s2021 - Session 1 - Course Introduction

Welcome to BUSI 403
Prof. Rath Session 1 – Course Introduction 1

BUSI 403 - SESSION 1
Introduction to Operations Management

Sandeep Rath (sun-deep rah-th)
▪ Assistant Professor of Operations
▪ Education
– Ph.D. UCLA Anderson School of Management
– M.S. and B.S., Electrical Engineering, Indian Institute of
Technology (IIT), Kharagpur, India
▪ Research Interests
– Healthcare operations
▪ Professional Experience
– Schlumberger Ltd., Manufacturing Engineer
– ITC Ltd., Assistant Operations Management
▪ Teaching
– BSBA Operations Management
– BSBA Service Operations (Elective)

Now, it’s your turn!
▪ Introduce yourself
– Your name
– Most recent show/movie/book/song you liked

Agenda
▪ Course Administration -objectives, projects,
assignments, grading, etc.
▪ What is Operations Management (OM) and why
should you care about it?
▪ Intro to Manufacturing versus Service
▪ Readings for next class.

Course Objectives: The Student Should…
▪ Understand the trade-offs among different types of production/operations

systems
▪ Understand the operations management issues and their relationship to

the other functional areas of the firm.
▪ Develop a basic competence with the tools and techniques used by

operations professionals
▪ Begin to develop an understanding of the managerial implications of

alternative operations policies and techniques

Expectations
▪ Read the syllabus (available on canvas)

▪ Read the assigned materials before class
– Supplementary readings available on canvas
▪ Attendance
– Attendance in the course is recorded and a part of your grade.
▪ Class participation
– Ask and answer questions in class, participate in class polls.
▪ Professional behavior
– Zoom camera
– Zoom microphone
▪ Homework:
– You should submit a single Word, PDF or Excel document using ‘File Upload’ method on Canvas. If you
submit an Excel document containing multiple worksheets, each worksheet tab should have a proper label
showing problem/part number. Unless stated otherwise, your homework is due at 11:59pm on the
announced due date (late work will not be accepted as solutions to the homework will be posted shortly
after). Only the most recent uploaded file will be graded.
▪ University honor code followed at all times

Grading
Course Deliverable Final Contribution to

Grade
Homework 10%
Attendance 10%
Class Participation 4%
Course Project 10%
Test 1 20%
Test 2 20%
Final Exam 26%

Attendance Grade Breakdown
Attendance Grade Grade Scale (of 10% grade

Breakdown contribution)
0-2 10% earned
3 7% earned
4 4% earned
>4 0% earned

Homework…
▪ Assigned at periodic intervals throughout the course
▪ Intended to help students become more familiar with concepts taught in
class
▪ Some exercises will require use of Excel
– Recorded optional excel refresher session available on canvas. I will
also send a class announcement with the link
– Additional office hours for excel on Jan 21st 2- 3 PM
▪ May be discussed with other class members but each person must submit
own work
▪ To be presented in neat and orderly fashion
▪ Submit an electronic copy using the ‘File Update’ function in Canvas as
explained earlier.
▪ Homework will be due at 11:59 pm on the posted due date. Late
homework WILL NOT be accepted as solutions will be posted at
midnight.

Class Project
▪ Each student will be member of a project group (group

size 5-6)
▪ Groups to be formed no later than February 2nd . There
is a google form for you to fill out with your preferred
group.
▪ If you don’t have a preference for a group, put your name
in the form, I will assign you a group. If you want to be
assigned with someone, please let me know as well, I will
try you keep you together in the groups I create.
▪ Group will do a study on a topic and present in class

▪ Read the syllabus for more information...will discuss more
next sessions

Website and Email
▪ Course website can be found on Canvas
– https://kenan-flagler.instructure.com
– Log in with your Kenan-Flagler ID and you will see the course listed
– All course materials, i.e., handouts, readings, etc will be posted on the
course website.
▪ If you have any questions or want to set up a time to meet,

you can email me at Sandeep_rath@Kenan-flagler.unc..edu

Why Does Operations Management Matter?
2010 2011
Problems
June: Delivery
Problems in
2008
Sep: Four
2004 horizontal years behind
2007
stabilizers schedule,
More Delays! ANA receives
First Order
2009
Aug: Engine its delivery
Apr: New blowout
All Nippon Delays delivery date,
Airline (ANA) Oct: First
Oct: Six month Sept. 2009 Nov: Test
places an commercial
delay announced First Flight flight has
order of 50 flight
for shortage of Airlines claim electrical
planes, fasteners and Dec: First
they will sue fire,
delivery incomplete test flight
Boeing for emergency
scheduled for software compensation
Fall 2007 landing

Why Does Operations Management Matter?
Source: Boeing Settles In for a Bumpy Ride --- Dreamliner Production Gets Closer Monitoring,
Wall Street Journal, Oct 7, 2009

