Course Information and Syllabus

Bus 40000:Operations Management: Business Process Fundamentals

Winter 2015, Parker

Course description:
This core course focuses on understanding levers for structuring, managing, and improving a
firms recurring business processes to achieve competitive advantage in customer responsiveness, price, quality, and variety of products and services. These levers are as applicable to
banks, hospitals, and brokerage firms, for example, as to traditional manufacturing. Processes
within firms, as well as between firms, i.e. supply chains, are explored. The fundamental
principles underlying state-of-the-art practices, such as Quick Response, Just-in-Time and
Time-Based Competition, are explored so that students learn to critically evaluate these and
other operational improvement programs.
Students learn the basics of how to manage the operations of a firm, and how operational
issues affect and are affected by the many business decisions they will be called upon to make
or recommend in their careers. As such, this course is essential to students aspiring to become
consultants, entrepreneurs, or general managers. A working knowledge of operations is also
indispensable to those interested in marketing, finance, and accounting, where the interface
between these functions and operations is critical. Finally, an understanding of how firms
become market leaders through operations is important in investment careers.
Most weeks consist of in-depth case discussion, integrated with theory. As such, the course is
ideal preparation for many cases encountered during interviews for internships and full-time
positions.
Prerequisites:
Any previous or concurrent exposure to basic statistics is helpful.
Course Web Page: http://chalk.uchicago.edu
Instructor: Rod Parker
Office: Harper 347
Voice: (773) 702-4997
Fax: (773) 702-0458
e-mail: rodney.parker@ChicagoBooth.edu
Office Hours: Tuesday 10:30-11:30am, or by appointment
Sections:
40000-03: Tuesday 1:30-4:30pm, Campus
40000-82: Tuesday 6-9pm, Gleacher
40000-04: Wednesday 1:30-4:30pm, Campus
Teaching Assistant:
40000-03,-04,-82: Luyi Yang, luyi.yang@ChicagoBooth.edu
Office hours: By appointment
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Course Materials:
The Goal by Goldratt
The Operations Quadrangle (course textbook) and class-by-class readings are on Chalk
Littlefield Technologies simulation coursecode (provided by instructor). See below.
Class Handouts
Assignments and Handouts will be posted on Chalk in pdf format (see below). Each
week you should download and print the slides before coming to class; I will not bring
hard copies.
Grading:

Group Homework 20%

Littlefield Simulation 10%
Class Contribution 10%
Midterm Exam 20%
Final Exam 40%

