MBA 851
OPERATIONS MANAGEMENT
SPRING 2002
INSTRUCTOR: Peg Pennington
Office: 612 Fisher Hall
Phone: (614) 292-3081 (O)
Phone: (614) 875-9950 (H)
FAX: (614) 292-1272
E-mail: Pennington.84@osu.edu
OFFICE HOURS: Monday and Wednesday 5 PM – 6 PM and by appointment
COURSE CONTENT
Operations represents a critical area for both manufacturing and service industry firms in
today’s competitive market place. This business function can be designed to provide
major competitive advantage along dimensions that include: cost, delivery speed and
reliability, quality, and quick response in product design. Because of the competitive
importance of operations activities, this function is undergoing rapid change and restructuring in many companies involving efforts such as:
- Cross-functional integration
- Continuous improvement of business processes
- Service and product quality improvement
- Employee empowerment and teamwork
- Time-based competition
The need for achieving improved competitive advantage through operations has created
important opportunities for MBA’s entering both general management and operations
management positions.
This course presents a general management perspective on the operations function in a
business. It is concerned with how operations activities can best be designed and
managed to support the strategic objectives of a business. It covers the basic areas of
managerial decision-making in operations, including operations strategy, process
improvement, quality management, and operations planning and control. The course is
designed to place the management of operations in a strategic business context, and to
support the increasingly competitive business environment faced by operations managers
today.
COURSE STRUCTURE
Each class session has two objectives. One involves the discussion of a case designed to
provide an opportunity to apply the concepts developed in the reading assignment for that
class. The other involves a lecture/discussion intended to re-enforce and elaborate upon
the concepts developed in the reading, case, or exercise assignment for that class. The
classes will also include several other type of activities. These include video type
presentations, class exercises, and executives as guest speakers.
REQUIRED COURSE MATERIALS
Course Pack: The course pack contains cases and readings and is available at Copy-EZ.
PERFORMANCE EVALUATION
Case Write-ups
Students will be expected to critically read all assignments and be prepared to discuss
them in class. You are encouraged to raise questions and share observations or analysis
that the readings have indicated to you. In each class session one case will be analyzed
and discussed. Two group written reports will be turned in. The written reports are due
at the start of the class for which they are assigned.
Each written report should be a maximum of 5 double spaced pages, plus exhibits, using
no smaller type font than a 12 font size. It is recommended that the case assignment
questions for each case (included in this course outline) be analyzed first. These
questions have been constructed as an aid in preparing the case analysis. After all of the
assignment questions have been analyzed, the written report should be prepared which
includes a response to each question.
Each report should begin with a short executive summary (1/2 page). In all instances,
reports should identify major issues, analyze those issues, and make clear
recommendations. Be sure that the recommendations that you make follow from your
analyses. Written cases are evaluated on both the quality of the analysis and the
presentation. Simply put, case write-ups should not only reflect good thinking but should
also be professional in style and appearance. The quality of the writing counts.
No formal presentation of results will be required although teams are encouraged to
prepare overhead transparency exhibits which might be shared with the class to support a
point of view during the case discussion.
Teams should consist of 5-6 students and will be determined on the first day of class.
Classroom Performance
The value of the class discussions is directly related to the amount of quality student
participation. The class discussion questions (included in this course outline) have been
developed as an aid in preparing the case analysis for all of the cases.
All students are expected to be prepared to discuss each assigned case regardless of
whether you have done a formal group analysis of that case. Your participation grade
will be based on quality rather than quantity:
- evidence of careful preparation of the case and readings
- clarity and conciseness of your comments and recommendations
- strong and convincing quantitative and qualitative analysis to support your
comments and recommendations
I will grade your contribution to the class discussion after every class meeting. You are
encouraged to check with me periodically to find out about your participation grade.
Grading:
Group Case Analysis
Group Assignments
Midterm Exam
Final Exam
Class Participation
Peer Evaluation
20%
10%
25%
30%
10%
5%
(10% per report)
(2.0% per assignment- must complete 5 out of 6)
Examinations:
Each exam will be a combination of case analysis and problem solving. The material
could be based on anything covered in the lecture, text, other assigned readings and video
or guest presentations. Formula sheets are given on exams.
No make-up, late or early exams will be given, except in the case of medical
emergency. Business related absences are not excused. Students should make
arrangements now to avoid time conflicts.
