[SOLVED] RSM270

Operations Management
Spring 2022

Copyright By Assignmentchef assignmentchef

Administrative Issues (Instructor)
Getting to know us:
(Instructor)
Please start subject with RSM270
Office hours: Fridays, 9-11 AM, and by appointment,
All office hours will happen on zoom
https://utoronto.zoom.us/j/88361623271passcode:604020
Administrative issues, questions about the material, feedback on the course.
Please check your Quercus very frequently.

Administrative Issues
If you have a question, raise your hand on zoom.
After asking your question, please mute yourself and drop your hand.
You can use the chat, but I will not be able to read it during the lecture.
Remember that the lectures will be recorded.
If for unpredicted circumstances I get disconnected, please wait for me to reconnect.

Administrative Issues (TAs)

Email Correspondence
Please be professional in all email correspondences.
Put RSM270 in the subject line of all emails.
We will try to respond within two business days.
Emails sent to the instructor or the TA should use the UTmail+ email address. You are responsible for ensuring that your UTmail+ email address is set up and properly entered on ACORN. For more information visit help.ic.utoronto.ca/category/3/utmail.html.

Meetings outside of office hours by appointments only over zoom:
More than 10 minutes late, appointment will be cancelled.
If you cannot attend a scheduled appointment, please notify me.

Administrative Issues
Getting to know you:
Keeping your cameras on are strongly recommended.
Please submit a one-page summary of yourself, including your name, student number, email address, your major, a picture of yourself, your interests, and your expectations of the course. Also please specify what other courses you are taking. One-page summary should be submitted https://submit.utm.utoronto.ca/utorsubmit/

SessionDateTopicReadings Individual AssignmentsGroup
Assignments
1Jan 12 Introduction & Overview
Chapter 1 & 2, Jacobs, Chase
19Process Analysis
Chapter 11, Jacobs, Chase
1-page Intro (DueSunday, Jan 23, 11:59 pm
26 Littles Law and Inventory Build-up
Chapter 11, Jacobs, ChaseAssignment 1 (DueSunday, Jan 30, 11:59 pmFinalize Groups (DueSunday, Jan 30, 11:59 pm Quercus )
2 Queueing AnalysisChapter 10, Jacobs, ChaseAssessment 2
9 QueueingModelsChapter 10, Jacob, ChaseAssessment 3
16Midterm week
Notes sheet + calculator!
(No Class this week!)

notes sheet
Calculator

6Feb 23 reading weekCase #1
Due Feb. 27th, by 11:59pm
2 ForecastingChapter 18,
Jacobs, Chase
9 Inventory Management I
Chapter 20 Jacobs, Chase
9March 15, 16 Inventory Management II
Chapter 20 Jacobs, ChaseAssessment 4
23 Inventory Management III
Chapter 20 Jacobs, ChaseAssessment 5
30 Linear Programming
Appendix A, Jacobs, ChaseAssessment 6

6 Linear ProgrammingAppendix A, Jacobs, ChaseCase #2
Tentative Due Date: April. 8th, by 11:59pm
Final ExamTBAFinal Exam (2 hrs)
notes sheet
Calculator

Process Analysis
Littles Law & Queueing Analysis
Inventory Management
Forecasting
Revenue Management &
Linear Programming

Course Materials
Required materials:
Syllabus (posted on course website: q.utoronto.ca)
Post 2 sets of slides: before-class version and after-class version.
In the before-class slides, there are some questions whose answers are not included. The goal is to solve and discuss these questions together in class.
In the after-class slides, I will include the answer to all the questions.
post the recording of the class after each class.
The lecture slides have the highest priority.
Recommended but not required reading:
Ebook for: Operations Management, RSM270, by McGraw-Hill/Irwin. ISBN-13: 9781260068115, ISBN-10 :1260068110: A tailored text book to our needs, based on Operations and Supply Chain Management, 15th Edition by Jacobs, Chase, 2018, McGraw-Hill Irwin
Optional readings:
Managing Business Process Flows: Principles of Operations
Management by Anupindi, Chopra, Deshmukh,, and
Zemel (2nd edition, Hall).
Suggested readings:
The Goal: A Process of Ongoing Improvement by Goldratt and Cox
Articles from newspapers, etc. (posted on course website)

