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    Abstract Code: 011-0533

    Designing a Simulation Laboratory Environment for

    Service-Oriented Supply Chain Information Management

    Stephen C. Shih1

    Chikong Huang2

    1

    Associate Professor & Associate Director,

    School of Information Systems and Applied Technologies

    Southern Illinois University

    Carbondale, Illinois 62901-6614, USA

    E-mail: [email protected], Phone: (618) 453-7266

    2 Professor, Department of Industrial Management,

    Institute of Industrial Engineering and Management,

    National Yunlin University of Science & Technology,

    123 University Road, Section 3, Touliu, Yunlin, Taiwan 64002, R.O.C.

    E-mail: [email protected], Phone: 886-5-5342601 ext. 5336

    POM 20th

    Annual Conference

    Orlando, Florida U.S.A.

    May 1 to May 4, 2009

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    Designing a Simulation Laboratory Environment for Service-Oriented Supply Chain

    Information Management

    Abstract

    The primary objective of this research is to propose a simulation laboratory environment to

    examine the interactions and information exchanges between various levels of the service-

    oriented supply chain network. The research involves the exploration of three areas: (1) the

    essential characteristics and associated requirements underlying various service-driven supply

    chain transactions, (2) business assumptions underlying conventional service-driven supply chain

    models, and (3) modeling theories adopted to redefine the new models. Furthermore, the

    laboratory will be used as a viable base to develop fundamental theories for improved network

    communications and increased operational efficiency. An important thesis of this research is to

    explore the synergy between service supply chain logistics and information exchange.

    Ultimately, this research has the potential to extend simulation techniques and information

    technology to an important economic sectorthe the service sectorthat has long been

    overlooked in the past.

    Key Words: service-driven supply chain management and logistics, service supply chain

    information management, and simulation.

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    1. Introduction

    The primary objective of this research is to propose a framework and information technology

    architecture for the design of a simulation laboratory environment to examine the interactions

    and information exchanges between various levels of the service-oriented supply chain network.

    The proposed simulation laboratory, Integrated Service Enterprise Systems Laboratory (ISES

    Lab), will provide an environment for researchers and students in various disciplines, including

    production and operations management, operations research, industrial engineering, and

    information systems, to conduct research in a number of areas related to service supply chains

    (e.g., exploration of the essential characteristics underlying service-driven supply chain

    transactions). The ISES Lab will be further used as the viable bedrock for development of

    theories on service supply chain network communications and information management.

    The research conducted in the laboratory involves the exploration of three areas: (1) the

    essential characteristics and associated requirements underlying various service-driven supply

    chain transactions, (2) business assumptions underlying conventional service-driven supply chain

    models, and (3) modeling theories adopted to redefine the new models. The lab research projects

    will help explore the synergy between service supply chain logistics and information exchange.

    This synergy has presented an unprecedented territory of innovation and challenge. Ultimately,

    the research work and resulted nourished from the lab has the potential to extend simulation

    techniques and information technology to an important economic sector, the service sector, that

    has long been overlooked in the past.

    2. Service Enterprise Systems and Service Supply Chains

    Due to global expansion and the need for close collaboration with business partners, many

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    companies have grown in the direction of enterprise systems extension by including service

    operations. Most of the manufacturing enterprises have historically focused mostly on the

    supply chain management of designing and manufacturing physical products while paying little

    attention to the so-called forgotten supply chain of their services and post-sales businesses.

    Post-sales businesses represent all the maintenance, repair, and overhaul (MRO) services that are

    either not included in the original equipment sales or not delivered by the original equipment

    manufacturers (OEMs). For the post-sales service intensive enterprises (e.g., Boeing and Otis),

    the profit margin of their MRO businesses is usually much greater than that of original goods or

    equipment sales. With combined higher net margins and decreased capital requirements of the

    post-sales service operations, greater financial value can be significantly created.

    Complexity is inherent in most real-world service enterprise systems which are usually

    characterized as a super-hybrid system. Service enterprise system modeling itself is a complex

    task not only from the effort involved in mapping out all the information paths and business

    processes in the service supply chain and the simulation models but also due to the complex

    taxonomy of object types involved in the enterprise system. A generic learning tool for designing

    and modeling an enterprise-level super-hybrid environment requires substantial innovative

    learning mechanisms.

