Use of ExtendSim in an Service Operations Management Course at the William E
Simon Graduate School of Business Administration.
Phillip J Lederer
William E Simon Graduate School of Busienss Admisintration
University of Rochester
Rochester NY
14627
I would like to report on my use of the simulation package in my MBA course: OMG
412: Service Operations Management in the Fall 2011. This is a second year elective
course taken by about 20 students.
This is the second time I have delivered this class using ExtendSim
The simulation package was a central part of the course. I attach a syllabus of the class
which shows sequence to topics taught, and specifically how I used ExtendSim.
The software fit quite well into the topic of the course which was managing service
systems. In terms of applications, the package was used by students to model various
service operations. Many of the cases were based upon Harvard Business School cases
(BAT, Benihana, CVS).
A car wash (an exercise from ExtendSim examples)
Police dispatching policies for patrol cars
Managing a technical call center and priority rules (BAT case)
Capacity analysis of a restaurant (Benihana of Tokyo)
Process improvement of a retail drug store (CVS case)
What is most enlightening is the list of homework assignments related to ExtendSim
Training materials:
I was greatly aided by Robin Clark who shared power point slides which provided a
quick and useful introduction to using ExtendSim. He also was very helfpful to me in
learning some of the more obscure features of the package.
I helped my students learn ExtendSim by making a series of video tutorials which I
posted on the class website. The tutorials were each about 10-20 minutes long and
focused on an increasingly complex set of modeling skills. In all I made 6 tutorials. The
students really liked “seeing how it was done” I made sure to pace them slowly enough
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so that the features of ExtendSim could be absorbed. I used the Macintosh software
called “Screenflow” to capture the ExtendSim screen and provided verbal narration.
THE WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
UNIVERSITY OF ROCHESTER
OMG 412
Service Operations Management
Phillip J. Lederer
Fall 2011
SYLLABUS
Service Management
Prof. Phillip J. Lederer
Office: Carol Simon 3306B 275-3368
Email: Lederer@simon.rochester.edu
COURSE INFORMATION
Overview and Objectives
The service sector dominates the economies of most developed nations. Worldwide, services
account for 64% of GDP and 40% of employment, and in the United States the service sector
accounts for 76% of GDP and 85% of employment. In addition to the “pure” service sector,
the delivery and support of many goods involves a significant service component. The
challenges involved in managing services have been complicated by globalization, for many
services are now delivered by service supply chains that involve multiple firms and cross
national boundaries.
In this class we will develop both quantitative tools and qualitative models that will help us to
manage in this complex environment. The class focuses on four topics: (i) understanding
business strategy for services, (ii) the operations/marketing interface, (iii) modeling service
systems using discrete time software, (iv) demand and revenue management and (iv) process
improvement in services.
In general, two themes will run throughout the course: the importance of aligning the design
and management of services with the marketing strategy of the firm and analyzing service
systems to improve performance. We will see how management lessons from the
manufacturing sector can sometimes be useful, and sometimes inadequate, when managing
services. For both manufacturing and service firms, the strategic mission can be described in
terms of cost, quality, delivery, and flexibility. In services, however, defining and measuring
these qualities can be particularly challenging. Likewise, we have seen that manufacturing
firms can struggle to handle variability in customer demands and production times. Service
firms are faced with additional sources of variability, including customers’ expectations,
subjective preferences, impatience and their willingness or ability to participate in elements
of the service process.
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These concepts will be illustrated with examples from health care, public services, retail,
food service, airlines, and business process outsourcing. The course will also examine the
interactions among service operations management and other functions and areas of research,
particularly marketing, information systems, and organizational behavior.
Because it is usually fruitless to discuss service management without some context, the
class will be primarily case-based.
What you will learn:
This course is designed to provide a structured approach to analyzing service
processes. By the end of the course, my goal is that you will have the following skills
to
• Map service processes
• Build a model of a service system using simulation tools, thereby
predicting capacity and delays
• Analyze the strategic fit of operations and marketing in a service
business
• Improve front room and backroom processes
• Learn the basics of revenue management systems
• Plan for service disruptions and react to service failures.