The midterm is an optional/droppable exam. That is, the 20% of your course grade
allocated to the midterm exam will be determined as the better of your midterm and
final exam grades.
If for any reason you cannot take the midterm exam at the scheduled time, I will shift
the 20% onto your final exam, i.e. your final will be worth 60%. I strongly discourage
you from using this option unless it is absolutely unavoidable.
This class cannot be taken Pass/Fail, or audited.
All grade disputes must be submitted in writing within two weeks of an assignment/exam
being returned. I reserve the right to regrade the entire assignment/exam, and possibly
lower your grade, if I find something that was misgraded.
You must pass each component of the grade in order to receive a passing grade for the
class.
Littlefield Technologies:
Between weeks 8 and 10, we will run the Littlefield Technologies simulation. Each team will
compete against each other in managing a factory that assembles Digital Satellite System
receivers. The team whose factory has the largest cash position at the end of the game wins.
More details will be given in the assignment writeup, to be posted on Chalk.
In order to play the game, students must form teams and register their team online. A
coursecode will be provided by the instructor to enable each team to register. When you
log in for the first time, you must enter your full name as it appears on the registrars
records. The links to register your team and start the game can be found in Chalk.
Every student is expected to fully participate in the game with their group. Failure to
do so will result in a zero for the Littlefield assignment.
Your grade will be based on a combination of your final cash position, relative to other
teams, and a writeup. A good writeup will provide a detailed analysis and justification
of the strategy used, rather than just an anecdotal description of the actions taken. I will
look for the following elements in your write-up: (1) What was your initial strategy and
how/why did you change your strategy during the game? Explain which levers you used
to match the operational infrastructure with the market demand. (2) Which concepts
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that you learned in this course did you apply in making your decisions? Explain. (3)
What did you learn from the game? A commented log of your historical actions and
events by itself will not be sufficient.
Any group that exerts little or no effort in playing the game will receive a grade of zero,
regardless of the quality of the writeup.
Honor Code:
Students in my class are required to adhere to the standards of conduct in the Chicago
Booth Honor Code and the Chicago Booth Standards of Scholarship. The Chicago
Booth Honor Code also require students to sign the following Honor Code pledge on all
work, I pledge my honor that I have not violated the Honor Code during this assignment/examination.
On group assignments, you are not permitted to confer with other groups.
You are not permitted to review or discuss case write-ups from other sections, past
quarters/instructors of Bus 40000, or the Internet while preparing the assignments.
Homework assignments:
Homework assignments are indicated on the course syllabus and will be posted on the
course website at least one week before they are due.
Homeworks will be turned in at the start of class in hard copy. Therefore, you should
make copies for your use during class and in preparing for exams.
Homeworks turned in late will be penalized. I will not accept homeworks turned in
more than 1 week late. Students adding the course late will be expected to complete all
homeworks, including those due in week 2.
Homeworks must be submitted in paper form, either in person or by fax.
I am looking for work done carefully and thoughtfully. I expect you to show your work
and rigorously defend your answers. Effort will factor heavily into homework grades.
It is a good idea to periodically check your email and Chalk for updates during each
week.
Groups:
On all group assignments you must work in a group of size 4 or 5. You may not work
alone on group assignments. You may only put your name on the group write-up if you
contributed.
I will allow you to form groups across sections. However, assignments must be turned
in at the first class session attended by any of your group members.
Submit ONE document per group containing the assignments due each week.
Attending other sections:
I expect you to attend the section in which you are enrolled. However, on a limited basis I
will allow you to move between sections as needed, but subject to the following:
Students enrolled in the section they are attending have seating priority.
Assignments must be turned in at the first class session attended by any of
your group members.
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 You must send me an email indicating the alternative section you wish to attend for the
week, and why.
Class contribution:
You should find a seat you are comfortable with and stay there the entire quarter. This
will help me in correctly assessing student contribution.
Use your name card every class.
You will be able to make class contributions if you have worked hard on the cases and
therefore come to class prepared.
Be prepared to be cold-called.
General Expectations:
Takeaways: Much of what we will do in class is learning how to dissect and analyze an
operation. Dont expect for there to be one or two key takeaways in each class. Usually
there will be many small lessons, and as these build over the quarter you will begin to
think operationally.
Concept Check Assignments: Most weeks there will be Concept Check questions,
to be done in your group and handed in. The purpose of these is to help reinforce what
you learned in the previous week. These will be good preparation for exam questions.
Solutions: In class we will discuss at least one set of solutions to the cases, and you will
also receive comments/corrections on your homeworks. I will distribute some spreadsheets that analyze cases, and I will distribute explicit solutions to the Concept Check
assignments. Some solutions will also be in the slides I post after class. If you are unclear
on the solution to anything we do, I encourage you to come to office hours or email me.
Workload: You should expect to spend between 4-6 hours per week on the course
outside of class.
Division of work: Each group member should actively work on every part of the
assignment that is due. Otherwise, I find that students only come to understand the
part of the course dealing with assignments they worked on, and do not learn the other
parts. This spells disaster during class discussions and at exam time.
Varied students: Please remember that this is a core course that surveys a wide range
of topics, for students having a great variety of backgrounds, skills (quantitative versus
qualitative), and interests. There are times when I need to cover or review some things
in order to ensure that everyone is on-board.
Studying for the exams: Take the practice tests, and review all the questions in the
homework. Focus on the case analyses, and the intuition we develop into the operational
structures encountered. I will not ask minutia from the cases, but I will expect that you
remember the important parts of the structure (though not the numbers) and names of
the steps in the process flow diagram for each case. Be sure to have read all the required
readings.

