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15.764 The Theory of Operations Management, Spring 2004. (Massachusetts Institute of Technology: MIT OpenCourseWare), (Accessed 10 Jul, 2010). License: Creative Commons BY-NC-SA

Outside of a factory building with smokestacks.

By focusing their operations directly on customers, some manufacturing businesses have gained competitive advantages. (Image courtesy of Ede Bittle, EDE.DESiGN.)

Course Highlights

The classes include student presentations of different research papers, which lead into group discussions. Readings are drawn from a range of classical and recent research papers.

Course Description

The doctoral seminar 15.764 focuses on theoretical work for studying operations planning and control problems. This term's special topic, "Customer-Driven Operations," considers how a number of companies have succeeded in focusing their operation systems on the customer. The class reviews the quantitative models and theoretical tools underlying some of the customer-driven operational practices of these cutting-edge companies. Students will read and present research papers on topics such as distribution systems, short life-cycle product management, and forecast evolution models.

This MIT OpenCourseWare site is dedicated to the memory of Bhuwan Singh, a member of the class.

*Some translations represent previous versions of courses.


Special Topic for Spring 2004 Course

Customer-Driven Operations


A number of companies are currently deriving significant competitive advantage from the customer focus of their operation systems; examples include Dell (personal computer) through its direct-to-consumer and assemble-to-order model, Zara (fashion retail) through product testing, forecasting and life-cycle management, and Amazon (e-retail) through its unique distribution system and web interface.

The purpose of this year's doctoral seminar in operations management is to review the quantitative models and theoretical tools underlying or describing some of the customer-driven operational practices of these and other cutting-edge companies. Accordingly, we will cover a wide range of both classical and very recent research papers illustrating the following topics:

  • Distribution Systems
  • Customer Choice Models
  • Assemble-to-Order Systems
  • Short Life-Cycle Product Management
  • Customer Service Centers
  • Forecast Evolution Models

Overall, this seminar should be a valuable opportunity to both learn about classical results and identify interesting current research opportunities.


Each class will consist of a paper presentation by a student, a group discussion about the paper and its general theme, and some remarks (possibly including theoretical complements) by the professor. We will maintain throughout an informal (luncheon) setting, with the goal of stimulating an active learning environment through open discussions. For the presenting student, the class will be followed by an individual coaching/debriefing session with the professor, specifically focusing on research presentation skills. Listeners are not allowed.


Since each class is based on the presentation and discussion of a paper, those titles are listed below. The readings page offers full bibliographic citations.


1 Organizational Session
Part I: Distribution Systems
2 Eppen, Gary, and Linus Schrage. "Centralized Ordering Policies in a Multi-Warehouse System with Lead times and Random Demand."
3 Graves, Stephen. "A Multi-Echelon Inventory Model for a Repairable Item with One-for-One Replenishment."
4 Roundy, Robin. "98%-Effective Integer-Ratio Lot Sizing for One-Warehouse Multi-Retailer Systems."
Part II: Assemble-to-Order Systems
5 Rosling, K. "Optimal Inventory Policies for Assembly Systems Under Random Demand."
6 Gallien, Jérémie, and Lawrence Wein. "A Simple and Effective Component Procurement Policy for Stochastic Assembly Systems."
7 Lu, Yingdong, and Jing-Sheng Song. "Order-Based Cost Optimization in Assemble-to-Order Systems."
8 Wang, Y., and P. Glasserman. "Lead-time Inventory Trade-offs in Assemble-to-order Systems."
9 Plambeck, Erica, and Amy Ward. "Optimal Control of High-Volume Assemble-to-Order Systems."
Part III: Forecast Evolution Models
10 Heath, D. C., and P. L. Jackson. "Modeling the Evolution of Demand Forecasts with Application to Safety Stock Analysis in Production/Distribution Systems."
11 Graves, Stephen, D. B. Kletter and W. B. Hetzel. "A Dynamic Model for Requirements Planning with Application to Supply Chain Optimization."
12 Toktay, Beryl L., and Lawrence M. Wein. "Analysis of a Forecasting-Production-Inventory System with Stationary Demand."
Part IV: Short Life-Cycle Product Management
13 Fisher, Marshall, and A. Raman. "Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales."
14 Kurawarwala, A., and H. Matsuo. "Forecasting and Inventory Management of Short Life-Cycle Products."
15 Ho, Teck-Hua, Sergei Savin, and Christian Terwiesch. "Managing Demand and Sales Dynamics in New Product Diffusion Under Supply Constraint."
16 Fisher, Marshall, and Kumar Rajaram. "Accurate Retail Testing of Fashion Merchandise: Methodology and Application."
Part V: Customer Choice Models
17 Mahajan, Siddharth, and Garrett van Ryzin. "Stocking Retail Assortments Under Dynamic Consumer Substitution."
18 Bitran, Gabriel, P. Rocha e Oliveira, and A. Schilkrut. "Managing Customer Relationships Through Price and Service Quality."
19 Talluri, Kalyan, and Garrett van Ryzin. "Revenue Management Under a General Discrete Choice Model of Consumer Behavior."
Part VI: Customer Service Centers
20 Whitt, Ward. "Improving Service by Informing Customers About Anticipated Delays."
21 Harrison, Michael J., and Assaf Zeevi. "A Method for Staffing Large Call Centers Based on Stochastic Fluid Models."
22 Pinker, Edieal J., and Robert A. Shumsky. "The Efficiency-Quality Trade-Off of Cross-Trained Workers."
23 Armony, Mor, and Costis Maglaras. "On Customer Contact Centers with a Call-Back Option: Customer Decisions, Routing Rules and System Design."
24 Shumsky, Robert A., and Edieal J. Pinker. "Gatekeepers and Referrals in Services."   Tell A Friend