Specific quantitative tools will be learned or practiced:
•
•
•
•
Discrete time simulation
Monte Carlo Simulation
Linear programming
Models of capacity allocation under uncertainty
Materials
Class materials are to be found at the university’s Blackboard site: www.myrochester.edu. I
will try to post all handouts. Thus if you miss a class you will have access to handouts
on the web.
You are to purchase the Harvard cases from their online store which lists the cases that I will
use. Go to http://cb.hbsp.harvard.edu/cb/access/10742886
. Cases not on Harvard’s list will be distributed by me in class.
You should have Crystal Ball and QMacros installed on the computer you use.
You will buy the ExtendSim LT software from the site: The cost is $25 and is a bargain for
this powerful software package. However the license will expire after 180 days. The
good news is the our computing center will continue to have the software available in
the computer lab.
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Office Hours
I will keep office hours as follows: before class on Monday from 3 to 5:15pm and by
appointment. It is not necessary to have an explicit question to make an appointment.
Please come see me if you wish to talk about anything related to the course or need some
special help.
Web Site
The course’s web site is accessible at http://my.rochester.edu. Most class handouts will be
available in Acrobat format there.
E-mail
If any corrections to assignments occur mid-week I will email you, so be sure I have the
email addresses that you wish me to use. I will use your University of Rochester email
address as a default.
Study Teams:
I ask you to organize yourself into study teams of 2 students. Study teams will prepare
cases for collection. I also would encourage team members to help each other on
problem sets. (However, problem sets are submitted by individuals, and should be the
work of your own hand.)
Cases
The purpose of studying cases is four-fold. First, cases represent real situations and thus
provide real examples. Second, cases provide examples, and impart institutional data and
details. Context is often important when solving any real operations problem. For
example, the incentive structure within the firm may support or hinder a particular
problem solution. Third, cases give us the opportunity to apply learned theory and tools
to more realistic situations. They will also force us to consider how the ideas from other
courses must be integrated to develop a complete solution. Fourth, cases are often messy
and complex problems that sharpen skills in problem identification, problem modeling,
and problem solving.
Class Discussion and Class Participation
Most managers spend very little time reading and even less time writing reports. Most
of their interactions are oral. I encourage you to participate because I am convinced that
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active participation leads to better learning and understanding. I also think that skill at
presenting and defending arguments is a valuable managerial skill.
I want to encourage you to participate in class discussion, and thus will grade class
participation. This means of course that you need to attend class, have done the
assignments, and follow the flow of class interactions.
Here are some of my observations about contributing to discussions.
1)
Make remarks relevant to what the current discussion is. To do this one needs to
be a good listener!
2)
Link your comments to the comments of others.
3)
Be willing to test new ideas and support them even if it seems to be the minority
view.
4)
Asking clarifying questions helps you and me. Your question helps me to
understand if I need to better explain a concept or point. But please show some
judgment—a question that is off topic does not aid class learning.
Class participation is broader than participating in discussions, so there are other ways to
contribute to the class. For example, being willing to present your solution to a
case or homework assignment,
Requirements
The course has four graded components: case discussion, team case write-ups, two individual
quizzes, and/or a project. The project is optional: students may choose to either take the
second individual quiz or complete a project.
1. Case Discussion Contribution All students should be prepared to discuss all cases,
including cases for which no work is submitted. While I will do my best to prepare for and
facilitate our discussions, the quality of the learning experience depends primarily upon your
own preparation and your constructive participation. I will judge your contribution on the
extent to which you appear prepared, the relevance and depth of your comments, the degree
to which you listen carefully and respond to your peers, and your willingness to take chances
in order to further the educational experiences of others.
