MBA 650 - Operations and Supply Chain

Management

Humberto
Florez,
PhD
 Associate
Professor
 hflorez@lynn
edu
 1-561-237-
7495
 IBC 355
 By
appointment
 Course Description
A comprehensive analysis and comparison of the various techniques that can increase productivity
for manufacturing and service operations. Provides an opportunity to assess the methods used in
striving for long-term strength and growth in economic enterprises.
Credit Hours: 3 credit hours. 150 contact-minutes per class session for the 15-week term, or
equivalent.
All course descriptions, credit hours, and prerequisites are located in  Lynn University Academic
Catalogs  (Links to an external site.).

Course Objectives
Upon completion of the course, the student should be able to:

 Calculate measures of productivity and the role of operations management in

maintaining and enhancing productivity.
 Creatively apply the techniques of PERT/CPM for project scheduling, including
project crashing as necessary.
 Examine what is meant by the decision analysis approach to decision-making and to
develop a risk analysis profile for each outcome.
 Develop reasonable forecasts and establish tracking signals as a means to monitor
forecasts.
 Develop and analyze statistical process control techniques to measure and manage
quality in products and services.

Students must demonstrate that they have met these objectives by satisfactory answering quiz
questions, completing group work and in class activities, as well as presenting the results of their
final project.

Pre-requisites
This course does not have formal pre-requisites. However, students are expected to have Master's
level knowledge of accounting principles, financial analysis, and statistics. Students should also be
proficient in the use of spreadsheets and analytical models.

Required Learning Materials

Required Textbook
 David Alan Collier; James R. Evans - Operations and Supply Chain
Management, 2nd Edition (2019).
ISBN-13: 978-0-357-13169-5
 

Supplemental reading material may be recommended during the course

Required Equipment
To take full advantage of the course, students are required to have a computer (Windows or MacOS)
in every class meeting. To complete case study assignments and other course work students will
need access to the full version of Microsoft Excel. The Office suite is available to all students at no
additional cost. Note that the Excel version available in iPads and other mobile devices does not
have the needed functionality.

Grading Criteria
Students will submit six case study assignments. These account for 30% of the course grade.
There are seven online quizzes accounting for 30% of the final grade. Students will take these
quizzes through Canvas.
In addition, students will be required to complete and present a final project. This will account for
40% of the final grade. Details of the project will be communicated in due time.
Due dates and times will be posted in Canvas.
 

Assignment Group Weight

Case Study Assignments (7) 30%

Quizzes (best 6 out of 7) 30%

Final Project 40%

Grading Scheme

Grade Range
A 100 % to 92.5%
A- < 92.5 % to 89.5%
B+ < 89.5 % to 86.5%
B < 86.5 % to 82.5%
 Grade Range
B- < 82.5 % to 79.5%
C+ < 79.5 % to 76.5%
C < 76.5 % to 72.5%
C- < 72.5 % to 69.5%
D+ < 69.5 % to 66.5%
D < 66.5 % to 59.5%
F < 59.5 % to 0.0%

Course Schedule
The schedule below is provided as reference and it is subject to change. Check the Canvas calendar
for updated due dates.

Preparation
Date Subject Graded Activities
Activities

Operations Management and Value Read Textbook Chapters Quiz 1

Chains 1, 2, and 3.
Case Study
3/4 Measuring Performance Assignment 1
Operations Strategy

Technology and Operations Read Textbook Chapters Quiz 2

Management 4, 5, and 6.
Case Study
3/11 Goods and Service Design Assignment 2
Supply Chain Design

Process Selection, Design, and Read Textbook Chapters Quiz 3

Improvement 7, 8, and 9
Case Study
3/18 Facility and Work Design Assignment 3
Forecasting and Demand Planning

3/25 Capacity Management Read Textbook Chapters Quiz 4

10, 11, and 12.
Process Analysis and Resource Case Study
Utilization Assignment 4
 Preparation
Date Subject Graded Activities
Activities

Managing Inventories

Supply Chain Management and Read Textbook Chapters Quiz 5

Logistics 13, 14, and 15.
Case Study
4/1 Resource Management Assignment 5
Operations Scheduling and
Sequencing

Quality Management Read Textbook Chapters Quiz 6

16 and 17.
4/8 Quality Control and SPC Case Study
Assignment 6

Lean Operating Systems Read Textbook Chapters Quiz 7

18 and 19.
4/15 Project Management Case Study
Assignment 7

Final Project Roundtable Final Project

4/22

Student Expectations
Learning Materials
Students are expected to read, watch, or listen to all assigned learning content in this course. Every
learning material posted was specifically included in order to help you successfully master the
learning objectives and complete required assignments, so students will need to review each content
in sequence before attempting any assignments.

