This book represents our view of the essential body of knowledge for an introductory Operations Management course. In the years that we have been teaching operations at The Wharton School, our students repeatedly asked us for recommended readings to go along with the cases and lectures in our courses. Unfortunately, our students found all our suggestions either too remote from the real world (fictitious companies with unrealistic assumptions) or too technical (measured by the number of Greek letters per page).
Given those shortcomings of existing textbooks, our guiding principle in the development of Matching Supply with Demand has always been “real operations, real simple”. “Real operations” means that most of the chapters in this book are written from the perspective of a specific company. The reason for this is twofold. First, we hope that the arguably somewhat dry material will come to life by discussing it in a real-world context. Companies and products are simply easier to remember than numbers and equations. We have chosen a wide variety of companies, small and large, representing services, manufacturing, and retailing alike. While obviously not fully representative, we believe that – taken together – these cases provide a realistic picture of operations management problems today.
Second, we do not want equations and models to merely provide students with mathematical gymnastic for the sake of an intellectual exercise. We feel that professional training, even in a rigorous academic setting, requires tools and strategies that students can implement in practice. We achieve this by demonstrating how to apply our models from start to finish in a realistic operational setting. For example, we do not assume the existence of inputs such as a demand forecast or a cost parameter, we actually explain how these inputs can be obtained in practice. Furthermore, we openly address the implementation challenges of each model/strategy we discuss, so that students know what to expect when the “rubber hits the pavement”.
As important as “real operations” is “real simple”. But “real simple” does not mean plenty of “blah-blah” without any analytical rigor. Quite to the contrary, instead of ducking the challenge, this text actually pushes the boundary of what is generally viewed as teachable to MBA students. To us, “real simple” means hard analysis that is made easy to learn. This is crucial for an operations text. Our objective is to teach business leaders, not tacticians. Thus, we need students to be able to quickly develop a foundation of formal models so that they have the time to explore the big picture, i.e., how operations can be transformed to provide an organization with sustainable competitive advantage and/or superior customer service. Students that get bogged down in details, equations and analysis are not fully capturing the valuable insights they will need in their future career.
So how do we strive for “real simple”? First, we recognize that not every student comes to this material with an engineering/math background. As a result, we tried to use as little mathematical notation as possible, to provide many real world examples and to adhere to consistent terminology and phrasing. Second, we provide various levels of detail for each analysis. For example, every little step in an analysis is described in the text via an explicit example, then a summary of the process is provided in a “how to” exhibit, then a brief listing of key notation and equations is provided at the end of each chapter and finally, solved practice problems are offered to reinforce learning. While we do humbly recognize, given the quantitative sophistication of this text, that “much simpler” might be more accurate than “real simple”, we nevertheless hope that students will be pleasantly surprised to discover that their analytical capabilities are even stronger than they imagined.
Version 0.1 of Matching Supply with Demand made its debut in the Fall of 2002 in the first part of the operations core course at Wharton. That experience led to version 0.2, which we tested on 12 sections of students in the second part of the operations core course at Wharton in the Spring of 2003. (At Wharton the semester long operations core course is actually chopped up into two quarter courses, one taught at the end of the Fall semester and one taught at the end of the Spring semester.) While we were gladly encouraged with the positive response from students, we used that course experience and feedback from student focus groups to create an improved version, this version.
Although this book has obviously been designed with MBA students in mind, this should not rule out its appeal to an undergraduate curriculum. Moreover, while you will probably not find this book in any airport bookstore (it is not that simple), we firmly believe that professionals in areas such as process analysis, supply chain management and service operations will also benefit from its content.
We teach the importance of quality in operations, and so we took quality quite seriously with this text. We checked and rechecked numbers ourselves, but we also engaged several students to check every number. Errors were found and corrected, and fortunately, fewer errors were found on each iteration of each chapter. While we hope this text is defect free, realistically, we are sure there must be a few additional errors. If any additional corrections are needed, we welcome to hear about them. This is a polished manuscript, but we will undergo another year of class testing before officially launching Matching Supply with Demand.
Although this book is still a work in progress, it is important to us to acknowledge the many people who have already helped with this project.
We begin with the 2004 MBA class that weathered our initial chapters through OPIM 631 and 632. It is not practical for us to name every student that shared comments with us, but we do wish to name the students who took the time to participate in our focus groups: Gregory Ames, Maria Herrada-Flores, Justin Knowles, Karissa Kruse, Sandeep Naik, Jeremy Stackowitz, Charlotte Walsh and Thomas (TJ) Zerr.
Along with our students, we would like to thank our co-teachers in the core last years: Krishnan Anand, Morris Cohen, Marshall Fisher, Serguei Netessine, Kathy Pearson, Stephan Spinler, Karl Ulrich, and Yu-Sheng Zheng. In addition to useful pedagogical advice and quality testing, they shared many of their own practice problems and questions. Anita Tucker, who will teach in the core this year, has already given us much useful feedback.
We have also received some indirect and direct assistance from faculty at other universities. Garrett van Ryzin’s (Columbia) and Xavier de Groote’s (INSEAD) inventory notes were influential in the writing of Chapters 2 and 11 and the revenue management note by Serguei Netessine and Rob Shumsky (Rochester) was the starting point for Chapter 13. The process analysis, queuing and inventory notes and articles written by Martin Lariviere (Northwestern), Michael Harrison (Stanford), and Christoph Loch (INSEAD) were also influential in several of our chapters. Martin, being a particularly clever question designer, was kind enough to share many of his questions with us. Several brave souls actually read the entire manuscript and responded with detailed comments. These reviewers included Stephen Chick (INSEAD), Mark Ferguson (Georgia Tech), Matt Keblis (Texas A&M) and Joe Milner (University of Toronto). Several more reviewers are busily at work, and we’ll happily acknowledge their contributions to the next version in the next version.
Our PhD student “volunteers”, Karan Girotra and Fuqiang Zhang, as well as Ruchika Lal and Bernd Terwiesch, took on the tedious job of quality testing. Greg Neubecker and Bethany Schwartz helped to collect and analyze data and could frequently solve practice problems faster than we could. The text is much cleaner due to their efforts.
The many cases and practical examples that illustrate the core concepts of this book reflect our extensive collaboration with several companies, including the University of Pennsylvania Hospital System in the Philadelphia region, the Circored plant in Trinidad, the Novacruz factory in New Hampshire, the Anser call center in Wisconsin, the operations group at O’Neill in California, and the supply chain group at Medtronic, Minnesota. We have benefited from countless visits and meetings with their management teams. We thank the people of these organizations, whose role it is to match supply and demand in the “real world”, for sharing their knowledge, listening to our ideas and challenging our models. Special thanks go to Jeff Salomon and his team (Interventional Radiology), to Karl Ulrich (Novacruz), Allan Fromm (Anser), Cherry Chu and John Pope (O’Neill) and Frederic Marie and John Grossman (Medtronic). Allan Fromm deserves extra credit as he was not only willing to share with us his extensive knowledge of service operations that he gathered as a CEO of a call center company, but also proof-read the entire manuscript and tackled most of the practice problems.
We thank Scott Isenberg, Cynthia Douglas and Colin Kelley at McGraw-Hill for providing guidance, motivation and insights.
Finally, we thank our family members, some of whom were surely unwilling reviewers that nevertheless performed their family obligation with a cheerful smile.