    Service quality is typically a significant competitive factor for those service-intensive

    industries that provide planning, monitoring, maintenance, and repairing services for their after-

    sale equipment (e.g., elevators). The ability to plan, schedule, and manage the service activities is

    crucial to the service-based companies. Nevertheless, in modern service industries, there are no

    consistent methods for service-related tasks, such as workforce planning, scheduling, and

    resource allocation. For global operations, most service-intensive organizations are still reliant

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    on a great number of different business processes and sub-optimized approaches to support each

    individual regional operation. Even though numerous analytical techniques have been developed

    for the scheduling of various manufacturing systems, only relatively few studies were targeted at

    the service sector. Among them, Ahituv and Berman (1988) have developed techniques that can

    be used in the management of various service networks including ambulance, police, fire, and

    courier services; Kolesar and Blum (1973), Smith (1979), Hambleton (1982), Agnihothri and

    Karmarkar (1992), Hill, March, Nachtsheim, and Shanker (1992) have studied the field service

    territory planning problems that involve balancing the number of technicians and the size of the

    geographic region they will service in order to achieve some performance objectives; Dzubow

    (1972), Panson (1983), Agnihothri and Karmarkar (1992), Hill (1992) have considered various

    dispatching rules for the Traveling Technician Problem (TTP); Haugen and Hill (1999) have

    proposed three scheduling procedures to maximize field service quality in the TTP and the

    comparison of these scheduling procedures against three dispatching rules in a simulated TTP

    scenario has shown domination of all scheduling procedures in all four service quality criteria.

    Most of these studies were too restrictive in their assumptions such as all service calls were of

    the same service class and had the same repair time distribution (i.e., ignoring the factors of

    various technician skill levels, parts/tools availability, planned regular maintenance vs.

    emergency repair, etc), constant travel speed (i.e., ignoring the factor of various traffic

    congestion levels at different times and locations), and do not account for the complexity of the

    real-life field service scheduling problem. Also, there are quite a few field service management

    software packages available in the market (Albright, 2002); however, their planning and

    scheduling algorithms are proprietary and undisclosed.

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    3. Service Enterprise Systems Education

    The trend of service enterprise systems evolution has urged many multinationals to view and

    manage the entire operations from a whole new perspective. Specifically, this trend has

    prompted companies to start focusing on dynamic, team-oriented organizational structure. As

    more companies strive to coordinate activities seamlessly, it is imperative that their employees

    be equipped with cross-functional knowledge and skills. Given that students often acquire

    knowledge and skills in different functional areas, many attribute deficiencies mentioned

    previously to the lack of systematic, cross-functional integration in the curricula. In other words,

    academic disciplines including information systems, POM, and other curricula still follow the

    stovepipe approach to educating their students (Albrecth and Sacks, 2000; Corbitt and

    Mensching, 2000; Gorgone et al., 2002).

    The leveling of organizational structure and the resultant changes in the workplace call

    for an interdisciplinary curriculum. A review of the current service enterprise systems education

    programs shows a lack of collaboration across the boundaries of academic disciplines. In

    addition, research has shown that the cross-functional approach to enterprise systems design is

    rarely the foci in the curricula (Trauth, 1993; Denis et al., 1995; Bandow, 2005). Such

    educational settings are not conducive to developing interdisciplinary knowledge and skills in a

    horizontal working environment. Consequently, many recent graduates were criticized for not

    being productive team players in a cross-functional team setting due to their lacking of extended

    enterprise perspectives and interdisciplinary problem-solving skills.

    4. The Framework of ISES Lab

    The proposed Integrated Service Enterprise Systems Laboratory (ISES Lab) pinpoints several

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    important trends that could profoundly shape and revolutionize the modern service enterprise

    systems education, including enterprise systems evolution, lean manufacturing, and horizontal

    organizations. Associated with each trend, major themes and focuses for advanced service

    enterprise systems education are identified and highlighted in this paper. The research projects

    and instructional lab assignments are unique in that it combines several service enterprise

    systems topics with proven pedagogical methods for conducting research projects and

    instructional assignments in service supply chain management. One of the foremost themes of

    the ISES Lab is to underline the importance of an extended enterprise system (Davis and

