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STERN SCHOOL OF BUSINESS NEW YORK UNIVERSITY

COURSE SYLLABUS OPERATIONS MANAGEMENT

Summer 2013 INSTRUCTOR: Ying Liu CLASS HOURS: 1:00-4:10pm Tuesday, Thursday (May 28 – July 4) CLASSROOM: TISCH UC21 OFFICE HOURS: 5-6pm Monday, Wednesday OFFICE: KMC 8-154 EMAIL: yliu2@stern.nyu.edu TELEPHONE: 212-998-0459

COURSE OVERVIEW AND OBJECTIVES Operations Management is the design and management of the processes that transform inputs into finished goods or services. Operations is one of the primary functions of a firm. Whereas marketing focuses on the demand for the product, and whereas finance provides the capital for the product, operations actually produces and delivers the product. This course provides a foundation for understanding the operations of a firm. Our objective by the end of the course is to provide you with the basic skills necessary to critically analyze a firm's operating performance and practices. Such knowledge is important for careers in a variety of areas, including general management, entrepreneurship, investment banking (e.g. business restructurings, mergers and acquisitions), venture capital (e.g. evaluating new business plans) and management consulting (business restructuring improvement). Unlike many courses in the core, which tend to treat the firm as a "black box", we will be primarily concerned with "opening up" the black box and discovering what makes a firm "tick" - or, for that matter, "stop ticking". In contrast to your management courses, our focus is on the technological rather than human dimension of a firm's internal operations - though there are obvious connections between the two that we will explore. In contrast to the measurement focus of your accounting courses, our concern is to understand what elements of a firm's operations enable it to produce quality outputs at a competitive cost structure. That is, we will focus on how the "physics" of material, work and information flows and the design and management of a firm's processes interact to determine a firm's cost structure and its ability to compete effectively in terms of non-cost measures such as quality, variety and speed. Because the operations of a firm vary widely from one industry to the next, a course like this cannot cover all topics that are relevant to any given industry. Rather, we have selected a set of topics that are fundamental to understanding operations in a wide range of industries. These concepts are then illustrated using cases from a diverse set of businesses.

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TEACHING METHODS To make the course materials more relevant to real business practices, we will provide a few video studies. To further enrich the class activities, we will also play various games and provide hands-on experience via in-class excel demonstration.

GRADING SCHEME Class Attendance + In-class Exercises 10% Homework + Project 40% Exam I 25% Exam II 25%

CLASS PARTICIPATION

I will judge class participation on the extent to which you appear prepared, the relevance and depth of your comments, the degree to which you listen carefully and respond to your peers, and your willingness to take chances in order to further the educational experiences of others. Your questions and comments after class will also be taken into account. Please notify your instructor by email in advance if you have to miss a class, or if you will be late or leaving early from class.

HOMEWORK AND IN-CLASS EXERCISES

There are four homework assignments in total. Each assignment will be handed out in class, and its electronic version will be posted on Blackboard. Please submit your homework at the beginning of class on the date specified on the assignment. Late homework will not be accepted. Keep a copy of all homework submitted for reference during class. There are an unspecified number of in-class exercises, which are required to perform and hand in during the class.

EXAMS

Exam I: In-class, Tuesday, June 11. Exam II: In-class, Thursday, July 4. The exams are non-accumulative and open notes.

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COURSE SCHEDULE

Modules Sessions Dates Important Events

Introduction to OM May 28 (T)

Process Analysis Bottleneck Analysis

An Exercise of Bottleneck Analysis:

Kristen’s Cookie

May 30 (R) HW 1 due

Case Study: Panama Canal

Service System Reducing Waiting Time June 4 (T)

Separating vs. Pooling Servers

Project Analysis Critical Path Method June 6 (R)

PERT and Project Crashing

Review June 11(T) HW 2 due

Exam I Exam

Inventory

Management

EOQ Model June 13 (R)

Newsvendor Model

Inventory Simulation Game

Linear Programming LP Formulation June 18 (T)

Excel Solver to Solve LP

Sensitivity Analysis

Revenue

Management

Revenue Management June 20 (R)

Supply Chain

Management

Hedging supply chain risk via

contracting

June 25 (T) HW 3 due

Hedging supply chain risk via

flexibility and pooling

June 27 (R)

Beer Game July 2 (T) Beer game

Bullwhip Effect

Review July 4 (R) Exam

Exam II

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Module I: Process Analysis

Plan: We learn how to analyze a process by using the bottleneck analysis. A recipe of bottleneck analysis will be given in class. Following the bottleneck analysis, we can identify bottlenecks, determine the process capacity, and time to serve customers. More importantly, we can provide concrete suggestions to improve the process performance.

Module II: Service

Plan: We explain why queues exist by playing a dice game, discuss how to reduce waiting time, and introduce an important queuing model: M/M/s. In the model, we can compute various system performance measures, by using the Excel spreadsheet.

Module III: Project Management

Plan: Competing based on time means being able to execute large projects, on time and within cost. We learn about network techniques for planning and managing large projects. Successful project management involves planning and managing the time to complete the project, monitoring the use of resources during project execution, and increasing the probability of successful completion. Network planning and control techniques provide the tools necessary for undertaking these tasks. We will discuss the probabilistic methods for project analysis. We will also touch upon project crashing. We will learn why it is sometimes beneficial to reduce the duration of a project, even though it may increase the cost of the project. We will discuss project crashing techniques that optimally reduce the duration of a project by selectively reducing the duration of only certain activities. Suggested reading: Read Chapter 3 of “Competitive Advantage from Operations” (any edition), the customized textbook by NYU Stern.

Module IV: Inventory Management

Plan: We introduce an important inventory model: the newsvendor model. We demonstrate via simulation game how firms can use newsvendor model to make their inventory decisions.

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Module V: Linear Programming

Plan: It deals with the use of linear programming for planning and optimizing systems. We shall discuss several applications of LP to operations management problems. Suggested reading: Quantitative Module B of “Competitive Advantage from Operations” (any edition), the customized textbook by NYU Stern.

Module VI: Revenue Management

Plan: Introduce the concepts of RM and their application in industry. Identify market conditions that favor RM applications. Develop a couple of simple RM frameworks. Connect RM to other OM topics discussed in the course.

Module VII: Supply Chain Management

Plan: Material, information and funds flow through supply chains. Demand is matched with supply, orders with fulfillment, and products are planned to fill customer needs and to compete against other products in the market. The integrated management of the three flows, material, information, and funds, is called supply chain management. We learn how firms compete with each other using new principles of supply chains. We also play and discuss the beer game.