A Classroom Exercise to Examine the Trade‐off between Mission Capacity and Life Cycle Cost

Abstract

This article presents a classroom exercise, centered on a simulation that has been used for 4 years in an MBA program to help students develop an understanding of the trade‐offs involved in managing capital assets in the public sector. Though often ignored in business schools, mission is a key criterion that must be considered when managing such assets, and acts as a surrogate for profit. The case presents a rich environment in which the impact of cost reductions (or additional investments) on mission can be quantified, and trade‐offs can be assessed and discussed. It gives students a chance to develop creative ideas for process improvement, and provides sufficient data for them to analyze the impact of their suggestions in a rigorous way.

Stickley Adhesives

“…Lapre (2010) used experiential approaches to teach capacity planning in hospitals and recommended their use for novice instructors. Kang and Doerr (2015) used a hands-on simulation to teach the analysis of tradeoffs when planning capacity for a public sector service. Garcia and Hernandez (2010) described the use of problem-based learning to give students a deeper understanding of theoretical queuing models for various problem types.…”

A Simulation for Managing Complexity in Sales and Operations Planning Decisions

“…The simulation emphasizes the application of tools within a team‐based setting to make effective decisions. Simulation‐based learning environments enable students to generate relationships among the key components of the simulation as they engage in the role of decision makers to apply course concepts (Kang & Doerr, ; Zantow, Knowlton, & Sharp, ). Experiential learning enables illustrating “theoretical business and operations management concepts in practice by simulating the workings of an actual manufacturing organization” (Piercy, ).…”