OPTIONAL PLANT TOUR
An optional plant tour at Delphi Automotive has been scheduled in conjunction with the
Operations Management course. The following tour dates are available; Thursday, April
18th and Thursday, April 25th. A sign up sheet for the tour will be provided on the first
day of class.
Delphi Automotive is located at 200 Georgesville Road, on the corner of Georgesville
Road and West Broad Street. The entrance to the plant is off of Georgesville Road.
Please park in the Visitors section. Appropriate attire is required. Shoes must be leather
with no exposed heels or toes. The tour will begin promptly at 6 PM.
TEAM GROUP CASE ASSIGNMENTS
CASE
TEAMS 6-8 PM
TEAMS 8-10 PM
Eli Lilly
A, B, C
1, 2, 3
Annonke Apparel
D, E
4, 5
Morris Valley
Grp Assignment All Teams Grp Assignment All Teams
American Seal
F, G, H, I, J
DAV
Grp Assignment All Teams Grp Assignment All Teams
Tile Products
Grp Assignment All Teams Grp Assignment All Teams
Manzana Insurance
A, B, C, D, E
Product Fantasy
Grp Assignment All Teams Grp Assignment All Teams
Columbus Spirits
Grp Assignment All Teams Grp Assignment All Teams
ToysPlus, Inc.
Grp Assignment All Teams Grp Assignment All Teams
U.S. Stroller
F, G, H, I, J
6, 7, 8, 9, 10
1, 2, 3, 4, 5
6, 7, 8, 9, 10
COURSE OUTLINE
OPERATIONS STRATEGY
Mon. April 1
1. Role of Operations Manager
Reading: Chapter 1, The Operations Function, Schroeder
Case: Too Short, The Day, (see assigned questions)
Wed., April 3
2. Successfully Competing Through Operations
Reading: Operations Based Strategies, CMR
Reading: Chapter 2, Operations Strategy, Schroeder
Case: McDonald’s Corporation, (see assigned questions)
Mon., April 8
3. Determining Process Choice
Reading: Chapter 4 & 5, Schroeder, pages 54-88
Case: Shipper Manufacturing, (see assigned questions)
CAPACITY AND DECISION MAKING
Wed., April 10
4. Capacity and Decision Making
Reading: Supplement A-Decision Making, pages 67-85
Reading: Customer Driven Manufacturing
Case: Eli Lilly and the Flexible Facility Decision (see assigned
questions)
GLOBAL OPERATIONS
Mon., April 15
5. Global Operations
Reading: Fast, Global, and Entrepreneurial: Supply Chain
Management, Hong Kong Style, An Interview with Victor Fung
Case: Anonke Apparel Company, Limited, (see assigned
questions)
QUALITY
Wed., April 17
6. Quality Analysis
Reading: Chapter 6, K&R,Total Quality Management
Case: Morris Valley Estate Winery, (see assigned questions)
Mon., April 22
7. Managing and Measuring Quality
Reading: Chapter 7, K&R, Statistical Process Control
Case: Merry Gremlin, (see assigned questions)
Video: Quality at Honda
Wed., April 24
8. Measuring Quality
Case: American Seal (see assigned questions)
Mon., April 29
9. Managing and Measuring Quality in the Service Sector
Case: Deutsche Allgemeinversicherung, (see assigned questions)
Wed., May 1
10. MIDTERM
PROCESS ANALYSIS AND IMPROVEMENT
Mon, May 6
11. Process Analysis and Business Process Reengineering
Reading: Method Study
Case: Tile Products, (see assigned questions)
Wed. May 8
12. Process Analysis and Improvement – Service Application
Reading: Chapter 7, Schroeder, Process Flow Analysis
Case: Manzana Insurance, (see assigned questions)
PROJECT MANAGEMENT
Mon., May 13
13. Project Management
Reading: Chapter 4, Project Management, K&R
Case: Fantasy Product, (see assigned questions)
SUPPLY CHAIN STRATEGY
Wed., May 15
14. Guest Speaker: Carlos Alvarenga, Managing Director KPMG
Reading: Chapter 11, K&R, Supply Chain Management
INVENTORY MANAGEMENT
Mon., May 20
15. Inventory Policy (P&Q Systems)
Reading: Chapter 13, Inventory Management, K&R
Case: Columbus Spirits, (see assigned questions)
MATERIAL REQUIREMENTS PLANNING
Wed., May 22
16. Manufacturing Resource Planning
Reading Chapter 15, MRP, K&R
Mon., May 27
MEMORIAL DAY
Wed., May 29
17. Manufacturing Resource Planning continued
Reading: Enterprise Resource Planning, K&R, pages 205-210
Case: Toys Plus, Inc.
