Red McCombs School of Business

The University of Texas at Austin




Spring 2005


Professor James A. Fitzsimmons Classroom: CBA 4.304

CBA 3.238; 471-9453 Meeting MW 8-9:30

Office Hours: MW 9:30-11:30 Unique No.: 03165


Course Description


The supply chain is viewed as beginning with product and process design and includes distribution, supplier management, customer service, and environmental impact. Topics will include systems thinking, project management, supplier management, international sourcing, supply chain logistics, customer service, new product innovation, process analysis, process simulation, focused operations, and environmental strategy. The impact on business strategy of the many dimensions of competition such as process development, quality, outsourcing, mass customization, and lean production will be explored.



A major theme throughout the course is the development of skills to think strategically. We will look at a range of strategic decisions within the supply chain and how they affect the ability of the firm to achieve its goals. To practice our systems thinking skills, cases will be used throughout the course. These cases will have a decision orientation, with a specific manager having responsibility for developing action plans. In summary, the course should prepare you to build and lead an organization to achieve its objectives though a supply chain framework guided by the principles of systems thinking.




(1) To develop skill in the use of systems thinking for understanding a situation and correcting the system without incurring unwanted consequences.


(2) To acquire the capability to manage projects using Microsoft Project.


(3) To view project management systems as a "critical chain."


(4) To develop habits of orderly thinking and rigor in formulating, evaluating, and recommending strategic operations initiatives.


(5) To analyze processes using the animated computer simulation software, ServiceModel.


(6) To appreciate the value chain context of operations management.




The case method is used throughout the course. To help in case preparation suggested "Study Questions on the Case" are included in the detailed course outline following each case abstract. These questions should serve only as a starting point. You should decide what the key issues are and how they can best be addressed and where possible apply systems thinking principles.


At the beginning of the class, one or more class members will be asked to start the session by addressing a specific question. Anyone who has prepared the case should be able to handle such a leadoff assignment. After a few minutes of initial analysis and recommendations, we will open the discussion to the rest of the class. As a group we will try to build a complete analysis of the situation through a learning dialogue using systems thinking principles when appropriate.


You are expected to be an active participant throughout the entire class and to contribute to the quality of the discussion. Please note that the frequency (i.e., the quantity) of your interventions in class is not a key criterion for effective class participation. The classroom should be considered a laboratory in which you can test your ability to use systems thinking principles to create a learning environment. Criteria that are useful in measuring effective class participation include:


(1) Is the participant a good listener?


(2) Are the points that are made relevant to the discussion? Are they linked to the comments of others?


(3) Do the comments show evidence of analysis of the case?


(4) Is there a willingness to participate?


(5) Is there willingness to test new ideas, or are all comments "safe"? (For example, repetition of case facts without analysis and conclusions does not add value.)


(6) Do comments clarify or build upon the important aspects of earlier comments and lead to a clearer understanding of the case?


An important element of this class is group work. You are expected to form your own study group (4 students) by the end of the third week of class. Each group will be responsible for preparing three written case assignments and one case presentation. The cases available for written analysis and presentation are listed at the end of the syllabus.




As a team you are asked to prepare two written cases of your choice (see last page for case selection) and one computer case analysis using ServiceModel (Renaissance Clinic due 2/28). As an individual assignment you will use MS Project to prepare the Paymor Shopping Center case due 3/21. The written assignment involves a thorough analysis of a case, but you are limited to five pages, typed double-spaced, plus exhibits. The assigned study questions for the cases are shown in the detailed outline section of this course description. At a minimum these study questions on the case must be addressed in the written analysis.


(1) Papers should be printed, double-spaced, with normal margins. The name of the case should be on the first page of the text with your names, date, and course number.


(2) The page limit for each paper is five pages of text, plus exhibits. Note that these are maximum limits. Papers should be concise and coherent.


(3) Exhibits should contain specific types of analyses (such as financial, break-even, comparison, cost, competitive, etc.) and information that supports and is relevant but would be too detailed for the body of the paper.


(4) Please proofread your paper before turning it in. Papers for this course should be of the same quality that you would provide to the management of the business.





Assess each team member (including yourself) based on the following criteria:





Give each team member a grade that reflects his/her performance on the above dimensions. State the grade in terms of a percent, from 70-100%. For example, if your team worked effectively together you should rate everyone at 100%. However, do not grade anyone below 70%.



























