OPERATIONS MANAGEMENT, OPMT 405, FALL 2001
Instructor:
Phone #:
Fax #:
E-mail:
Office:
Office hrs:
Secretary:
TA:
Professor George L. Vairaktarakis
(216) 368-5215
(216) 368-4776
gxv5@po.cwru.edu
Room 612 Enterprise Hall
Open door Monday, Wednesday
Ramona David, Enterprise Hall, 6th Floor, Tel: 368-3809, rxd47@po.cwru.edu
Jeff Schwarz, jcs20@po.cwru.edu
COURSE DESCRIPTION
Operations managers, ranging from supervisors to vice presidents, are concerned with the
production of goods and services. More specifically, they are responsible for designing, running,
controlling and improving the systems that accomplish production. This course is a broad-spectrum
course with emphasis on techniques and information that are helpful to the practice of management in
general and at any level.
We will discuss commonly occurring application problems such as capacity planning, production
scheduling, line balancing, inventory control, quality management, just-in-time concepts, etc. The field
of operations management was originally concerned with manufacturing systems. But many of the same
ideas apply, and the same trade-offs are present, in service organizations like health care, insurance, hotelmanagement, airlines and government related operations. Several manufacturing and non-manufacturing
environments will be discussed explicitly, and the emphasis will be on the fundamentals of the operations
function in an organization. Also we will explore the interface of operations management with other
functional areas such as marketing, finance, accounting, etc.
This course is not oriented toward specialists in operations management. Its goal is to introduce
you to the environments and help you appreciate the problems that operations managers are confronted
with. Then, we will typically discuss some system specifics and emphasize the principles and issues that
play key role in their management.
Course Materials

The required texts are:
-

Course pack (CWRU Notes)
Eliyahu M. Goldratt, The Goal, latest edition, North River Press, Inc., NY 10520.
If you would like an additional reference, you might consider: Norman Gaither, Production and
Operations Management, 7th Edition, Duxbury press, Belmont, California 94002, 1996.
COURSE REQUIRMENTS
In this course every student needs to have:
Working knowledge of EXCEL or comparable program
Working knowledge of the STORM package on quantitative modeling
An active network account (if not you need to activate one ASAP)
1
The course involves a combination of lectures and class discussions of readings and cases that are
contained in the course pack. As described below, the workload consists of class participation, individual
assignments, and a book review. The course grade will be based on the weights shown in parenthesis.
Class Participation (10%)
Students are expected to come to class prepared and actively participate in class discussions. Useful
criteria for measuring effective class participation include:
1.
Is the student absent too many times? Is the participant a good listener?
2.
Are the points that are made relevant to the discussion? Are they linked to the comments
of others?
3.
Do the comments show evidence of analysis of the case?
4.
Is there a willingness to participate?
5.
Is there a willingness to test new ideas, or are all comments “safe” (e.g., repetition of case
facts without analysis and conclusions)?
6.
Do the comments clarify or build upon the important aspects of earlier comments and
lead to a clearer statement of the concepts being covered and the problems being
addressed?
Skill Building Exercises (20%)
There will be several skill building exercises (SBE) assigned during the course. These assignments focus
more on applying the quantitative methods developed in class rather than developing qualitative insights.
SBE’s are individual assignments. You are encouraged to work with other students in the class on the
concepts presented in class but not on the SBE’s. Strikingly similar solutions will be left ungraded and
filed for further consideration. Each SBE will be graded on a scale 0-20. Please turn in your SBE,
properly stapled if more than 2 pages, at the beginning of the corresponding class session. Credit on
homework will be proportional to both effort and correctness. Please note that late submission of
homework is not acceptable.
Critique of the Goal (10%)
What is The Goal? The book claims to be many things. It claims to be about science and education,
about progress, about global principles of manufacturing, and some of you might say that it is about a
love story. For me the book is:
(a)
a fascinating description of an operations process, and for those of you without an
operations background, an excellent opportunity to get an introduction to manufacturing
environments,
(b)
an excellent example of how operations should be viewed: as a business function which
can be understood with the use of a business language and not with the use of obscure
technical terminology, and
(c)
a powerful demonstration that the most important, and in most cases only, prerequisite
for becoming an operations manager is common sense and intellectual attraction to
environments that exhibit complexity and variability.
I recommend that you treat The Goal as a leisure activity and pace it over a few days. The danger
is that some of you might find it such an irresistible reading that you may want to finish it
overnight. After you read the book, answer the following questions.
1.
2.
3.
4.
Provide the definitions of throughput, inventory and operational expense given in
The Goal. How do they compare with the traditional definitions? Do you find
them useful, and why?
Provide the definition of a bottleneck machine. Develop your own simple
example to demonstrate it to me.
What are the production scheduling principles discussed in The Goal?
Provide an explanation of the pitfalls, as discussed in The Goal, of using cost
accounting data for manufacturing decision making.
2
The above is an individual assignment. It should not take more than two double spaced pages to answer
the 4 questions. You are required to turn-in this assignment on September 26, in class.
Midterm Exam (30%)
The midterm exam will take place during the midterm week. The exam will include all the material
covered in the course prior to the exam date.
Final Exam (30%)
The final exam will take place during finals week. This exam will include all the topics covered in class
following the midterm exam.
Grading: A curve will be used to determine each student’s final course grade. The curve will be
determined based on the performance of the rest of the class.
Attendance policy: I understand that other demands may require to miss a class, but with 25 or
so class meetings, you should not be absent more than two times during the semester. In the event
that you have to miss a class you should submit in advance any homework that has been assigned. Also,
students should take the necessary steps to recover the missed lecture and assignments.
Honor Code: All students are expected to adhere to CWRU’s Honor Code. Do not use any
materials from previous semesters or from other courses unless the same has been available by me to
every one of your fellow students in this class.
