OM in the News: Inventory “Shrinkage” on the Rise

Retailers regularly conduct a physical count of their inventory and compare it to what is recorded on their books. The difference is known as shrinkage, a broad term that encompasses not just internal and external theft but also process failures that could lead to inventory being lost or recorded inaccurately.

Shoppers now face items locked in glass cabinets in NYC and other cities

Target just announced that it expected the shrinkage problem to reduce gross margins for the year by over $600 million. TJX and Macy’s also reported higher shrink rates. The shift in shoppers returning to stores after a surge in online buying during the pandemic is partly responsible, writes The Wall Street Journal (March 13, 2023). More theft happens in stores, as opposed to warehouses that fulfill online orders. But a never-seen-before jump in organized retail crime in certain U.S. cities is also a factor.

External theft, which includes organized retail crime in addition to regular shoplifting, has become a bigger piece of the pie. Organized retail crime, involving rings that steal from stores in bulk and then peddle the goods online, cost retailers $720,000 for every $1 billion in sales. Seven years ago, theft by employees was the largest category of loss by retailers. Now, it’s external theft.

Retailers are combating the problem by adding security guards and cameras to stores, locking up goods and making use of facial recognition software to help identify repeat offenders. Macy’s is using radio frequency identification (RFID) tags to better track inventory, adding more security personnel to stores and securing high-end brands with locked cables and sensors.

Retailers and shoppers say there is a fine line between deterring criminals and annoying honest customers. “Retailers are locking up everything from shaving cream to soap,” said one customer. “These should be things that are quick and easy to grab and go. But now I’ve got to find an employee to unlock them for me.”  Some retailers agree they may have gone too far in their theft-prevention measures. Macy’s used to keep German shepherds in its Manhattan flagship for security sweeps, but discontinued the practice in 2015.  NYC police now ask shoppers to take off their face masks before entering stores, a measure intended to help them better identify criminals. The plea came after four men stole  $1.1 million of goods from a jewelry store.

Classroom discussion questions:

  1. What tools does Chapter 12 suggest stores use to control shrinkage?
  2. What is causing the theft increase?

OM in the News: Who Should Jack Up the Car in a Nascar Pit Stop?

The pit crew for Christopher Bell in action at Phoenix Raceway

“There are two ways to win a Nascar race,” writes The Wall Street Journal (March 10-11, 2023). The first is to go faster, when you’re in motion, than anyone else. The second is to spend less time at rest than your opponents, shaving away expensive tenths of seconds sacrificed in pit stops, as we illustrate in Chapter 10’s Global Company Profile.

Joe Gibbs Racing (JGR) has done it both ways—on the track, with star drivers like Denny Hamlin and Martin Truex Jr. In the pit, it has brought the business of data analytics to the greasy work of changing tires and refueling cars. JGR’s crews have been either the fastest or second-fastest in Nascar every year since 2014, a span during which the organization has won two Cup Series championships. A month into the 2023 season, three JGR drivers are among the top 10 point earners on the circuit, due largely to the roster of ex-football and baseball players assembled in the pit.

Their ranks include CJ Bailey, a former college running back who has become Nascar’s premier tire carrier, and Caleb Dirks, a former pitching prospect for the Atlanta Braves who now applies his length as a jackman, sprinting out with his hydraulic device and pumping the pitting car airborne. (An experienced pit crew member who works for a top-tier team, by the way, can make around $500,000 per year).

Affixing motion sensors and running JGR’s pit crew through a gamut of high-tech exercises. data analysts logged the fluidity with which they transitioned from one effort to another. A 4-tire pit stop is a frantic 5-man ballet—all tight corridors and heavy equipment, set at breakneck tempo. The difference between a 9.8-second and 10.8-second stop can decide a race and a season.