Calculating Individual Grades


An average is determined for each team member based on peer percentage scores. Assume the example scores above are the average for each team member. If the grade on the team assignment was a 9 out of 10, each individual’s grade would be:




Assignment Grade

Individual Grade





















Note: Do not grade any member lower than 70%



A book report on the Critical Chain is an individual assignment due on the day the book is discussed in class as shown in the course outline. The written report is limited to five pages, typed double-spaced, plus exhibits. The assigned questions must be addressed as a minimum with further elaboration or reflections on the book welcomed. The guidelines above for written analysis of cases apply to the book report also.


Class Behavior and Individual Norms


Because every faculty member has somewhat different expectations as to class behavior and individual norms, I'd like to outline a few of mine at the outset.


(1) Please let me know in advance if you must miss a class. If you do miss a class, please find out from a classmate what additional assignments might have been made, and what handouts you may have missed.


(2) To help me learn your names as quickly as possible, I'd like you to use a name card in class. During the third class, I will pass around a seating chart and ask you to use the same seat for duration of the semester.


(3) Preparation of the case and thinking about the assigned questions is essential for a stimulating and rewarding class experience.


(4) For purposes of general class preparation, group work is acceptable and encouraged.


(5) I will try very hard to use the class time effectively and request that you do the same. This includes starting and ending on time.




Your course grade will be based on the following team and individual activities with weights as shown:



Renaissance Clinic Computer Case (due 2/28) 15%

Written Case Analysis 2@10% 20%


Critical Chain Book Report (due 2/21) 15%

Paymor Shopping Computer Case (due 3/21) 15%

Quiz 2@10% 20%

Class Participation 15%


Interpretation of Grades







Creative analysis exceeding expectations



Flawless in execution



Well done with minor blemishes



Addressed all issues but without creativity



Lack of depth in addressing issues



Real mistakes in understanding



Missed the point in addressing some issues


Why bother

An embarrassment


Note: Grades are final and no make-ups are permitted. Give it your best shot!


bOoks and Course PACKET


The following materials are required for the course:


Eli Goldratt, Critical Chain, North River Press, 1997. 0-88427-153-6


A Course Packet of cases is available at the GSB Copying Center.





Session #1 (January 19): THE BUSINESS OF PARADIGMS


Paradigms determine the way we see the world and our future. They help us evaluate and organize new information, but paradigms also can limit the way we look at life. Our paradigms can be so deeply rooted, so unquestioned, that they can become barriers to our ability to see new opportunities. The "old way" may seem like the "only way."


Video: The Business of Paradigms with Joel Barker (38 min.) - Call No. 2075


Discussion Questions on the Video:


1. When does a paradigm shift?

2. How can one anticipate a paradigm shift?

3. What skills are required to challenge assumptions?

4. How can imagination be a competitive resource?


Session #2 (January 24): PROCESS ANALYSIS


Reading: Glossary of POM Terms 9-687-019

Case: Kristen's Cookie Company (A) 9-686-093

A university student living on-campus has decided to start a fresh baked cookie business out of his apartment. This simple make-to-order business provides an opportunity to use tools of process analysis such as process flow diagrams and Gantt charts to address questions about the feasibility of the business.

Study Questions on the Case:

1. Answer the Key Questions.

2. Answer the Problems for Further Thought.

3. Construct a Gantt chart when the batch size is 2-dozen cookies.

4. For a 2-dozen batch size, is it possible to do it on your own? Why or why not?


Session #3 ( January 26): CAPACITY ANALYSIS


Reading: Capacity

Exercise: Fishing Fleet and Cannery

A firm operates both a fleet of fishing boats and a cannery. All fish brought in by the firm's fleet are processed at its own cannery. Read the note and the fishing fleet and cannery exercise. Be prepared to answer the questions at the end of the exercise.

Game: Yield Management Analyst




Case: National Cranberry Cooperative 9-675-014

National Cranberry is a New England cooperative that processes water-harvested and dry berries from local farmers. Farmers have been complaining about the excessive delays waiting for their trucks to unload fruit at the receiving plant. A suggestion has been made to invest in two new dryers at $25,000 each and convert dry berry holding bins to store wet-harvested berries at a cost of $5,000 per bin.

Study Questions on the Case:

1. Develop a process flow diagram and identify the bottlenecks. Show only the necessary level of detail – a common mistake is to have far too much detail. Note that dry and wet berries share some resources (dechaffers and separators). Assume that 2/3 of these capacities will be allocated to wet berries reflecting the anticipated 70% wet berry harvest in 1971.

