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A partner and owner of the Sunset Grill at Blue Mountain in the village at Blue Mountain, Ontario had very mixed emotions. The restaurant had just finished its first year of operation and had broken even, and had been named Business of the Year in the counties of Simcoe and Grey. On the other hand, the owner knew that operations were still far from perfect. This case was written for courses on operations, particularly in the section on managing capacity and demand. It could also be used in a service management or service operation course.

A summer intern student at 3M Health Care must analyse the health care division's logistics systems and report her findings to the vice president of 3M Health Care Markets. The vice president is most interested in the recommendations for the proposed changes to the existing method of distributing products to Canadian hospitals. This case provides sufficient information for students to assess the quantitative and qualitative issues relating to direct distribution versus maintaining its current supply chain structure of using valu-added resellers

In October 2008, the president of Millbrook Estate Homes Ltd. is trying to determine if his firm should take on a new development called Whistle Hill Estates. Millbrook began as a builder of modest homes on a large scale, but the Whistle Hill opportunity would involve developing high-end custom homes.<br><br><br><br>The president’s decision will have a significant effect on Millbrook’s future strategy. Millbrook can stay within its comfort zone and continue building large numbers of entry-level or mid-level homes, purchasing supplies in bulk, and negotiating volume discounts with the trades, or the company can choose to move into the high-end custom home segment, in which it will have to manage more complex designs, source custom materials, and provide a greater level of customer service to clients. In the second option, Millbrook has the opportunity to earn higher profits per house built. If the president wants Millbrook to expand into the custom home segment, he needs to consider what changes will be necessary to position the Whistle Hill opportunity for success.

This is an MIT Sloan Management Review article. In industry after industry, managers have taken deliberate steps to separate their value chains and shift important activities and functions to outside suppliers. But what happens when companies become too dependent on outside suppliers and cede them too much control when they lack the same degree of understanding and awareness about how important product or service elements fit together and what's necessary? How can they go about reestablishing critical internal levers? These questions arose during a multiyear research project examining supply strategy relating to new product development at a major European automotive company. In the late 1980s, the company -the authors call it Alpha -had direct supply relationships with more than 3,000 suppliers, most of them small companies that were involved in component production. In the early 1990s, however, management began shifting increasing amounts of design and engineering work to suppliers -a trend that was hastened by the proliferation of electronics in cars. By the mid-1990s, Alpha began to outsource the design of complete systems, such as dashboards, seats and safety systems. Alpha management hoped to increase flexibility, reduce lead times and cut development costs while improving product quality. But as the internal engineering teams got smaller and less up to date on the specific design and technical issues, problems emerged with integrating systems and making decisions about trade-offs. The article examines the difference between integrating physical systems and integrating the performance of such systems. The authors found that successful new product development depends on three main factors: component-specific knowledge; learning by doing; and technological renewal. Modular product architecture may make good sense for dealing with physical integration, but it is not adequate for resolving issues of performance.

This is an MIT Sloan Management Review article. The increase in outsourcing and offshoring of complex work has resulted in innovation efforts that require coordination across cultural, geographic and legal boundaries. If that coordination is mishandled, companies can find themselves needing to make multimillion- or even billion-dollar changes. The authors show how problems often arise along the boundaries between organizations and activities -with the likelihood of trouble increasing with the complexity of the work being done. Then they provide guidance on how to define boundaries. Specifically: What activities to combine/ separate; what should be in-sourced or outsourced; and what to onshore or offshore. Once boundaries have been established, the authors explain how they can be spanned by rules, technology and people. Even so, the complexity of the task makes midcourse corrections likely. Managers must anticipate and adapt their processes in order to reduce risk and, ultimately, cost.

The project manager for American Constructors Inc. (ACI) sat down with his team on September 24, 2009, to evaluate the progress of their building expansion project in Murfreesboro, Tennessee. The team had been working on the World Outreach Church expansion project for over a year already and it was nearing completion. Originally scheduled for completion by March 2010, the project deadline was pushed ahead to December 14, 2009, at the request of the client, who desired to use the property for the Christmas season. In an effort to maintain the reputation of ACI, which had grown to be known as middle Tennessee's premier contractor, the project manager and his team needed to determine if the December 14 deadline was feasible. This case was designed for use in an undergraduate or MBA operations management or introductory project management course. Developed to aid instructors in facilitating discussions of key project management concepts, the case content allows for an analytical approach to covering the basic skills in planning a project, including precedence relationship, critical path, due dates, uncertainty (PERT tasks), crashing, etc. It can be used to teach students the use of MS Project or other project management software. It can also be used for a less analytic, more managerial discussion of project management. During the case discussion, the instructor can bring out points regarding what actually happened (included in the teaching note) that help round out the case discussion.