The analysts isolated biomechanical thresholds that, if met by a prospect, predicted success in a certain role. Prospective tire changers were valued for their baseball hitting background but also for their “arc of hip rotation.”  Tire carriers had their relative eccentric force production gauged. One such uncovered gem was Bailey. Their data revealed that he had the precise proportions of upper-body might and nimble footspeed of the ideal carrier. Last season with JGR he was graded as 13.8% more efficient than any other carrier in the sport—the fastest hauler of metal and rubber alive.

Classroom discussion questions:

  1. How do time and motion studies apply to Nascar pit stops?
  2. What methods analysis tools in Chapter 10 can be used to examine pit stop efficiency?

OM in the News: China’s Dominance in the Rare Earth Supply Chain

The minerals, metals and rare earths needed for the green and digital transitions are shaping up to be the oil of this century—complete with a race to secure raw materials and production capacity at home or in friendly locations.

China has the early lead, writes The Wall Street Journal (March 9, 2023), dominating production of many critical materials including lithium and rare earths. Over the past years, China secured deposits around the world and invested heavily in the domestic manufacturing of clean technologies such as electric vehicles, batteries and solar panels. As the graph shows, China has a clear lead in the rare earth supply chain.

Western nations have now made it a top priority to secure a supply of these materials. The West has been tempted by the economic opportunity but also chastened by the recent semiconductor shortages, Europe’s efforts to replace Russian energy imports, and Beijing’s support for Russia after it invaded Ukraine.

Going back to President Trump, the U.S. signed executive orders for critical minerals– and has had recent success in starting to build local supply chains. The European Union’s latest effort—a Critical Minerals Act—aims to kick-start mining, processing and recycling in that region. There is one area where the EU act is right on the money—accelerating permitting. Permitting has been a key challenge for companies investing across geographies and sectors including mining, processing, power lines, solar, wind and batteries. In the EU, ambitious permitting reforms appears to be be the biggest hurdle to getting political agreement on that bloc’s local production of EV batteries. Limiting or overriding local opposition is rarely a vote-winning stance.

We may also get a G-7 critical minerals buyers club of the Group of Seven advanced democracies to secure supply from mineral rich countries in Africa, Asia and Latin America. Reduced Chinese supply—if it happens—will force Western policy makers and voters to face the trade-off between the carbon benefits of wind energy or electric vehicles and the environmental and pollution costs associated with manufacturing those technologies.

Classroom discussion questions:

  1. Why are countries and companies so concerned about “rare earths”?
  2. What is the main benefit in dominating the mineral supply chain?

OM in the News: Corruption and Global Operations Management

In Chapter 8 (Location Strategies), we write: “One of the greatest challenges in a global operations decision is dealing with another country’s culture. Bribery and corruption create substantial economic inefficiency.” Table 8.2 (page 339) ranks corruption based on Transparency International’s annual survey, which has just been updated for 2022. The news is not encouraging.

The 2022 Corruption Perceptions Index (CPI)  shows that most of the world continues to fail to fight corruption: 95% of countries have made little to no progress since 2017. According to the Global Peace Index, the world continues to become a less peaceful place. There is a clear connection between this violence and corruption, with countries that score lowest in this index also scoring very low on the CPI. Governments hampered by corruption lack the capacity to protect the people, while public discontent is more likely to turn into violence. This vicious cycle is impacting countries everywhere from South Sudan (with a score of 13 (on a 0-100 scale, with 0 being highly corrupt and 100 being very clean) to Brazil (score of 38).

The head of Transparency International adds: “Corruption has made our world a more dangerous place. As governments have collectively failed to make progress against it, they fuel the current rise in violence and conflict – and endanger people everywhere. The only way out is for states to do the hard work, rooting out corruption at all levels to ensure governments work for all people.”

The CPI ranks 180 countries and territories by their perceived levels of public corruption. The CPI global average remains unchanged at 43 for the eleventh year in a row, and more than 2/3 of countries have a serious problem with corruption, scoring below 50.