2. Why are the delivery trucks waiting so long? Draw an inventory buildup diagram to examine the buildup of inventory at the wet bins. Assume that 18,000 barrels of berries (of which 70% are wet) arrive uniformly over a 12-hour day and that the plant starts processing at 7:00 am when the first truck arrives. What can you conclude about truck waiting times from this diagram?

3. Make recommendations for reducing overtime costs, decreasing truck waiting time, and improving the overall profitability of NCC. Validate your recommendations with a revised inventory buildup diagram.


Video: Ocean Spray (10 min.)


Session #5 (February 2): SERVICE PROCESS ANALYSIS


Case: Manzana Insurance – Fruitvale Branch


A competitor that has promised a one-day turnaround for all its agents is challenging Manazana, a property insurance firm. Manazana must redesign its property insurance process to improve its response time performance. Queuing analysis will be used to evaluate proposed improvements in the process.

Study Questions on the Case:


1. Does Manzana have adequate capacity to process the demand for requests? If, yes, why are the average turnaround times averaging 5-6 days when the standard processing times are in hours?

2. How important are policy renewals to Manzana's future? How is the demand for RERUNs different from that of all other requests?

3. It is commonly believed at Fruitvale that RUNs are the most profitable jobs? Is this belief justified?

4. Recommend a process redesign that will compete with the one working day turnaround guarantee offered by Golden Gate. Support with queuing analysis.

5. Discuss implementation issues associated with your redesign including staffing, reorganization, personnel training, and information technology needs.


Session #6 (February 7): SERVICE MODEL DEMO (Meet in Computer Lab)


Readings: SerivceModel Student Module, Exercise1: Call Center, Exercise 2: WIDGETS


Case: Pronto Pizza


Pronto Pizza is a delivery-only pizza service that promises delivery within 40 minutes of receiving a call for an order or the customer gets $2 off the price. Pronto employs a single pizza maker, paid $10 per hour, who can make, on the average, one pizza every three minutes. This service time has a negative exponential distribution. Pizzas are placed in a large oven with a capacity for ten pizzas to bake for approximately 12 minutes. The one-way travel time to deliver a pizza in the market area averages 10 minutes, with negative exponential distribution. Calls for pizza average one every five minutes, with negative exponential distribution. Drivers who use their own cars are paid $8 per hour to deliver pizzas to one customer at a time.


Study Questions on the Case



Note: Class will meet in Mod East Computer Lab, CBA 5.325


Session #7 (February 9): SERVICE MODEL TUTORIAL (Meet in Computer Lab)


Reading: Exercise 3: Reengineer Order Processing System


In a tutorial session a simulation model of an order processing system will be modeled and run.


Note: Class will meet in Mod East Computer Lab, CBA 5.325


Session # 8 (February 14): CAPACITY PLANNING (Meet in Computer Lab))


Case: Renaissance Clinic (Group Project)


Renaissance Clinic provides dedicated obstetric and gynecological services. The medical treatment at this facility is wrapped in an exclusive-feeling physical environment that is distinctly unique to Austin. The practice is intimate - only a receptionist and a nurse clinician assist Dr. Thompson.


Study Questions on the Case:



Note: Class will meet in Mod East Computer Lab, CBA 5.325


Session #9 (February 16): Project Day (Meet in Computer Lab)


Note: Class will meet in Mod East Computer Lab, CBA 5.325




Session #10 (February 21): Critical Chain


Readings: Critical Chain book report due addressing the following questions:


Questions: 1. What key insights about project management has the author discovered?


Session #11 (February 23): MANAGING PROJECTS


Lecture and discussion on project management topics beginning with project initiation using work breakdown schedules. Project management techniques such as variance analysis and earned value charts will be explored. Finally, we will discuss techniques for project controls, auditing, and methods for project termination.


Video: Alton Bridge (15 min)


Session #12 ( February 28): MICROSOFT PROJECT (Meet in Computer Lab)


Case: PERTing the Pumping Unit


An oil well located in West Texas has been drilled and capped. Now a pumping unit must be installed to bring the well into production with a pipe leading to a tank farm at some distance away.


Study Questions on the Case:


1. Based on the description of the project activities compute the expected time and variance of each. Note that each activity has an optimistic (a), pessimistic (b), and most likely time (m) assessment. Recall that the expected activity time is calculated as (a+4m+b)/6 and activity variance as [(a+b)/6] 2.


