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Process Management

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University of Illinois at Urbana-Champaign
College of Commerce and Business Administration

BADM 467 - Process Management

Summer 2003

Dilip Chhajed Nick Petruzzi chhajed@uiuc.edu petruzzi@uiuc.edu
323 DKH 328D DKH office hours: office hours:

Description
Process Management includes a myriad of activities: insuring that a product or service is of high quality, choosing the appropriate design and technology for producing a good or service, planning and controlling the flow of materials or customers so that lead times are minimized, and distributing finished goods or services. Relevant decisions range from how much material to order for making a product, to determining how much capacity is needed to provide a good level of service, to evaluating which technology will best meet a company's needs. In short, this course focuses primarily on developing and applying tools and techniques to ensure that the right products and resources are at the right place at the right time so as to maximize profit within a business process or supply chain. The “products” could be either goods, services, or both; and the “resources” could be either material, people, money, information, or any combination of the four.

In the first part of this course, we will focus on process design and improvement issues by studying the relationships between key process parameters such as capacity and throughput, and by analyzing processes in order to identify and eliminate bottlenecks. And, in the second part of the course, we will focus on process coordination issues by studying methods for the efficient planning and controlling of critical resources.

Specific objectives are:
To describe an operating system or a business process and how it can be used as a competitive weapon in a variety of manufacturing and service organizations.
To understand decisions faced by operations managers, the skills required to make these decisions effectively, and how these decisions integrate with the overall strategy of the firm.
To highlight many of the interfaces between the operations function and other functions of the firm such as finance, accounting, and marketing.
To develop skills in analyzing operating processes, assessing economic trade-offs, and defining planning and control mechanisms.

Design

The approach to this course is both lecture and case analysis. We will develop concepts and tools in class, but the true test in learning a new concept or tool is whether or not it can be applied.

Working in teams of 5, you will have the opportunity to hone skills and explore application possibilities through homework problem sets and case studies. The team aspect is important because group deliberation often opens avenues of thought otherwise not considered even to exist. Of the cases that we study, some are geared toward stimulating thinking about an issue (e.g., Toyota Motor Manufacturing), and others present a business problem that requires diagnosis, analysis, and development of a plan of action (e.g., Sea Pines Racquet Club). However, all cases have been chosen to illustrate basic concepts of process management as they apply to a variety of organizations and to stimulate discussion between you and your classmates. Therefore, class participation is a necessary element in the process.
You may organize yourself into teams of 5, but try to have your team in place by the second session so that you will have sufficient time to collaborate before the first assignment is due. If your team is not established by the third session, please let me know by the beginning of class; I will help.

Materials (Required)

(1) Ritzman and Krajewski (2003), Foundations of Operations Management, First Edition, Prentice-Hall, New York. (Abbreviated as KR.)

(2) Goldratt, E.M. (1992), The Goal: A Process of Ongoing Improvement, Second Edition, North River Press.

(3) Readings and Cases: “Michigan Manufacturing,” HBS Case Study (# 9-694-051) “Dore Dore” HBS Case Study (# 6-689-030) “Manzana Insurance –Fruitvale Branch,” HBS Case Study (#9-692-015) “Toyota Motor Manufacturing, U.S.A., Inc.,” HBS Case Study (# 9-693-019) “Benihana of Tokyo,” HBS Case Study (# 9-673-057) “Sea Pines Racquet Club,” HBS Case Study (# 9-674-011) “Johnson Controls, Automotive Systems Group” HBS Case Study (# 9-693-086)

Grading

Your course grade will be based on two exams and 4 homework assignments. The homework assignments comprise problem sets and case reports; they are to be completed by your team. Each exam must be an individual effort (surprise, surprise).

A letter grade for the course (A+, A, A-, B+, B, B-, C+, C, C-, F) will be assigned based on a relative scale. Homework Assignments 40% Exam I 30% Exam II 30% TOTAL 100%

Homework Assignments

Each team is required to submit 5 homework assignments (each case is worth 5% and each problem set is worth 10% of the grade). The purpose of the homework is to provide a structured framework for applying concepts and tools from class and to serve as practice for the exams.

The due date for each assignment is as follows: Homework 1: Case Report (Dore-Dore) Sessions 6 (Jun 24) Homework 2: Case Report (Manzana) Sessions 9 (Jun 30) Homework 3: Problem Set Session 10 (Jul 1) Homework 4: Problem Set Session 18 (Jul 15) Homework 5: Problem Set Session 25 (Jul 28)

All assignments are due at the beginning of class. You may want to bring an extra copy for yourself.

Case Reports and Preparation. Some of the homework assignments will be in the form of case reports. In addition, cases often will be assigned as preparation for classroom discussion.

Case reports should not be more than one page in length (single-spaced, font size 12, one inch margins) with up to two additional pages of exhibits. Divide your report into three sections:
Background (What is the case about? Identify one or two major problems.); Analysis (what are the causes of the problem(s) identified? What are the alternatives to solve the problem? , and Recommendations (what is your recommendation to solve the problem in short term and long term? Address any implementation concerns.). A grading penalty will be assessed for reports/outlines that do not conform to these formats. Additional pages will be ignored, so please adhere to the page limits.
A list of “case discussion questions” has been prepared to guide your analyses of the cases, both written and otherwise. In general, these questions are not all-inclusive or exhaustive. They are intended to guide your analysis of the case, but not preclude you from exploring other avenues or questions that may occur to you. On the other hand, it is usually true that clear and comprehensive answers to the assigned questions will comprise a good written analysis of a case. So, if in doubt, cover the questions thoroughly first, then explore other avenues for an excellent report.

No outside research is expected for any of the case reports.