  • Denmark (90) tops the index this year, with Finland and New Zealand following closely, both at 87. Strong democratic institutions and regard for human rights also make these countries some of the most peaceful in the world.
  • South Sudan (13), Syria (13) and Somalia (12), all of which are embroiled in protracted conflict, remain at the bottom of the CPI.
  • 26 countries – among them the United Kingdom (73), Qatar (58) and Guatemala (24) – are all at historic lows this year.

Corruption, conflict and security are profoundly intertwined. The misuse, embezzlement or theft of public funds can deprive the very institutions in charge of protecting citizens, enforcing the law, and guarding the peace of the resources they need.

Classroom discussion questions:

  1. Why is this a Chapter 8 topic?
  2. What world events have impacted corruption levels this past year?

Guest Post: The Cutting Stock Problem

Prof. Howard Weiss suggests an interesting problem. It is called the “cutting stock problem,” which is often solved using linear programming, the topic of Module B.

What is the major thing that your television, tablet and phone all have in common? They all have a glass display screen. These display screens are all cut from a larger piece of glass known as the Mother Glass.

Mother glass is the largest possible size of glass that can be fabricated that will not break under its own weight. In 1987, the first mother glass, termed Generation 1, was roughly 12 inches by 16 inches accommodating nearly 200 square inches of screen. The latest mother glass, Generation 10, accommodates more than 70 times that amount of screen.

Consider mother glass that is 87 inches by 98 inches for a total of roughly 8,500 square inches. A 65-inch television has a width of 52 inches and a height of 39 inches for a surface area of 2027 inches. If surface area was all that mattered than this mother glass could be used for 8500/2027 = 4 (you have to round down), 65-inch televisions. However, the longer side of a 65-inch television is 52 inches and you cannot fit two of them on top of each other because the mother glass only has 98 inches for its longer dimension. If you make three, 65-inch televisions then you are utilizing 3*2027 inches of the mother glass or only 71% of the mother glass.

The layout chapter (Ch. 9) in your Heizer/Render/Munson textbook describes Assembly Line Balancing. The concepts of rounding down, making 4 televisions in theory, but only being able to make 3 televisions in practice, and utilization are identical to Assembly Line Balancing concepts of rounding down, not always being able to achieve the minimum number of stations and utilization of time, rather than area (square inches).

Fortunately, there are other options that better utilize the mother glass. If you only want to make one size of television, you could make six 55-inch televisions, eight 48-inch televisions or eighteen 32-inch televisions, each of which utilizes over 90% of the mother glass. In addition, you do not have to make only one size of screen on the mother glass. For example, glass could be cut as shown in the diagram above that includes both 55-inch televisions and 65-inch TVs.

Classroom discussion questions:
1. What is the largest single panel LCD that is currently manufactured? (Check it out on-line)
2. Using graph paper determine how many 83-inch and 32-inch televisions could be cut using the Mother Glass dimensions above.

OM in the News: Foxconn’s Big India Expansion

Apple has identified India as a prime destination as it seeks to diversify the sites where its products are assembled.

Apple’s main manufacturer, Foxconn Technology, is considering a major expansion in India, including assembling millions more iPhones and setting up new production sites as it seeks to further diversify beyond China, reports The Wall Street Journal (March 6, 2023). It aims to boost iPhone production to 20 million units annually by 2024 and triple the number of workers to as many as 100,000 at its existing plant near Chennai. The plant currently produces 6 million units.

Foxconn also plans to build:  a new production facility in Karnataka, where it would make products including iPhones; a new production site in Hyderabad; and a silicon carbide fabrication plant for its semiconductor business. The Indian government has offered billions of dollars of incentives in recent years to lure global manufacturers to India, as part of a major push to boost advanced manufacturing jobs and decrease reliance on electronics imports.

Meanwhile, Apple has been pushing suppliers to diversify beyond China after many of them faced production disruptions in China multiple times during Covid lockdowns. Geopolitical tensions have been growing between the U.S. and China, as well as between Beijing and Taiwan, where Foxconn is based.