Course Schedule
Students must carefully follow the Course Schedule in order to succeed with learning objectives.
Each assignment will provide the foundation for the next assignment, so staying on task and
submitting high-quality work in each module is necessary in order to continue proceeding through
the course.
Professionalism
In all interactions with classmates and the instructor, students are expected to behave, speak, and
write in a professional manner befitting a graduate program. Language, spelling, and grammar
should be appropriate for Masters-level students and professionals. Presentation materials should be
clear and professional.

COVID-19 Classroom Guidelines

Classroom Safety Standards
The following standards are to ensure the safety and well-being of our Lynn community:

 Students, staff, and faculty will be required to wear masks prior to entering the
classroom. Faculty shall deny entry to the classroom if a student is not wearing
their mask. Students denied entry can attend the class virtually for that day;
 Students will be assigned seating in all classrooms to help the university with
contact tracing;
 There is a limitation for entering and exiting of class to one student at a time
while keeping 6-feet distance;
 All academic spaces will be cleaned and disinfected between each class;
 All academic spaces will undergo a deep cleaning and sanitization process
each evening to further ensure a clean and safe workspace;
 Social distance (6-feet) should be practiced in the classroom and  when
approaching someone with a question;
 No sharing for iPad or any other devices;
 Students are required to attend classes during Thanksgiving week and will be
marked absent otherwise;
 Students who have any COVID-related symptoms or who suspect they have
been exposed to or infected by coronavirus should not attend class in person.
Students should attend class virtually and notify the health center;
 Students arriving more than 15 minutes late to class should attend the class
virtually for that day;
 Group work is done virtually (shared documents, discussion boards, Zoom
rooms, etc.);
 No food or drink (other than a personal water bottle) allowed during class
time;
 Faculty will submit seating charts after the first day of class. If a student tests
positive, the university will notify the students who sit around the student and
the faculty member;
 All students, staff, and faculty will participate in regular health screenings.

Class Format
This class may meet in a staggered-hybrid format, where face-to-face students are assigned to Group
A or Group B, and attend class in the classroom only on specified days, and from home on Zoom on
the remaining days. On classroom days, students must sit in their assigned seats in the classroom
throughout the term. Students in Group A are not permitted in the classroom on Group B days, and
vice-versa. Students who are not in the classroom on their assigned days will be marked absent.
Similarly, students who are not on Zoom during their assigned Zoom days will be marked absent.
Being marked absent will not affect a student's course grade; however students who are not present
(either in the classroom or on Zoom) could miss participation points or other graded coursework.
Those students who cannot be present in the classroom on their assigned classroom days due to
illness or any other reason should plan to attend class from home on Zoom. It is important to abide
by these rules to allow for social distancing and contact-tracing.

Institutional Academic Course Policies

Add/Drop and Withdrawal from a Course
Requests by students to withdraw from a course must be made in writing through the Registrar's
Office.  Courses may be dropped without record until the add/drop deadline (see table below for Fall
Terms Add/Drop dates).  After this period, the grade would be recorded as "W".  No quality points
will be given and the credits earned will not figure in computation of the GPA.  Withdrawal from
this course is permitted without a grade penalty until the withdrawal deadline (see table below for
Fall Terms Withdrawal dates).

Term Drop/Add Deadline  Withdrawal Deadline 

Graduate Spring I 1/11/2021 2/19/2021
Online UG – Spring I 1/11/2021 2/19/2021
Spring UG Day Session A 1/27/2021 2/12/2021
Spring UG Day Session B 2/24/2021 3/12/2021
Spring UG Day Session C 3/24/2021 4/9/2021
Spring UG Day Session D 4/21/2021 5/7/2021
Graduate Spring Semester 1/29/2021 5/7/2021
Graduate Spring II 3/8/2021 4/16/2021
Online UG – Spring II 3/8/2021 4/16/2021
Summer Day Term 5/19/2021 6/4/2021
Graduate Summer I 5/3/2021 6/4/2021
Online UG – Summer I 5/3/2021 6/4/2021
Graduate Summer Semester 5/21/2021 7/30/2021

Attendance and Absence Policy

Although attendance is not a factor in the determination of the final grade, each student is expected
to attend all classes and is responsible for all classroom material regardless of attendance.
In the case of an injury or prolonged illness causing absence in more than three consecutive class
meetings, it will be the student's responsibility to contact the Dean of Students and provide
documentation for this nonattendance. In such a situation, the Dean of Students will notify the
appropriate instructors, informing them of the absences and that the appropriate documentation has
been provided by the student. The University has adopted a mandatory policy for reporting class
attendance requiring each faculty member to submit attendance reports via the Attendance App.