Toyota, the world's leading automotive company and a global benchmark for quality and continuous improvement stumbled seriously. They faced a recall crisis unlike any they had seen before. Mr. Akio Toyoda, Toyota's president and grandson of the founder, was called to testify before the U.S. House of Representatives Committee on Oversight and Government Reform about the company's response to the recall. Through the lens of the accelerator crisis, the case documents trade-offs Toyota made while pursuing a marketing strategy based on quality and customer experience, while simultaneously pursing an operational generic cost leadership strategy. Historic information tracks the evolution of the company's early focus on lean manufacturing, quality, and the customer to the contemporary focus on aggressive cost control and rapid globalization; it also traces the factors that shaped the context in which the product failures occurred; and documents the failure of Toyota to respond appropriately and with sufficient speed. The case discusses Toyota's evolution from a small entrepreneurial family firm to global industry giant status; their role in driving industry-wide lean manufacturing, continuous improvement, and quality, known as the Toyota Way; their responses to a series of highly visible product failures; and the resultant erosion of Toyota's reputation. The case concludes with Akio Toyoda exhausted from his testimony, considering which combination of strategic, structural, or cultural challenges led to the current recall crisis. Had the company lost sight of its long-term philosophy, a key principle behind the Toyota Way? Had Toyota sacrificed quality and their historic customer focus at the expense of extreme cost reductions? Were nonfamily managers truly to blame for "hijacking" Toyota? What role did Toyota's supply chain and keiretsu structure play in the recalls? Or was Toyota simply subject to the latest media witch hunt in the wake of the global economic crisis?

In 2005, Stanford Hospital and Clinics (SHC) was internationally recognized as a leading medical institution in terms of its clinical capabilities and specialty expertise. However, the organization was lagging many of its competitors in terms of its operations and information technology (IT). While other major health care providers of a similar caliber had begun to transition to integrated electronic medical records (EMR) systems, SHC was using a patchwork of disjointed and outdated software programs to manage inpatient and outpatient care, as well as its back office functions. Dr. Kevin Tabb, who was the chief quality and medical information officer at the time, along with other executives within the organization, recognized the importance of adopting an EMR system. Yet the implementation of such a system would require a sizable investment over multiple years and would necessitate a major organizational disruption. In parallel with building a business case to justify the cost of the new system (see OIT-101A), Tabb and his colleagues had to think carefully about the implementation strategy that would lead to the successful adoption of the EMR system. This case explains EMR systems, describes SHC's vendor selection process, introduces Epic System Corporation's EMR offering, and explores the key issues that SHC considered in developing its implementation strategy, including the appropriate rollout approach and timing, how to manage system configuration and customization, and how to most effectively staff the project.

Supplement case for UV5972.

Furniture Bank was an organization that collected and distributed donated, gently used furniture to those in need. After several years of tight financial circumstances, the interim executive director was relieved that the past year had provided relief via generation of record amounts of excess cash. He was preparing a report to be presented to the board of directors concerning his thoughts on what direction he thought the Furniture Bank should take, concerning opportunities for growth and the community's needs. With several thousand dollars of unrestricted reserves to access, but competing ideas for use of those reserves, the executive director realized the organization faced some difficult strategic and tactical decisions. All the ideas seemed to be important for Furniture Bank but the executive director was unsure if the organization had the capability to implement them; and he was unsure how to evaluate their relative priority. Any recommendation he made had to consider Furniture Bank's long-term direction and build on its recent financial success.

The vice-president of manufacturing for W.C. Wood Company was reviewing a proposal to change the company's packaging for their line of refrigerators and freezers. The proposal recommended a move from cardboard packaging to a combination of polystyrene foam and clear plastic film. Switching to this method of packaging would save on material and labour costs, and result in a significant reduction in damage claims due to the increased package stability; however, a substantial capital investment would be required to launch the change. The equipment required to convert to the new design would require a six-month lead time and one week to install, preferably over the company's summer shut-down. The vice-president needed to evaluate his options of converting all lines at once or transitioning to the new packaging system in stages in order to make his decision.

