Houston Community Amazon JP Morgan Quantitative Decision Making Article Summary Quantitative Decision Making: Current Issue/Event Article and Summary The

Houston Community Amazon JP Morgan Quantitative Decision Making Article Summary Quantitative Decision Making:

Current Issue/Event Article and Summary

The current event must relate to my class.

During weeks 2, 3, and 4, one of the course requirements is that you find and summarize a current issue/event. Your source must be from a reputable source (e.g., peer-reviewed journal, respected business or industry journal, valid company web site, etc.). Find article about some current issue/event (article and/or event must be within the last 2 years) related to one or more of the topics covered that week, or as indicated in this assignment.

Submit to Discussion Board

(2-3 sentences) Write a brief summary, and explain how it relates to the course content. Try to relate it to some of your work, education, or personal experiences.
(1 question) Write a discussion question, as if you were going to use this article as the basis for a class discussion. The discussion should be open-ended and require thought and/or research to answer (not a yes/no, or just a factual response question from the article).
At least 250 words.
Citation. Include the proper citation in APA format. See the APA Style GuideLinks to an external site. produced by the UNH Writing Center.
If the article is in PDF or other downloadable format (rather than directly viewable on a web page), attach the file to your post.

Parameters

Topics for Week 2: Topics covered in Chapters 1, 2, 11, 3, 4
You must make your post to the discussion board before you will be able to see anyone else’s post. This is by design!
Once you have made your post, browse through some of the other posts. You can respond to a few as well.

Real World Case That My professor mentioned in class:

https://www.bloomberg.com/news/articles/2017-12-19/robots-are-making-your-sushi-and-that-s-good-for-the-economy

https://www.bloomberg.com/news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-factory

https://www.bloomberg.com/news/features/2018-04-09/yes-these-chickens-are-on-the-blockchain

