Matching Supply with Demand: An Introduction to Operations Management Gérard Cachon ChristianTerwiesch All slides in this file are copyrighted by Gerard Cachon and Christian Terwiesch. Any instructor that adopts Matching Supply with Demand: An Introduction to Operations Management as a required text for their course is free to use and modify these slides as desired. All others must obtain explicit written permission from the authors to use these slides.

ROIC Return Revenue Invested Cap. Price Fix cost Flow Rate Var Cost Price Flow Rate Invested Cap.

Process Capacity Available Hours Hours per Table Number of workers Hours worked per year per worker Actual production time (activity time) Time needed before production time Set-up time Wait time : + +

Fix Costs Direct Labor Other Overhead Number of workers Hours worked per year per worker Rent Depreciation Available Hours Hourly wage rate Indirect Labor Management Finishing / QA Marketing

Fix Costs Direct Labor Other Overhead Number of workers Hours worked per year per worker Rent Depreciation Available Hours Hourly wage rate Indirect Labor Management Finishing / QA Marketing ROIC Return Revenue Invested Cap. Price Flow Rate Var Cost Price Flow Rate Invested Cap. Process Capacity Available Hours Hours per Table Number of workers Hours worked per year per worker Actual production time (activity time) Time needed before production time Set-up time Wait time Demand Price of wood Wood per table Kg per table Scrap loss

Invested Capital PP&E Working Capital Inventory Unearned Revenue % Down-payment Revenues Raw Materials WIP Time of down-payment Pre- Payments Total $ spent on wood Time of pre-payment Flow Rate Material costs : :

Flow Rate Break even volume Current volume Volume After improvement Fix costs Revenues Dollars

Return on Invested Capital EBIT Capital Revenue Cost Fixed capital RPM Yield ($/RPM) ASM Load Factor Labor cost Number of planes ASM per plane Wages per employee Employees per ASM ASM Fuel cost Cost per gallon Gallons per ASM ASM Other cost Other expenses per ASM ASM Number of planes Capital per plane Working capital Other capital