JUST-IN-TIME MANUFACTURING
Mon., June 3
18. Lean Manufacturing
Guest Speaker: Jan Santerre, VP Customer Relations OAI
Reading: Beyond Toyota: How to Root Out Waste and Pursue
Perfection, by James Womack
Wed., June 5
19. Just-in-Time Systems
Reading: Chapter 17, Schroeder
Case: US Stroller, Schroeder, page 486
Mon., June 10
FINAL EXAM, 6 PM
CLASS DISCUSSION QUESTIONS
Too Short, The Day
1. How does Giles Chamberlain spend his day?
2. What do you think of Giles Chamberlain’s day?
3. Comment on the situation described in the case study and be prepared to propose any
changes which you think would be beneficial.
McDonald’s
1. What characteristics of McDonald’s production system have been most important in
building its record of success and growth in the industry?
2. What are the key types of flexibility that McDonald’s operations strategy needs to
support? Which does it support and how? Which does it not support well and why?
3. How should McDonald’s respond to Burger King’s October 1st announcement?
Shipper Manufacturing
1. What objectives should be adopted in manufacturing with respect to cost, delivery,
quality, and flexibility?
2. How should the objectives in manufacturing be achieved through process,
organization, equipment, workforce, capacity, scheduling, quality management, and
production and inventory control systems?
Eli Lilly and the Flexible Facility Decision
1. How has the competitive environment in pharmaceuticals been changing over the past
few years? What are the implications for the role of manufacturing within Eli Lilly?
2. How does each facilities option affect Lilly’s cost structure capacity management and
product development capabilities? For what type of products does the proposed flexible
facility provide an efficient (i.e. low cost) manufacturing capability?
3. What type of flexibility does the “flexible facility” provide? What is the value of this
flexibility to Eli Lilly? How much is Lilly paying for this flexibility?
4. Review the current position from a business perspective. What are the important
strategic issues for marketing and manufacturing? What changes, if any, would you
recommend concerning the firm’s marketing and manufacturing strategies?
Anonke Apparel Company, Ltd.
1. Review the marketing initiatives undertaken by Anonke. In your review, analyze the
market segments in relation to the perceived order winning criteria and their customer
characteristics.
2. Review the manufacturing initiatives undertaken by Anonke. What are the
characteristics of the process choice decisions made by the company?
3. What are the implications for manufacturing of the marketing initiatives (and vice
versa)? How well is the company performing against the market requirements being
placed on manufacturing?
Morris Valley
1. How important is quality to the MVW?
2. What actions should be taken concerning the bottle vendors?
3. What should be done about the bottle quality problems? Group Assignment: Please
prepare a pareto chart detailing the bottle quality problem at MVW. Each team
should hand in 1 copy of their chart after class.
Merry Germlin
1. Exhibit 1 shows some recent experiences with a quality characteristic associated with
the bottle for Sticky Glue. Assume the sample size is 10 bottles. The target value fo the
inside diameter is 0.7500 inch and the average range has been 0.012 inch. Please
construct an X-Bar Chart using the data in Exhibit 1.
2. What can you say about the process average based upon the data in Exhibit 1?
3. Address the sources of quality problems brought out in the interviews. What can be
done to resolve them?
American Seal
1. What are the problems that American Seal faces?
2. What insights can you gain from the sample data in Exhibit 12? (The data represent
20 samples of 5 observations each. For examples numbers 1-5 correspond to sample 1,
numbers 6-10 correspond to sample 2, and so forth)
3. What do you recommend?
DAV
1. Why is DAV using SPC? What are the primary challenges in applying Statistical
Process Control to a service industry compared with manufacturing?
2. The first 12 weeks of the data in Exhibit 4 represent the diagnostic period for the
Policy Extension Group. What are the 3-sigma control limits for the process? In which
of the subsequent weeks is the process out of control (if any)? Group Assignment:
Please prepare a P-Chart with 3 sigma control limits for the first 12 weeks for the
Policy Extension Group. Each team should hand in one copy of their chart after
class.