https://freakonomics.com/podcast/project-management/ CH01: Operations & Productivity
ADMN580
QUANTITATIVE DECISION MAKING
CH01: PRODUCTIVITY
Roger Grinde
ADMN580: Quantitative Decision Making
1
CH01: Operations & Productivity
LOOKING AHEAD
Check Access to eText & MyOMLab
SCHEDULE
Review Schedule / Canvas Assignments
Read Chapter 02: Operations Strategy
ADMN580: Quantitative Decision Making
2
CH01: Operations & Productivity
AGENDA
Introduce Operations Management (OM)
Compare/Contrast Goods & Services
Conduct Productivity Analysis
Review Trends & Challenges
Discuss Ethics in Operations
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CH01: Operations & Productivity
OPERATIONS MANAGEMENT
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OM IS IMPORTANT, and FUN!
Real Bottom Line Impact
Challenging Problems
Creative Solutions
Teamwork
Value
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
What is Operations Management (OM)?
The Textbook Definition
Activities that relate to the creation
of goods and services through the
transformation of inputs to outputs.
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPS MGT – Visual Definition
People
Equipment
Facilities
Materials
Land
Energy
Processes
1
3
5
2
ADMN580: Quantitative Decision Making
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Goods
Services
7
CH01: Operations & Productivity
THE “BIG THREE” KEY FUNCTIONS
• Track financials
• Pay the bills
• Collect the money
Material &
Service Inputs
Sales
Revenues
Support Functions
Operations
• Manage resources
• Optimize processes
• Produce value
•
•
•
•
Information Systems
Human Resources
Engineering
Etc.
(goods / services)
Marketing/Sales
• Manage demand
• Generate sales
• Take orders
CUSTOMERS
SUPPLIERS
Finance/Accounting
Product &
Service Outputs
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CH01: Operations & Productivity
OPERATIONS FUNCTIONS
Figure 1.1
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPERATIONS FUNCTIONS
Figure 1.1
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPERATIONS FUNCTIONS
Figure 1.1
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPS HAS BOTTOM LINE IMPACT
You are leading a new tech start-up that makes virtual
reality goggles. You need to double the dollar
contribution to cover your fixed equipment costs and
achieve a profit.
Which of the following helps you the most?
1) Increase SALES REVENUE by 50%
2) Cut FINANCE costs in half
3) Reduce OPERATIONS cost by 20%
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPERATIONS FUNCTIONS
BASELINE ASSUMPTIONS
COGS (as % Sales)
80%
Tax on Profit
25%
CONTRIBUTION DRIVERS
Increase in Sales Revenue
Reduction in Finance Costs
Reduction in Production Costs
CURRENT
Sales Revenue
$ 100,000
Cost of goods
$
(80,000)
Gross margin
$
20,000
Finance costs
Pretax Profit
Taxes
Contribution
$
$
$
$
(6,000)
14,000
(3,500)
10,500
SCENARIO ONE
50%
0%
0%
MARKETING
$ 150,000
$ (120,000)
$
$
$
$
$
30,000
(6,000)
24,000
(6,000)
18,000
SCENARIO TWO
0%
50%
0%
FINANCE
$ 100,000
SCENARIO THREE
0%
0%
20%
OPERATIONS
$ 100,000
$
(80,000)
$
(64,000)
$
20,000
$
36,000
$
$
$
$
(3,000)
17,000
(4,250)
12,750
$
$
$
$
(6,000)
30,000
(7,500)
22,500
Table 1.1: FISHER TECHNOLOGIES P&L STATEMENT
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OM MISSION
$ ADD VALUE
EFFICIENTLY
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OM MISSION
Think of a recent job.
How did you “add value”?
$ ADD VALUE
▪ Increase customer value at each stage of the process
▪ The “value added” is the net increase from input to output
EFFICIENTLY
▪ Meet customer requirements for quality, cost, delivery, etc
▪ While minimizing waste (cost) and optimizing value
Think of a recent job.
Any obvious process inefficiencies?
OM is where a company really makes (or loses) money.