Note: Class will meet in Mod East Computer Lab, CBA 5.325


Session #13 (March 2): PROJECT DECISON MAKING (Meet in Computer Lab)


Case: Paymor Shopping Center (A) (B) (C) ( Individual Case)


Ingerson Associates, a general contractor, is in the process of completing a four-store addition to Paymor Shopping Center. Mr. Puckett, the owner, has approached Ingerson with a request to build a tire sales and service shop on the shopping site with its completion ready for the grand opening of the four store addition in 58 days.


Study Questions on the Case (A):



Study Questions on the Case (B):



Study Questions on the Case (C):



Note: Class will meet in Mod East Computer Lab, CBA 5.325


Session #14 (March 7): Quiz 1


Session #15 (March 9): Project Day (Meet in Computer Lab)


Note: Class will meet in Mod East Computer Lab, CBA 5.325




Session # 16 (March 21):


Guest Speaker:


Session #17 (March 23): NEW PRODUCT INNOVATION


Case: Alaska Airlines9-800-004


Alaska Airlines, serving west coast cities from Prudhoe Bay, Alaska to Puerto Vallarta, Mexico, has won awards for providing outstanding customer service. Faced with price competition from Southwest Airlines, Alaska is introducing frontline technology and customer self-service options to improve productivity and reduce costs.


Study Questions on the Case:



Video : Southwest Airlines: Herb Kelleher and His Airline (12min.)


Session #18 (March 28): PROCESS DEVELOPMENT


Case: Chaparral Steel: Rapid Product and Process Development 9-692-018


Located outside Dallas, TX, Chaparral Steel has been a successful mini-mill producing standard "I" beams for the construction industry using recycled auto bodies. With an interest in the more profitable wide-flange beams, Chaparral has been experimenting with a new continuous casting process called "near net shape" that will cast molten iron into a "dog-bone" shape requiring fewer rolling passes.

Study Questions on the Case:


1. What competitive strategy has Chaparral Steel chosen (i.e. low cost, differentiation, or focus)? Explain.

2. What features of the Chaparral process technology, organizational culture, and facility location support its competitive strategy?

3. Is Chaparral Steel an example of a learning organization? Explain.

4. Should Chaparral expand its Midlothian site or construct a new facility?


Video: Chaparral Steel (15 min.)


Session #19 (March 30): FOCUSED OPERATIONS


Case: Southwest Airlines-1993 (A) 9-694-023


Southwest Airlines, the only major U.S. airline to be profitable in 1992, makes a decision as to which of two new cities to open, or to add a new long-haul route. This case provides a window into Southwest’s strategy, operations, marketing, and culture. Lessons can be learned how an airline can simultaneously be a low-cost leader, service leader, and profit leader.


Assignment Questions:



Video: Interview with Herb Kelleher (10 min.)


Session #20 (April 4): EXCELLENCE IN QUALITY


Case:The Pursuit of Quality at AT&T Universal Card Services (A) 9-694-047


As part of its overall strategy for “delighting” customers, Universal Card Services, a wholly owned financial services subsidiary of AT&T has created a comprehensive quality measurement and compensation system. Through multiple measures of both internal process performance and external customer satisfaction Universal Card Services attempts to achieve rapid identification of process problems, ongoing assessment of customer satisfaction, and motivation of employees to sustain high levels of customer service. Despite the company’s success, its management continues to struggle to balance the basic tensions that arise from linking compensation to performance measurement.


Study Questions on the Case:



Video: National Association of Realtors Call Center (12 min.)


Session #21 ( April 6): FIELD SERVICE


Case: Otis Elevator: Managing the Service Force N9-191-213


The high margin service business of Otis Elevator is under attack from small local providers. Poor communications have resulted in nonproductive travel and preventative maintenance is being shortchanged because of unscheduled callbacks. Emerging communications technologies and scheduling software provide an opportunity to significantly improve the productivity of the field force.

Study Questions on the Case:


1. Discuss the relationship between elevator maintenance and callbacks as it relates to field service productivity.

2. What are the advantages and disadvantages of the three field maintenance organizational structures ( Boston, Glendale, and Dallas)?

3. Why might there be opposition to KDT and the OSM software from the mechanics? How would you overcome this opposition?


Lecture: Vehicle Routing Algorithm


Session #22 (April 11): MASS CUSTOMIZATION


Case: National Bicycle


A mass producer of bicycles is considering the introduction of a make-to-order system called POS (Panasonic Order System), which will use a measuring stand at the retail store to allow the manufacture of a custom fit bicycle.