China has been the biggest manufacturing hub in the electronics supply chain for years, with Apple a major driver after building much of its supply chain and assembly in the country over the past two decades.  Concerns over that reliance heightened after protests erupted at the world’s biggest iPhone production site in central China late last year over tight pandemic control policies and wages. Still, expanding into India won’t mean companies such as Apple and Foxconn leaving China. The supply-chain infrastructure that these companies have built over the past decades there can’t be easily replaced by other countries.

Despite strides in local automobile and smartphone production in recent years, India has long trailed regional rivals in advanced manufacturing due to concerns over the country’s challenging bureaucracy, protectionist rules and underdeveloped infrastructure. India, alongside Vietnam, has already been identified by Apple as a prime destination with the company seeking to diversify the sites where its products are assembled. Apple has told its suppliers to plan more actively for assembling its products beyond China.

Classroom discussion questions:

  1. Why India and Vietnam? Why not the U.S?
  2. Chapter 8 lays out key success factors that affect location decisions (see page 337). Which of these factors is Apple considering?

OM in the News: The Boarding Logjam

The glacial pace of boarding planes irritates frequent fliers and airline employees, writes The Wall Street Journal (March 3, 2023). Along with other preflight requirements, it also adds costly time on the ground for Southwest and other airlines, which regularly study ways to speed up boarding.

Southwest employees carry mobile devices to speed up processes such as checking bags.

Today, Southwest is on a mission to shave 5 minutes off the time a plane spends at the gate between flights. The average “turn’’ is now 40 minutes for its smaller Boeing 737s and 50 for the larger ones. “If you can collect up enough of these minutes in each turn, then you can start to squeeze out some more flying,’’ says Southwest’s COO.

Research shows boarding bottlenecks are the biggest detriment to turnaround times. Delays in seconds between passengers finding their seats, or sitting in the wrong seat, add up fast. Southwest is testing 11 concepts at four gates at the Atlanta airport. Signs tell passengers they are entering an “innovation zone.’’ The Atlanta project is a big component of Southwest’s 5-minute quest, with goals of saving 2-3 minutes on boarding per flight. Southwest hopes the rest of the time savings can come from efforts including bigger overhead bins, a possible increase in boarding planes from the front and back simultaneously, and paperless takeoff documents.

One of the biggest changes: The stanchions where passengers line up to board have video monitors. They display a boarding countdown, an alert when important announcements are being made and flashing lights when boarding begins. Southwest is also testing a designated preboarding area for passengers in wheelchairs and families boarding together, a staging area it hopes will reduce gate crowding. It went so far as to test different carpet colors for each area—yellow is out because it showed stains.

Southwest brought music to the jet bridge because the team’s research found people move faster to up-tempo music. Preliminary results show the music and prerecorded jet bridge announcements about bin space, seat availability and other information are helping. They answer the questions flight attendants say they hear over and over again during boarding.

Classroom discussion questions:

  1. What other suggestions do you have to speed up the boarding process?
  2.  What tools for process analysis in Chapter 7 of your Heizer/Render/Munson text can be applied in  a case like this?

OM in the News: Child Labor Abuse in the U.S.

Throughout our text, we offer chapter-by-chapter Ethical Dilemmas. What would you do in the case of underage workers at a subcontractor’s plant in Viet Nam? Slave laborers making your Nikes in China? But in a New York Times (Feb, 26, 2023) expose, the headline reads “Brutal Jobs Common for Migrant Kids. Well Known Brands Use Vulnerable Labor Force.” 

Migrant children gather on a school day to find roofing, landscaping or other work in Florida.

Except the article is about manufacturers in the U.S. It opens: “The factory in Michigan was full of underage workers who had crossed the southern border by themselves and were now spending late hours bent over hazardous machinery, in violation of child labor laws.”  In L.A., children stitch “Made in America” tags into J. Crew shirts. They bake dinner rolls sold at Walmart and Target, process milk used in Ben & Jerry’s ice cream, and help debone chicken for Whole Foods. Middle-schoolers make Fruit of the Loom socks in Alabama. In Michigan, children make auto parts for Ford and GM. Girls as young as 13 wash hotel sheets in Virginia, 12 year old roofers work in Florida and Tennessee and other underage workers are employed by slaughterhouses in Delaware, Mississippi and N. Carolina.