Midterm Exam 36%
Final Examination 36%
6 Individual Online Assignments12% (6 x 2%)
2 Group Case Studies 14% (2 x 7%)
Two group case studies (4 members per group)
must be submitted online in PDF format (with Excel/Word source files)

Class Participation2%
Midterm Exam: TBA
Final Examination: TBA (2 hrs)
Allowed Aids in Midterm and Final:
1 double-sided notes sheet and non-programmable calculator

Additional Help
In addition, to help you learn better, I will post on QUERCUS:
Summary notes: these notes are supposed to help you quickly review the material to refresh your memory. (posted after class)
Weekly sample questions with solutions: The goal of sample-questions and their solution is to help your understanding and improve your problem-solving skills.These are separate from your assignments, and they will be released together with their solutions.

Where can you find material, assignments, case statements?

Assignments (Individual work) will be posted on Utorsubmit: https://submit.utm.utoronto.ca/utorsubmit/ and your solutions should be handed in online through Utorsubmit as well.

Case statements (group work) will be posted on QUERCUS and you should submit your work online on Quercus as well.

Video lectures, summaries, Case questions, sample midterms , sample finals and practice problems will be posted on Quercus.

Please check your Quercus announcements frequently.

Readings & More
For a better grasp of the key concepts, the following readings are only recommended:
Chapter 1 and 2 of Textbook (some parts of the chapters are covered)

For next class, please:
Take a good look at the Quercus site for the course

Next Class: Process analysis

Goals for the Course

Understand key operations management concepts.

Articulate the importance and applicability of these concepts in different operational environments.

Learn new quantitative and qualitative tools and models as well as the OM terminology.

Practice the application of these concepts and tools to improve the performance of any business.

Enjoy the course!!!!!

We learn in this lecture:
What is Operations?

What is operations management?

What is a good operations management?

Why study operations management (OM)?

What is Operations?
Make/create

The Transformation of Inputs into Outputs

Operations refers to manufacturing andservice processes used to transform the resources employed by a firm to a product desired by customers.

Introductory Exercise
Your friend decides to start running a coffeeshop and ask you for help to start the business.

What are the different things that he should think about in order to manage successfully his coffeeshop?

Inputs and Outputs
Facilities
TRANSFORMATION
Make/create

(Products)
Make/create

Transformation Processes: Examples
Production
Primary Inputs
Transformation
Primary Outputs
Purchased parts
raw materials, tools,
equipment, workers
Fabrication and
Automobiles
Hungry customers,
raw materials,
workers, equipment
Transform raw
materials into food
and serve the
Satisfied (and
full) customers
Automobile
Restaurant
University
Students, teachers,
staff, books, supplies,
Transmit information,
develop knowledge
and skills
individuals

Inputs and Outputs
Facilities
TRANSFORMATION
Make/create

(Products)
Make/create

Service-commodity goods continuum

A restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of the table, etc
Product-service bundling: refers to a company building service activities into its product offerings for its current users.

Operations Management & Service
Traditionally, operations management has been associated with physical goods

But services, the provision of intangibles to customers, is a larger share of the economy
Services moved from about 60% of the Canadian GDP to about 65% from 1970 to 1991
GDP composition by sector:

200520092012
Agriculture: 2.2% 2.3% 1.8%
Manufacturing: 29.4%26.4% 28.6%
Services: 68.4%71.3%69.6%

Services versus Goods
A service is an economic activity where an immaterial exchange of value occurs. A service is
Intangible: they can not be touched, gripped, tasted, looked at, etc. Thus neither potential nor need for transport, or storage.
Perishable: An empty seat on a plane never can be utilized and charged after departure.
Inseparable: Service requires some degree of interaction with customer. The hairdresser or the pilot must be in the same shop or plane with customer, respectively, for delivering the service.
Heterogeneous: Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated.
Evaluated as a package: evaluated considering (a) supporting facilities (b)facilitating goods (C implicit and explicit services

We learn in this lecture:
What is Operations?