Study Questions on the Case:



Session #23 (April 13): LEAN PRODUCTION


Case: Toyota Motor Manufacturing, USA Inc. 1-693-019


At its Georgetown, Kentucky plant a growing number of cars are sitting off-line with defective seats or are missing them entirely. The plant is determined to solve the problem using the famed Toyota Production System.


Study Questions on the Case:

1. What are the key operational principles of the Toyota Production System (TPS)? Be sure to understand not only the terms, but their fundamental purpose as well.


Video : Nissan – Oppoma Plant (12 min.)


Session #24 (April 18): OUTSOURCING


Case: Taco Bell Corp.9-692-058


Taco Bell is a fast food restaurant chain serving Mexican food reformulated to appeal to the American general public. As of 1991, the company had gone through a remarkable transformation and was hailed by the press and industry experts as having revolutionized the fast food world. In a period when most other fast food chains experienced flat domestic sales and declining profits, Taco Bell was profitable and increased its market share.

Study Questions on the Case:





Reading: “Recycling” by Wenyih Lee


Case: Australian Paper Manufacturers (A) 9-691-041


New found manufacturing capability is used as weapon to invade the market of a strong incumbent with careful attention to growing environmental concerns in the industry. The expansion requires consideration of financial, strategic, and ethical considerations.


Study Questions on the Case:



Session #26 (April 25): ROBUST DESIGN


Reading: "Robust Quality"


Exercise: Paper Airplane Design


Read the "Introduction to Parameter Design." Come to class prepared to build a paper airplane and conduct a Taguchi experimental design exercise.


Session #27 (April 27): FACILITY LOCATION


Reading : Service Facility Location


Case: Athol Furniture, Inc.


Athol Furniture is considering three potential sites upon which to build a store in Bluff Lake where two competing stores currently share the market. Athol does not wish to consider a store smaller than 10,000 square feet and only in increments of 5,000 square feet up to the maximum allowable size limit for the site.


Study Questions on the Case:


1. Read the note “Service Facility Location.” Use the Huff Spreadsheet Model (with l = 1.0), to recommend a store size and location for Athol Furniture, Inc.

2. What is the expected annual net operating profit before taxes and expected market share for the outlet you have recommended? Defend your recommendation.

3. Try two other values of l (e.g., 0.5 and 5.0) to measure the sensitivity of customer travel propensity on your recommended location.

4. Briefly state any shortcomings you may perceive in using the Huff model.


Session #28 (May 2): Quiz 2



Spring 2005 Course Outline Fitzsimmons


Session Date Topic Case


Module 1: Process Analysis


1 1/19 The Business of Paradigms

2 1/24 Process Analysis Kristen's Cookie

3 1/26 Capacity Analysis Fishing Fleet/Cannery

4 1/31 Manufacturing Process Analysis National Cranberry

5 2/2 Service Process Analysis Manzana Insurance

6 2/7 ServiceModel Demo (meet in lab) Pronto Pizza

7 2/9 ServiceModel Tutorial (meet in lab)

8 2/14 Capacity Planning (meet in lab)

9 2/16 Project Day (meet in lab) Renaissance Clinic


Module 2: Project Management


10 2/21 Critical Chain book report due

11 2/23 Managing Projects

12 2/28 Microsoft Project (meet in lab) Pumping Unit

13 3/2 Project Decision Making (meet in lab)

14 3/7 Quiz 1

15 3/9 Project Day (meet in lab) Paymor Shopping

Spring Break


Module 3: Strategic Elements of the Supply Chain


16 3/21 Guest Speaker

17 3/23 New Product Innovation Alaska Airlines

18 3/28 Process Development Chaparral Steel

19 3/30 Focused Operations Southwest Airlines

20 4/4 Excellence in Quality AT&T Card Services

21 4/6 Field Service Otis Elevator

22 4/11 Mass Customization National Bicycle

23 4/13 Lean Production Toyota Motor

24 4/18 Outsourcing Taco Bell

25 4/20 Recycling and Remanufacturing Australian Paper

26 4/25 Robust Design

27 4/27 Facility Location Athol Furniture

28 5/2 Quiz 2

29 5/4 Wrap Up




Case Write-up Choices




Make 5 Choices in Order of Priority


Alaska Airlines



Chaparral Steel



Southwest Airlines



AT&T Card Services



Otis Elevator



National Bicycle



Toyota Motor



Taco Bell



Australian Paper


Team Members: ________________________________








E-mail Correspondent ____________________________