Migrant child labor benefits both under-the-table operations and global corporations. The workers are part of a new economy of exploitation: Migrant children, who have been coming into the U.S. without their parents in record numbers. This shadow workforce flouts child labor laws that have been in place for nearly a century.

The number of unaccompanied minors entering the U.S. climbed to 1/4 million in the last 2 years – three times what it was 5 years earlier. Nearly half are coming from Guatemala, where poverty is fueling a wave of migration. Parents know that they would be turned away at the border or quickly deported, so they send their children in hopes that remittances will come back.

But as more and more children have arrived, the White House has ramped up demands to move the children quickly out of shelters and release them to adults who will agree to house them. Caseworkers say they rush through vetting sponsors, and the government lost contact with 1/3 of migrant children. Caseworkers complained that the U.S. regularly ignored obvious signs of labor exploitation.

Classroom discussion questions:

  1. As a hotel operator, what do you do when you find 13 year-olds working for you?
  2. What is the solution?

OM in the News: New York City’s Inventory Bust

Just last week we posted a blog by Howard Weiss that dealt with “stockpiling.” Now comes a surprising revelation on how New York City’s then mayor Bill de Blasio stockpiled over $225 million in pandemic-related supplies that are now almost worthless.

Since last summer, the city has systematically tried to auction off millions of dollars worth of Covid-related personal protective equipment (PPE)  and medical supplies — gowns, face shields, hand sanitizer, KN95 masks, N95 masks — that it decided are no longer needed. Many of these supplies remain in their original packaging and are brand-new. About 9.5 million items purchased by NYC for $224 million  have been auctioned so far, garnering about $1/2 million, reports THE CITY (a NY weekly on Feb.21, 2023) .

A top NYC official fretted in July 2022 that if the public learned about the auctions, it would prompt an inquiry “about the city’s over-buying during Covid,” an email reveals. So officials “crafted talking points to address why the city is auctioning off PPE while Covid cases continue to persist.”

Here are a few examples:

Taxpayers paid $12 million for 3,000 “bridge vent” breathing devices. The devices were unloaded, unused, in an auction described as “non-functioning medical equipment sold as scrap metal.” A junk dealer picked up the entire $12 million, 500,000-pound load — for only $24,600.  It took 28 truckloads to cart the stuff away.

In many cases, the city paid wildly inflated prices. One company sold the city 50,000 face shields at $6.70 per shield when the average open market price was $3.67. So taxpayers paid $335,000 for items that on average should have cost $183,500. This month, the city put up for auction a lot containing 701,100 face shields, with an opening bid of $1,000. That’s less than one penny per shield.

Huge discounts were also available for isolation gowns. NYC has been trying to sell off millions of these — still packed in their original boxes — for a tiny fraction of what taxpayers paid for them. Last month it offered a lot of 97,850 of their gowns for $1,000. It got zero bids and put the same lot up again last week, dropping the opening price to $280.

As of last week, taxpayers had shelled out $17.8 million for warehousing 13,500 pallets of these stacked medical goods. A city official recommended more aggressive marketing of auctions, lowering starting bids, breaking lots into smaller purchases, and giving some of the stuff away “in parks, subway stations.” And one other option: “destroying whatever can’t be auctioned.”

