Max Mednik
  • Home
  • About
  • Interests
    • Angel investing
    • Magic
    • Scuba Diving
  • Blog
  • Contact

Readings and musings

Lessons Learned from Operations Class

3/14/2011

2 Comments

 
Picture
Beware the bullwhip (effect)!
I enjoyed my operations class this quarter because the professor was fun and engaging, and I finally had the chance to be in a full, real class with  the rest of my section.

While most of my operations classes at Stanford focused on theory, such as around production systems design and supply chain management, this was a general course on operations management -- putting into practice through cases various higher level operations analysis techniques.

A lot of this wasn't new to me, but it was nice to see it in a different context and more from the perspective of a general manager. The objective of the class was to teach us how to use operations in an organization as a competitive "weapon" and not as a burden or friction to minimize.

Below are my biggest takeaways from the course.

  1. Companies fulfill their business strategy through operations. A company's goal is to make money, and it does this through its value proposition in one or more of the following areas: price, quality, time, and variety. The mix of these four determines the operations strategy that best aligns with the business strategy. For example, if variety and quality are key to producing some very customized product, a job shop manufacturing process with flexible, independent cells and scheduling would make sense, whereas if price and time are more important, such as in producing some commodity good, a continuous flow or assembly line process is a better fit.

  2. Manage by the bottleneck. We studied various quantitative techniques of process analysis and read The Goal to learn that the first area of attack when aiming to improve a system is the bottleneck. An hour lost on the bottleneck is an hour lost for the entire plant, whereas an hour lost on a non-bottleneck is a mirage.

  3. The bottleneck should be the most expensive resource. Otherwise, if the bottleneck is a cheap resource, it would be silly not to purchase additional copies of the resource until the point where it is no longer the bottleneck. We learned that at Amazon the bottleneck is an extremely large and complex sorting and box-filling robot; this is its most expensive piece of machinery, and the company does what it can to make sure it is operating at full capacity to meet demand.

  4. Don't optimize for efficiency, but for your goal (profit). Looking at localized efficiency (like the utilizations of labor or specific machines) is what many people do, and this leads to inferior global performance. As long as the bottleneck is at maximum utilization and running at a pace that matches sales, it is irrelevant how much of your labor or other machines you're utilizing (to a certain degree). You should make decisions that maximize profit, not ones that make your plant look "efficient" in as many areas as possible.

    This is a similar lesson to what I learned in my Thinking on Your Feet class this quarter, which I'll post about later: the difference between productive and effective thinking. You can be very productive and efficient in taking care of lots of tasks or brainstorming lots of ideas, but if you're just doing that to be efficient with your time rather than actively working towards a concrete goal, this is often time and energy that's wasted. This now reminds me of the w4w lesson from The 4-Hour Workweek: "work for work's sake" as opposed to work that's globally required and productive.

  5. There are many non-manufacturing (such as service) applications for the Newsvendor model. This is a simple model we covered in class that allows you to decide how much inventory or capacity to build up in order to deal with random demand and differing underage and overage costs. I thought it was neat how we applied the model to service industries (like hotel and flight overbooking) and even to web advertising inventory planning.

  6. The psychology of waiting lines: We read some research that presented some common findings about lines that I've definitely thought about or personally experienced before.

    -Unoccupied time feels longer than occupied time.
    -Pre-process waits feel longer than in-process waits.
    -Anxiety makes waits seem longer.
    -Uncertain waits are longer than known, finite waits.
    -Unexplained waits are longer than explained waits.
    -Unfair waits are longer than equitable waits.
    -The more valuable the service, the longer I will wait.
    -Solo waiting feels longer than group waiting.

    In class, we studied ways that queue waiting times can be minimized (analyzing various queue structures under Markov/Poisson/Exponential assumptions), and when they can't, there are ways to use the psychology results above to make waits "seem" shorter (providing entertainment, making the wait seem like it's an in-process wait, explaining waits, etc.).

  7. When redesigning queue layouts, minimizing actual service time by employing better servers/employees is more effective than employing multiple servers. In other words, one server who is twice as fast is better than two servers at half the speed. I thought this was an interesting result and shows how training and staff selection can be more important than simply hiring more people.
2 Comments
Keith
3/14/2011 04:40:27 pm

Now go out there and kill that final tomorrow! :)

Reply
Transcend Your Limits link
6/4/2014 08:35:08 pm

This is a great post. You really can learn a lot about yourself and how you deal with stress from an operation, and I like to think what doesn't kill you makes you stronger.

To read my story, have a look at this.. I went through a knee operation and I like to think it made me stronger.

http://www.transcendyourlimits.com/lessons-from-a-knee-arthroscopy/

Reply

Your comment will be posted after it is approved.


Leave a Reply.

    Archives

    July 2024
    June 2024
    May 2024
    March 2024
    February 2024
    January 2024
    November 2023
    August 2023
    June 2023
    May 2023
    April 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    January 2022
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    April 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    May 2019
    March 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    February 2018
    January 2018
    November 2017
    October 2017
    September 2017
    May 2017
    April 2017
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010

    Categories

    All
    Angel Investing
    Cacti
    Cars
    China
    Community Service
    Culture
    Design
    Djing
    Dogs
    Education
    Entertainment
    Entrepreneurship
    Family
    Finance
    Food
    Google
    Happiness
    Incentives
    Investment Banking
    Judaism
    Law
    Lighting
    Magic
    Marketing
    Medicine
    Networking
    Nolabound
    Philosophy
    Professionalism
    Psychology
    Reading
    Real Estate
    Religion
    Romance
    Sales
    Science
    Shangri-La
    Social Entrepreneurship
    Social Media
    Sports
    Teams
    Technology
    Travel
    Turtles
    Ucla
    Venture Capital
    Web Services
    Weddings
    Zen

    Subscribe

    RSS Feed

Picture
Picture
  • Home
  • About
  • Interests
    • Angel investing
    • Magic
    • Scuba Diving
  • Blog
  • Contact