MBA 518 footnotes

Hello students:


I will add some footnotes for MBA 518 in this page. It will be updated several times after our lecture and class discussion.

(9/25/2012) Regarding the productivity and utilization page that I used on 9/25 lecture, you can see here:

US Labor productivity & Utilization

When I said that the utilization for the whole industry is roughly between 75%-85%. This is not a strict rule for a company at any point of time. Of course, if the utilization is as high as 100%, it means the capacity is used and not wasted. When the customer demand is uncertain, it implies that you also have quite a lot of orders that is unfulfilled and may go to your competitors. As a result, a high utilization (normally is 85%-90%, not till 100%) signals an expansion is needed. 

When we talked about the inventory turns formula, Judy pointed out the difference between SCM and Accounting. Accounting uses inventory turns in the right formula below, and SCM uses both formula. When a firm has several different products (for example, Walmart has hundreds of thousands of items with various unit prices), the right one will be more useful to evaluate the inventory performance in a department or a company.

Picture provided by Yuwen Chen.

One operations book (not a textbook, but a novel Novel!? Yes, a novel about operations and process an agreement) I mentioned in the class is The Goal. If you are interested to know more about operations and process analysis, it is a well known and easy to read book.

(5/26/2012)
Today, we covered project management. When we used the wedding project planning as a class exercise example, it seemed many students were deeply involved and realized that the operations concepts are really around us. Bing brought up the similarity between "project management" and "cash flow" management, and I felt it s great part of team teaching. The time element in project management and in cash flow is similar. In cash flow, you have $$$ inputs and $$$ outputs. Even though there is no direct precedent relationship between two cash flows, you have be aware of your cash level in all time and the incoming of cash outflows, inflows and the cash at hand. In cash flow management, a mistake or mismatch of timing can bring the company into crisis. In project management, a miscalculation of the precedent relationship among activities or a delay in activities can ruin a whole project. Delay the project sometimes means you lose the whole opportunity. (Imagining a X'mas theme movie cannot be finish before December 25).

I strongly recommend you to watch some films that Hasbro participated and watch the production diary in the extra video part of the DVD. Sometimes, this production diary interviews reveal a lot of situations that a project manager (the director and the producer of the firm) encounter in a big project like film production. If you cannot find a good film (that Hasbro participated) with good production diary videos, I will recommend you to rent "Lord of the Ring" DVD. Their production diary is so complete and amazing. You normally won't get the extra materials from movie streaming.

5/28/2012 Beer Game

Today, we played the beer game in our class. There are several things that the beer game teaches us:
(1) Information sharing: our beer game did not allow you share information with your suppliers or customers. So, you don't know how much is the realized demand or how much is the production from your supplier. Lack of information sharing is one of the reasons that cause the inventory fluctuation.
(2) Supply chain lead time: in this game, the information takes two week to the supplier and the beer take two weeks shipping to the customer. Long lead time delays the information and the player cannot response in a timely manner.
(3) In a supply chain, there is no good player or bad player or there is no role is the easiest one to play (in the game or the real world). Well, yes, some players messed up the inventory calculation and disrupted the flow movement, but it is a different story. All roles in a supply chain are important. And your performance is subject to the actions of your suppliers and customers. For example, you may have a big order from your customer, but your supplier was conservative in stocking in the last several weeks and has a very lean inventory. If (s)he cannot satisfy your order, you will run out of stock.