Classroom discussion questions:

  1. Evaluate this inventory situation.
  2. How would you resolve the problem?

 

OM in the News: The Shifting Supply Chain Winds

The world economy is undergoing significant changes as we shift from a global approach to one focused on regional and national production, reports Industry Week (Feb. 21, 2023). Demographic, geographic and political factors are reshaping our world and driving the change. Going forward, companies will need to continue to navigate supply chain disruptions, China risk, and concerns about capital outlays. The new model will not be defined by the globalization that dominated the last half-century. Here are four of the challenges the article presents:

The American China Crisis The post-COVID world has escalated tensions between the U.S. and China, with allies involved on both sides. Consumers still want the low-cost products they can get through the Chinese manufacturing value chain. But companies that ignore the post-China supply chain plan are putting their companies’ futures at risk with a clear and quantifiable situation.

Regional Industrial Labor and Skill Shortage Companies are looking to low-cost manufacturing zones in North America and Europe in an effort to move higher-value production to the region. Much of the shift to date has been items where a logistics penalty supported a more rapid move. Challenges exist for smaller commodity components with low margins, which are currently manufactured in China. These parts, mostly taken for granted, will likely stress supply chains in the near future. Purchasing teams need to regionalize their value chains. Mexico continues to shine as the heart of the North American low-cost manufacturing engine.

Shifts in the Semiconductor Industry The semiconductor life cycle has historically been cyclical, and this time is no exception. COVID drove a rapid expansion in consumer electronics, pulling this cycle ahead. Automotive companies suffered, but availability is temporarily increasing. However, with the shift to EVs requiring a growing number of semiconductors per vehicle, constraints will re-emerge. The U.S. has taken steps to engage allies and block further development of a Chinese semiconductor industry.

The War in Ukraine The Russian war in Ukraine continues to be a serious crisis with disruptions across Europe. Neon gas supplies remain tight, impacting semiconductor production. Companies should be evaluating a shift to military and government production if the Ukraine war breaks out to a larger conflict in Europe. There is a short window for companies to re-engineer value chains for risk mitigation.

The Industry Week article concludes that  “2023 is an opportunity for companies to work together to restructure and regionalize their manufacturing value chains.”

Classroom discussion questions:

  1. Why is Mexico a popular regional option?
  2. What factors are impacting the China supply chain?

 

OM in the News: Pilots and the Airline Capacity Problem

Airlines have complained about a shortage of pilots for several years, but they made it worse during the pandemic by encouraging pilots to take early retirement when air travel collapsed in 2020. About 10,000 pilots have left the field since then, reports the Telegraph Herald (Feb. 10. 2023).

Southwest Airlines has more than 700 planes but parks 40 to 45 of them each day because it lacks pilots to fly them. That amounts to more than 200 flights a day or 8% of Southwest’s flying.

United Airlines’ CEO said the lack of pilots will continue to prevent airlines from expanding as much as they would like to take advantage of strong travel demand. “Pilots are and will remain a significant constraint on capacity,” he said.

The pilot shortage is most severe at smaller carriers that don’t pay as well and serve as stepping stones to the big airlines. Many of them operate regional flights under the names of American Eagle, United Express and Delta Connection. Those carriers have parked more than 400 planes for lack of pilots, and air service is collapsing as a result. Regional airlines are short by 8,000 pilots and a dozen smaller cities have lost all air service — about 50 more have lost half or more of their flights — despite the broad rise in travel demand. (The median annual pay for U.S. airline pilots last year topped $200,000 by the way).

If a pilot calls in sick, often there is no one immediately available to replace him or her, and that is leaving tens of thousands of travelers stranded. The lack of pilots contributed to a 52% increase in flight cancellations last year compared with 2021.

The shortage started even before the pandemic. Over the past decade or two, industry officials warned it was coming as travel boomed and thousands of U.S. pilots approached mandatory retirement age. The Federal Aviation Administration raised that age from 60 to 65 in 2007, which just pushed the problem off for a few years.

Classroom discussion questions:

  1. Supplement 7 (Capacity and Constraint Management) provides what tips for when demand exceeds capacity?
  2. What is the solution for regional carriers? For the major carriers?

Guest Post: Why Does the U.S. Keep Stockpiles?

Prof. Howard Weiss shares his insights with us monthly.

