International Operations Final Exam - Spring 2025

• Summary of Management of International Operations, Spring 2025, Prof. Pau Barbarà Mir

• Continuous evaluation grades are due Friday, March 14th

• The Problem Set Submission deadline is Friday, March 14th

• A solution set exists

Hints for the Final Exam

• The final exam logistics include hints

Final Exam Logistics

• Final exam on Monday, March 17th
• The exam is scheduled from 16:00 to 17:30
• Exam location is at Sala d'Actes + 1.1
• 50% of the the final exam is multiple-choice questions (20 questions)
• The other 50% comprises exercises (5 exercises)
• For multiple-choice questions, Correct answers score +1 point
• -.33 points are deducted for wrong answers and 0 points for no answer
• The final exam will require a calculator for easy computations
• No computers, notes, or sharing of anything is allowed during the exam

Mentimeter Polls

• A link to a Mentimeter poll is provided: https://www.menti.com/al2utrrycbz3

What have we learned Together?

• Operations Management (OM) involves the transformation of inputs into outputs
• This impacts everything involving the transformation of resources into something valued by the customer

Process View of Operations Management

• OM Transforms inputs to outputs

• A graphic depicts the process view of operations management, showing Suppliers providing Inputs (Materials, Information) and Customers receiving Outputs (Goods, Services)

• The Transformation Process includes Tasks A, B, and C

• Performance Feedback is assessed

• Competitors, Technology and Regulations impact the performance

• The process boundary is the organizational boundary

• This depicts an extended enterprise approach

• Overview of the 7 topics covered during the course:

• Introduction to Operations Management

• Operations Strategy

• Process Analysis

• Queuing Management

• Linear Programming applied to OM problems

• Inventory Management

• Quality Management

• The "Process Analysis Group Project" also occurred

What do Customers Care About?

• Customers care about Cost, Quality, Variety, and Time

Order Qualifier and Winner

• Order Qualifier refers to the minimum selection criterion that permits products or service to be even considered by potential customers

• Order Winner refers to the criterion that differentiates the products or services from competitors, resulting in winning orders from customers (Hill, 1993)

• Functional considerations are the task the user seeks to accomplish

• Emotional considerations are how the user wants to feel in that circumstance

• Social considerations are how the user wants to be perceived by others

Operations Strategy Elements

• Business Performance is measured through Customer Requirements such as Order Qualifiers, Order Winners, and Competitive Capabilities
• Target Customers are essential to the success
• The External Environment and Other Functional Strategies impact the business
• Operations Strategy Decisions are made to optimize strategy implementation

Performance Trade-offs

• Cost influences aspects like Efficiency, Labor costs, and Customers/day based on price
• Quality affects Product quality, Process quality, and Conformance as they influence the defect rate
• Variety impacts Breadth of portfolio and Customer reach
• Time influences Responsiveness to demand, lead time, and flow time within operations

Competitive Advantage

• Michael Porter's "Efficient Frontier" illustrates that Best Practice performance falls along the Efficient Frontier
• Performance less than Best Practice falls below the Efficient Frontier

Breakthroughs

• Examples of technological and business breakthroughs include Xerox, Skype, Spotify, Netflix, Instagram, Uber, Smart, United Colors of Benetton, Dell, Subway, and Airbnb

Microsoft and Satya Nadella

• A case study of Microsoft and Satya Nadella is mentioned; a link to a further video is included

Return on Equity

• Return on Equity (ROE) = EBIT / Equity
• ROE is broken down into components using DuPont Analysis :
• ROE = (Assets / Equity) x (Sales / Assets) x (EBIT / Sales)
• Where:
  • Assets / Equity = Equity Multiplier which relates to financial leverage
  • Sales / Assets = Asset Turnover
  • EBIT / Sales = Operating Margin
• The product of Asset Turnover and Operating Margin is Return on Assets (ROA), which is impacted by operations

Product-Process Matrix

• The Product-Process Matrix describes the relationship between Customization and Volume
• Job Process has low volume and requires high customization
• Small Batch Process has low volume and moderate customization
• Line Process has high volume and low customization
• Continuous Process has very high volume and very low customization

Process Analysis

• Process Analysis
  • Raw materials are heat treated (softened)
  • Initial shaping and cutting
  • Grinding machine smooths edges
  • Basic machining and processing
  • CNC machine accurately shapes the parts
  • Product passes on to packaging department

Flow Units

• Flow unit (U): Things being processed
• Flow time (T): Time from start to finish
• Flow rate (R): Unit per a given time
• Cycle time (CT): Time between units
• Inventory (I): Units tied up in the system

Little’s Law

• Little's Law relates flow time, flow rate and system inventory
• Inventory = Flow Rate * Flow Time, or I = R * T

Flow time and Flow rate

• Flow time and flow rate can be impacted by;
• Utilization limited by demand, work with sales and marketing to increase the demand
• Limited by the bottleneck, reduce the bottleneck by rebalancing station times
• Innovation (breakthrough), introduce a new way of doing an activity faster and or Reduce headcount, etc

Variability affect

• Processing times will fluctuate around averages
• Higher processing times, i.e., lower capacities, can cause delays
• Delays affect other following activities as they have to wait
• Speeding up tasks may not benefit other activities as they may not be able to catch up.