Syllabus
Bus 40000-03,-04,-82 Operations Management
Winter 2015, Parker

Part I: Introduction to Operations Management

Session 1 Module 1: Introduction to Operations Management
Objective: To characterize the operational capabilities of business processes and their link to to
corporate strategy to gain competitive advantage.
Topics:

Strategic operational capabilities

Definition of operations management
The Operations Quadrangle
Introduction to business process flows
Littles Law

Required Reading:

The Goal, Goldratt, to the end of chapter 8 (page 62)

Competing on Capabilities, Stalk, Evans, Shulman
Deep Change: How Operational Innovation Can Transform Your Company, Hammer.
Varsity Subs, Eisenstein. (attempt, but do not hand-in, the questions)
Basic Concepts in Probability, optional review if needed

Part II: Business Process Management

Session 2 Module 2: Capacity Management
Objective: To develop a fundamental understanding of what determines the capacity of an operation, the impact it has on profits, and how to alter it for operational improvement.
Topics:
Capacity analysis
Product mix decisions
Linear programming
Required Reading:

The Goal, Goldratt, to the end of chapter 19 (page 161)

Chapter 2, Capacity Management of The Operations Quadrangle
McDs Service Stalls at Drive-Thru, Crains Chicago Business, 1/2/06.
National Cranberry Cooperative, Harvard Case 9-675-014
Merton Truck Company, Harvard Case 9-189-163 (Do not do the Problems on page 4 of
the case.)

Prepare with your group and hand-in:

Assignment: Concept Check #1
Assignment: National Cranberry Cooperative
Assignment: Merton Truck Company

Session 3 Module 3: Focus Strategies and Cycle-Time Management

Objective: To explore how firms increase profitability through operational focus and cycle-time
reduction.
Topics:

Operational focus
Profit drivers and the Operations Quadrangle
Reengineering
Critical paths

Required Reading:

The Goal, Goldratt, to the end of chapter 29 (page 246)

Chapter 3, Sections 3.1 and 3.2, Cycle-Time Management of The Operations Quadrangle
Reengineering, Chapter 2, Hammer and Champy
Coffee on the Double, WSJ
Shouldice Hospital, Harvard Case 9-683-068
Linear Programming Note: Merton

Prepare with your group and hand-in:

Assignment: Concept Check #2
Assignment: Shouldice Hospital

Session 4 Module 4: Capacity Management Under Uncertainty

Objective: To examine how enterprises manage capacity in business proceses that are subject to
uncertainty in supply and demand.
Topics:

Service operations, Call center management

Queueing phenomena: balking, jockeying, reneging
Levers for improving queueing costs
M/M/1 and G/G/1 queueing models

Required Reading:

Finish The Goal, Goldratt

Finish Chapter 3, Cycle-Time Management of The Operations Quadrangle
Merchants Mull the Long and the Short of Lines, WSJ,
The Psychology of Waiting Lines, Maister
Breaking the Trade-Off Between Efficiency and Service, Frei
Sof-Optics, Inc. (A), Harvard Case, 9-681-052

Prepare with your group and hand-in:

Assignment: Concept Check #3
Assignment: Sof-Optics, Inc.

Session 5 Module 5: Lean Operations

Objective: To explore the basic principles and challenges of implementing lean operations.
Topics:

Process design: craft versus assembly

Toyota Production System, Just-in-Time (JIT), jidoka
Quality management
Cellular production

Required Reading:

Chapter 4, Lean Business Processes, of The Operations Quadrangle

The Lean Service Machine, Cynthia K. Swank.
Jeans Therapy, King
Bucket-Brigades: Self Organizing Work Teams, Eisenstein and Bartholdi
Riverside Fashions, Eisenstein
Toyota Motor Manufacturing, Harvard Case 9-693-019
In Lieu of Money, Toyota Donates Efficiency to New York Charity, New York Times.
Boeing keeps building Dreamliners it cant fly, CNN Money.
Six Sigma: What It Is and How to Use It, Plotkin.

Prepare with your group and hand-in:

Assignment: Concept Check #4
Assignment: Riverside Fashions Case
Assignment: Toyota Motor Manufacturing
Important:
Be sure to register your Littlefield Technologies team by midnight on Wednesday, February
18. The coursecode will be distributed by the instructor.

Session 6 Midterm Exam

In class.
Closed book. You will be allowed to bring one page of notes, double-sided.
If you cannot take the midterm exam, or counting it hurts your final course grade, I will shift
all the weight onto your final exam.