Your Heizer/Render/Munson text inventory chapter (Ch. 12) discusses the use of safety stock. While companies use safety stock, so too does the U.S. maintain safety stock, termed stockpiles, for several different types of products. The most well-known stockpile is that of the Federal Emergency Management Agency (FEMA) which was most recently used due to the damage caused by Hurricane Ian. FEMA stockpiles commodities such as food and water and equipment such as generators across eight distribution centers.

The Strategic National Stockpile (SNS) was created in 1999 for the storage of medical supplies. It has recently been in the news because at the end of 2022, the SNS released flu medication due to the high number of patients with flu across the country. In addition to medication, the SNS contains masks, gloves, gowns, respirators, face shields and other emergency supplies. These supplies are stored at secret locations. Your textbook discusses preventive maintenance in the Maintenance and Reliability chapter, and one other aspect of storing the ventilators is that they each must undergo annual preventive maintenance.

Since 1975, the U.S. has maintained a Strategic Petroleum Reserve (SPR) to be used in the event of a disruption in the flow of oil. The oil is stored in underground tanks in Texas and Louisiana. In November of 2021, oil was released due to the rising cost of gasoline and in March of 2022, oil was released due to the invasion of Ukraine. The reserve is currently at its lowest level since 1983. In addition to the SPR there is a separate stockpile of home heating oil maintained in Boston, New York and Groton, Connecticut for the Northeast section of the country because the Northeast has the majority of homes that use heating oil.

In 1925, the U.S. authorized the creation of the National Helium Reserve in Texas. Helium was used for blimps by the military and has other uses, including medical ones. In 1996, plans were created to move control to the private sector by 2023. In 1977, the government began to purchase the milk that dairy farmers could not sell. It converted the milk into cheese and other products and ultimately stockpiled over 500 million pounds located in 35 states.

Not surprisingly, the U.S. stockpiles weapons and ammo and rare earth materials used for weapons. Currently these stockpiles are low due to release of the stockpiles to the Ukraine.

Classroom discussion questions:
1. What are some of the items that individuals stockpiled at the beginning of COVID?
2. What is another downside to stockpiling equipment in addition to having to maintain the equipment?

OM in the News: Electric Cars and the Climate

An EV charging at a shopping center in California

Replacing all gasoline-powered cars with electric vehicles won’t be enough to prevent the world from overheating, says a new U. of California report. “The report offers a look at the environmental and economic sacrifices needed to meet net-zero climate goals,” writes The Wall Street Journal (Feb. 13, 2023).

The study notes three problems:

Problem No. 1: Electric-vehicle batteries require loads of minerals such as lithium, cobalt and nickel, which must be extracted from the ground like fossil fuels. If today’s demand for EVs is projected to 2050, the lithium requirements of the US EV market alone would require triple the amount of lithium currently produced for the entire global market. Unlike fossil fuels, these minerals are mostly found in undeveloped areas that have abundant natural fauna and are often inhabited by indigenous people. Mining can be done safely, but in poor countries it often isn’t.

Problem No. 2: Mining requires huge amounts of energy and water, and the process of refining minerals requires even more. Mining accounts for 4% to 7% of global greenhouse-gas emissions. Auto makers have made a priority of manufacturing electric pick-up trucks and SUVs because drivers like them, but they require much bigger batteries and more minerals. More mining to make more EVs will increase CO2 emissions. It will also destroy tropical forests and deserts that currently suck CO2 out of the atmosphere, the report says.

Problem No. 3: Producing EVs is an energy- and emissions-intensive process with high levels of embodied carbon. Electrification of the US transportation system will massively increase the demand for electricity while the transition to a decarbonized electricity grid is still underway.

The report concludes that the auto sector’s “current dominant strategy,” which involves replacing gasoline-powered vehicles with EVs without decreasing car ownership and use, “is likely incompatible” with climate activists’ goal to keep the planet from warming by more than 1.5 degrees Celsius compared with preindustrial times. Instead, the report recommends government policies that promote walking, cycling and mass transit.