Academic Honesty Policy

Integrity and honesty are essential to Lynn University's mission and community standards.  As an
academic community, honor, integrity and truthfulness are essential to the pursuit of knowledge and
to establishment of mutual respect and trust among faculty, staff and students. Personal and
professional integrity are also essential to our mission to educate students to become responsible and
ethical citizens within a global community.  Violations of the academic honesty policy undermine
the fundamental values and standards of our community, and therefore, faculty, staff and students
must accept their responsibility to uphold and abide by the highest standards of integrity and
honesty.

Definitions
Violations of the Academic Honesty Policy include, but are not limited to the following:

Cheating
Intentionally using or attempting to use unauthorized materials, information, or study aids in any
academic exercise. Infringing on the academic rights of others, such as defacement or theft of library
material is considered cheating.

Fabrication
The intentional and unauthorized invention or falsification of any information or citation in an
academic exercise.

Plagiarism
Intentionally or unintentionally representing the words or ideas of another as one's own in any
academic exercise.

Facilitation
Intentionally or knowingly helping or attempting to help another to commit an act of academic
dishonesty, including unauthorized collaboration on academic assignments.

Procedures
Faculty members who have evidence of a possible violation of the academic honesty policy must
formally report the incident to the Office of Academic Affairs. Under no circumstances is the
faculty member permitted to resolve the alleged incident on a unilateral basis. The Office of
Academic Affairs will review the faculty member's report, and if sufficient evidence exists, notify
the student(s) of the alleged infraction(s). The allegation can be adjudicated by either the informal or
formal process. The formal process must be used if a finding of guilt might result in the suspension
of the student, including all cases of second violations.

Informal Resolutions
The Office of Academic Affairs will send the student a formal written notification of the allegations
and the possible sanctions.  The student will then have ten (10) days to respond in one of the
following ways:

 Sign the form and request a meeting with the Office of Academic Affairs to
discuss the allegations and or proposed sanctions;
  Sign and return the form to the Office of Academic Affairs accepting
responsibility for the violation and agreeing to the recommended sanction(s).

If the student fails to respond within thirty (30) days, a hold will be placed on the student's account
and the right to participate in the resolution of the allegation will be forfeited.       

Formal Resolutions
If the alleged violation could result in the suspension or dismissal from the university, or if the
student or faculty member requests a formal resolution, the Office of Academic Affairs will notify
the faculty member and the student(s) that a formal hearing of the Academic Dishonesty Committee
will be convened. The committee will be comprised of seven (7) full time faculty members to be
appointed by the Vice-President for Academic Affairs on an annual basis. The Office of Academic
Affairs will serve as chair and will not have voting privileges. The Vice-President for Student
Development will serve as an ex officio member of the committee.
The Office of Academic Affairs will schedule a hearing in a timely manner and all parties will be
notified of time and location. If the accused student(s) requests, the Office of Academic Affairs will
assist the student in securing a member of the university community to advise and assist the student
in preparing for the hearing.
All parties will have the opportunity to present their evidence to the committee. The documents,
testimony and record of the hearings will be confidential. Upon completion of the testimony, the
Committee will meet in closed chambers and vote on the disposition of the student's status at the
university.

Penalties
Depending upon the intent and severity of the violation, a student found responsible for any act of
academic dishonesty will be subject to one or more of the following penalties:
The student is placed on academic honor probation until graduation. For any student on academic
honor probation, a second violation will result in a minimum sanction of one semester of suspension
from the university.
In addition to academic honor probation, a student might also receive a grade of "F" on the
assignment or test; students might also receive an "F" in the course; or be suspended or dismissed
from the university. No provision will be made for the student to receive a "W" regardless of
whether the professor or student initiate said request.
If the student receives a grade of "F" for the course or is suspended or dismissed from the university,
the transcript will indicate the grade with "HF" and/or the notation "Academic Honor Suspension
(Dismissal)."
All students found guilty of academic honor violations shall have a written letter detailing the
violation and sanction placed in their permanent record.  Copies of this letter will also be sent to the
faculty member of the course, appropriate College Dean, and to the Vice-President for Student
Development.

