A NOTE ON CASE STUDY:
AN EXAMPLE IN OPERATIONS MANAGEMENT
The faculty of the Operations Management Area, College of Business Administration Northeastern University prepared this material,
Summer 1993. It was revised subsequently.
Management principles provided in this OM course and other courses provide a framework for analyzing complex situations. Yet,
they can be difficult to fully comprehend when presented in "textbook" situations. To provide more realistic and interesting settings,
cases are employed.
Case studies are based on actual business situations. They provide opportunities to perform quantitative and qualitative analyses, to
examine different alternatives, and to formulate and assemble action plans. Effective management requires more than knowing a
collection of techniques or concepts; it requires the ability to know how and when to apply these methods.
Analyzing a case entails examining data presented, suggested or implied. To get the full meaning of the information, it is generally
necessary to relate the different pieces of data to one another in the context of the situation. It is then possible to generate alternative
solutions, to evaluate the merits of each alternative, and, finally, to decide upon - and to be able to defend logically - a course of
action.
The purpose of this note is to assist you in working through a case. Although everyone has their own style of learning, suggestions are
provided to help you develop a structured approach for analyzing unstructured situations. Be advised, however, that what you get out
of the case study depends upon what you put into the effort.
Analyzing a Case
Be prepared - There are several things you need to do before examining the case. If there is a reading assignment, read the article or
text pages first. These materials have been selected to provide you with tools, frameworks, or techniques you will use in analyzing the
case. You may also want to review the concepts covered in the class to date. Typically, each case will build on the materials covered
previously in the course.
Read the assignment questions that accompany the case. These will help focus your initial view of the situation described in the case.
You may find it useful to put each assignment question on a separate piece of paper. (A separate page for "other items" can be useful
also.) As you read the case note items relevant to that question as well as the page number of the case where the item arose.
Make certain you have enough time to read the entire case (including exhibits), make notes, and reflect on your initial thoughts. If you
do not plan for this, you are likely to discover that four, half-hour periods spread over two days is worth less than one-hour of
concentrated effort.
Get the "Big Picture" - Read the case rapidly to determine the general nature of the company, the issues, and the players. Think about
what the operating unit has to do well. This will mean looking at the product or service offering, at what the customers value the most
highly (for example, cost, fast delivery, or product variety), and at what competitors are doing to challenge the firm. Record your
findings as described earlier.
Ask what's wrong - Your first reading of the case will identify the "presenting problems" or "symptoms" which are causing concern to
the management. These may be such things as declining profits, poor productivity, high scrap rates, or late deliveries. Unfortunately,
no manager has a button to push to improve any of these. A manager could, however, increase worker training, introduce maintenance
policies, simplify the product or the process for making the product, or take other actions to reduce high scrap rates. Hence, the need
to go to the next step.
Analyze - What are the underlying causes of the symptoms you have identified? This is where you will begin using specific analytical
tools. It is also where you will begin "crunching numbers". (See Appendix to this Note, "Crunching the Numbers".) Conducting a
diagnosis is usually not cut and dried. It requires a willingness and creativity to look at several ideas to see if they could possibly
explain what is going on.
In some situations, the symptoms will be due to one major underlying cause. For example, you go to a physician with watery eyes, a
sore throat and a stuffy nose. The physician could treat each of these separately, but further analysis is likely to indicate that you have
a cold. If the physician treats the cold, all the other issues improve. If the physician treats your nose, eyes and throat problems
separately, they may appear better in the short term, but are likely to reappear shortly. This is also referred to as "peeling the onion" to
get to the core issue.
In performing your diagnosis, pay particular attention to the exhibits. This is where most of the quantitative data will be provided.
What do these data indicate about the present situation? Are there any trends? Do the numbers fit with your earlier ideas about what
the problems are?
Also be aware that as in any business situation there will be data of little consequence for the particular set of issues at hand. Part of
the value of performing case analyses is learning to separate the useful from the useless.
Begin formulating a plan - Once you have a tentative diagnosis, think about what alternatives are available. For example, if the case
were about the need for additional capacity, alternatives might include adding new plants, new equipment, or more people.
Analyze alternatives - Time for some more analysis and number crunching. Will the alternatives you have identified reduce the
underlying problems? If so, to what extent will they improve the current situation? What will each alternative cost to implement? As
part of this step, you will want to perform sensitivity analysis.
In addition, there are other factors to be considered. What are the risks involved with each alternative? How do you think the people in
the case will react to each alternative? In short, you want to look at the pros and cons for each alternative.
Back to the "Big Picture" - Look for unplanned side effects of your proposed changes and the interactions amongst them. Look at the
strategic implications for the firm as a whole of the change you are proposing. Will it solve today's problem at a larger cost in the
future? On the other hand, will it give the firm capabilities that will enhance its future?
Make a decision - Which alternative would you select if you were the decision-maker? Do not get "paralysis through analysis" managers get paid to make decisions.
Having made a decision set a plan of action. Set priorities on what to do first. Think through your contingency plans. How and when
will you check to make sure your actions have had the anticipated effects? What can go wrong (and, likely will), and how will you
respond? Who should do what? Consider immediate, intermediate and longer-term solutions.
APPENDIX: CRUNCHING THE NUMBERS
The most frequently heard complaint with respect to numerical analysis of cases is "How do I figure out which calculations to do?" It
is not your numerical ability that tells you what calculations to do. It is your ability as a manager to assess a business situation and
decide which calculations are relevant.
Ability to "do the numbers" is not innate. Rather, it is a matter of approach and practice. There are good and bad numbers' habits. The
ideas in this note range from the simple to the complex, and are intended to help you develop good numbers habits.
The Basics
Take it slow. Never pick up your calculator until you know why you are doing a calculation - what will you do with the result? How
will you interpret it? Always seek a reaction to the result by asking questions such as, "What does this mean? What does it imply? Am
I surprised?"
Guess at the answer before doing the calculation. Then, see if you are surprised. If so, is your intuition off or is there a message here?
Either way you benefit: you make progress with the case and/or improve your business intuition. When faced with a business
situation, the appropriate procedure is to ask, "What do I need to know to understand this situation? What measurements will assist in
my assessment? How can I get these measurements? What calculations do I need to perform? What data are needed for the
calculations? Where are the data given in the case? If not in the case, can I make an informed guess at the missing data?"
Some Useful Tricks
Do not try to do the whole calculation at once. Break it down and record all the steps on paper.
Make use of sentences as you record the interim steps. Instead of writing down 12/3 = 4, write down 12 boxes per day total divided by
3 workers equals 4 boxes per day per worker. When you return to this step five minutes later (probably having gotten lost later in the
process), you can remember where you were.
Write down all calculations as if someone else were going to read them 2 days later. Never put a number on paper without its units or
dimensions. Write 12 boxes per day/3 workers = 4 boxes per worker-day.
Understanding More by Going Slower
Separate your calculations into distinct elements, give each a title, and write it down. For example:

Calculations of weekly capacity: (4 boxes per worker-day) x (3 workers) = 12 boxes per day (12 boxes per day) x (5 work-days
per week) = 60 boxes per week

Calculations of current utilization: Current output = 45 boxes per week. Capacity = 60 boxes per week Utilization = 45/60 =
0.75 = 75% of capacity.
As soon as you have finished the calculation, write down a sentence summarizing the conclusion. Example:

Calculation of current utilization: Utilization = 45/60 = 75% Conclusion: Could increase output without needing to add capacity.
This will often stimulate ideas for further analysis.

Conclusion: Could increase output without needing to add capacity.

Question: How much? Calculation of possible increase in output: Capacity = 60 boxes per week. Current output = 45 boxes per
week. Unused capacity = 15 boxes per week

Conclusion: Can expand output by 33% without adding capacity.
This last result might stimulate further questions such as, "Can we sell more output in the market? What would the additional
contribution be from doing this?"
Searching for Meaning
Your ability to interpret the numbers will depend partly on your experience. For example, suppose you obtain a debt/equity ratio of
20/1. Is this a good, bad, or indifferent result? In every subject area you study, you should be developing a set of norms about
reasonable value for certain standard calculations. This will happen as a course progresses, but only if you work at it. (Scale the result
up or down. Sometimes meanings become clear when this is done. Does a work rate of 160 boxes per 8-hour day per person seem
reasonable? What about 20 boxes per hour per person? 1 box every three minutes? 800 boxes per person per week? 4,000 boxes per
person per year?)
Beware of averages.
An average of 2,000 might be the result of 1,000 and 3,000 or the result of 1,999 and 2,001. Always
Ask, "Does this number serve well as a representative value in this situation? (Another way to react to a number is to flip it. All rates
are ratios. 1 box every three minutes can be converted to minutes per box by taking the inverse. Three minutes per box may be more
useful than 1 box every three minutes.)
Use fracturing to break a calculation into its components. For example:

Annual sales = (number of salespersons) x (annual sales per salesperson) = (number of salespersons) x (sales per day) x (days
worked per salesperson) = (number of salespersons) x (sales per square mile) x (square miles covered per day) x (days worked
per salesperson)
Last Thoughts
A number only has meaning when compared to another number, such as a standard, your past experience, or another number in the
case. When you have done the various calculations, carefully reassemble them and review them together. The object in doing the
calculations is not just to do them and not just to get a reaction. The point is to ask what can be done in the next step, if anything, to
improve the number? Separating the calculations into distinct elements, giving each a title, and fracturing are ways to address this.