Classroom discussion questions:

  1. Comment on the report’s recommendations.
  2. What can overcome the three problems cited?

 

MyOMLab: Enriching MyOMLab Problem Selection

Readers may have noticed, that in the 14th edition of our OM text, we have continued to add to the rich selection of solved problems and end-of-chapter problems (which now comprise about 1,000 static problems). When the multitude of algorithmic versions are added, the number of problems may exceed 10,000! (We have actually not tried to count them).

In addition to the end-of-chapter problems, MyLabOperationsManagement also includes a number of problem variations noted as ‘brief’, ‘alternate’, and ‘extension’.

‘Brief’ problems are designed to allow faculty to assign problems with a smaller data set (see Problems 4.3, 4.6). These may be especially useful for time-constrained testing situations or with assignments containing a number of other problems. In these situations, students focus a larger percentage of their time on applying the technique a few times rather than generating “busy work” by repeating the same technique over and over. While the problem should take less time to solve, the ‘brief’ problem may have a data set that is smaller than should be used for a reasonable sample in the real world. Faculty may want to note this for students.

‘Alternate’ problems are variations of the text problem(s) (see Problems 15.24, 15,25 and 15.26) to enhance the variety of problems available to assign to students.

Finally, ‘extension’ problems  enrich the comprehensiveness of the problem, as in Chapter 15, for example, where the critical ratio option has been added as an ‘extension’ of the scheduling problem (see Problems 15. 25, 15.27)

In all cases these problems can be accessed by the instructor by ‘clicking’ the “Show other custom questions” in the Assignment Manager, under Instructor Tools.

Guest Post: What Does a Super Bowl Parade Cost?

Dr. Misty Blessley, Associate Professor of Statistics, Operations, and Data Science at Temple U., shares her sports preferences with us today.

Next week, the winners of Super Bowl LVII will be honored by their hometown fans in a Super Bowl Parade. This Sunday, the Kansas City Chiefs will face off against the Philadelphia Eagles. Everyone loves a victory parade, but how does a city plan for a parade that might not happen? As a faculty member at Temple University, upon seeing the Eagles clinch the NFL Conference Championship, on Sunday, January 29th, I looked into parade operations. In 2018, the parade celebrating the Eagles’ Super Bowl LII win was held the following Thursday. Public transit was halted to Temple’s campus, which disrupted a joint event with Institute for Supply Management.

If the parade were to be held on the Thursday following Super Bowl LVII, it would disrupt a Supply Chain Management consulting event. My first stop was to Google, When is the Super Bowl parade in Philadelphia?, and the response was,“omg, please stop Googling this until the big game actually happens.” (The Philadelphia Inquirer, January 30, 2023). As of earlier this week, Mayor Jim Kenney, “… doesn’t really want to talk about it.”(NBCSports.com, February 7, 2023).

The EA Madden game is going with an Eagles victory (Fortune, February 6, 2023), as are the legalized betting organizations. Still, we forge on with consulting event planning. I took a picture of a long line of portable toilets north of City Hall, which were in preparation for Pope Francis’ visit in 2015. It is to be food for thought about all that goes into planning a parade. “Kansas City officials are planning a multimillion-dollar parade for Feb. 15…,” (The Kansas City Star, February 2, 2023).

I’ll be cheering for the Eagles, but my heart belongs to the Pittsburgh Steelers. If you are like me, this Super Bowl commercial is for you – https://www.youtube.com/watch v=4taNFpPmZag . Still, enjoy the game!

Classroom discussion questions:
1. How can project management be used to plan a parade? What activities will most likely need to be crashed/require crashing cost payment?
2. What are the advantages and disadvantages of Philadelphia’s and Kansas City’s positions? Win or lose, what do they mean for city officials, planners and for workers employed in the hometown, in terms of productivity?
3. How can forecasting be used in the planning process?