Part III: Supply Chain Management

Session 7 Module 6: Supply Chain Dynamics and Strategies
Objective: To examine the main strategic factors that drive supply chain performance. By
playing a supply chain simulation game, students will gain an understanding of the Bullwhip
Effect and learn techniques for mitigating it. Please arrive to class on time so we may start
the game promptly.
Topics:
The Bullwhip Effect
Just-in-Time Distribution (JITD)/Vendor Managed Inventory (VMI)
Collaborative Planning and Forecasting for Replenishment (CPFR)
Required Reading:
Barilla SpA (A), Harvard Cases 9-694-046
Please login onto the following website and review all of the screens under the prepare
tab, including the intro video:
http://forio.com/simulate/forio/root-beer-game-demo/simulation/login.html
Username: Wholesaler
Password: wholesaler
To use the website, you will need the following:
1. Computer with 1024x768 screen resolution
2. High-speed internet connection (DSL / cable modem quality)
3. Internet Explorer 6+ / Firefox 2.0+ web browser
4. Flash Player 9+ browser plug-in (Users with earlier versions of Flash will be notified
automatically and given the option to upgrade. This is a free browser plug-in.)
Prepare with your group and hand-in:
Assignment: Barilla SpA
Post-class Reading:
Barilla SpA (B), (C), and (D), (to be distributed in class)
The Bullwhip Effect In Supply Chains, Lee, Padmanabhan, Whang, Sloan Management
Review

Session 8 Module 7: Foundations of Inventory Management

Objective: To introduce the fundamental theory and basic concepts of inventory management that
are encountered in practice.
Topics:

Introduction to forecasting
Newsvendor problem
Economic order quantity
Safety stock, cycle stock: (Q, R)-policies

Required Reading:
Chapter 5, Inventory Management, of The Operations Quadrangle.
Ciscos $2.25 Billion Mea Culpa, CNET
L. L. Bean, Harvard case 9-893-003
Prepare with your group and hand-in:
Assignment: Inventory Processes
Assignment: L.L. Bean

The Littlefield Technologies simulation will begin on Friday, February 27, at noon. It
will end on Sunday, March 8, at 1pm. (Notice that Daylight Saving Time commences
on Sunday, March 8, so this ending time accounts for that.) I will post the assignment,
Littlefield Technologies: Overview, on the course website. Your writeup will be
due at our first class meeting after the completion of the simulation (Session 10:
Module 9). NOTE: You will be able to work on and complete much of the writeup
before the game actually ends. The links for registering your team and starting the
game can be found on Chalk.

Session 9 Module 8: Supply Chain Contracts and Pooling Strategies

Objective: To explore how incentive problems can degrade supply chain performance, and how
to resolve them through contracts. To explore various ways of pooling inventories to hedge risk,
achieve scale economies, and improve inventory performance.
Topics:
Supply chain contracts
Pooling and postponement
Required Reading:
Section 5.5.6 (page 101), Pool Inventories, of The Operations Quadrangle.
Supply Chain Coordination, Chapter 14 of Matching Supply with Demand by Cachon and
Terwiesch.
Supply Chain Close-Up: The Video Vault, Harvard case 9-102-070
Mass Customization at Hewlett-Packard, Feitzinger and Lee
JungleBooks.com, Eisenstein.
Prepare with your group and hand-in:
Assignment: Concept Check #5
Assignment: Video Vault
Assignment: JungleBooks.com

Session 10 Module 9: Littlefield Debriefing, Course Wrapup

Objective: To summarize the lessons learned from the Littlefield game, and draw together the
various learnings in the course.
Topics:
Littlefield discussion and lessons
Course wrapup
Prepare with your group and hand-in:
Assignment: Concept Check #6
Littlefield Technologies writeup is due.

Session 11 Final Exam

In class
40000-03: Tuesday, March 17, 1:30-4:30pm, Harper
40000-82: Tuesday, March 17, 6:00-9:00pm, Gleacher
40000-04: Wednesday, March 18, 1:30-4:30pm, Harper
Closed book. Comprehensive. You will be allowed to bring two pages of notes, double-sided.

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