NYU Stern School of Business

Undergraduate College


Spring 2012

Instructor Details

Armony, Mor


Tuesday, Wednesday, Thursday 5:15-5:45pm, or

Room KMC 8-62


Course Meetings

TWR, 1:00pm to 4:55pm

Tisch T-UC21

Final Exam: Friday, Jan 20: 1pm-4:55pm

Schedule exceptions
    Class will not meet on: 

    Class will meet on:Tuesday, Wednesday and Thursday, Jan 3-19, 2012: 1pm – 4:55pm


Course Description and Learning Goals

This course serves as an introduction to Operations Management. The coverage of the discipline is very selective: We concentrate on a small number of powerful themes that have emerged recently as the central building blocks of world-class operations. We also present a sample of operations management tools and techniques that have been proved extremely useful over the years. The topics are equally relevant in the manufacturing and service sectors.


We will meet over three consecutive weeks. Attendance in all sessions is required for full credit.


Course Pre-Requisites



Course Outline



Session # + Date




1) Tue. Jan 3



Operating Systems


Process Analysis

Benihana of Tokyo


Kristen Cookies

Case assignment #1: Benihana


Case assignment #2:

Kristen Cookies


Personal information form

2) Wed. Jan 4


Waiting Lines

First City National Bank


3) Thu. Jan 5




4) Tue. Jan 10

Linear Programming


Homework #1


5) Wed. Jan 11


Project Management


Allied Distributing



6) Thu. Jan 12


Quality Management

Statistical Process Control

Cost of Quality

South Tree Electronics


Case assignment #3: South Tree Electronics

7) Tue. Jan 17


Introduction to Inventory



Inventory management under uncertainty

Xenon Drives case


Case assignment #4:

Xenon drives case


Homework #2

8) Wed. Jan 18

Newsvendor model


The Beer Game

L.L. Bean



Case assignment #5:

L. L. Bean

10) Thu. Jan 19


Supply Chain Management


The Goal


Final Review


Complete reading The Goal


Homework #3

Fri. Jan 20

Final Exam






Required Course Materials

Required Course Materials (available in bookstore)

Cases and Readings:   Digital Course-pack (also, some cases will be distributed in class, and some can be downloaded from the course web site)

The Goal:A Process of Ongoing Improvement”, third revised edition), by Eliyahu Goldratt and Jeff Cox, North River Press, Inc.


 Computer Software: Excel.


Custom Text: Seventh edition ofa Pearson customized version with selected chapters from Operations Management; Heizer and Render; 10th Edition; Prentice Hall (2011)


Assessment Components



Class Attendance & Participation:          10%

Case Assignments:                             20%

Homework:                                        30%

Final exam:                                       40%


Attendance and Participation: Attendance is required in all class sessions for full credit. Students are also expected to participate in class discussion and other in-class activities. The use of computers and communication devices is not allowed during class sessions (with the exception of a few class sessions, in which we will be specifically using laptops). If you would like to use your laptop for the purpose of note taking, please discuss with the instructor.


Case Assignments: There are 5 case assignments. These may be prepared in groups of up to 4 people. One copy per group per assignment needs to be submitted at the beginning of the class session. Page limit: 2 page, 11pt, double spaced.


Homework Assignments: In addition to case assignments, there will be 3 homework assignments. These need to be prepared individually. Students may discuss the problems with others, but writing the report should be done alone.


Final Exam: The final exam will test you on all the material covered in the entire class. The exam is open books and open notes, and you will need a calculator.


Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during 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.



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



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:




Classroom Norms


Stern Policies

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.


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.


Detailed Course Descriptions

Session 1: Introduction to Operations and Process Design and Analysis


  • The Goal: Start reading(Read up to page 264 before Jan 19)


  • Case: Benihana of Tokyo, W. Sasser and J. Klug, Harvard Business School (1998). 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.)

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?


Case Assignment #1: (Due at the Beginning of Class)

Answer questions c) and d) and submit at the beginning of class. Justify your answers.


  • Case: Kristen’s Cookie Company, Roger Bohn, Harvard Business School (1990). Read, analyze, and be prepared to discuss the Kristen's Cookie Company case, utilizing the six key questions at the end as guides.


Case Assignment #2: (Due at the Beginning of Class)

Identify all possible bottleneck operations in Kristen’s process. Explain.