Appeals
A student may submit a written appeal of a guilty finding to the Vice-President for Academic
Affairs within ten days of receipt of the original decision.  Appeals must be based on new evidence,
additional information, or procedural errors or misconduct.  The Vice-President's decision is final.
A student can petition to have the grade of "HF" removed during their last semester as long as there
are no further incidents of dishonesty.

Grade of Incomplete
For a student to be eligible to receive an incomplete for a course:

1. The student must provide to the Dean of Students documentation of the

extenuating circumstance(s) that prevent them from satisfying the course
requirements and learning outcomes of that particular course.
2. The student, at the time of applying for an incomplete, must have completed two-
thirds of the term and have a passing grade.

The application process

1. The student will have the option of applying for an incomplete in one or more
courses.
2. The student will obtain and complete the incomplete application form and bring it
to the dean of students with appropriate documentation. The dean of students will
verify that the student's application satisfies the eligibility criteria. If the
application satisfies the eligibility criteria, then the dean of students will return the
approved form to the student who will then take the form to the professor of the
course. The professor and student will draw out a contract, which includes but is
not limited to: all course work to be completed and the deadline for this material to
be submitted. After the student agrees to the terms of the contract and signs the
form, the professor will take the contract to the dean of their college. The dean
will then review the contract and sign the form upon approval. The "I" is now
official and the contract is binding. The dean of the college will distribute copies
of the contract to the professor, the student, the dean of students and the Registrar.
Each recipient will place the copied contract in the appropriate file. The professor
will keep one copy and the original will be placed in the student's file in the
college of their major.

The form

1. Will be available online.

2. Will contain current grade, what specific assignments are to be completed due date
for all material (not to exceed one year beyond the original term final grade due
date), and state that the final course grade will be a "W" if the student does not
complete the requirements.

Similarity Report (Turnitin)

Students agree that by taking this course all required papers may be subject to submission for textual
similarity review to Turnitin.com (directly or via learning management system, Canvas) for the
detection of plagiarism. Turnitin generates a report on the originality of your writing by comparing
it with a database of periodicals, books, online content, student papers, and other published work.
This report can help you discern when you are using sources fairly, citing properly, and
paraphrasing effectively—skills essential to all academic work. All submitted papers will be
included as source documents in the Turnitin.com reference database solely for the purpose of
detecting plagiarism of such papers. The use of the Turnitin.com service is subject to the Usage
Policy posted on the Turnitin.com site.

Accommodation Statement
Lynn University makes reasonable accommodations for qualified students with documented
disabilities under the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation
Act. If special accommodations are needed, please contact the Academic ADA Specialist, Dr.
Catherine Wharton at 561-237-7105 or CWharton@lynn.edu to assist in documenting and defining
those needs. 
Accommodations are not retroactive therefore, to receive any accommodation(s) the
instructor must be presented with the formal form specifying the needs each semester. The
Academic ADA Specialist is located in the Green Center.

Recording Policy and Restrictions

In order to provide access to all LU students, we are recording and publishing all course sessions.
However, certain policies must be followed and violations of this policy could subject a student to
discipline under the Lynn University Code of Conduct or to liability under copyright laws and/or
civil litigation must be aware of the following restrictions:

 The class recording is only for that specific students' own academic purpose. 
 The recording may not be used or released for any other purpose.
 The recording may not be shared with others. This includes sharing it with
other people, including other Lynn University students, non-Lynn University
students, friends or family, or posted it on social media. 
 The information contained in the course session is protected under federal and
international copyright legislation and may not be published, released, or
quoted without the lecturer's explicit written consent and without properly
identifying and crediting the lecturer. 
 All lectures and course materials, including Power Point presentations, tests,
outlines, and similar materials, are protected by copyright law.