    Spekman, 2003) to go beyond its organizational boundary by including its service supply chain

    partners in collaborative planning and execution of its aftermarket business operations. With the

    notion of extended enterprise, the proposed laboratory environment emphasizes the importance

    of seamless integration and multi-directional service supply chain coordination. Second, the lab

    assignments fosters critical knowledge and practical applications of lean thinking (Womack

    and Jones, 2003) in enterprise systems design to create a lean enterprise (Henderson et al., 1999;

    Kennedy, 2003). Based on a holistic, value-stream approach, a lean enterprise is the application

    of lean principles and techniques to an extended service enterprise and supply chains. Moreover,

    another key tenet of conducting lab research projects and assignments in the laboratory is

    interdisciplinary that underscores the significance of intra-organizational collaboration and

    integration among business units to ensure a successful extended service enterprise system

    implementation. The laboratory environment, along with the practical set of lab assignments,

    provides a robust interdisciplinary framework for integrating service enterprise systems

    education for students from the disciplines of information systems (IS) and production and

    operations management (POM). Finally, the proposed laboratory incorporates several

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    experiential learning and instructional methods, such as web-enabled collaborative learning,

    scenario-based simulation and discovery learning, and student-driven evaluation.

    Several courses and project assignments are designed to offer the students practical

    application opportunities on lean service enterprise systems improvement through establishing

    baselines and target metrics for key business processes. In the wake of changing organizational

    structure, the lab environment is created to help students develop cross-discipline knowledge and

    skills needed in horizontal organizational structures and develop an integrated service enterprise

    perspective by immersing them in a learning environment that closely simulates real-world

    business scenarios.

    4.1 Web-enabled, simulation-based, collaborative learning laboratory environment

    To support the implementation of the ISES Lab, a web-enabled, simulation-based, collaborative

    computing environment is set up as the foundation for both the instructional modules and the

    laboratory projects. In a snapshot, this technology-enabled learning laboratory serves multiple

    purposes:

    The laboratory forms the basis of an ideal collaborative learning environment where students

    can learn from hands-on experience via various assignments in real-life business contexts.

    The ISES Lab provides a variety of software tools in the areas of computer simulation and

    modeling (e.g., ProModel and ILOG), business applications development tools (e.g.,

    Microsoft Visio Studio), database management systems (e.g., Microsoft SQL Server), and

    knowledge discovery and data mining (e.g., Oracle Express and SAS Enterprise Miner) to

    support the entire service enterprise systems development process. Specifically, ProModel is

    recommended for developing the simulation models, while ILOG CPLEX should be installed

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    to develop C and C++ programs for linear programming, mixed integer programming, other

    mathematical programming problems. In addition, ILOG Solver can be used to solve

    problems in production planning, resource allocation, optimization, and management.

    To simulate information sharing and transaction exchanges with business partners in a supply

    chain, an ERP system (e.g., Microsoft Dynamics) is provided to support such learning tasks

    as systems analysis, process mapping, system configuration, and testing.

    Next, as an important tool in the simulated environment of intra and inter-organizational

    collaboration and communication, an service enterprise portal is incorporated into the

    laboratory to demonstrate how a web portal can facilitate more effective group decision-

    making, information sharing, and collaborative planning and design among different team

    members.

    The ISES Lab includes a collaboration mechanism, shared reference space, for collaborative

    learning. This multimedia-enriched cognitive support tool allows students to visually

    conceptualize, analyze and communicate their analyses of complex service enterprise

    systems problems, and apply lean principles in different settings of information exchange.

    The shared reference space support both synchronous and asynchronous communications.

    When students are present at the same time over the service network, the collaborative

    learning support should assisting students in brainstorming ideas and exchanging information

    to co-develop enterprise system solutions. This collaborative learning continues when they

    are not working in the same workspace or time, since all the ideas, comments, findings, and

    changes to the solution are tracked and recorded in the shared reference space. Collaborative

    learning offers a viable, effective approach to deal with the dynamic, demand-responsive

    nature of service enterprises.

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    The ISES lab also offers handicapped accessible laboratory facilities and other necessary

    computing equipment (e.g., electronic smart board) for web-enabled collaborative teaching and

    learning. A small-scale enterprise database is used as the underlying data source for the project.