  • Readings:
  • Read the note “Analysis of an Operation” (Blackboard)
  • Read Chapter 1: Operations and Productivity (H&R)
  • Read Chapter 5: Design of Goods and Services (H&R)
  • Read Chapter 7: Process Strategy and Sustainability (H&R)
  • Read Supplement 7: Capacity and Constraint Management (H&R)



Session 2:The Effects of Uncertainty–Waiting Lines & Queueing Theory


  • Characteristics of a Waiting-Line System
  • Arrival, Waiting Line, Service Characteristics
  • Measuring the Queue’s Performance
  • Queuing Costs
  • Psychology of Queues


  • Readings:
  • Read Quantitative Module D: Waiting-Line Models (H&R)
  • (Optional) Read Queueing Management and Models, Columbia Business School (available on Blackboard)


  • Case:Read, analyze, and be prepared to discussFirst City National Bank case. The following study questions will help:
  • Considering the date supplied for arrival and service times, how would you calculate an average arrival rate and service rate?
  • As Mr. Craig, what characteristics of this queueing system would you be most interested in observing?
  • What is the best number of tellers to use?



Session 3: Simulation


  • Readings:
  • Read Quantitative Module F: Simulation (H&R)


Please bring laptops.


Session 4: Optimal Resource Allocation


  • Linear Programming
  • Models and Applications
  • Sensitivity Analysis and Shadow Prices


  • Readings:
  • Read Quantitative Module B: Linear Programming (H&R)
  • (Optional) Read Introduction to Linear Programming (available on Blackboard)


Submit Homework #1



Please bring laptops.




Sessions 5:  Project Management


  • Project Management
  • CPM
  • Crashing the project



  • Readings:
  • Read Chapter 3: Project Management (H&R)


  • Case: In preparation for class, draw the network describing the projects in FCN/Securities Demo (A) and Allied Distributing exercises.

Read and be prepared to discuss FCN(B).



Sessions 6:Quality Management

  • Quality Analysis, Measurement and Improvement
  • Continuous improvement & Six Sigma
  • Control Charts
  • Cost of Quality



  • Readings:
  • Read Chapter 6: Managing Quality (H&R)
  • Read Supplement 6: Statistical Process Control (H&R)


  • Case: Read, analyze and be prepared to discuss the quality control issues in the South Tree Electronics case.  In analyzing South Tree's quality control problem the following study questions may help:
  • Indicate on the process diagram, all current inspection points and note the accumulated cost and yield of each operation and test in the process.
  • How many circuits must you start with to achieve the desired output level?
  • At what yield rate would you be indifferent between continuing and discontinuing the first inspection in the process?



Case Assignment #3: (Due at the Beginning of Class)

With respect to South Tree Electronics calculate the cost of a good unit.



Session 7  Introduction to Inventory Management

  • Importance of Inventory
  • Inventory Measures
  • Economic Order Quantity (EOQ)
  • EOQ under Uncertainty





  • Readings:
  • Read Chapter 12: Inventory Management (H&R)


  • Case: Xenon Drives. Read, analyze and be prepared to discuss the Xenon Drives case.


Case Assignment #4: (Due at the Beginning of Class)

Comment on Allen’s Claim: “I can’t see why it requires any more inventory to keep one month’s supply on hand in four branches than it did to keep a month’s supply on hand back at just the factory’s warehouse. A Month’s supply is a month’s supply no matter how you look at it.” 



Submit Homework #2




Session 8  Inventory Management Under Uncertainty

  • Newsvendor Model
  • The Beer Game


  • Readings:
  • Read Chapter 16: JIT and Lean Operations (H&R)


  • Case: Read and be prepared to discuss the L.L. Bean, Inc case.



Case Assignment #5: (Due at the Beginning of Class)

With respect to the L.L. Bean case, please answer the following three questions:

1. How does L.L. Bean use past demand data and a specific item forecast to determine how many units of that item to stock?

2. What item costs and revenues are relevant to the decision of how many units of that item to stock?

3. How would you address Mark Fasold's concern that the number of items purchased usually exceeds the number forecast?


Session 10: Jan 18 (pm), Supply Chain Management, The Goal and Final Review


  • Supply Chain Management
  • The Bullwhip Effect


  • Readings:
  • Read Chapter 11: Supply-Chain Management (H&R)
  • (Optional) Read Supplement 11: Outsourcing as a Supply-Chain Strategy (H&R)
  • The Goal: Read up to page 264


Discussion of “The Goal”

a.       How does production control work in Alex’s factory? More specifically, given a set of orders to be produced, what is the scheme by which work is released to the factory? What is the scheme by which work is prioritized at each process step?

b.      What steps did Alex take to improve performance (as measured by the goal) in his factory?

c.       What are the weaknesses in the message of The Goal?


  • Submit Homework #3



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