Team Case write-ups Each team will write up and submit a report on the cases. However,
your grade will be based upon the best 5 cases submitted. Two of the cases are required by
all teams: “BlueSky (A) and (B)”, and “Transportation National Group.”
2.
3. Quizzes There will be two quizzes. The first will focus on process design and service
strategy. The second quiz will focus on revenue management. Students may either take the
second quiz or complete a project.
4. Project. Students who complete a project will not take the second quiz. Students who
choose to complete a project are expected to apply the techniques in the class to a real-world
problem. Projects are done individually. A successful project must use a technique
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developed in class to help solve an organization’s service operations problem. For example,
examine the admissions procedure for Strong Hospital emergency room and create a
simulation model (using the ExtendSim software package), identify bottlenecks, and suggest
process improvements. If you are an entrepreneur, you might consider a project that describes
a new service business. You will submit an operations and marketing plan with supporting
analysis. The deliverable for the project is a PowerPoint presentation that describes the goals
of the project, the analysis, and the results. You may also be asked to present to the class on
the last day. If you wish to do a project, a proposal is due by the 5th class meeting. I will
schedule meetings to discuss projects just after these proposals are due.
Attendance and Laptop Policy
Everyone is expected to attend and to prepare fully for each session. If you plan to miss a
class, notify me--a simple e-mail will do.
If you are unprepared for class, please let me know before class begins. (You will avoid
embarrassment and wasting the class’ time, too!
I would like you to bring your laptop to class for every class. I ask this so we can learn and
practice software packages. If you cannot bring a laptop, it will be fine to work along with a
colleague in class who has one. In any case, all datasets discussed or analyzed in class will
be available at the course web site on SimonExchange.
In class, your laptop should only be used for class activities such as working on an in-class
tutorial, taking notes, or referring to a spread sheet. Of course, you should not be conducting
any non-class activities such as email during class time.
Grading
Your grade will be determined as an average with the following weights:
20% Class Contribution
40% Team Case write-ups
20% Quiz 1
20% Quiz 2 or Project
Unless otherwise indicated by shading: all classes meet at 5:50-8:50pm in Gleason 219
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The Preliminary Schedule is subject to change based upon weekly progress. Check with
the weekly assignment sheet for the up-to-date schedule and assignment.
Shaded boxes are half-sessions!
Week
1
2
Topic of class
September 19
Monday
5:30-6:50
September 26
Monday
3
October 3
Monday
4
October 10
Monday
5
October 17
Monday
6
October 24
Monday
7
October 31
8
November 7
Monday
November 14
Monday
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HW due for this session-for
details look at the weekly
assignment sheet. (Please
follow the up-to-date weekly
assignment sheet as the
precise assignment.)
Intro to course and
service strategy
Process mapping, Shouldice Hospital Ltd. case
removing variability and questions.
in service delivery Readings on service strategy
Introduction to
ExtendSim
modeling
Extend software
ExtendSim Tutorial
Managing the
backroom
Managing the front BAT case and readings on
room
managing the back room
Managing customer Yum-Yum case and
service
readings on managing the
front room
Quiz 1
Benihana case and
Benihana
readings on linear
programming
Introduction to
Case TBA case
revenue
Exercises in linear
management
programming
ING Direct
Blue Sky
Revenue
Management II
Blue Sky A,B,C cases
8
10
11
November 21
Monday 5:30-6:50
Thanksgiving week
break
November 28
Monday
Transportation
National Group
Service Failures and Northwest Air case
recovery
Wrap up
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OMG 412
Service Operations Management
Homework for Week 3: Due Monday October 3, 2010
1.
Skim: Basic Training for ExtendSim slide set
2.
Watch: Video tutorials on ExtendSim-found on Blackboard. (View numbers
1-4).
3.
Read and prepare simulation for: Discrete Event Modeling Tutorial. This
tutorial develops a model for a car wash. Features added to this model
include: drawing plots, adding a parallel server, adding workers who are
needed to clean the cars, setting item attributes, introducing random arrivals
for customers who desire different services, routing these services to different
servers. Create this simulation and run it.
