Tuesday & Thursday 4-5PM (or by appointment)
Monday 4:30-5:30 PM, Wednesday 12:00-1:00 PM
TR, 11:00am to 12:15pm
Final Exam: Dec 18
Class will not meet on:
Class will meet on:
Final Exam: Dec 18
Operations Management is the design and management of the processes that transform inputs into finished goods or services. Operations is one of the primary functions of a firm. Whereas marketing focuses on the demand for the product, and whereas finance provides the capital for the product, operations actually produces and delivers the product.
This course provides a foundation for understanding the operations of a firm. Our objective by the end of the course is to provide you with the basic skills necessary to critically analyze a firm's operating performance and practices. Such knowledge is important for careers in a variety of areas, including general management, entrepreneurship, investment banking (e.g. business restructurings, mergers and acquisitions), venture capital (e.g. evaluating new business plans) and management consulting (business restructuring improvement).
Unlike many courses in the core, which tend to treat the firm as a "black box", we will be primarily concerned with "opening up" the black box and discovering what makes a firm "tick" - or, for that matter, "stop ticking". In contrast to your management courses, our focus is on the technological rather than human dimension of a firm's internal operations - though there are obvious connections between the two that we will explore. In contrast to the measurement focus of your accounting courses, our concern is understanding what elements of a firm's operations enable it to produce quality outputs at a competitive cost structure. That is, we will focus on how the "physics" of material, work and information flows and the design and management of a firm's processes interact to determine a firm's cost structure and its ability to compete effectively in terms of non-cost measures such as quality, variety and speed.
Because the operations of a firm vary widely from one industry to the next, a course like this cannot cover all topics that are relevant to any given industry. Rather, we have selected a set of topics that are fundamental to understanding operations in a wide range of industries. These concepts are then illustrated using cases from a diverse set of businesses.
Module I: Production Processes
Session 1 (Sep 4)
Topic: Introduction to Operations Management
Plan: Course introduction and overview.
Session 2 (Sep 6)
Topic: Process strategy and vocabulary of process analysis
Plan: In this session we discuss process choice. Two of the variables that affect the choice of a process are volume and variety. The choice of process goes beyond determining whether to mass produce or make by hand. We also learn some useful concepts such as how to measure capacity that will be used to analyze the Kristen's Cookie Company case.
Session 3 (Sep 11)
Topic: Process analysis
Plan: In this session, we learn how to analyze a process by using the bottleneck analysis. A recipe of bottleneck analysis will be given in class. Following the bottleneck analysis, we can identify bottlenecks, determine the process capacity, and time to serve customers. More importantly, we can provide concrete suggestions to improve the process performance.
Session 4 (Sept 13)
Topic: Kristen's Cookie Company case
Plan: We discuss the Kristen's Cookie Company case. We should realize that the process in this case is not as complicated as many processes in real companies. Nevertheless, this is an excellent example where we can practice using the bottleneck analysis as introduced in Session 3. Furthermore, our methodology and insights obtained from this case are useful for analyzing more complicated processes.
Preparation: Read Kristen's Cookie Company case (from Case-pack).
Module II: Time-to-market and Responsiveness
Session 5 (Sep 18)
Topic: Waiting-Line Models
We explain why queues exist, and introduce two important queuing models: M/M/1 and M/M/s. In these two models, we can compute various system performance measures, either by using the closed-form expressions or the Excel spreadsheet. These two models provide ammunition for you to analyze the First City National Bank case that will be discussed in Session 6.
Read Quantitative Module D on Waiting Lines and Queuing Theory (pages 739-768 of H&R).
Session 6 (Sep 20)
Topic: First City National Bank
Plan: We use the M/M/1 and M/M/s models to analyze the First City National Bank case. In particular, we make comparisons between a system of s separate M/M/1 subsystems and an M/M/s system. We demonstrate how to use the Excel spreadsheet to analyze important queuing problems in practice.
Module III: Simulation
Session 7 (Sep 25)
Topic: Simulation I
Plan: Simulation is a useful tool to study processes. It is widely used in practice to answer different types of questions, such as, what should be the configuration and capacity of facilities, what scheduling rules should be used, how should due-dates be assigned to customer orders, how does yield impact process performance etc. In this session we shall learn about discrete event simulation. The technique will be applied to simulate alternate waiting line rules in the First City National case.
Reading: Read Quantitative Module F on simulation (pages 785-808 of H&R).