    Using a web-based information sharing mechanism and an integrated enterprise database,

    students can perform the tasks mentioned above by extracting and aggregating information and

    knowledge from different functional areas in an enterprises value chain, such as engineering

    design, manufacturing, logistics, and services.

    4.2 Laboratory projects and assignments

    Through completing laboratory projects and assignments, students are imbued with important

    concepts in analyzing and improving a service enterprise and its supply chain, such as business

    workflow and production processes, balancing demand and supply (capacity), global supply

    chain optimization and integration, infrastructure of information systems and computer networks,

    interaction and information sharing among internal and external environment (i.e., upstream

    suppliers, downstream dealers, retailers, and customers, as well as the third-party inbound and

    outbound logistics providers), and implementation and deployment strategies.

    The lab also provides a viable environment for developing fundamental theories to

    improve service supply chain network communications and collaborative efficiency.

    Specifically, the lab projects and assignments were designed to test several hypotheses of

    complex behaviors in service-oriented supply chain operations. For instance, three tested

    hypothesis are shown as follows:

    Hypothesis # 1 The size and complexity of a service-oriented supply chain can evolve

    dramatically with characteristic time-constants, such weeks and months. The dynamic,

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    demand-responsive nature of many services makes the modeling and decision making

    under uncertainty significantly more critical than in manufacturing settings.

    Hypothesis #2 Transactions and interactions in a supply chain network may track up to

    thousands of supply chain units and each unit may further contain hundreds of

    maintenance actions. Each maintenance action can represent a unique supply chain unit

    including spare parts, repair processes, technical skills, logistics and distribution, etc.

    Hypothesis #3 The object types in a supply chain may constitute a complex taxonomy

    ranging from material properties, inventories, technical skills, to transportation dynamics.

    It has been realized that substantial service improvements in quality as a result of

    implementing visually rich simulation systems. The proposed laboratory environment applies

    this idea to testing the hypotheses mentioned above via laboratory simulation and

    experimentation. Laboratory simulation and experimentation involves the creation of an artificial

    environment for isolating and better controlling of potentially confounding variables (Hersen &

    Barlow 1976, Jarvenpaa et al. 1984, 1985, Jarvenpaa 1988, Benbasat 1990a, 1990b, DeSanctis

    1990). A simulation-driven decision support laboratory will be developed to examine the

    explosion in distributed supply chain network and information exchange activities. A set of

    simulation models are developed and tested on a hypothetic or real-world demonstration problem

    against an established baseline and the three hypotheses mentioned above. In addition, scenario-

    building is adopted to gather new insights into relationships among transactional variables in a

    service supply chain network.

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    4.3 Implementation principles and learning methods

    The following paragraphs depict how the lab project is carried out through the application of

    three fundamental implementation principles: (1) collaborative and just-in-time learning via

    multidisciplinary product team formation and role-playing and (2) scenario-based simulations

    and discovery learning.

    Collaborative learning has long been promoted by numerous educators and researchers

    (Johnson and Johnson, 1989; Kuhn, 1993). The ISES Lab supports collaborative learning by

    creating a simulated, shared environment in which students can collectively investigate real-

    world business problems in case studies of model companies and recommend viable enterprise

    systems solutions. Moreover, to promote just-in-time learning, both the IS and OM teams are

    encouraged to continually develop their competencies by learning new knowledge and skills

    from their own disciplines as well as from other disciplines in an iterative cycle of learning and

    application.

    To assist students in successfully carrying out the laboratory projects, the blended

    learning approach is adopted by combining instructor-led lectures with scenario-based

    simulation learning and discovery learning methods (Bruner, 1961, 1966; Leutner, 1993;

    Hammer, 1997; Johnson et al., 2003). The scenario-based simulation learning method is

    recommended because computer simulation research has shown the effectiveness of computer

    simulation as a strategic planning tool for organizations to implement lean principles (Fripp,

    1993; Towne, 1995; Aldrich, 2003). With scenario-based simulation, students learn to analyze

    and simulate different production scenarios, think hypothetically, and evaluate different potential

    solutions before making the final decisions.