3
ABRIDGED OUTLINE
SESSION
DATE
TOPIC
MODULE 1: Project Management
1
Aug 29
Overview of syllabus, Introduction to OM
2
Sept 5
The Critical path method: ABC’s of the Critical Path Method
3
Sept 12
Project Crashing using STORM
MODULE 2: Operations Process Analysis
4
Sept 19
Measuring Capacity: Process Fundamentals
Measuring Capacity: Kristen’s Cookie Company
5
Sept 26
Aligning Process Design & Business Objectives: McDonalds, Burger
King
Assignment on Goal is due
MODULE 3:
6
7
8
Managing Capacity
Oct 3
Bottleneck Analysis and Congestion: Nat’l Cranberry Cooperative
Oct 10
Capacity Planning for Service Processes
Oct 17
Managing a Capacity Constrained Service System: NYPD
MODULE 4: Production and Inventory Management
9
Oct 24
The basic trade-offs in establishing an inventory policy
Why we hold inventory? Performance measures for an inventory policy
10
Oct 31
Implementing a Production and Inventory Policy: Blanchard Importing
& Distributing
11
Nov 7
Midterm
12
Nov 28
Centralized versus Decentralized Inventories: Acme Widget
MRP and Kanban
13
Dec 1
The Beer Game
MODULE 5: Management of Quality
14
Dec 4
Introduction to Quality/The Tools of Quality
Using Data to Diagnose a Quality Problem: Plastron Division
Dec 11
FINAL EXAM: Room TBD
4
COURSE READINGS and QUESTIONS
MODULE 1: PROJECT MANAGEMENT
SESSION 1: Overview of Syllabus, Introduction to Operations Management
Reading: syllabus
SESSION 2: The Critical Path Method
Reading: ABC’s of the Critical Path Method
SESSION 3: Project Crashing using STORM
Reading: None
MODULE 2: OPERATIONS PROCESS ANALYSIS
SESSION 4: Measuring Capacity
Reading: Process Fundamentals, Kristen’s Cookie Company
Kristen’s Cookie Company
1.
2.
How quickly can Kristen fill an order for 1 dozen cookies? 2 dozen? 3 dozen?
What is the maximum rate at which Kristen can produce cookies if she makes batches of
1 dozen, 2 dozen, 3 dozen? What assumptions do you have to make?
MODULE 3: MANAGING CAPACITY
SESSION 5: Aligning Process Design and Business Objectives
Readings: McDonald’s Corporation
Burger King Corporation
McDonald’s/Burger King Corporation
Discussion Questions
1.
For each case, draw a process flow diagram that reflects the major components of the
current operations. Keep the diagrams simple. How do the two diagrams reflect the
differences in competitive strategies?
2.
What performance characteristics are relevant for these two operations? What implicit or
explicit standards, if any are used? How is each system managed so as to achieve these
standards?
SESSION 6: Bottleneck Analysis and Congestion
Reading: National Cranberry Cooperative
5
National Cranberry Cooperative
1.
2.
3.
4.
Draw the process flow diagram showing the major process steps, inventories and flows.
Indicate the capacity at each of the process steps.
In Exhibit 2 of the case it is shown that, over the 20 days from 9/20/ to 10/9, an average
of 16,400 barrels per day are delivered. Assume that on average each truck carries 75
barrels, and that trucks arrive uniformly over a 12 hour period. Also assume that during
this period, the trucks carry 70% wet berries and 30% dry berries.
(a)
Which operation(s) are bottlenecks? Note that both dry and wet berries can be
run through the system at the same time.
(b)
How much overtime is required?
(c)
Why are the truck waiting times so high?
What alternatives are there for improving the operation? How would you evaluate them?
On what basis would you compare them?
What major sources of uncertainty may affect the performance of RP#1?
SESSION 7: Capacity Planning for Service Processes
Reading: A Note on the Management of Queues
SESSION 8: Managing a Capacity Constrained Service System
Reading: NYPD Patrol System
NYPD Patrol System
1.
2.
3.
Assume that you have 18 cars to allocate for this tour. How many should you assign to
each precinct? What is your objective? Are there alternative objectives that might be
considered?
Assuming now that there is no “budget” of cars, how many cars should be assigned to
each precinct to achieve “good’ performance?
Why might the actual delays experienced by callers to 911 be different from those
predicted by the model that you have used?
MODULE 4: PRODUCTION AND INVENTORY MANAGEMENT
SESSION 9: Why we Hold Inventory? Performance Measures for an Inventory Policy. The Basic Tradeoffs in Establishing an Inventory Policy
Reading: none
SESSION 10: Implementing a Production and Inventory Policy
Reading: Blanchard Importing and Distributing Inc.
Blanchard Importing and Distributing Inc.
1.
2.
3.
4.
What is wrong with the way that the EOQ and ROP quantities have been determined for
each of the five items mentioned in the case?
Assuming that an EOQ/ROP system is an appropriate way to run this system, how would
you correct the EOQ/ROP quantities for the five items? How do the corrected figures
compare with the quantities calculated in 1969 and with production volumes scheduled
for the June 1972 bottling run?
What are the advantages and/or disadvantages of the formal EOQ/ROP system and the
actual system used for scheduling bottling runs at Blanchard? Which system do you
prefer? What improvements can be made?
What should Hank Hatch recommend to his boss, Toby Tyler?
SESSION 12: Centralized versus Decentralized Inventories, MRP and Kanban
6
Readings: Acme Widget, Note on MRP
SESSION 13: The Beer game
Reading: The Beer Game
MODULE 4: MANAGEMENT of QUALITY
SESSION 14: Introduction to Quality/The Tools of Quality, Using Data to Diagnose a Problem
Reading: Plastron Division
7