. Bean choose for this item?  

 

 

 

 

 

 

 

 

MODULE 6: Time-to-Market & Responsiveness

 

Dec 4     SESSION 25:     THE EFFECTS OF UNCERTAINTY - WAITING LINES

 

  1. Read  Queueing Management and Models (available on Blackboard)

 

Dec 6   SESSION 26:      QUEUING THEORY IN ACTION

 

Read, analyze, and be prepared to discuss the First City National Bank case (on Blackboard). The following study questions will help:

  1. Considering the data supplied for arrival and service times, how would you calculate an average arrival rate and service rate?
  2. As Mr. Craig, what characteristics of this queuing system would you be most interested in observing?
  3. What is the best number of tellers to use?
  4. Calculate the waiting time for a customer (time spent in the queue before service) and determine which of the two line configurations you would recommend? Support your result with the appropriate quantitative queuing analysis.

 

 

Dec 11SESSION   27:     USE OF SIMULATION AS PROBLEM SOLVING TOOL

 

  1. Read  Intro to Simulation by J. Banks (available on Blackboard)
  2. Homework #8:

(a)  Consider the 2:00-2.30 slot on a normal day. What is the smallest number of tellers to use in the single-line teller arrangement in order to ensure that the average waiting time of a customer is 1 minute or less? What is the teller utilization in this case? 

(b) Consider again the 2:00-2.30 slot on a normal day. What is the smallest number of tellers to use in the alternative teller arrangement in order to ensure that the average waiting time of a customer is 1 minute or less?  What is the teller utilization now?

(Hint:  For this scenario, in which each teller has a separate line, assume that the arrival rate at each teller is the total arrival rate divided by the number of tellers and consider each teller and his customers as forming an M/M/1 system.   Use MMS.xls for all calculations in both scenarios.  Be careful with units of time.)

  1.  Consider the First City National Bank case again (on Blackboard). By hand, simulate and submit 25 arrivals (track them through the bank) using the inter-arrival time distribution and service time distribution given in the case, with three tellers, for each of the two line arrangements. Identify assumptions that are necessary?
  2. What are the advantages of using simulation to study this operation? What are the limitations?
  3. Which alternative arrangement of teller lines should Mr. Craig select based on the simulations?

 

Dec 13   SESSION    28:     REVIEW OF COURSE MATERIAL  

 

Required Course Materials

CUSTOM TEXT (Optional): Competitive Advantage from Operations (Seventh Edition) a customized text created for Stern students containing Chapters from Heizer and Render, Operations Management, 10thedition, Prentice Hall, 2010.  This package was prepared by Pearson Custom Publishing.

 

CASEBOOK  (Required): containingHarvard Cases and Readings.  This Case Book has to be purchased at the bookstore.

 

 

 

CASEPACKET (Downloadable from Blackboard):  containingNYU, Columbia and Stanford Cases and Readings. This Case packet is on Blackboard under Course Documents.

 

 

 

COMPUTER SOFTWARE:  EXCEL

 

 

RECOMMENDED READING:    The Goal,  Third Edition (Buy in Bookstore), Eliyahu M. Goldratt and Jeff  Cox, North River Press, Inc. 2004.

 

Re-Grading

The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.

If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.

 

Professional Responsibilities For This Course

Attendance

 
Participation

In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:

 

Assignments

 

Classroom Norms

 

Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.

 

Recording of Classes

Your class may be recorded for educational purposes

 

Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.

 

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