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OPS HALL OF FAME
Eli Whitney
(Standardized Parts)
Frederick W. Taylor
(Scientific Management)
Henry Ford
(Assembly Lines)
Frank & Lillian Gilbreth
(Work Measurement)
W. Edwards Deming
(Quality Control)
Taiichi Ohno
(Lean / JIT)
breakthrough ideas in ops have
resulted in worldwide improvements
(ultimately resulting in better quality of life overall)
Do you agree?
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
KEY DECISION AREAS IN OM
$
ADMN580: Quantitative Decision Making
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
DESIGN of goods and services
Measuring and Managing QUALITY
PROCESS and CAPACITY Strategies
We will touch on many of
these in this course
LOCATION Strategy
LAYOUT Strategy
HUMAN RESOURCES and JOB DESIGN
SUPPLY CHAIN MANAGEMENT
INVENTORY MANAGEMENT
SCHEDULING
See Table 1.2
MAINTENANCE
FORECASTING
PROJECT MANAGEMENT
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CH01: Operations & Productivity
VALUE TO STAKEHOLDERS
EVOLUTION OF OPERATIONS MGT
Advancements in OM Deliver
Value to All Stakeholders
• Shareholders
• Employees
• Customers
• Suppliers
• Community
• Environment
TIME
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
GOODS AND SERVICES
What sectors have you worked in?
Goods / Services / Hybrid
GOODS
Tangible, physical product
Can keep in inventory
Limited customer contact
SERVICES
WHICH ONE . . .
• is physically tangible?
Intangible services
• can you hold in inventory?
• Requires more customer contact?
Consumed when produced
• Requires shorter response times?
High customer interaction
• Is easier to track quality metrics?
Longer response time
Shorter response time
Easier to track quality
More difficult quality metrics
ADMN580: Quantitative Decision Making
See more detail and examples in Table 1.3
19
CH01: Operations & Productivity
Think about a past job and your “process”
jot down the following and think through the operations
Inputs / Outputs / Customers / Feedback Mechanism
Understanding how your “operations machine” works will result in greater success!
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
PRODUCTIVITY
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
Productivity measures how efficiently
inputs are converted into outputs
OUTPUT
INPUT
Productivity is the ratio of outputs (goods and services) divided
by the inputs (such as labor, capital, and management)
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
PRODUCTIVITY AT STARBUCKS
Why is improving
PROCESS IMPROVEMENT productivity
SAVINGS a “game of
seconds” at Starbucks?
Stop requiring signatures on
08 sec per
credit card purchases under $25 transaction
Change the size of the ice scoop 14 sec per drink
New espresso machines
12 sec per shot
Ops improvements have helped Starbucks increase yearly
revenue per outlet by $250,000 to $1,000,000 in seven years.
Productivity has improved by 27% (about 4.5% per year)
ADMN580: Quantitative Decision Making
read more about this in chapter
one
23
CH01: Operations & Productivity
PRODUCTIVITY FORMULAS
PRODUCTIVITY
Units Produced
Inputs Used
SINGLE-FACTOR
PRODUCTIVITY
Units Produced
A Single Input
MULTIFACTOR
PRODUCTIVITY
Units Produced
Labor + Material + Energy + Capital + Misc.
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
LET’S BUILD A PRODUCTIVITY MODEL
Download CAR MODEL template
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
BUILD A PRODUCTIVITY MODEL
CAR MODEL
YEAR ONE
YEAR TWO
YEAR THREE
2.1
2.4
2.7
Employees
115,000
113,000
112,000
Sales ($ millions)
$38,000
$41,000
$49,000
Cost of Sales ($ millions)
$32,000
$33,000
$39,000
Unit car sales (millions)
Build an excel model to calculate
• Partial Productivity of unit car sales by employee
• Total Cost Productivity for each year
include year-over-year
Percent Change
−
∆ =

ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
BUILD A PRODUCTIVITY MODEL
CAR MODEL
∆ =
(21.24 − 18.26)
18.26
YEAR ONE
2.1
115,000
$38,000
$32,000
YEAR TWO
2.4
113,000
$41,000
$33,000
YEAR THREE
2.7
112,000
$49,000
$39,000
Unit Car Sales/Employee
Year-to-Year Improvement
18.26
N/A
21.24
16.3%
24.11
13.5%
Total Cost Productivity
Year-to-Year Improvement
1.19
N/A
1.24
4.6%
1.26
1.1%
Unit car sales (millions)
Employees
Sales ($ millions)
Cost of Sales ($ millions)
Τ = (2.1 ∗ 1,000,000)/(115,000)
ADMN580: Quantitative Decision Making
= $38,000/$32,000
27
CH01: Operations & Productivity
ANALYZE THE RESULTS
Which metric is better in this case?
Partial Productivity or Total Productivity
Why?
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
ANALYZE THE RESULTS
Which metric is better in this case?
Actually, it depends . . .
Productivity measures must be compared to something,
i.e. another year, a different company, a different product.
Raw productivity calculations
do not tell the whole story.
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
NEXT STEPS AS OPS MANAGERS
Our company has achieved partial productivity
improvements in cars produced per employee
What changes could we implement
Partial
Cars Produced
to continue improving this
Productivity =
Employees
“Partial
metric?
(cars
per employee) Productivity”
output
input
Think of an equation as test equipment
that we can use to model scenarios.
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
NEXT STEPS AS OPS MANAGERS
Your operational improvements will continue
to increase cars produced per employee
How do your decisions impact
• Other Organizational Metrics?
• Other Qualitative Factors?
• Your Company Stakeholders?
•
•
•
•
•
•
Shareholders
Employees
Customers
Suppliers
Community
Environment
Go beyond the quantitative analysis
and think like an ops manager!
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
PRODUCTIVITY METRICS CHALLENGES
Quality may change while the quantity of
inputs and outputs remains constant
External Elements may cause an
increase or decrease in productivity
Precise Units of measure may be lacking
Productivity is not a “perfect metric”
… but it is better than nothing!
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
“PRODUCTIVITY VARIABLES”
10% LABOR
38% CAPITAL
52% MANAGEMENT
smart application of knowledge and technology
read more about these in
chapter one
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
TEXTBOOK TIPS (eText or Hard Copy)
1.
2.
3.
4.
(On Paper) Outline Major Topics
Skim Chapter for main ideas
Read for detail. Add key ideas to notes.
Review outline and summarize main ideas
in words: written, oral.
5. Review “Rapid Review” (end of chapter)
6. Next day. Review notes and re-skim chapter
(REINFORCEMENT LEARNING)
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
OUR NEXT TOPIC WILL BE . . .
OPERATIONS STRATEGY
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
CHECK THE SCHEDULE
Any questions on the required
readings & deliverables?
ADMN580: Quantitative Decision Making
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CH01: Operations & Productivity
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
ADMN580
QUANTITATIVE DECISION MAKING
CH02: OPERATIONS STRATEGY,
GLOBALIZATION
Roger Grinde
ADMN580: Quantitative Decision Making
1
CH02: OPS STRATEGY, GLOBAL
OPERATIONS STRATEGY
How do we make sure tactical decisions support our top-level strategy?
ADMN580: Quantitative Decision Making
2
CH02: OPS STRATEGY, GLOBAL
THE CHALLENGE OF
MAKING DECISIONS
MANAGING
OPERATIONS
In both business and in life
We make bad judgment calls because
of inherent biases in the human mind.
Anchoring (or focalism) is the idea that your mind can be swayed
by totally irrelevant information when you’re making a decision.
I’m asking $5,000 for this
classic Buick Century, but
for you I can do $4,300.
. . .the actual average retail is $2,500.
We can use data and analysis as an antidote to the warping that
naturally goes on when we are making intuitive judgments.
The story of how two Israeli psychologists Amos Tversky and Danny Kahneman redefined how the human mind
actually works – establishing a cognitive basis for common human errors that arise from heuristics and biases
http://freakonomics.com/podcast/men-started-thinking-revolution/
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
STRATEGIC DECISIONS
Business organizations are a collection of individuals
constantly making decisions of varying importance.
(or waiting for decisions to be made for them)
STRATEGIC DECISIONS
TACTICAL DECISIONS
Broad in Scope
Longer-term
All Encompassing
Narrow in Scope
Shorter-term
“Lower Level” Issues
(What product should we launch next,
in what markets?)
(Who will cover second shift
next week?)
As you progress in your career – try to be one of the decision makers!
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
COMPARE OPTIONS & MAKE A DECISION
You are tasked with helping
National Architects Incorporated
select an outsourced IT provider.
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
USE A “WEIGHTED DECISION MATRIX”
Also known as the FACTOR-RATING METHOD
• Quantitative approach to evaluating multiple options
• Helps drive team consensus around key decisions
Decision Matrix Worksheet
Simple Tool, Surprisingly Effective. Gets people talking.
ADMN580: Quantitative Decision Making
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OPERATIONS: Decision Matrix
example problem
You are tasked with helping National Architects Inc. select an outsourced IT provider.