Audio Recording Policy and Restrictions: 

 Unauthorized recording of classes is prohibited. A student seeking to record
any class must receive permission through the ADA Office. Once the ADA
Office has granted you the accommodation to audio record classroom lecture
and discourse, you must provide that notification to your professors. In order
to protect the privacy of the other students and professors, while
accommodating students with disabilities, certain restrictions must be
followed. Violations of this policy could subject a student to discipline under
the Lynn University Code of Conduct or to liability under copyright laws
 and/or civil litigation. Students availing themselves of the audio-recording
ADA accommodations must be aware of the following restrictions:  
 The class audio recording is only for that specific students' own academic
purpose. 
 The recording may not be used or released for any other purpose.
 The recording may not be shared with others. This includes sharing it with
other people, including other Lynn University students, non-Lynn University
students, friends or family, or posted it on social media. 
 The information contained in the audio-recorded lecture is protected under
federal and international copyright legislation and may not be published,
released, or quoted without the lecturer's explicit written consent and without
properly identifying and crediting the lecturer. 
 All lectures and course materials, including Power Point presentations, tests,
outlines, and similar materials, are protected by copyright law.

Observance of Religious Holidays

Lynn University respects the rights of all individuals to observe customarily recognized religious
holidays throughout the academic year.  If a student intends to be absent from classes as a result of
any such observance, the student should notify their professors in writing prior to the specific
holiday.

Title IX Statement
Sexual and or gender-based misconduct (including sexual harassment, sexual assault, domestic
violence, dating violence, and stalking) and discrimination are prohibited by University policy.
Individuals experiencing or affected by such behavior may obtain confidential support from the
Counseling Center (561-237-7273), Health Center (561-237-7231), and from the Confidential
Student Advocate (561-237-7955). To report sexual or gender-based misconduct, contact the Title
IX Coordinator (561-237-7727) or Campus Safety (561-237-7226).  Disclosure to University faculty
or staff of sexual misconduct, domestic violence, dating violence, stalking, or sex discrimination
must be shared with the Title IX Coordinator who will provide the affected student with information
regarding rights and assistance. The Title IX Coordinator will consider any requests for
confidentiality. For more information, see my.lynn.edu/Titleix (Links to an external site.)

Learning Management System

Lynn University is now delivering all academic course materials through the Canvas Learning
Management System. It can be accessed through my.lynn.edu, Quick Links, Canvas.

Changes or Modifications
The instructor reserves the right to change or modify the syllabus when necessary to meet course
objectives.

Course Syllabi Statement

This syllabus is informational in nature, and is not an express or implied contract. It is subject to
change due to unforeseen circumstances, as a result of any circumstance outside the University's
control, or as other needs arise. If, in the University's sole discretion, public health conditions or any
other matter affecting the health, safety, upkeep or wellbeing of our campus community or
operations requires the University to make any syllabus or course changes or move to remote
teaching, alternative assignments may be provided so that the learning objectives for the course, as
determined by the University, can still be met. The University does not guarantee that this syllabus
will not change, nor does it guarantee specific in-person, on-campus classes, activities,
opportunities, or services or any other particular format, timing, or location of education, classes,
activities, or services.

College of Business and Management Policies

Student Assignment/Test Late Policy
All assignments and tests are due at the date and time determined by the professor.
A student who submits an assignment or test past this deadline shall be assessed the
following penalties:

Number of Days Penalty

1 day late 10% off grade
2 days late 20% off grade
3 days late 30% off grade
4 days late 40% off grade
More than 4 days late 50% off grade

This is assessed as a late penalty.

For example, if an assignment is scored out of 100 points and is due on Sunday,
October 1 at 11:59 pm ET, and a student submits the assignment on Monday, October
2 at 12:05 am ET, the student will receive a penalty of 10%. The assignment will be
graded normally, and a penalty of 10% will be assessed off the grade. So, if the
assignment was graded at 92%, after the 10% late penalty is assessed, the student
would receive a final grade of 82% on the assignment. If the student submits that
assignment on Tuesday, October 3 at 7:00 pm, the late penalty would be 20%. If the
assignment was graded at 92%, after the 20% late penalty is assessed, the student
would receive a final grade of 72% on the assignment. No assignment will be
accepted after the last day to withdraw from a course. The new version of gradebook
in Canvas allows for courses to be set up to allow for the deductions to be
automatically calculated, and populated.