4.
Use what you have learned to: propose a service system with arrivals of
different types of customers who must be served by different servers.
Describe a resource that the servers need, but there is only one unit available.
Plot the waiting times for the different customers. Create a 95% confidence
interval for the wait times. Hand in this model via email before class time.
You can make this problem as difficult or easy as you wish. However, to
reduce headaches start easy and then make it more complex. You may do
this by team. By all means help each other!
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5.
OMG 412
Service Operations Management
Professor Phil Lederer
Homework for week 5: Due Monday October 17, 2011
There is a new case to buy at the Harvard site: Yum! Brands, Inc: A Corporate Do-Over
1. Yum! Brands, Inc: A Corporate Do-Over. In your write-up, give your assessment
of CEO David Novak’s expansion plans using the concepts we have used so far in the
course. Take the perspective of an investment analyst: would you recommend your clients
to invest in Yum? Why or why not?
Case: Yum! Brands, Inc.: A Corporate Do-Over
a. What is the value proposition for YUM! Brands’ (Yum’s) customers? How well are
Yum’s restaurant chains delivering on the value proposition?
b. Analyze Yum’s service model. What operations design choices has the company made
to deliver on its service concept? What is your assessment of these choices?
c. What do you see as the prospects for the multi-branding initiative? For further
international expansion?
d. What is your assessment of the company’s future growth prospects? What are the
biggest obstacles to growth? How would you recommend that Yum overcome these
obstacles?
2. Read Wykoff and Maister: The Laws of Service Businesses
Medscape Business of Medicine Business Tool Kit: Managing the Physican’s Front
Office
3. Watch the video tutorial #5 on “batching and unbatching with ExtendSim”. You
will find it on Blackboard.
Homework for week 7
OMG 412
Week 7
Due October 31, 2011
Read the case Benihana of Tokyo. Supplemental case information: Benihana generally “batches”
customers in groups of 8 when going from the bar to the dining area. In other words, if you arrive
in a party of 2, you will wait in the bar until you can be seated alongside 6 strangers at a table for
8.
1. How successful is Benihana? The first West Side Benihana reportedly paid for itself in 6
months. A more typical Benihana might be its Chicago unit. Using the data in the case,
compare Benihana’s profitability to that of a typical restaurant by filling out the following
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table (all percentages relative to gross sales unless indicated otherwise):
Item
Typical restaurant
(%)
Food sales
Beverage sales
Gross Sales=
Food cost (% of food
sales)
Bev cost( % of bev
sales)
Gross profit=
Labor and benefits
Advertising
Rent
Other (supplies,
utilities, admin,
maint., insurance,
royalties)
Pretax profit=
70-80%
20-30%
100%
38-48%
Typical
Benihana
(%)
Typical Benihana
($)
100%
1,300,000
25-30%
55-65%
35-40%
.75-2%
4.5%-9%
10-20%
3-14%
2. Construct a process flow for Benihana. Compare and contrast this process flow with that of a
typical restaurant.
3. What does Benihana do to reduce the dining time of its patrons? What does Benihana do to
control variability?
4. How big of a factor are the bar and the batching of customers to Benihana’s profitability? I
have provided a ExtendSim simulation of Benihana called: Benihana.mox simulation that can be
found Blackboard. Run the simulation multiple times under the following three scenarios: (1) as a
“typical old-fashioned restaurant” – that is, a restaurant without a bar that doesn’t batch
customers; (2) as a “typical modern restaurant” – that is, one with a bar that doesn’t batch
customers; and (3) as Benihana runs their restaurants, with a bar and batching. Using your results,
calculate how much the bar adds to the restaurant’s profitability. Also calculate how much
batching of customers adds. (Run all the simulations with 14 tables in the restaurant.)