Queuing Theory

• Queues are a way of dealing with the imbalance between supply and demand and variability

• As long as demand exceeds supply, queuing theory provides tools and understanding for optimizing queues

• Applications include Retail, Telecommunications, Transportation, Project management, Finance and banking, Computing, Logistics

• Channels are equivalent to servers

• Channels or servers refer to the number of stations where you receive service

• Phases of service refer to the number of steps required to get full service

• Each parameters can take two values: single (one) or multi (several) - Four possible combinations

Queuing Systems

• Depictions of Single channel queuing system, Multichannel queuing system, Single channel multi phase system, Multichannel multi phase system

• Queue disciplines include FIFO, LIFO and Priority queuing

Queuing Psychology

• Unoccupied time feels longer than occupied time
• Unexplained waits are perceived as longer than they really are.
• Unfairness of the queue, be it real or perceived, impacts how customers feel

Types of queue management Systems

• Physical lines, Sign-in sheets, Ticket-based systems, Digital management systems, and Human management

Linear programming

• Linear programming solves constrained optimization problems
• An aim exists to optimise- either maximising or minimising- some objective , subject to A set of constraints that limit the possible solutions.

Steps in formulating LP Problems

• Defining the decision variables
• Write the mathematical function for the objective
• Write the constraints mathematically.
• RHS of each constraint should consists of Write a 1- or 2-word description of each constraint and LHS should consists of Decision Variables and coefficents multiplying them

Performance metrics

• Performance metrics include:
  • Inventory Turnover
  • Days of Supply
  • Cash to Cash Cycle

Key metrics

• Performance:Inventory Turnover is the Number of times inventories are turned (Annual sales volume / Average Inventory)
• Inventory Turnover = Cost of good sold + Average Inventory
• Performance: Days of Supply is a Reciprocal of inventory turnover (Number of sale days that can be covered by inventory levels available)
  • = Average Inventory (monetary value) / Daily Sales (at cost or COGS)
• Performance metric Ill:Cash to cash cycle - Time period between initial investment in working capital and cash collection - = Days in inventory + Days in accounts receivable – Days in accounts payable

Inventory Managment

• The Economic Order Quantity (EOQ) trades off the fixed cost of setup and order placement vs. holding cost
• Holding cost is the cost associated with holding inventory : cost of working capital, warehousing, spoilage, obsolescence
• The EOQ is the order quantity which minimizes total cost.

Outsourcing

• Outsourcing

• Outsourcing involves conventional reasons and risks

  • Reasons for outsourcing : lack of capacity, special knowledge, economy of scale.
  • Risks of outsourcing: quality risks, loss of core activities and dependence

• Outsourcing can occur when it makes sense to both sides

• Asset Specificity is specific machinery To the process in question, cant be used elsewhere

• Conventional reasons for outsourcing:

  • Asset Specificity is low
  • Uncertainty is low

• Conventional reasons against outsourcing:

  • Asset Specificity is high
  • Uncertainty is low

supply chains

• A supply chain consists of the links through which goods and services get transformed and flow from raw materials to finished products delivered to end users. Christopher, 1992

Building supply

• Building supply chains, consider and align demand and supply uncertainty

• Supply certainty is low

• demand certainity is low

• This results in efficient production

• Process is stable

• Developing process requires safety stock and multiple suppliers

• Supply certainty is high

• demand certainity is high

• This results in agile produciton

• Process is stable

• Demand certainty is high

  • Innovative, fusion requires Responsive productions
  • High volume locations and mass customization result

Quality

• Quality is subjective
• A wheel of fortune game provides an answer where quality is subjective
• Cost of Quality Prevention: Quality planning, Product design, Process design, Supplier selection Training Costs Appraisal: Inspection of Purchase materials / services, In process checks, Final inspection, Field test

Internal Failure: Scrap, Retesting, Rework, Downgrading, Delays, employee moral External Failure: Complaint handling, Service recoveries, Repairs, Warranty, Customer dissidents.

Traditional View of Total Cost of Quality

• The Cost of Quality perspective helps understand where you're investing (or wasting) your money:
• It measures what one spends on preventing defects and assuring quality, or what one spends performing rework and handling customer complaints

Learning Together

• A current debate exists: Glovo Workers, Glovo Unions, Glovo itself, and the relevant stakeholders and regulators
• Kodak first patented filmless camera in 1975. It failed

Alcarrás S.L.

• Example of a Linear Programming Problem

• You're asked to formulate problem to minimize total costs

• Set decision variables, objective function and constraints

• Minimize Total Cost

• A table provides data for Demand Forecast (kg) and Production Cost (€) for Quarters Q1-Q4

• Use 'Solver' function in excel to use above to define quantity constraint, production costs and holding costs

• "Insert Total Cost formula / Minimize Total Cost"

• Q & A- Is there any doubts?

• The sky is the limit!