Exceptions and Extensions:

A "personal event" is any routine, personal activity restricting a student's ability to
attend class or complete an assignment, such as a vacation, family party, and the like.
A student shall not be granted an exception from late-submission penalties for any
"personal event."
A "University event" is any officially-sponsored academic or varsity/club sports
activity. An "unplanned event" is an unscheduled or unexpected activity outside of
the student's control, other than ordinary illness, such as a death in the family or an
emergency medical procedure. A student shall be granted an exception from late-
 submission penalties, and a reasonable deadline extension from the professor, for any
"University event" or "unplanned event" provided that the student immediately
contacts the professor and makes appropriate arrangements.
This policy does not apply to internships.
For any student granted an extension by the University as an accommodation under
the Americans With Disabilities Act, the late-submission penalty clock shall begin
after the conclusion of that extension accommodation.
No assignment shall be accepted after the end of the term date, as published in the
Academic Catalog, under any circumstance.

 View Course Stream

 View Course Calendar View Course Notifications

To Do
 CSCMP Quarterly - Podcasts
o Mar 25 at 6:54am

Dismiss CSCMP Quarterly - Podcasts

 Case Study 4 - Inventory Management

o 100 points
o Mar 28 at 11:59pm

Dismiss Case Study 4 - Inventory Management

 Quiz 4
o 100 points
o Mar 31 at 11:59pm

Dismiss Quiz 4

 Case Study 5 - Scheduling

o 100 points
o Apr 4 at 11:59pm

Dismiss Case Study 5 - Scheduling

 Quiz 5
o 100 points
o Apr 7 at 11:59pm

Dismiss Quiz 5
  Case Study 6 - Quality Control
o 100 points
o Apr 11 at 11:59pm

Dismiss Case Study 6 - Quality Control

 Quiz 6
o 100 points
o Apr 14 at 11:59pm

Dismiss Quiz 6

Course Groups

 XPO Logistics

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Hardy Hospital - Case Study4

Caroline Highgrove, Hardy Hospital's director of materials management, glanced at the papers
spread across her desk. She wondered where the week had gone. On Monday, the director of
university operations, Drew Paris, had asked Caroline to look into the purchasing and supplies
systems for the hospital. Drew specifically wanted Caroline to evaluate the current materials-
management system, identify ways to reduce costs, and recommend a final plan of action. Drew
explained that the university was under pressure to cut expenses, and hospital inventory did not
seem to be under control.
As Caroline reviewed her notes, she was struck by the variations in order sizes and order
frequencies for the hospital's stock-keeping units (SKUs). For some SKUs, inventory ran out before
new orders came in, whereas for other SKUs, excessively high stock levels were being carried. The
university and hospital's computerized materials-management system was about a decade old and
generally worked well; however, employees often ignored or did not update key information. Thus,
data integrity was a major problem in this information system.
Hospital and university supply orders were classified as either regular stock or special order. The
hospital was the originator of almost all special orders. Regular stock items, such as bed sheets,
uniforms, and syringes, were characterized by their long-standing and frequent use throughout the
university and hospital, and by a low risk of obsolescence. When a department needed a regular
stock item, that department generally ordered (requisitioned) the item. If the item was in stock, it
would be delivered to the department by the next delivery date.
When the university did not normally stock an item, individual hospital departments could special-
order them. Special-order items were supposed to be those of an experimental nature or critical to
patient health care, but not used frequently. Hospital departments requiring these special items
bypassed the university purchasing system. Once a special order was placed, the hospital
department informed university purchasing so that it could eventually authorize payment on the
vendor's invoice. Hospital department coordinators, doctors, or head nurses were responsible for
initiating and/or authorizing special orders. In total, these special orders required a significant
amount of work that took department coordinators and head nurses away from their duties.
University purchasing kept no records on the hospital's special-order inventories or for the 215
secondary hospital stocking points such as exam rooms and moveable carts.
One department's head nurse explained that many departments were afraid of running out of
regular stock items. University purchasing didn't understand the importance and nature of hospital
inventory, and they were slow to respond. The nurse cited the months-long period university
purchasing process needed to place new items on the regular stock list, and the long lead times
sometimes involved in receiving orders requisitioned from the university's approved vendor list.
Because the university was a state institution, strict bidding and purchasing procedures had to be
followed for both regular stock and special orders. For example, three written bids were required
for an individual order of $2,000 or more. The processing of these bids often took up to two
months. For orders between $800 and $1,999, three telephone bids were necessary. In these
situations, purchases could be made only from the lowest bidder. Orders under $800, or items on
the state contract list, could be ordered over the phone, without any bids. State contract list items
were those for which statewide needs had been combined and one contract left to cover all of
them.
Caroline had gathered information on the costs of ordering and storing hospital supplies. For order
costs, she estimated that, on average, the purchasing, account payables, and receiving personnel
spent three hours processing a single purchase order. A single purchase order typically included
four SKUs (i.e., each SKU on a purchase order was called a line item). The average hospital
storeroom's wage was $17.50 an hour; with employee benefits and associated overhead, the cost
of one worker-hour came to $23.
For inventory-holding costs, the university warehouse and hospital storeroom used 36,750 square
feet of storage space. The university stored an average of $4.25 million in hospital supplies in this
space. Records indicated that the average annual variable and semi-variable cost for storage space
this year would be $4.75 per square foot. Five warehouse workers and storeroom associates were
required to handle the hospital's supplies. These individuals each earned $35,000 a year; benefits
and overhead rates for these employees were the same as for other personnel, about 20 percent.
Other warehouse costs, including obsolescence and taxes, were expected to reach $400,000 this
year. The hospital operated 52 weeks per year. Also, the state recently had floated a bond issue at
6.7%, and Caroline thought that might be a good estimate of the cost of money to finance
inventory, but she wasn't sure what other costs to include in inventory-holding costs.
After reviewing her notes on the hospital's materials-management situation, Caroline decided to
take a closer look at some individual regular stock items. She sorted through the papers on her
desk and found 30 SKUs of interest. She wanted to analyze all 30 SKUs but decided to begin with
one SKU widely used in the hospital: Strike Disinfectant.
This product is delivered in 4-gallon cases with a cost per case of $84.50 and a lead time of two
weeks. Caroline noticed that the current inventory level is 96 cases (week 1) and learned that the
hospital is expecting a shipment of 200 cases in week 7. No other purchases are planned within the
next 16 weeks.
Demand for the next 16 weeks, obtained from hospital requisitions is shown in the table below.