What is operations management?

What is a good operations management?

Why study operations management (OM)?

What is Operations Management?

Transformation

Operations
Management

Operations Management: The management (design, operation and improvement) of the transformation processes that create value (= quality / price).

The Process View of organizations
What is a process?
A set of tasks that transform inputs into outputs

Every organization has several processes that work to transform inputs into outputs.

These processes can be analyzed at different levels of detail
Their management can be different depending on the overall objective or strategy of the business.

Levels of detail in process analysis
Each process consists of several sub-processes

Make/create

Which processes are we interested in?
Operations management studies the planning, buy, make/create, Delivering (sell and moving) and returning of processes.
Planning: processes that need to operate an existing supply chain process
Sourcing: Selection of suppliers that deliver goods and services required to create firms product.
Make/create: Manufacturing/Production
Delivering: Logistics and selling
Returning: processes for receiving defective products from customers.

We learn in this lecture:
What is Operations?

What is operations management?

What is a good operations management?

Why study operations management (OM)?

How do we measure process performance?
How do you a know a process is performing well?

Efficiency vs. Effectiveness

Efficiency:
Doing something at the lowest possible cost.
How well are inputs transformed into outputs?

Effectiveness:
Doing the right thing to create most value.
How far is a stated objective achieved?

Example: TD Bank
Efficient: using fewest people possible at counter
Effective: minimize time customers need to wait

More Examples of:
Efficiency vs. Effectiveness
EfficiencyEffectiveness
Washing MachineEnergy consumption per cycleCloths clean?
Do they smell so bad?
CarFuel consumptionToo small (5 mpg)?

Managers need to find the right balance!

How to measure Efficiency?

Productivity is a common measure on how well resources are being used.

Broadest sense, it is defined as the following ratio:

Our goal is to make this ratio as large as practical.
Productivity: measures how well a business unit is using its resources. Productivity is a relative measure (can be compared either with other similar operations, or over time within the same operation).

Productivity Measures
Partial measure of productivity (PMP):
For example, Labor productivity = Output/Labor
(Ex: Car Manufacturer: vehicles per man shift)

Multi-factor measures of productivity (MFP):
Output/(Labor + Capital + Material)

Total Factor Productivity (TFP):
Includes all factors of production
Output/(All Input)

Partial Measure of Productivity (PMP): When we are concerned with the ratio of output to a single input (e.g., output per labor, or output per worker per hour).
Multifactor Productivity Measure (MPM): If we want to look at the ratio of the output to a group of inputs (but not all) (We should unify input units when we combine for example in dollars).
Total factor measure of Productivity(TFP): When we want to express the ratio of all outputs to inputs. (We should unify input units when we combine for example in dollars).

Productivity: Example
A company that makes candles, has 2 workers. Each worker produces an average of 20 candles per hour. Labor cost is $10 per worker hour, and machine cost is $20 per hour.
Calculate labor productivity. Use candles per worker hour as the measure of labor productivity.

Calculate the multifactor productivity. Use candles per dollar cost (labor plus machine) as the measure.
Company decided to hire 2 new workers. The workers still produce 20 candles per hour. Do you think the multifactor productivity would change?

20 candles per worker per hour.
20*2/(2*10+20)=1 candle per dollar cost

How to tell a process is effective?

Low cost process
High quality process
Fast delivery process

Change in volume

Flexible Process

Technical support
After sale support
Environmental impact
Performance objectives/targets:

What is a Good Process?
Productivity
Maximize output for a given amount of input
Efficiency
Minimize cost for a given amount of input
The Efficiency View
The Strategic View
Effectiveness
Match supply and demand at the lowest cost!

What is a Good Process?

Compatible

What is Good OM?
Trade-offs and Innovation

Improvement

Innovation
Productivity

Taxonomy of process types: competing firms
Effectiveness and efficiency are usually competing objectives.
Frontiers firms: firms that dominate other firms either in productivity or effectiveness.
Firms try to locate on the frontier and find a right balance between effectiveness and productivity.
Innovation in operations management pushes the envelope, i.e., move the frontier.

