International Operations
Management
MGMT 6367
Lecture 06
Instructor: Yan Qin
Fall 2012
Outline

Review for Mid-term Exam

Case study
◦ Case: New Balance
◦ Case: Xbox
◦ Case: Mattel
Review for Mid-term Exam

Additional office hours:
◦ 7:00 pm – 8:00 pm, Oct 11 CST
◦ 7:00 pm – 8:00 pm, Oct 13 CST

Mid-term Exam: 2 hours, open book/slides, in class

Only Multiple-choice questions will be given on the exam.
◦ There will be 30 multiple-choice questions on the exam. Each is
worth 4 points.

Anything that is not listed on the review slides will
not be tested.

No case-related questions will be asked on the exam.
What you should know – Week 1

Definitions of Production, Operations, and Operations
Management

Four competitive priorities

Definitions of qualifying/winning criteria

What is Logistics

Global Vs. Domestic Operations and Logistics

Differences between goods and services
What you should know – Week 3

Definitions of Outsourcing, Off-shoring, Back-sourcing, and
Near-shoring

Why outsourcing

Four types of components classified based on the SIC matrix
◦ Outsource/in-house recommendations for each type of
component

What are the 5 typical buyer-supplier relationships
◦ Pros and Cons of each type of relationship

Products suitable for global outsourcing

Risks of outsourcing
What you should know – Week 3

Calculation:You should know how to
◦ Use the method of Factor Rating to find the supplier with the
highest/lowest overall rating;
◦ Solve for the break-even quantity
◦ Give make-or-buy suggestions based on the relative magnitude
of break-even quantity and the expected production quantity
What you should know – Week 4

Definitions of Supply Chain Management

What is Bull-whip effect?
◦ Major causes and possible remedies

What is risk?

Four types of risks in a Supply Chain

Possible risk management strategies

Common types of qualitative and quantitative forecasting
methods
What you should know – Week 4

Calculation:You should know how to
◦ Compute Inventory Turnover and Weeks of Supply based on the
information given.
◦ Compute the significance of a risk event
◦ Use moving average methods and exponential smoothing
method to make required forecasts
What you should know – Week 5

Definitions of customer value, value-added activities, nonvalue-added activities, and waste

Ohno’s seven wastes

Expectations in a Lean Supply Chain

What is Group Technology
◦ Benefits offered by the use of Group Technology

Pros and Cons of small transfer batches

Definition of setup time

Differences between internal and external setup steps
What you should know – Week 6

Key in storage design

Common types of storage systems

Inputs to the layout decision for production facilities

Four basic production layouts
◦ Description of each layout
◦ Suitable products for each layout

Calculation:You should know how to
◦ Compute the material handling costs for a process layout. Pay
attention to the example given on Process Layout Design;
◦ Compute the required workstation cycle time, the theoretical
minimum number of workstations, and efficiency in assembly-line
balancing.
Case study

Sample answers to the case-related questions can be found in
the PDF document titled “Case Study – Sample Answers”
posted on the course website.

Please note that the sample answers may not be 100% correct
or the only solutions.
Case Study: New Balance
 Please read the case “New Balance Athletic Shoe, Inc.” and think
about the following questions:
 What are the competitive implications of the Adidas/Reebok
transaction for New Balance? You may want to refer to figures in
Exhibit 2.
 In what aspects did New Balance see itself differentiated from
Nike, Adidas, or Reebok?
 New Balance placed a disproportionately large emphasis (relative
to sales generated) on serving smaller retailers and ensuring timely
delivery of products to them. What are the reasons for them to do
that?
New Balance – Cont.
 New balance performed 25% of its manufacturing in the United
states at a time when nearly all of its competitors were
manufacturing 100% of their products in Asia. What are the
primary reasons for them to maintain domestic manufacturing?
 Suppose the total US volume of athletic shoes per year is 400
million pairs. How much is the cost penalty resulted from New
Balance’s domestic manufacturing?
Case study: X-Box
 Read the case on X-box and think about the following
questions:
 What were the challenges facing Microsoft with the original Xbox?
 What supply chain changes did Microsoft make between Xbox and
the Xbox 360? And what’s the motivation?
 What are the benefits and risks of the global launch planned for the
Xbox 360?
 Microsoft planned to use three EMS firms for the Xbox 360, all
manufacturing in China. What were the benefits and limitations of
the approach?
Case study:
and the toy recalls (A)
 This case details the events leading up to the recalls at MATTEL
in 2007 and highlights the difficulties a multi-national company
faces in managing global operations. Please read the case
carefully and think about the following questions:
 What are the characteristics of the toy industry and how do they
affect toy production?
 Two quality problems were mentioned in the case: lead paint and
small magnets. What were the causes of these problems?
 What challenges do toy companies face in managing offshore-
outsourcing?
Good luck on the exam!
Just let me know if you have any questions!