The vice-president of manufacturing for W.C. Wood Company (Wood) was pleased with the implementation of the new packaging system for the refrigerators and freezers (known as clear pack). Despite some initial start-up issues, problems were resolved and customers had even begun complimenting Wood on the change. Therefore, it came as a surprise when Maytag refused to take delivery of the clear pack product and instead notified Wood of an impending warranty claim under their supply agreement for product damages. Wood had filed all the product testing forms and approvals with Maytag prior to implementing the clear pack product; however, the Maytag distribution warehouse had not been made aware of the proper handling requirements. Additionally, Maytag's largest customer had not been made aware of the handling changes and was similarly unprepared. As a result, damage claims had increased more than 300 per cent and were expected to rise if something was not done quickly.

Deborah McDonald of Upper Canada Insurance (Upper Canada) was reviewing several pieces of data she and her team had spent the last month collecting. McDonald and her team had been asked to address the inefficiencies in the life insurance application process, largely due to the high numbers of applicants withdrawing from the system (known as wastage) in the midst of the process. Upper Canada had determined that the most common reason for clients abandoning the application process was the long time required to get a response, followed by lack of communication and poor customer service. It was thought that by solving these problems, Upper Canada could meet or exceed industry wastage levels and improve the efficiency of the sales team. McDonald was assigned the task of analyzing the data and making recommendations to resolve the issues of the application process, but was not certain where to begin.

Grainger is a distributor of MRO (maintenance, repair, and operations) equipment, based in the US. Most revenues were from the US in 2008, but Grainger was positioning itself to expand its limited global presence. Grainger was increasing the volume of private-label products, which offer higher margins and meet price points. These private label products were sourced primarily from China, by a separate business unit (Grainger Global Sourcing, or GGS) within Grainger. The GGS network, as of 2008, had significant cost inefficiencies. Furthermore, the network was not well-suited for increasing global sales of the private label products. The task in the case is to re-engineer the supply chain to improve efficiencies and better position Grainger for global growth.

This technical note supports the "Shrimp Commodity Systems Learning Lab" (SCSLL) simulation (UVA-OM-1405S) used in environmental sustainability or systems thinking courses. It offers detailed guidance for the progression of interactive learning experiences in the SCSLL. Through the simulation, users develop an understanding of the issues facing the shrimp industry system and how policy alternatives could improve the industry's typical boom-and-bust patterns. A teaching note (OM-1428TN) is available.

This case follows Laura Milanes as she defines the problems facing Midco Pharmaceuticals, a leading manufacturer of store brand over-the-counter (OTC) drugs and vitamins. Students analyze Midco's new-product development (NPD) process. This requires critical-path, capacity, and process flow analysis. Students then conduct a cost-benefit analysis and make recommendations.

This note provides an introduction to operational systems thinking using the language of stocks and flows and guided by a scientific method-based mapping process. Operational mental models link explicit cause-and-effect relationships to the dynamics (behaviors over time) that unfold within the system. Such mental models improve students' ability to mentally simulate how different interventions in a system will affect its long-term performance.

In June 2008, the Kimpton Hotels' area director of revenue management (director) for Washington, D.C. was trying to process the most recent customer information report from Priceline.com (Priceline). In an attempt to improve revenues during periods of low occupancy at the hotel, the director had recently been using Priceline's name your own price bidding format. While using this sales channel had limited success, the director was wondering the best way to maximize the revenue coming from Priceline without cannibalizing existing sales or tarnishing the Kimpton brand. His challenge was to create a pricing strategy that would determine the optimal posted price for rooms in the Washington, D. C. hotel as well as the number of rooms that should be provided to Priceline.

In June 2008, the Kimpton Hotels' area director of revenue management (director) for Washington, D.C. finished creating a pricing strategy that would determine the optimal posted price for rooms in the Washington, D. C. hotel as well as the number of rooms that should be provided to Priceline.com. He realized there was even more potential to gain revenue by posting more than one price; however, this would add further complexity into the strategy and he was unsure of the potential impact of having multiple posted prices.

The Kimpton Hotels' area director of revenue management (director) for Washington, D.C. was excited about using Priceline.com to help fill rooms on some of Kimpton's low-demand weekends. He estimated the coming weeks' demand across three rate classes and across three lengths of stay (LOS), and he wanted to make sure he did not use Priceline.com too aggressively by releasing too many rooms onto the site.