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Example: The US Airline Industry
Prof. Christian Terwiesch
Example: The US Airline Industry
Prof. Christian Terwiesch
Introduction
Prof. Christian Terwiesch
Personal Introduction
MBA core course: Operations Management: Quality and Productivity Taught ~ 60 times ~ 4000 MBA students McKinsey Ops Practice ~ 500 new associates Research: Operations Management, focus on Healthcare Management Innovation tournaments and contests
Prof. Christian Terwiesch
Introduction
Efficient Frontier
Prof. Christian Terwiesch
Four Dimensions of Performance: Trade-offs
Cost Quality
▪ Efficiency ▪ Measured by:
Example: Call center of a large retail bank - objective: 80% of incoming calls wait less than 20 seconds - starting point: 30% of incoming calls wait less than 20 seconds - Problem: staffing levels of call centers / impact on efficiency OM helps: Provides tools to support strategic trade-offs
Prof. Christian Terwiesch
Four Dimensions of Performance
Cost Quality
▪ Efficiency
▪ Product quality (how good?) ▪ Process quality (as good
as promised?)
Variety
What Can Ops Management (This Course) Do to Help? Step 1: Help Making Operational Trade-Offs
Responsiveness High
Very short waiting times, Comes at the expense of Frequent operator idle time
Prof. Christian Terwiesch
What Can Ops Management (This Course) Do to Help? Step 3: Evaluate Proposed Redesigns/New Technologies
Responsiveness High Redesign process
Low Low labor productivity
Competitor B High labor productivity Labor Productivity (e.g. $/call)
Example: • Benchmarking shows the pattern above • Don’t just manage the current system… Change it! Provides tools to identify and eliminate inefficiencies => Define Efficient Frontier Types of inefficiencies: -Poor process design - Inconsistencies in activity network
Prof. Christian Terwiesch
What Can Ops Management (This Course) Do to Help? Step 2: Overcome Inefficiencies
Responsiveness
High
Current frontier In the industry Competitor A Eliminate inefficiencies Competitor C
Prof. Christian Terwiesch
Text Book
Course book Cachon, Gerard, Christian Terwiesch, Matching Supply with Demand: An Introduction to Operations Management, 3rd edition, Irwin - McGraw Hill, 2012 (ISBN 978-0073525204, 507 pages)
Tradeoff Low Low labor productivity
Long waiting times, yet operators are almost fully utilized y
High labor productivity
Labor Productivity (e.g. $/call)
- number of options - flexibility / set-ups - make to order make-to-order
▪ Responsiveness to p
demand
▪ Measured by:
- customer lead time - flow time
Prof. Christian Terwiesch
Format of the course
Prof. Christian Terwiesch
Course Outline / Grading / Homework
Objective of the course: Understanding and improving business processes Performance measures How-to Mix of industries: healthcare restaurants automotive computers call centers banking etc healthcare, restaurants, automotive, computers, centers, banking, Course Outline Introduction (0.5 weeks) 1. Process analysis (1.5 weeks) 2. Productivity 3. Product variety 4. Responsiveness 5. Quality Requirements / Prerequisites: There are no prerequisites for the course Some modules require statistical knowledge (standard deviation, normal distribution) Homework assignments One large assignment after each module (five assignments); 10% each Final exam with questions from all modules; 50% q ;
Christian Terwiesch terwiesch@ Andrew M. Heller Professor at the Wharton School Senior Fellow Leonard Davis Institute for Health Economics 573 Jon M. Huntsman Hall Philadelphia, PA 19104.6366
- cost per unit - utilization
▪ Product quality (how good?)
=> Price
▪ Process quality (as good
as promised?) => Defect rate
Variety
Time
▪ Customer heterogeneity ▪ Measured by:
Prof. Christian Terwiesch
Cost Quality
▪ Efficiency
▪ Product quality (how good?)
▪ Process quality (as good as
p promised?) )
Variety
Time
▪ Customer heterogeneity
▪ Responsiveness to demand
New frontier Current frontier In the industry Low Low labor productivity High labor productivity
Labor Productivity (e.g. $/call) ( $/ )
Example: • What will happen if we develop / purchase technology X? • Better technologies are always (?) nice to ha e b t will the pa ? al a s have, but ill they pay? OM helps: Evaluates system designs before they occur