Weekly Demand (from Hospital Requisitions)

Week Demand (cases)
1 31
2 27
3 2
4 12
5 11
6 7
7 4
8 15
9 14
10 17
11 10
12 9
 13 8
14 5
15 10
16 4
 

As Ms. Highgrove is extremely busy, she has retained your professional

services to prepare a consulting report answering these questions:

1. What are good estimates of order cost and inventory-holding cost

for this supply used by Hardy Hospital?
2. What is the recommended economic order quantity for this
particular SKU?
3. What is the reorder point with safety stock for Strike Disinfectant
to offer a 97% service level?
4. What are the estimated savings resulting from the implementation
of a fixed quantity system (FQS) based on the economic order
quantity compared to the existing replenishment practice?

Include your Excel file with all calculations.

This short consulting report (no more than three pages in length) must
briefly describe the situation faced by Ms. Highgrove, list key
assumptions underlying the analysis, and provide answers to the questions
above, along with your professional recommendations. Note that this is
not an academic paper but rather a business document. The use of exhibits
(graphs, tables, etc.) to illustrate points is recommended.

Rubric
Short Consulting Report

Short Consulting Report

Criteria Ratings P

This criterion is linked to a Learning

OutcomeCompletness 20 pts 16 pts 8 pts 0 pts
The report covers the points requested All points Most points Some points None of the
20
are well are well are well points is
by the client. covered covered covered properly
covered

This criterion is linked to a Learning 20 pts 16 pts 8 pts 0 pts

OutcomeDepth Above Within Below Well below
20
The report demonstrates understanding expectations expectations expectations expectations
Short Consulting Report

Criteria Ratings P

of the situation described in the case

study.

This criterion is linked to a Learning

OutcomeCritical Thinking 20 pts 16 pts 8 pts 0 pts
20
The report contains statements Above Within Below Well below
demonstrating the consultant's critical expectations expectations expectations expectations
thinking.

This criterion is linked to a Learning

OutcomeProfessionalism 20 pts 16 pts 8 pts 0 pts
20
The report demonstrates Above Within Below Well below
professionalism (proper language, expectations expectations expectations expectations
spelling, grammar, terminology, etc.).

This criterion is linked to a Learning

OutcomeSpreadsheet Organization and
Accuracy 20 pts 16 pts 8 pts 0 pts
20
The submitted Excel file is well Above Within Below Unacceptable
organized and leads to accurate results, expectations expectations expectations
supporting the recommendations
offered.

Total Points: 100