    Systematic validation and statistical analysis of simulation results is an essential step of a

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    successful simulation modeling and development. To ensure the validity of the developed

    simulation model, a validating process will be performed to examine if the model correctly

    represents the essential aspects of the system within the real-life context. To begin with, a

    number of validation criteria will be defined to facilitate fully understanding of a successful

    simulation. The modeling assumptions and sensitivity will be examined by testing and changing

    various parameters identified in the model. Statistical tests (e.g., goodness-of-fit tests) will be

    performed on all inputs and internal processes. The model will be assessed to verify whether the

    simulation model is built with respect to requirements and performance criteria established

    during the requirements definition stage and further examine if it is a viable representation of the

    real-life service system. Furthermore, an empiricists approach (Law, 1991) will be adopted for

    supply chain model validity checking on the initial set of modules and a rationalists approach

    for the newly defined model components. With the empiricists approach, the performance

    results generated by the scenario simulation model are then compared with historical data in the

    real-life environment. Hypothesis tests are used to determine if the disparity between the various

    performance results is statistically significant between the real model structure. For the new

    model development, historical data is unattainable. The newly developed model is then closely

    examined and the assumptions are properly updated and justified.

    To fully seize the essence of the behavior of the system, experimentations will be

    indispensable. Formulating pertinent experimental conditions and simulation scenarios under

    which the model behavior is examined. Given that statistical analysis of the results of each

    experiment is appropriately conducted and the results are properly evaluated and compared, the

    experimentation process will not only lead to a greater comprehension of the behavior of existing

    system but also figure out the ways to enhance the system with desirable performances.

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    As shown in Figure 1, students are required to role-play as employees in two

    organizational units at any typical organization as they were in the real world setting:

    Department of Information Systems (IS) and Department of Production and Operations

    Management (POM). In addition, students take turns playing the role of the end customers

    who work with the product teams to provide insight from the customers perspectives. By

    playing different roles and working with students from different disciplines, both the IS and

    POM teams can acquire cross-functional knowledge and skills. Essentially, the laboratory project

    requires the students to carry out multidisciplinary, collaborative tasks in the following areas:

    Information processing support activities: The IS teams carry out information processing and

    related support activities. They are responsible for developing right-sized information

    systems to provide just-in-time ERP data and information

    Primary production activities: The POM teams focus on the primary activities directly

    related to services and after-sale operations. In addition, they are in charge of organizing all

    the value-creating activities in the best sequence for a specific service along a value stream.

    Continuous process improvement: While each team has its primary focus, both the POM and

    IS teams will collectively define and continually refine the business and manufacturing

    processes throughout the entire project.

    5. A Generic Example of Service Enterprise Systems Simulation

    To assist in conceiving both the theoretical and practical significance of the lab projects, a

    generic examplefield service planning and scheduling of after-sale equipmentis

    illustrated in this section. From a broader perspective, the primary sources of field service

    work include planned maintenance tasks, callbacks, repair work and open-order requests.

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    Among them, planned maintenance and scheduled repairs are performed at regular intervals

    on the serviced units through service contracts. Callbacks or emergency service calls are

    unplanned service requests that are due to equipment failure and that arise randomly over

    time. These work types have very different scheduling requirements. One of the integral

    simulation models is to combine all the work types in one optimized scheduling solution to

    address some highly dynamic and challenging problems. In the simulation process, various

    real-life scenarios are to be set up and constraints on service work are to be defined,

    including different work types, spatially separated service geography, skills, parts, and other

    business rules.

    Suppliers

    Primary Production Activities

    (role-played by the POM Team)

    Information Processing Support Activities

    (role-played by the IS Team)

    Information Flows

    Material Flows

    Databases

    Design

    Programs

    Design

    Interfaces

    Design

    Networks

    Design

    The

    CustomerGroup

    Inbound

    LogisticsOperations

    Outbound

    Logistics

    Product

    Team X

    Product

    Team Y

    Product

    Team Z

    Figure 1. Role-Playing and Interdisciplinary Learning for Collaborative Planning and Design