What can go wrong?
Processes can be poorly designed & not effective
The process might not fit the strategic business objective
Example: Waiting 30 minutes for your coffee.

Processes can be inefficient
There is a mismatch between supply and demand
Example: How many people need to make a latte?

Ideally, processes should be designed and managed to efficiently meet the demands placed on it.
Processes should also be run so that the overall business objectives are met.

In 2006, when Nintendo launched the Wii console, many customers had to wait several weeks to purchase the product. In fact, many units were resold online for several hundred dollars over the retail price.

In the 2002-2003 flu season, 95 million doses of flu vaccine were produced but demand was much lower and excess vaccines had to be destroyed. In the next season, insufficient vaccines were available and there were widespread shortages.
Source: Matching supply with demand, by G. Cachon and C. Terwiesch, McGraw-Hill.

Why do these problems occur?
Making sure that your processes work perfectly is NOT EASY!

The business world is full of uncertainties.

Some companies manage their processes much better than their competitors and this gives them a huge advantage in the marketplace.

Airline Industry
Source: http://biz.yahoo.com/
See also: http://www.cbsnews.com/stories/2007/08/30/sunday/main3221531.shtml
In 2005, Southwest Airlines posted a profit for its 33rd consecutive year (or the 132nd consecutive quarter)
In the first half of 2005, the ten largest airlines lost a combined US$10 billion (CDN $11 billion).
Some airlines even filed for bankruptcy protection
Many airlines underwent massive efforts to restructure their entire business model!

Airline Industry Continued

Southwest says that if its boarding times increased by 10 minutes per flight, it would need 40 more planes at a cost of $40 million each to run the same number of flights it does currently. textbook
Can they do better?

Airline Industry Continued
What did airlines do to survive?

They now charge to check-in baggage
What is your strategy as response?

Airline Industry Continued

Airline Industry Continued
What are airlines doing to survive?

They now charge to check-in baggage
What is your strategy as response?

You board the plane in a specified order

Dynamic pricing: The price you pay for a ticket depends on when you buy it!

Dynamic Pricing (Time)
Lets compare the price of each ticket that is sold:
An airline ticket 1 year from departure
An airline ticket 1 week from departure

Round trip flight from Toronto to Calgary:
$450/ticket 1 year from departure
$503/ticket 1 week from departure

Round trip flight from Toronto to Rome:
$1115/ticket 1 year from departure
$1991/ticket 1 week from departure

We learn in this lecture:
What is Operations?

What is operations management?

What is a good operations management?

Why study operations management (OM)?

Why study operations?
Managing the core process is important for all firms.

Companies with good operations are doing much much better than others.

Routinely in large organizations the COO will be the heir apparentto the CEO. wiki

Operations management principles are being applied to other areas such as marketing & finance.

Career Paths

Functional Role Before Becoming CEO (SP 500)

Background/Experience of CEOs (SP 500)
Source: SpencerStuart 2008

Lessons & Summary
OM is the management of the core activity of any company (i.e., the creation of goods and services) and is critical to the performance of an organization.

More visible measures of performance (e.g., profits, return-on-assets, customer satisfaction) directly depend on how well the system, and each individual process, process is managed.

Management of the underlying processes that create the goods and services are critical to the performance and long-term sustainability of an organization.

What is a good process?
Efficiency vs. Effectiveness
(Productivity vs. Quality)

Upcoming Deadlines and Reminders
Personal Bio: January 24th, 11:59PM sharp. Post on utorsubmit:https://submit.utm.utoronto.ca/utorsubmit/

Please try to form groups of 3 and submit your group list(Due January 31st, 11:59 PM). TA will post soon the instructions on how to submit your lists on Quercus.
Please let me know if you have a time-conflict with the midterm.

Readings & More
For a better grasp of the key concepts, the following readings are only recommended:
Chapter 1 and 2 of Textbook (some parts of the chapters are covered)

For next class, please:
Take a good look at the Quercus site for the course

Next Class: Process analysis

CS: assignmentchef QQ: 1823890830 Email: [email protected]