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UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION

BADM 467 - PROCESS MANAGEMENT

SUMMER 2002

Dilip Chhajed Nick Petruzzi


chhajed@uiuc.edu petruzzi@uiuc.edu
323 DKH 328D DKH
office hours: office hours:

Description
Process Management includes a myriad of activities: insuring that a product or service is of high quality, choosing the
appropriate design and technology for producing a good or service, planning and controlling the flow of materials or
customers so that lead times are minimized, and distributing finished goods or services. Relevant decisions range from how
much material to order for making a product, to determining how much capacity is needed to provide a good level of service,
to evaluating which technology will best meet a company's needs. In short, this course focuses primarily on developing and
applying tools and techniques to ensure that the right products and resources are at the right place at the right time so as to
maximize profit within a business process or supply chain. The “products” could be either goods, services, or both; and the
“resources” could be either material, people, money, information, or any combination of the four.
In the first part of this course, we will focus on process design and improvement issues by studying the relationships between
key process parameters such as capacity and throughput, and by analyzing processes in order to identify and eliminate
bottlenecks. And, in the second part of the course, we will focus on process coordination issues by studying methods for the
efficient planning and controlling of critical resources.
Specific objectives are:
• To describe an operating system or a business process and how it can be used as a competitive weapon in a variety of
manufacturing and service organizations.
• To understand decisions faced by operations managers, the skills required to make these decisions effectively, and how
these decisions integrate with the overall strategy of the firm.
• To highlight many of the interfaces between the operations function and other functions of the firm such as finance,
accounting, and marketing.
• To develop skills in analyzing operating processes, assessing economic trade-offs, and defining planning and control
mechanisms.

Design
The approach to this course is both lecture and case analysis. We will develop concepts and tools in class, but the true test
in learning a new concept or tool is whether or not it can be applied.
Working in teams of 5, you will have the opportunity to hone skills and explore application possibilities through
homework problem sets and case studies. The team aspect is important because group deliberation often opens avenues of
thought otherwise not considered even to exist. Of the cases that we study, some are geared toward stimulating thinking
about an issue (e.g., Toyota Motor Manufacturing), and others present a business problem that requires diagnosis, analysis,
and development of a plan of action (e.g., Sea Pines Racquet Club). However, all cases have been chosen to illustrate
basic concepts of process management as they apply to a variety of organizations and to stimulate discussion between you
and your classmates. Therefore, class participation is a necessary element in the process.
You may organize yourself into teams of 5, but try to have your team in place by the second session so that you will have
sufficient time to collaborate before the first assignment is due. If your team is not established by the third session, please
let me know by the beginning of class; I will help.
Materials (Required)
(1) Krajewski and Ritzman (2002), Operations Management - Strategy and Analysis, Sixth Edition, Addison-Wesley
Publishing Company, New York. (Abbreviated as KR.)
(2) Goldratt, E.M. (1992), The Goal: A Process of Ongoing Improvement, Second Edition, North River Press.
(3) Readings and Cases:
“Time – The next source of competitive advantage,” HBR, July-August, 1988
“Executive Shirt Company,” HBS Case Study (# 9-696-071)
“Donner” HBS Case Study (# 6-689-030)
“Toyota Motor Manufacturing, U.S.A., Inc.,” HBS Case Study (# 9-693-019)
“Benihana of Tokyo,” HBS Case Study (# 9-673-057)
“Sea Pines Racquet Club,” HBS Case Study (# 9-674-011)
“Johnson Controls, Automotive Systems Group” HBS Case Study (# 9-693-086)

Grading
Your course grade will be based on two exams and 4 homework assignments. The homework assignments comprise problem
sets and case reports; they are to be completed by your team. Each exam must be an individual effort (surprise, surprise).
A letter grade for the course (A+, A, A-, B+, B, B-, C+, C, C-, F) will be assigned based on a relative scale.
Homework Assignments 40%
Exam I 30%
Exam II 30%
TOTAL 100%

Homework Assignments
Each team is required to submit 4 homework assignments (each of which counts for equal weight). The purpose of the
homework is to provide a structured framework for applying concepts and tools from class and to serve as practice for the
exams.
The due date for each assignment is as follows:
Homework 1: Case Report for Executive Shirt Case Session 5 (Jun 17)
Homework 2: Problem Set Session 9 (Jun 24)
Homework 3: Problem Set Session 20 (Jul 15)
Homework 4: Problem Set Session 27 (Jul 25)
All assignments are due at the beginning of class. You may want to bring an extra copy for yourself.
Case Reports and Preparation. Some of the homework assignments will be in the form of case reports. In addition, cases
often will be assigned as preparation for classroom discussion.
A list of “case discussion questions” has been prepared to guide your analyses of the cases, both written and otherwise. In
general, these questions are not all-inclusive or exhaustive. They are intended to guide your analysis of the case, but not
preclude you from exploring other avenues or questions that may occur to you. On the other hand, it is usually true that clear
and comprehensive answers to the assigned questions will comprise a good written analysis of a case. So, if in doubt, cover
the questions thoroughly first, then explore other avenues for an excellent report.
No outside research is expected for any of the case reports.
Case reports should not be more than two pages in length (1 1/2-spaced, font size 12, one inch margins) with up to two
additional pages of exhibits. A grading penalty will be assessed for reports/outlines that do not conform to these formats.
Additional pages will be ignored, so please adhere to the page limits.