This is a rather sophisticated “mox” model. We can talk about some of the details during the
class
5. Is Benihana constrained by its capacity? Compare Benihana’s demand (as found in the
simulation) with its capacity. Comment on Benihana’s utilization as compared to a typical
restaurant
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with a similar size and demand.
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Name: _______________
Quiz 2
•
This quiz contains 3 problems. Write answers to questions directly on the exam.
Each question on the exam has one relatively difficult question, and it is usually the
last. Don’t waste too much time on these harder questions if you have limited time to
complete the exam.
I have given you hints or suggestions in several places. Take advantage of them.
You need to get your answer to me by 5pm on Friday December 9, 2011
•
When you are done, email supporting models and/or spreadsheets to me with each file
labeled with your last name and the problem the file refers to.
•
All work on the quiz must be your own. No communication is allowed during the
quiz. No communication about the quiz is allowed between a student who has
completed the quiz and a student who has not.
•
•
•
While you take the quiz, you may refer to any of the material that has been distributed
for this class, but you may not consult other material.
If you have a question or are stuck during the exam, please contact me for help.
#
1
2
3
Total
Score
Out of…
33
33
34
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Question 2
The new internet home-delivery firm WeGet.com has the slogan “What you need, when
you need it.” If you live in high-density areas of San Francisco, New York, and a few
other major cities, you can visit their web site and order videos, music, books, CDs or
snacks.
Within each service area, WeGet employs a fleet of bicycle couriers and on-foot couriers
to make deliveries, and WeGet has located inventory depots throughout each city.
Assume that WeGet handles orders on a first-come, first-served basis, and that if all
couriers are busy then the order waits in a queue. To fill an order, a courier visits the
nearest depot, picks up the order, delivers the order to the customer, and collects
payment.
There are two types of orders: ones near a depot that are delivered on foot, and ones
farther away that are delivered by bike. About 60% of the calls are on bike. A delivery
on a bike takes a total amount of time distributed as an exponential distribution with a
mean of 20 minutes. If the package can be delivered by foot, the time is distributed as an
exponential random variable, with a mean of 10 minutes.
WeGet employs 7 couriers: four on bicycles and three on foot. Assume that the bike
couriers can be used as foot couriers, but the foot couriers cannot be used as bike
couriers. For simplicity, the bike couriers take the same amount of time as the on-foot
couriers for local deliveries.
During operating hours, orders arrive at the rate of 20/hr. The time between each order is
distributed as an exponential random variable.
Use ExtendSim to answer the following questions:
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a) What is the mean (average) duration between the time a customer places an order and
the time the foot/bike courier finishes payment collection and the delivery is
completed?
b)
c) Mean time between order placed and delivery completed: ____________
d)
e)
f)
g) For a “bike delivery”, what is the mean (average) duration between the time a
customer places an order and the time the bike courier finishes payment collection
and the delivery is completed?
c)
What fraction of all orders is completed within 30 minutes?
Fraction of orders: ______________
d) If the firm offered a $10 off coupon for a delivery that takes more than 30 minutes,
what is the expected cost of this guarantee per hour?
Make sure to email me all appropriate models.
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Problem:Dispatching police patrol
cars
✤
A town has to 2 police patrol districts. Currently, if there is a call for
service from a district , only patrol cars from that district are dispatched
✤
The Sheriff is trying to decide if it makes sense to let a car from the other
district serve a call for service if all of originating district’s patrol cars are
busy.
✤
How to model this???
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
1.
1
Patrol cars dispatched to own
district only
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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2
Settings for the Pooled Resources
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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3
What if a patrol car can be sent to the other
district if all of its cars are busy?
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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4
Set block assigns the origin of the
call
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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5
Setting the queue block
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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6
Set the first activity time to account for
extra travel time from district to district
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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Similarly, have the second activity block
capture the return time to the home district of
the patrol car
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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8
The pool release blocks are the
same
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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The information blocks capture the time from call
to service completion: from call to completion no
matter the origin of the patrol car
©Phillip J. Lederer 2010!
OMG 412 Service Operations Management
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