Your supplier management team conducted a Request for Proposal (RFP) and
received the following results. Which supplier do you recommend?
REALITY CHECK
Multiply each factor score by their weight.
# FACTOR (CRITERION)
1 Can reduce operating
costs
2 Can reduce capital
investment
3 Skilled personnel
4 Can improve quality
5 Access to technology
not in company
6 Can create additional
capacity
7 Aligns with policy/
philosophy/ culture
WEIGHT
OUTSOURCING PROVIDERS
BIM (US)
SPC (India) TELCO (Israel)
0.2
3 x 0.2 = 0.6 3 x 0.2 = 0.6 5 x 0.2 = 1.0
0.2
4 x 0.2 = 0.8 3 x 0.2 = 0.6 3 x 0.2 = 0.6
0.2
0.1
5 x 0.2 = 1.0 4 x 0.2 = 0.8 3 x 0.2 = 0.6
4 x 0.1 = 0.4 5 x 0.1 = 0.5 2 x 0.1 = 0.2
0.1
5 x 0.1 = 0.5 3 x 0.1 = 0.3 5 x 0.1 = 0.5
0.1
4 x 0.1 = 0.4 2 x 0.1 = 0.2 4 x 0.1 = 0.4
0.1
2 x 0.1 = 0.2 3 x 0.1 = 0.3 5 x 0.1 = 0.5
3.3
3.8
3.9
Then sum the column for a total weighted score.
Scores
2% of each
What
would you
Repeat are
for within
each column
and other.
compare
thedo
results.
Whorecommend?
do you pick? 7
Decision Matrix Practices
Assume your team plans to take a “group gap year”. Use a decision
matrix to reach a consensus on how to spend your time away from UNH.
Download DECISION MATRIX template
❑ Brainstorm decision criteria – reflecting your team’s goals (list at least five)
❑ Review the criteria list and weight the importance of each (on a scale of 1 to 10)
❑ Brainstorm gap year options – where to go? / what to do? (be specific – list five)
❑ Review options and score each based on how well each would fulfil the required
decision criteria (1 “not at all” thru 10 “completely”)
❑ Once all options are scored, multiply the option score by the associated criteria
weight and sum the product to get a weighted score for each option
❑ Discuss results as a team and select an option for your gap year experience.
Report back to the class and comment on how the decision process worked.
How will your team spend your gap year? How strong is the consensus?
9
CH02: OPS STRATEGY, GLOBAL
BALANCED SCORECARD (BSC)
CUSTOMER
INNOVATION
(Learning & Growth)
An approach to creating a Strategy Focused Organization
(complements what is covered in CHAPTER TWO)
FINANCIAL
ADMN580: Quantitative Decision Making
INTERNAL
PROCESSES
10
CH02: OPS STRATEGY, GLOBAL
BSC: QUICK VIDEO OVERVIEW
Four Minute Video: https://www.youtube.com/watch?v=M_IlOlywryw
Go to CANVAS and
watch the video.
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
STRATEGY FOCUSED
Developed by by Drs. Robert Kaplan (Harvard Business School) and David Norton
Implementing a
BALANCED SCORECARD
BALANCED
SCORECARD
High Performance
helps create a
Strategy-Focused Organization
by providing a framework for aligning the organization and
human capital components needed to achieve
Think about your
own business
startup idea.
As we discuss BSC connect the approach
to how you might run your own business.
ADMN580: Quantitative Decision Making
Copyright © 2005 by the Balanced Scorecard Institute. All rights reserved.
13
CH02: OPS STRATEGY, GLOBAL
MISSION
(Why We Exist)
VISION
(What We Want to Be)
VALUES & PRINCIPLES
(What’s Important to Us)
STRATEGY
(How We Want to Get There)
SCORECARD
(How We Measure Progress)
IMPLEMENTATION PLANS
(What We Need to Do)
PERSONAL PLANS
(What I Need to Do)
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
BSC METRICS
How do we generate value
for our stakeholders?
FINANCIAL
How do we
create value?
What benefit
do we provide?
CUSTOMER
STRATEGY
INNOVATION
(Learning & Growth)
How will we
sustain our ability
to change and
improve?
INTERNAL
PROCESS
To satisfy customers at what
business processes must we excel?
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
PROCESS
Step One:
Step Nine:
Evaluate
the Results
Assess
Corporate
Priorities
Step Two:
Develop
Business
Strategy
Step Three:
Step Eight:
Decompose
Strategy into
Objectives
Roll-out
the Scorecard
Step Four:
Step Seven:
Categorize/Map
the Strategy &
Objectives
Systematize
the Scorecard
ADMN580: Quantitative Decision Making
We will focus
on the first
two steps.
Step Six:
Step Five:
Identify
Enabling
Initiatives
Define
Performance
Measures
16
CH02: OPS STRATEGY, GLOBAL
1) ASSESS PRIORITIES
Environmental Scanning
Monitoring the business
environment for
• trends
• threats
• opportunities
Mission / Vision / Values
Statement that defines
• what is our business
• who are our clients
• how our values define
our business
Core Competencies
Unique strengths that that
help us win in the market
• workforce
• facilities
• know-how
• systems/technology
Business Strategy
Defines the longrange plan for the
company
ADMN580: Quantitative Decision Making
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CH02: OPS STRATEGY, GLOBAL
ENVIRONMENTAL SCANNING
Porter’s Five Forces Model
NEW ENTRANTS
THE INDUSTRY
SUBSTITUTES
OUR COMPANY
FIVE FORCES
TRADITIONAL COMPETITORS
SUPPLIERS
ADMN580: Quantitative Decision Making
CUSTOMERS
18
CH02: OPS STRATEGY, GLOBAL
ENVIRONMENTAL SCANNING
Porter’s Five Forces Model
NEW ENTRANTS
•
•
•
•
Combimix
HB Fuller
Sika
Product Technologies
SUPPLIERS
DRYTEK
SUBSTITUTES
•
•
•
•
•
Manual Labor (Concrete)
Raised Floors
Liquid Solutions (Epoxy)
Backer Board
Low Alkali Concrete
FIVE FORCES
• Contract Manufacturer
• Key Raw Materials
• Lafarge
• Kerneos
• Elotex
• Bags
• Logistics Providers
ADMN580: Quantitative Decision Making
THE INDUSTRY
Self-leveling Cement Flooring
Products & Accessories (Americas)
•
•
•
•
•
•
•
•
•
•
•
Traditional Competitors
Ardex
Mapei
ProSpec (Old Castle)
CMP
Dayton Superior
Laticrete
Maxxon
USG
Raeco
Hacker
Dependable
CUSTOMERS
• Di…
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