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CASE DISCUSSION QUESTIONS

Executive Shirt Company


Assume 20 days/month; In Mike’s plan ten layers are cut at a time.
1. For the current process compute a) cycle time, b) flow time, d) WIP, d) capacity e) capacity utilization, f)
direct labor content, g) direct labor utilization. Show your work.
2. Compute the above quantities for Mike’s Plan. Show your work.
Assignment Questions (report due on June 17th)
1. Compute the above quantities for Ike’s plan.
2. Compare Mike’s and Ike’ plans? What do you recommend? What would be your plan?
(Limit your report to two pages + exhibits)

Donner
1. Draw a process flow diagram of Donner’s order processing process (from bids to releasing the order to the shop floor)?
2. What order size would you schedule on the CNC router? on the punch press?
3. Assuming a normal process flow, how many minutes per board are needed to produce an order of 8 circuit boards? of
80 circuit boards? of 800 circuit boards?
4. List three specific actions that Mr. Plummer should take to reduce the average flow time of jobs processed by Donner?
Explain why the actions would achieve their intended outcome.
5. Is Donner trying to do too much by accepting a mix of small and large orders? What is the effect of this policy on the
shop floor? On various performance measures?

Toyota Motor Manufacturing


1. As Doug Friesen, what would you do to address the seat problem? Where would you focus your attention and solution
efforts?
2. What options exist? What would you recommend? Why?
3. Where, if at all does the current routine for handling defective seats deviate from the principle of the Toyota
Production System?
4. What is the real problem facing Doug Friesen?

Benihana of Tokyo
1. What is the Benihana concept (what differentiates Benihana from other restaurants)?
2. Consider the typical flow of customers through Benihana’s. How well thought out is Benihana’s operating
system?

Sea Pine Racquet Club


1. What is the dilemma facing John Baker? What are his options? (Think in terms of supply and demand.)
2. What should he do for the coming season? For next year?

Johnson Controls
1. Analyze the process flow at the Georgetown Plant. How does the flow of information fit in?

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TENTATIVE COURSE OUTLINE

Jun 10 Session 1 Topic: Introduction to Process Management


Readings: 1. Chapters 1, 2 and 3 (KR).
2. “Time – The Next Source of Competitive Advantage,” HBR

Jun 11 Session 2 Topic: Process Strategy


Case: BSB, Inc., pages 61-62 (KR). Prepare the questions at the end of the case
Readings: LFKHS and Chaparral Steel plant tours in Chapter 2 (KR)

Jun 12 Session 3 Topic: Process Fundamentals


Readings: Chapters 1-8 of The Goal

Jun 13 Session 4 Topic: Process Analysis: Fundamentals


Case: Executive Shirt Company, prepare answers to the “Case Discussion Questions”
Readings: Chapter 10 (KR)

Jun 17 Session 5 Topic: Process Analysis


Case: Simulation, Goal discussion
Readings: Pages 381-387, Supplement D (KR)
Submit: Homework 1 (Case Report for Executive Shirt case)

Jun 18 Session 6 Topic: Process Analysis


Case: Donner Company, prepare answers to the “Case Discussion Questions”

Jun 19 Session 7 Topic: Process Quality Management


Case: Cranston Nissan, page276-278 (KR). Prepare questions at the end of the case
Readings: 1. Chapter 6 (KR)

Jun 20 Session 8 Topic: Process Quality Management: Statistical Process Control


Readings: 1. Chapter 7 (KR)
2. “Six Sigma Enlightenment,” NYT

Jun 24 Session 9 Topic: Lean Production


Readings: Chapter 16 (KR)
Submit: Homework 2 (Problem Set)

Jun 25 Session 10 Topic: Lean Production


Case: Toyota Motor Manufacturing

Jun 26 Session 11 Topic: Project Management


Readings: Chapter 4, pages 139-154 (KR)

Jun 27 Session 12 Topic: Project Management


Readings: Chapter 4, pages 154-173 (KR)

Jul 01 Session 13 Topic: Exam I

Jul 02 Session 14 Topic: Supply Chain Coordination


Readings: Beer game

Jul 03 Session 15 Topic: Supply Chain Coordination

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Jul 08 Session 16 Topic: Integrated Operations
Case: Benihana

Jul 09 Session 17 Topic: Waiting Line Management


Reading: 1. Supplement E, pages 327 – 331 (KR)

Jul 10 Session 18 Topic: Capacity Planning


Case: Sea Pines Racquet Club

Jul 11 Session 19 Topic: Coordinating Supply and Demand

Jul 15 Session 20 Topic: Resources Planning


Reading: 1. Chapter 15, pages 673 – 684 and 695 – 700 (KR)
Submit: Homework 3 (Problem Set)

Jul 16 Session 21 Topic: EOQ Decision Framework


Readings: 1. Chapter 13, pages 544 – 577
2. Supplemental G, pages 583 – 586

Jul 17 Session 22 Topic: EOQ Application


Challenge: To be issued

Jul 18 Session 23 Topic: Continuous Review Systems


Readings: 1. Chapter 13, pages 557 – 564 (KR)

Jul 22 Session 24 Topic: Periodic Review Systems


Readings: 1. Chapter 13, pages 564 – 568 (KR)

Jul 23 Session 25 Topic: Short Life-Cycle Systems


Readings: 1. Supplement G, pages 586 – 589 (KR)

Jul 24 Session 26 Topic: Just-In-Time Manufacturing


Case: Johnson Controls, Automotive Systems Group
Readings: 1. Chapter 16 (KR)

Jul 25 Session 27 Topic: Revenue Management Part I


Activity: Yield Management Game
Submit: Homework 4 (Problem Set)

Jul 29 Session 28 Topic: Revenue Management Part II

Jul 30 Session 29 Topic: Supply Chain Incentives and Control

Jul 31 Session 30 Topic: Review Session

Aug 01 Session 31 Topic: Exam II