3. Develop specific implementation plans for solving the problems facing Annette Kluck
that are described on page 9 of the case.
4. How would you now begin improving the performance of the operation?
Tile Products Case
1. What will be the future capacity requirements of the company?
2. Assuming that each molder works three molds at a time, prepare a Multiple Activity
Bar Chart similar to that shown in Figure XXX of the Method Study reading in the course
packet. Please include the times for each activity in developing your chart. What
conclusions can be drawn from your analysis? Group Assignment: Please be
prepared to share your chart with the class as an overhead. Each team should hand
in 1 copy of their chart after class.
Manzana Insurance Company Case
1. What is the basis of competition in the market that Fruitvale serves? What is your
assessment of the current competitive interaction between Manzana/Fruitvale and Golden
Gate?
2. Please review the Operations Flow chart in Exhibit 2, and the operating data provided
in Exhibits 3, 4, 6 and 7, and on pages 1 and 2 of the case. What is the capacity and
utilization for each step in the process? How long does it take to process a policy? What
conclusions can be drawn from this analysis?
3. What are the most important measures of operating performance for the Fruitvale
branch? How are they doing on those? Why have profits been deteriorating over the past
several quarters?
4. Please put your creative hats on! Recommend at least three different process
improvement options that could be implemented to improve the competitiveness of this
process. Please sketch these options out in sufficient detail so that they could be present
to Tom Jacobs.
Fantasy Product
1. When would the project be completed using normal times?
2. Is it possible to complete the project in 18 weeks? What would the associated
additional cost be? Which activities would need to be completed on a crash basis?
3. Is the additional cost justifies in terms of the increased profits expected?
4. The estimated demand is very uncertain; how much can this number vary without
changing the recommendations you are making?
5. Is there some time frame other than the 18 weeks Vera has recommended that would
make more sense in terms of profits?
Group Assignment - Please be prepared to share your AON diagrams for questions
1 and 2 with the class as an overhead. Each team should hand in 1 copy of their
diagrams after class.
Columbus Spirits
1. Describe the types of inventory held at Columbus Spirits. Use the information given in
Exhibit 2 to do an ABC analysis.
2. What is the savings using the EOQ for ordering each item listed in Exhibit 3 versus
the current system?
3. Develop an independent demand inventory system using a Q-system for the items
listed in Exhibit 3?
4. Develop an independent demand inventory system using a P-system for the items
listed in Exhibit 3?
5. What recommendations if any would you make to Columbus Spirits’ current inventory
system?
Group Assignment: Each team should prepare an ABC analysis of the inventory as
well as developing a Q-System for the items listed in Exhibit 3.
ToysPlus, Inc.
1. Calculate economic order quantities for each of the three types of toys.
2. Prepare a master production schedule for the next six weeks using the EOQ’s
calculated in question 1 and a workforce of 10 employees. What inventory turnover ratio
is achieved by this master schedule? How does this turnover compare with past levels
and with management’s goals?
3. Group Assignment: Prepare a parts explosion to support the master schedule.
What parts should be ordered each week?
4. What should Andrea Meline do to meet the inventory and service goals stated by
management?
5. How should Andrea deal with the organization issues presented in this case?
U.S. Stroller
1. Evaluate the current situation facing U.S. Stroller.
2. Discuss the pros and cons of the options presented in the case.
3. What will be the impact of these options on the MRP system currently in use?
4. What options do you recommend and why?
Peer Evaluation – Group Projects
Peer evaluations will count for a maximum of 5% of the total points. Your peer
evaluation points will be awarded as follows: the quality and timeliness of your
submission and the rating by your peers.
When you are evaluating the efforts of yourself and your peers you should take the
following actions into account; quality of effort, quantity of effort, working relationship
with group members, and completion of assignments in a timely fashion. Peer
evaluations are due to the instructor by Wednesday, June 5.
Your Name:______________________________
Team #/Letter_____
Group Members (including yourself):
Weight
(out of 100%)
Name: _________________________________
________
Name: _________________________________
________
Name: _________________________________
________
Name: _________________________________
________
Name: _________________________________
________
Name: _________________________________
________
TOTAL
COMMENTS:
100%__