Case Discussion Questions

Michigan Manufacturing
1. Study Exhibit 2 in the case carefully. Can you explain why overhead costs vary so greatly from plant to plant in Michigan Manufacturing’s system?
2. Why have managers in the Heavy Equipment Division under invested in the Pontiac Plant?
3. Should Noelle Allen close the Pontiac plant? If so, what should she do with the products currently manufactured in Pontiac? Should she follow the recommendations of her task force? If you believe she should continue to operate the plant, what if anything, should she do to transform it into a profitable operation?

Dore Dore

1. How does the performance of the traditional operation and cellular manufacturing system in the children’s knitwear operations differ?
2. Should Dore-Dore implement cells in its hosiery production area? If so, would you suggest any changes to the cell design as currently proposed by M. Enfert? If not, what alternative approaches could Dore-Dore take to address the concerns M. Marguet raises in the case?

Manzana Insurance

1. What is the basis for competition in the market that Fruitvale serves?
2. What is your assessment of the rules used to assign priorities at Fruitvale?
3. What are the important measures of operating performance for the Fruitvale branch? How well has the branch been performing according to these measures?
4. Why have profits been deteriorating over the past year?
5. What are your recommendations for managerial action? In particular, how should Manzana respond to Golden Gate’s new policy of one-day service?

Toyota Motor Manufacturing

1. As Doug Friesen, what would you do to address the seat problem? Where would you focus your attention and solution efforts?
2. What options exist? What would you recommend? Why?
3. Where, if at all does the current routine for handling defective seats deviate from the principle of the Toyota Production System?
4. What is the real problem facing Doug Friesen?

Benihana of Tokyo
1. What is the Benihana concept (what differentiates Benihana from other restaurants)?
2. Consider the typical flow of customers through Benihana’s. How well thought out is Benihana’s operating system?

Sea Pine Racquet Club
1. What is the dilemma facing John Baker? What are his options? (Think in terms of supply and demand.)
2. What should he do for the coming season? For next year?

Johnson Controls
1. Analyze the process flow at the Georgetown Plant. How does the flow of information fit in?

Tentative Course Outline

Jun 16 Session 1 Topic: Introduction to Process Management Readings: 1. Chapter 1 (KR).

Jun 17 Session 2 Topic: Process Types Readings: Chapter 2 (KR); LFKHS and Chaparral Steel plant tours in CD-ROM

Jun 18 Session 3 Topic: Process Strategy Case: Michigan Manufacturing, prepare answers to the “Case Discussion Questions” Readings: Chapter 2 (KR)

Jun 19 Session 4 Topic: Process Management: Bottlenecks Readings: Chapters 1-12 of The Goal

Jun 23 Session 5 Topic: Process Analysis; Line Flow Readings: Chapters 13-20 of The Goal

Jun 24 Session 6 Topic: Process Analysis I: Cell Process Case: Dore Dore, prepare answers to the “Case Discussion Questions” Submit: Case Report

Jun 25 Session 7 Topic: Process Quality Management Case: Cranston Nissan in CD-ROM. Prepare questions at the end of the case Readings: 1. Chapter 5 (KR)

Jun 26 Session 8 Topic: Process Quality Management: Statistical Process Control Readings: 1. Chapter 5 (KR)

Jun 27 Plant Trip (8:00 am – 12:00 noon)

Jun 30 Session 9 Topic: Process Analysis II: Service Application Readings: 1. Chapter 6 (KR) Case: Manzana Insurance, prepare answers to the “Case Discussion Questions” Submit: Case Report

Jul 1 Session 10 Topic: Lean Production Readings: Chapter 13 (KR) Submit: Homework 1 (Problem Set)

Jul 2 Session 11 Topic: Lean Production Case: Toyota Motor Manufacturing

Jul 3 Session 12 Topic: Exam I Readings:

Jul 7 Session 13 Topic: No class in lieu of the plant trip

Jul 8 Session 14 Topic: Integrated Operations Case: Benihana

Jul 9 Session 15 Topic: Waiting Line Management Reading: 1. Supplement 6S, pages 181 – 186 (KR)

Jul 10 Session 16 Topic: Capacity Planning Case: Sea Pines Racquet Club

Jul 14 Session 17 Topic: Coordinating Supply and Demand

Jul 15 Session 18 Topic: Resources Planning Reading: 1. Chapter 12, pages 399 – 409 (KR) Submit: Homework 2 (Problem Set)

Jul 16 Session 19 Topic: EOQ Decision Framework Readings: 1. Chapter 10, pages 323 – 334 2. CD-ROM Supplement H, H.4 – H.7

Jul 17 Session 20 Topic: EOQ Application Challenge: To be issued

Jul 21 Session 21 Topic: Continuous Review Systems Readings: 1. Chapter 10, pages 335 – 342 (KR)

Jul 22 Session 22 Topic: Periodic Review Systems Readings: 1. Chapter 10, pages 342 – 347 (KR)

Jul 23 Session 23 Topic: Short Life-Cycle Systems Readings: 1. CD-ROM Supplement H, H.7 – H.10 (KR)

Jul 24 Session 24 Topic: Just-In-Time Manufacturing Case: Johnson Controls, Automotive Systems Group Readings: 1. Chapter 13 (KR)

Jul 28 Session 25 Topic: Revenue Management Part I Activity: Yield Management Game Submit: Homework 3 (Problem Set)

Jul 29 Session 26 Topic: Revenue Management Part II

Jul 30 Session 27 Topic: Supply Chain Incentives and Control

Jul 31 Session 28 Topic: Supply Chain Incentives and Control

Aug 4 Session 29 Topic: Supply Chain Coordination Readings: Beer game (Class in 370 WH at 8:30 am)

Aug 5 Session 30 Topic: Supply Chain Coordination

Aug 6 Session 31 Topic: Review Session

Aug 7 Session 32 Topic: Exam II

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