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OM5 C2 IM
9. * A university currently has a recycling program for paper waste. The fixed cost of
running this program is $10,000 per year. The variable cost for picking up and
disposing of each ton of recyclable paper is $40. If the work is outsourced to a
recycling company, the cost would be $65 per ton.
a. If the forecasted demand is 275 tons, what should the university do?
b. Find the break-even point.
Using Equation 2.1 we compute
If demand is larger than 266.67 tons, recycle in-house; if demand is less than
10. Research and find a value chain integrator in a goods or service focused value
chain and write a short paper (maximum of two typed pages) on how it does its
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OM5 C2 IM
job within the supply chain. What value does the integrator bring to the supply
chain and its suppliers and customers?
Excel Logistics, iTunes, Orbitz, Verizon, Priceline, are just a few value chain
11. Summarize the key issues that managers face with global value chains in
comparison with domestic value chains. What must an organization do to address
these issues?
These issues are discussed in Sections 5 and 6 such as
Global supply chains face higher levels of risk and uncertainty, requiring
Global purchasing can be a difficult process to manage when sources of
supply, regional economies, and even governments change.
International purchasing can lead to disputes and legal challenges relating
Why go global?
What are different global customer and market segments?
12. Research and find an organization that has a disaster or emergency readiness plan
and write a short paper (maximum of two typed pages) on the topic. Focus your
discussion on value chain operations and logistic (supply chain) capability. Cite
your sources.
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Nearly every organization addresses emergency readiness as a result of terrorist
acts, foreign and domestic, as well as natural disasters such as hurricanes or the
oil platform explosion in the Gulf of Mexico in 2010. Students should readily find
13. Research and find a good or service with a quantifiable carbon footprint. Write a
short paper (maximum of two typed pages) on the topic, and if possible, how they
compute the carbon footprint. Cite your sources.
This is a challenging assignment since many organizations and governments are
only recently trying to quantify carbons emissions and footprints for a good or
14. Research and find a good or service that is biodegradable or carbon neutral. Be
prepared to present your findings to the class in a short 2- to 5-minute discussion.
A Web search reveals over 10,900,000 hits for “carbon neutral”, for example, so
students will have no problems researching these issues. Packaging, plastics,
15. Research any topic discussed in this chapter and write a box feature similar to
those in the book about what you found. Develop a creative title, cite your
sources, and explain to the class what lessons can be learned from the box
(maximum of two typed pages).
This is an open-ended question that allows students to write about what interests
Case Teaching Notes: Bookmaster Case Study
The objective of the case is to study bricks and mortar versus internet-based value chains
for acquiring books. Students should be familiar with the issues and alternative value
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OM5 C2 IM
chain structures and policies. Book, music, apps, and video downloading have become a
Kindle and iPad, for example, are restructuring industries and their value chains. The
e-book revolution is upon us, much like the e-music revolution of past years. For
example, one New England boarding school, Cushing Academy, found that only about
Case Questions and Brief Answers
1. Draw the “bricks and mortar” process stages by which hard copy books are
created, distributed, and sold in retail stores. How does each player in the value
chain make money? (You can use the exhibits in the chapter to help you identify
major stages in the value chain.)
The case begins by describing the huge number of physical and inconvenient
tasks involved in a customer going to a bookstore in your vehicle to search for
Students can describe how the traditional value chains works. Advantages of this
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Suppliers
Authors,
Distributor
s
Retail
Stores
Traditional Book Bricks and Mortar Value Chain (5 stage view)
Customers
Novels,
Manufacturers
Factories for
OM5 C2 IM
Disadvantages of this value chain structure include the difficulty finding the right
book, the physical act of going to and from the store, high price for the customer
2. Draw the process stages for creating and downloading an eBook today. How does
each player in this electronic/digital value chain make money?
In such an Internet-based on-line value chain, there is little need for expensive and
physical retail stores. Customers can download books in their homes, automobile,
office, or when walking around the wireless neighborhood or city at their
3. Compare and contrast value chain design and structure in the previous two
questions from customer and management viewpoints. What are the advantages
and disadvantage to each value chain design?
Advantages of an Internet-based value chain include (1) much lower prices for
suppliers, distributors and customers; (2) ability to customize to meet individual
tastes including selling a novel chapter by chapter (mass customization using
self-service) and (3) referring the customer to similar content such as other
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Suppliers
Authors,
Internet
Distributors
Today’s Book Internet-based (Digital) Value Chain (3 stages)
Customers
Novels,
OM5 C2 IM
Disadvantages of an Internet-based value chain focus on (1) eliminating the
economic incentive for artists to write books (Can e-providers protect the author’s
intellectual property?), (2) jobs lost at retail stores, factories, transportation firms
Have fun discussing this case! The students know much more about this value
(1) How long does it take a customer to buy a book in a store?
(2) How long does it take you to download one book on-line?
The answer to the last question focuses on customer to service provider in a retail
4. What is the role of operations in each of these value chain designs and structures?
What role does operations management play in this traditional bricks and
mortar value chain? Students may give examples and mention OM areas such
as (1) scheduling recording sessions, delivery trucks, and retail store staff, (2)
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OM5 C2 IM
What role does operations management play in an e-based value chain?
Students may give examples and mention OM areas such as (1) scheduling
recording sessions and on-line and telephone customer service staff, (2) inventory
5. What other criteria and issues are important in critiquing these two different value
chain designs?
The previous questions cover this question very well but here are some more
(a) A disruptive technology called the Internet is redefining the value chain in
this industry,
“It was a choice between publishers embracing technology and a
world-class technology company embracing publishing.”
“Publishers are selling drinks on the Titanic.”
(b) Price, cost and speed reductions are dramatic hundreds and thousands of
(c) The nature of the service encounters are greatly changed (bricks and
(d) Economic, social, and environmental sustainability have been improved,
(e) Value chain capability now exists to do mass customization, using
(f) Operations plays a major role in the old and new value chain designs and
(g) This is an example of “physical assets beginning replaced by
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Teaching Plan
You can read this case in class in 5 minutes and then discuss. We teach this case
early in an OM course and it works very well. Some of your students may have
iPads and Kindle’s with them in the classroom!!
We put much of this on the board especially the two drawing of a five versus three
stages value chain, and advantages of each. You can get prices of actual books
on-line versus hardcopy to highlight prices. Some general lessons include:
(a) A disruptive technology called the Internet is redefining the value chain in this
industry,
Note: Bloomberg Businessweek, February 5, 2012 has a cover titled “Amazon
“It was a choice between publishers embracing
(b) Price and cost and speed reductions are dramatic,
(c) The nature of the service encounters are greatly changed,
This case also ties to the Chapter 5 discussion of high or low scalability so use it
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