MGTSC 352: Operations Management

Lecture 1

Marking Philosophy

• Feasibility: could the plan you proposed be used in reality

• Consistency: are your numbers internally consistent?

• Optimality: is your plan the best possible, or close to it?

My name is ...

Kenneth SchultzOffice 340G Business

Telephone 492-3068

Email klschult

This course is …

… a continuation of MGTSC 312

Not ...

Mgtsc != Stats

“Traditional” University Course

• Class– Come to class (sometimes) – Listen to The Prof (maybe not) – Take notes (perhaps) – Get bored

• Study – Read the text (maybe not) – Memorize stuff (wondering why—maybe not)

• Write exams– Sometimes multiple choice – Sometimes regurgitation

This course

• Class– Come to class, try to follow the lecture, participate– Come to lab/work on your own and try to repeat

what was done in lecture

• Study – Read the notes/text– Read/post to discussion forums– Do the HWs

• Do exams (on-line)

We want you to…

• … think with us (lectures, labs)• … interact with us• … take initiative/responsibility • … experiment aggressively • … learn by DOING

• This ain’t no sit-back-and-relax, you-pays-your-fees-and-you-gets-your-credits course.

Evaluation25%

Assignments Best 8 out of 9Must get 40% to pass (10 out of 25)

25%Quizzes Best 2: 10% each

Worst one: 5%Must get 40% to pass(30 out of 75)

50%Final exam

Grade Distribution

MGTSC 352, Fall 2005

8 7 49

2536

51

6658

49

3221

010203040506070

F D D+ C- C C+ B- B B+ A- A A+

Grade

Num

ber

of s

tude

nts

• Similar to other 3rd / 4th year courses

• Your relative mark is what matters

Active Learning

• Form groups of two

• Whose birthday is earlier in the year?– You’re the recorder

• Question: What have you heard about this course?

• Time: 1 minute

Why Active Learning?

0102030405060708090

100

0 5 10 15 20 25 30

Time spent lecturing (min.)

Per

cen

t re

call

What is this course about?

• Forecasting • Simulation • Aggregate Planning • Distribution Planning • Inventory Management • Congestion Management

Production and delivery of …

… goods and services

Show me a chart

Corporate Strategy

Marketing Strategy Operations Strategy Finance Strategy

Operations Management

Operations:

Inputs Parts Processes Plants Outputs

Planning People

Another Chart: the “Process View”

Inputs OutputsGoods

Services

Labor & Capital

Informationstructure

Network ofActivities and Buffers

Flow units(customers, data, material, cash, etc.)

Resources

ProcessManagement

Example: Amazon.Com

• Inputs:– Customer orders– Books, CDs– Packing material

• Outputs– Shipped orders

• Flow units– Customer orders– Cash– Books

• Resources:– Capital: contact centres,

warehouses– Labor: agents, order-

pickers, web programmers– Inventory

• Activities: Order taking, order filling, shipping

• Process management: Warehouses, inventory, distribution, capacity.

• Information structure: Transaction data for each order

Active Learning

• In your groups again

• Task: fill in as much of the next slide as you can

• Time: 2 minutes

Example: Business School

• Inputs:

• Outputs:

• Flow units:

• Resources:– Capital:– Labor:

• Activities:• Process

management:• Information structure:

Do I have to take this course?

Majors that need 352 ASAP• Operations Management• Decision and Information Systems• Distribution Management

Majors that require 352• Accounting• Business Studies• Finance• International Business• Management Info. Systems• Marketing• Retailing

Majors that do not require 352• Business Economics and Law• Entrepreneurship and Small Business• Human Resource Management• ______ Studies (language programs)• Organizational Studies

Who are we?

• Instructor: Kenneth Schultz• Lab Masters:

– Morgan Skowronski – Jen Tyrkalo

• Grading: Jared Coulson• Tech Master: Angela Kercher• Lab Accelerators

Kenneth Schultz

• Wharton Undergraduate

• 12 Years United States Army

• Ph.D. 1997, Cornell

• Research: Including human behavior in Operations Management models.

My course priorities are:

I’m fairYou learn

Morgan Skowronski

Jen Tyrkalo

Things To Do Before Next Class

• Course web– Read the “things to do” page

WINTER 2007 MGTSC 352 LEC B1 > COURSE DOCUMENTS > RESOURCES > GENERAL

RESOURCES – Read FAQ

WINTER 2007 MGTSC 352 LEC B1 > COURSE DOCUMENTS > RESOURCES > GENERAL

RESOURCES > FREQUENTLY ASKED QUESTIONS – Get familiar with course web and discussion forums

• Read Introduction chapter (Course pack)

• Read syllabus

Musical Break ... do not leave

Excel Basics

• Jan 20, 11 – 1, B24/B28

• Free

• Basic Excel skills

Course Packs

• $20

• Today, 3-5 in B20

• Wed, 10-12 in B20

• Friday in labs

Model

• Selective abstraction of reality– Model airplane– Floor plan of a house– Map of Alberta

• Spreadsheet (algebraic) models– Define decision cells (variables)– Express relations between cells (formulas)

Inputs OutputsMODEL

Revenue = Quantity x Price

Output Inputs

Why model?

• Provides a precise and concise problem statement• Establishes what data are necessary for decision• Clarifies relationships between variables• Enables the use of known solution methods• Enables us to generalize knowledge to solve

problems we haven’t encountered before, to go beyond experiential learning.

Example

Fisheries Management

• Lake currently has 1,000 trout• Carrying capacity = 100,000 trout• Fish population expands in May and June• Fishing allowed in September• Trout population at end of August:

PAug = PApr + (a – (b PApr)) PApr), a = 0.45, b = a / capacity.

• Each fish can be sold for $11 in any year• Discount rate is 6%.• Which policy maximizes the NPV?

Come again?

May population = 12,000August population?

PAug = PApr + (a – b PApr) PApr)

= ?

In your groups!Time: 1 min.

b = a / Cap = .45 / 100,000

Come again?

May population = 12,000August population?

PAug = PApr + (a – b PApr) PApr)

= 12,000 + (0.45 – (0.45 / 100,000 12,000)) 12,000 = 12,000 + (0.396)*12,000 = 16,752

b = a / Cap = .45 / 100,000

Recap

• Data– Starting population– Capacity– Growth parameter (a)– Discount rate– Price

• Variables: # of fish caught, for every year.• Output: NPV (and fish population every year)