Session 8 (Sep 27)
Topic: Simulation II
Plan: We apply simulation to study alternative scheduling rules in the First City National Bank case. We also discuss other applications of simulation, such as, to project management and analysis of cash flows.
Session 9 (Oct 2)
Plan: Review of course material; Go over questions on sample midterm.
Session 10 (Oct 4)
Plan: First midterm exam (open notes)
Module IV: Quality Control
Session 11&12 (Oct 9 & 11)
Topic: Quality Management
Plan: In these two sessions we discuss quality management, which includes questions such as what is quality, what are the tools for total quality management, and how to control quality. We shall discuss useful quality management tools such as process control charts.
Reading: Chapter 6 & Supplement 6 of H&R.
Session 13 (Oct 18)
Topic: Ritz-Carlton Case
Reading: Ritz-Carlton Case
Module V: Project Management
Session 14 (Oct 23)
Topic: Project Management I
Plan: Competing based on time means being able to execute large projects, on time and within cost. In this session we first discuss the value of time-based competition. Then, in this and the next session, we learn about network techniques for planning and managing large projects. Successful project management involves planning and managing the time to complete the project, monitoring the use of resources during project execution, and increasing the probability of successful completion. Network planning and control techniques provide the tools necessary for undertaking these tasks.
Reading: Read Chapter 3 in H&R (p. 55-100).
Session 15 (Oct 25)
Topic: Project Management II
Plan: We will discuss the probabilistic methods for project analysis. We will also touch upon project crashing. We will learn why it is sometimes beneficial to reduce the duration of a project, even though it may increase the cost of the project. We will discuss project crashing techniques that optimally reduce the duration of a project by selectively reducing the duration of only certain activities.
Session 16 (Oct 30)
Topic: Practice Problems on Project Management
Session 17 (Nov 1)
Topic: Review of course material
Session 18 (Nov 6)
Topic: Second midterm exam (open notes)
Module VI: Inventory and Supply Chain Management
Session 19 (Nov 8)
Topic: Inventory Management and Inventory Models I
Plan: We discuss inventory management and study an important inventory model: the EOQ model.
Reading: Chapter 12 of H&R (page 465-618)
Session 20 (Nov 13)
Topic: Inventory Management and Inventory Models II
Plan: We introduce another important inventory model: the newsvendor model.
Session 21 (Nov 15)
Topic: L.L. Bean Inc. case.
Plan: Read, analyze and be prepared to discuss the L.L. Bean Inc. case.
Session 22 (Nov 20)
Topic: Supply Chain Management and Beer Game
Plan: Material, information and funds flow through supply chains. Demand is matched with supply, orders with fulfillment, and products are planned to fill customer needs and to compete against other products in the market. The integrated management of the three flows, material, information, and funds, is called supply chain management. We learn how firms compete using new principles of supply chains. We also briefly introduce the beer game.
Reading: Skim through Chapter 11 of H&R (p. 417-448)
Session 23 (Nov 27)
Topic: Playing the Beer game
Session 24 (Nov 29)
Topic: The Bullwhip Effect
Module VII: Optimal Resource Allocation
Session 25 (Dec 4)
Topic: The basic linear programming (LP) problem
Plan: We begin the last module that is integrative in nature. It deals with the use of linear programming for planning and optimizing systems. We shall discuss several applications of LP to operations management problems.
Session 26 (Dec 6)
Topic: Solution techniques
Plan: We demonstrate how to formulate and solve LP problems using Excel. We also interpret Excel outputs for LP problems.
Session 27 (Dec 11)
Topic: Examples of LP
Session 28 (Dec 13)
Topic: Review for the final exam.
Session 29 (Dec 18)
Topic: Final Exam (open books).
CUSTOM TEXT: Competitive Advantage from Operations (Seventh Edition) a customized text created for Stern students containing Chapters from Heizer and Render, Operations Management, 10th edition, Prentice Hall, 2010. This package was prepared by Pearson Custom Publishing. The book is denoted by H&R in the syllabus.
CASEBOOK (Required): containing Harvard Cases and Readings. This Case Book has to be purchased at the bookstore.
CASES (Downloadable from Blackboard)
COMPUTER SOFTWARE: EXCEL
RECOMMENDED READING: The Goal, Third Edition (Buy in Bookstore), Eliyahu M. Goldratt and Jeff Cox, North River Press, Inc. 2004.
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