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    To address the realism of the defined service demand assumptions and requirements, a

    field service planning and scheduling process for automated and real-time resource allocation

    and scheduling is to be simulated. This simulation task will be conducted based on a multi-

    dimension assignment of service jobs, required resources, and time slots. For initial schedule

    planning, an external Enterprise Resource Planning (ERP) system is connected for the provision

    of basic data, such as equipment history and usage data, types of service work, parts availability,

    etc. The planning module of the system is capable of developing an optimal plan by grouping the

    service jobs based on both the distance-proximity clustering and time-proximity clustering

    methods. For essential mapping information, an external Geographic Information System (GIS)

    will be integrated to provide a map database containing layout of roads, geocode information,

    direction and speed limits of roads, etc. As the heart of the simulation model, an automated and

    integrated scheduling engine will be built to continuously run for maintaining a real-time

    optimal or near-optimal solution across a rolling horizon as uncertain conditions, such as

    service times, travel times and arrival of callbacks, are realized. The scheduling engine is

    capable of integrating all service work types and the solution will faithfully abide by all the

    objectives (soft business rules) and constraints (hard business rules). Figure 2 depicts a

    conceptual architecture of the simulation environment mentioned above.

    The modules of the lab will be a simulation-based testing environment with two essential

    components: Visual Modeler and Simulator and Service Operations Optimizer.

    Visual Modeler and Simulator. This component will be employed to create necessary

    simulation models to simulate various interactive and collaborative transaction and

    exchange scenarios in specific service supply chain implementations. This simulation

    environment setting will help design and valuate high performance service operations.

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    Geographic

    Information

    System

    (GIS)

    Field Service

    Planner

    Field Service

    Scheduler

    Enterprise Resource Planning (ERP)

    Equipment Usage Types of Parts

    History Data Work Data

    ...

    Business

    Objectives

    & Constraints

    Figure 2. Conceptual Architecture of the Field Service Simulation Environment

    Service Operations Optimizer. This mechanism is to assist in optimizing complex

    stochastic problems in the systems via optimization modeling.

    The simulation-based laboratory will help contribute to develop service-oriented supply

    chain and optimization theories for the service industries. Meanwhile, the results will provide

    guidelines to academic and business communities in the design of advanced supply chain

    software for service sector. In addition, the research effort will advance new capabilities in

    modeling, simulation, and optimization of service supply chain.

    6. Conclusions

    The ISES Lab facilitates implementing a service enterprise systems educational plan in two

    aspects: (1) developing the after-sale service logistics and information management courses and

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    (2) implementing a new approach to enhancing the learning of modern service supply chain

    optimization and service enterprise systems integration. When it comes to broader impacts, the

    ISES Lab could help promote research that extends the application of optimization theories,

    simulation and modeling techniques, and information technologies to an important economic

    sector, the after-sale service sector. For instance, one of the research initiatives is the

    development of fundamental theories of condition-based maintenance (CBM) and field service

    management for improving the competitiveness and reliability of after-sale service enterprises.

    Additionally, this research will open a new area for teaching service planning and scheduling,

    service chain optimization, and e-service information systems design. It will provide the

    foundation for introducing after-sale service logistics optimization in the supply chain

    management course, which is becoming an important course in the curricula of many disciplines,

    such as industrial engineering, production and operations management, operations research, and

    management information systems.

    This research work can be incorporated into the teaching of both operations management

    and information systems at both the undergraduate and graduate levels. The educational plan

    potentially leads to significant enhancement in the learning of service supply chain and logistics

    management. The introduced courses will improve both theoretical and practical aspects of the

    service enterprise systems curriculum. Involving students in research not only trains them

    adequate problem-solving skills but also encourages them to continue graduate study. The

    proposed ISES Lab also supports educational enhancement for cross-disciplinary programs by

    incorporating various innovative learning methods for effectively engaging students in service

    enterprise systems design and management. The philosophy to innovative technology

    development consists of applying results from various sources. The proposed lab environment

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    facilitates collaboration among multidisciplinary members (majoring in IS, POM, etc.) allowing

    the project teams to leverage their diverse experiences, knowledge, and skill sets. With the

    special designed lab projects and assignments, teaching and learning are significantly enhanced

    through the use of the scenario-based simulation exercises and discovery learning method. The

    ISES Lab provides an interdisciplinary and collaborative learning environment allowing students

    to greatly advance their cross-functional knowledge, problem-solving skills, and innovative

    thinking in lean enterprise systems designwhich will well prepare them prior to their entering

    the job marketplace.

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