Cyberpunk 2077

Cyberpunk 2077
2012 2020
Announcement 2018 Release
Dec: Thousands of
Title announced Pre-orders gamers upload
by CD Projeckt videos of glitches
8m people pre- and bugs. They
Red, buy-in
from celebrities ordered the game include tiny trees
including Keanu covering the
floors of buildings,
Reeves, Grimes
tanks falling from
and ASAP Rocky the sky
https://www.nytimes.com/2020/12/19/style/cyberpunk-2077-video-game-disaster.html

Cyberpunk 2077
2012 2020
Announcement 2018 Release
Dec: Thousands of
Title announced Pre-orders gamers upload
by CD Projeckt videos of glitches
8m people pre- and bugs. They
Red, buy-in
from celebrities ordered the game include tiny trees
including Keanu covering the
floors of buildings,
Reeves, Grimes
tanks falling from
and ASAP Rocky the sky
https://www.nytimes.com/2020/12/19/style/cyberpunk-2077-video-game-disaster.html

Operations Management in a Nutshell
▪ All businesses create a salable “product”

– Cars, planes, computers, checking accounts, insurance
policies, medical services …
▪ Product is made by transforming inputs into

output(s)
– The final product is the output
– The transformation is “value added”
▪ The operations function manages this

transformation process
– Obtaining input resources, converting to output product,
delivering the product to customers

Let’s look at two different businesses
Inputs
Processes
Output

Three Main Functions in a Firm
Marketing Operations Finance

• Manages customer • Manages people, • Manages cash flows,
demand, generates sales technology, equipment, investments, and current
materials, and information assets
to produce/deliver goods
and services

Examples of Operations and Marketing Interactions
Needs to design new Identifies market for new

products/processes products
Operations Marketing
Needs to determine if
Identifies opportunity to
customers will pay more
deliver service more
for the quicker service
quickly

Examples of Operations and Marketing Interactions
Identifies profitability
Modify product line issue in particular
product line
Operations Finance
Needs to determine
Identifies need for new
best way to finance
production facility
the construction

Class of 2020 BSBA Employment by Functional Area
% Student Placed
Analytics
6%
Other
10%
Operations Finance
3% 41%
Finance
Consulting
Marketing/Sales
Marketing/Sales Consulting Operations
15% 25%
Analytics
Other
http://www.kenan-flagler.unc.edu/programs/undergraduate-business/career-services/employment-statistics

Consulting engagements often focus on operations
“Just a few years ago, seduced by visions of limitless growth and the dotcom boom, many
companies gave short shrift to seemingly mundane business processes. Today, the focus is on
McKinsey fundamental strength and bottom-line results, and CEOs are making operational excellence their
top priority.” (McKinsey website)
“In virtually every industry, the competitive stakes are being raised as companies are forced to
move faster, grow more efficient, and find fresh sources of differentiation. BCG's Operations
BCG practice is dedicated to helping clients achieve a decisive competitive advantage through
operational excellence.” (BCG website)
“Bain [operations team] conducts a thorough, 8- to 10-week analysis by measuring defects, delays
and returns; mapping organizational processes; and assessing systems to identify the largest
Bain opportunities. Over the next six to eight months, we provide client implementation teams with
Bain support for the most difficult and critical initiatives.” (Bain website)
“Bain has done more than 1,000 projects involving branch and service-center networks, field
service operations, and call centers or self-service.” (Bain website)

Operations can Provide a Competitive Edge
Dell HP
Zara vs. Gap
Walmart K-Mart
Jetblue, Southwest American Airlines

Dell HP
Zara vs. Gap
Walmart K-Mart
Jetblue, Southwest American Airlines

Zara Gap
vs.

Operations Impact Performance
Christmas 1999
▪ Could not make
scheduled deliveries of
its online orders
Toys "R" Us Stock Price
(NYSE: TOY)
before Christmas
$18.00
$16.00
▪ Example of bad:
$14.00
$12.00
– Forecasting
$10.00
$8.00
– Inventory planning
$6.00
$4.00
– Capacity planning
$2.00
$0.00
Dec-99 Jan-00 Feb-00 Mar-00 Apr-00

Recessions Force Companies to Refocus on Operations
Starbucks – Profit Soared in

2009 Despite Decreasing
Revenues
▪ The Seattle-based chain posted earnings of $150
million for the quarter ended Sept. 27 up from $5.4
million a year earlier. Revenue fell 3.7% to $2.42 billion
▪ Chief Executive Howard Schultz said in a conference
call that a "more disciplined focus on operations"
helped the company increase earnings and that it is
seeing improvements in its surveys of customer
satisfaction.
Source: Wall Street Journal Nov. 6, 2009

Company Leadership

Importance of Operations
▪ Operational excellence can provide competitive advantage
▪ Operations impact financial performance
▪ Recessions force companies to refocus on operations
▪ Company leadership

Manufacturing vs. Service
Difference with respect to type of “product”
Manufacturing Service
•Tangible product, physical •Intangible product, not a

object physical object
•Product can be stored in •Cannot be produced

inventory before it is needed ahead of time

Manufacturing vs. Service
Difference with respect to type of “customer contact”
•Low customer contact •High customer contact
•Retailers, distributors of •Customers present during

product come in contact service delivery
with the customer

Examples of Manufacturing and Service Businesses
▪ Manufacturing ▪ Service
– Apparel – Banks
– Pharmaceutical – Colleges
– Computers – Hospitals
– Furniture – Advertising

Manufacturing vs. Service: Summary of Differences
▪ Tangible product ▪ Intangible product

▪ Low customer contact ▪ High customer contact
▪ Can be stored in inventory ▪ Cannot be stored for later use
▪ Quality easier to measure ▪ Quality harder to measure
▪ Capital intensive ▪ Labor intensive
▪ Long response time ▪ Short response time
▪ Defective units can be fixed or ▪ Defects are immediately
repaired before they reach experienced by customers
customer

If you remember nothing else
▪ Operations Management is about the management of

processes that transforms inputs to outputs
▪ Operations is one of the three major business functions and

it interacts heavily with other business functions
▪ Operations impacts performance, period!
▪ Manufacturing organizations have tangible products and low

degree of customer contact whereas service organizations
have intangible products and high degree of customer
contact

Reading For Next Session
▪ Read Chapter 1 (as recap on today)
– Chapter 1,
– pp 2-11, 19-23
▪ Next session on Forecasting Demand

– Chapter 9
– pp. 178-188
– Reading #1: The Software That Could Make Airport Lines Less Miserable (available on Canvas)


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Welcome to BUSI 403

Prof. Rath Session 1 – Course Introduction 1

Prof. Rath Session 1 – Course Introduction 2

Prof. Rath Session 1 – Course Introduction 3

Prof. Rath Session 1 – Course Introduction 4

Prof. Rath Session 1 – Course Introduction 5

▪ Understand the trade-offs among different types of production/operations

▪ Understand the operations management issues and their relationship to

▪ Develop a basic competence with the tools and techniques used by

▪ Begin to develop an understanding of the managerial implications of

Prof. Rath Session 1 – Course Introduction 6

▪ Read the syllabus (available on canvas)

▪ University honor code followed at all times

Prof. Rath Session 1 – Course Introduction 7

Course Deliverable Final Contribution to

Prof. Rath Session 1 – Course Introduction 8

Attendance Grade Grade Scale (of 10% grade

Prof. Rath Session 1 – Course Introduction 9

Prof. Rath Session 1 – Course Introduction 10

▪ Each student will be member of a project group (group

▪ Group will do a study on a topic and present in class

Prof. Rath Session 1 – Course Introduction 11

▪ If you have any questions or want to set up a time to meet,

Prof. Rath Session 1 – Course Introduction 12

2004 horizontal years behind

Prof. Rath Session 1 – Course Introduction 13

Prof. Rath Session 1 – Course Introduction 14

Prof. Rath Session 1 – Course Introduction 15

Prof. Rath Session 1 – Course Introduction 16

Prof. Rath Session 1 – Course Introduction 17

▪ All businesses create a salable “product”

▪ Product is made by transforming inputs into

▪ The operations function manages this

Prof. Rath Session 1 – Course Introduction 18

Prof. Rath Session 1 – Course Introduction 19

Marketing Operations Finance

Prof. Rath Session 1 – Course Introduction 20

Needs to design new Identifies market for new

Prof. Rath Session 1 – Course Introduction 21

Prof. Rath Session 1 – Course Introduction 22

Prof. Rath Session 1 – Course Introduction 23

Prof. Rath Session 1 – Course Introduction 25

Prof. Rath Session 1 – Course Introduction 26

Prof. Rath Session 1 – Course Introduction 27

Prof. Rath Session 1 – Course Introduction 28

Prof. Rath Session 1 – Course Introduction 29

Starbucks – Profit Soared in

Source: Wall Street Journal Nov. 6, 2009

Prof. Rath Session 1 – Course Introduction 30

Prof. Rath Session 1 – Course Introduction 31

Prof. Rath Session 1 – Course Introduction 32

Difference with respect to type of “product”

•Tangible product, physical •Intangible product, not a

•Product can be stored in •Cannot be produced

Prof. Rath Session 1 – Course Introduction 33

Difference with respect to type of “customer contact”

•Low customer contact •High customer contact

•Retailers, distributors of •Customers present during

Prof. Rath Session 1 – Course Introduction 34

Prof. Rath Session 1 – Course Introduction 35

▪ Tangible product ▪ Intangible product

Prof. Rath Session 1 – Course Introduction 36

▪ Operations Management is about the management of

▪ Operations is one of the three major business functions and