PART 1 – VINEBOX (20 POINTS)

Please read the following article about a start-up and then answer the questions after the article.

VINEBOX OFFERS WINE BY THE GLASS AS A MONTHLY SUBSCRIPTION

Jordan Crook, TechCrunch, 2015/09/16

There are plenty of subscription services out there that will hit you with a box of various wine bottles, but none offer subscription tastings by the glass.

Until Vinebox https://www.getvinebox.com/ (Links to an external site.)).

The new startup has just launched to offer subscription wine by the glass for $35/month, with each box containing three separate tasting vials of wine that are measured to the standard 100ml cup. These wines come from highly curated and world-renowned vineyards across France, Spain, and Italy.

The idea here is that the high-end wine offered through Vinebox would usually cost the American customer a fortune and could only be purchased by the bottle. So, if the customer didn’t like it, they’d have already spent quite a bit on an entire bottle. With Vinebox, users can still sample some of the best wines to learn what they like while being generally cost-effective. If they really enjoy a particular vial of wine, they can then order a full bottle from Vinebox.

Beyond that, Vinebox gives extra attention to detail when it comes to its tasting vials, which are made with hand-drawn glass and maintain the same graphic design label you’d see on each vineyard’s bottle. Wine can last up to three years in the Vinebox vials.

Vinebox ensures that the tech it uses to rebottle wine from its original bottle over to the vial will maintain the exact same taste and quality as if the user were pouring directly from a freshly uncorked bottle.

The regular price of a Vinebox subscription is $35/month, but users who sign up for a three-month subscription before October 1 will get a 20 percent discount, paying $28/month.

Vinebox ad:https://www.youtube.com/watch?v=NmgnGu68jrU (Links to an external site.)

QUESTION 1 (5 POINTS)

The traditional way customers buy wine is through retail shops. Namely, a shop or supermarket (i) orders bottles from a supplier, (ii) receives the bottles and stores them in inventory or their shelves, (iii) waits for customers to come and buy the wine bottles. For this traditional wine buying method, list one information risk that customers face and one information risk that retailers face. One or two sentences for each risk is sufficient.

QUESTION 2 (10 POINTS)

Name two Business Model Innovation concepts from our class that Vinebox is using. How is Vinebox using them? Short explanations suffice.

QUESTION 3 (5 POINTS)

Do one of the innovation concepts you listed in Question 2 help address one of the information risks you listed in Question 1? How? If you do not think the innovation concepts, you listed in Question 2 address the risks you listed in Question 1, explain what risks Vinebox is addressing. Short explanations suffice.

PART 2 – STANPLUS (20 POINTS)

Across Asia, ambulance fleets are fragmented and uncoordinated. Ambulances struggle to respond to patients and suffer from low utilization rates. In India, the status of emergency response is particularly dire. Unlike other countries, there is no single emergency dispatch number in India. Every hospital, clinic, and nursing home has its own emergency number. This leads to confusion in case of an emergency. The caller has no idea of how far the ambulance is or what the response time will be.

Stanplus, a fast-growing startup, is attempting to address these problems. StanPlus is a platform that allows for efficient and central dispatching of ambulances and emergency care. Below is a slide from their pitch deck.

Here is a part of a news article about StanPlus:

StanPlus: The Uber for ambulances does much more than mere aggregation

Chhavi Tyagi, Economic Times, 2016/12/13

According to StanPlus, cofounder and CEO Prabhdeep Singh, 75% of the patients who need an ambulance use their own personal vehicle to reach a hospital and 30% of those brought in by an ambulance arrive dead. It is to change these horrific statistics that Singh started his ambulance aggregation and standardisation startup, StanPlus, along with two co-founders – Antoine Poirson and Jose Leon.

“We are building India’s largest private medical helpline and consolidating private ambulances to service this helpline. The objective is to reduce the time it takes for an ambulance to reach a patient from the current average time of 40 minutes to less than 15 minutes. These ambulances are optimised according to patients’ needs and use the power of network to match the patient with closest hospital that has facilities to take care of them. We are also standardizing the fare, care, and equipment,” explains Singh. “Customers can trust that, by calling our helpline in an emergency, they will have a high-quality ambulance readily available at a standardized and fair price”.

After months of detailed research and planning the company launched its commercial operations last month in Hyderabad. “Hyderabad is a very important medical market and we want to focus on it for the time being. We want to have the quality and the confidence of Hyderabad’s patients and ambulance providers before we engage other markets. We do not wish to grow too fast and then fail,” says Singh. The startup claims to have 50 ambulances on its network already and the ability to service 50% of Hyderabad’s population within 15 minutes and 85% of population under 30 minutes.

The startup does not simply aggregate the available ambulances, but also standardizes, trains drivers on CPR and first aid, quality checks the inside of the ambulances, among other things. It also provides a live tracking feature to the patients through SMS.

“Ambulance market in India is fragmented and suffers from low asset utilization. The owners of the fleets are unable to upgrade the ambulances because of demand spreading very thin. By focusing the demand on standardized ambulances, we are increasing the asset utilisation and thereby incentivising the owners to improve the quality – both of hardware, and what we call ‘care-ware’,” says Singh. “We also give the option to ambulance providers to use our platform or their own dispatch system” he adds.

The company is in the process of partnering with corporates and hospitals to expand its reach and plans to engage patients directly through advertising once it finalizes its seed funding.

“We are already in talks with multiple players and expect to close the funding by February. We plan to raise anywhere between $600,000-1 million in the round,” Singh divulges. The next step for the startup is to provide a team of well-trained care staff including paramedics and nurses for the patients.

The company charges users a fair share per ride but plans to increase collaboration with insurance companies and hospitals to decrease the burden on the patients. It also offers fleet management to ambulance owners as a source of revenue.

Based on the information above, please answer the following questions. Short and objective explanations suffice.

Question 1 (15 points)

What are the benefits StanPlus (the intermediary) is bringing to this environment? How are they operationalizing these benefits? Structure your response using the marketplaces discussion from class. (Only limited information has been provided in the question statement, so answer as best as you can with the information available).

Question 2 (5 points)

List two other business model innovation (BMI) tools that StanPlus is using (besides intermediation/marketplaces/platforms from Lecture 9) describe how they are using them and what are the advantages of these tools. If you can’t think of two, describe one tool that they are using, and describe another BMI tool that they could benefit from and how it could be used.

PART 3 – MULTIPLE CHOICE (10 POINTS)

Please answer the multiple-choice questions below and provide a very brief explanation for your answer if requested.

Question 1 (2 points)

Consider Alex Rogo’s plant in The Goal, at the beginning of the book before any of Jonah’s recommendations are implemented. Suppose Alex wishes to identify the bottlenecks in the plant. Production data helps him to find a few machines with utilization very close to 1. Can Alex be sure that all these machines are bottlenecks (recall our definition of bottlenecks)?

1. Yes

2. No

Why?

Question 2 (2 points)

Which of the following most directly expresses the motivation behind the expression “Do not starve the bottleneck”?

1. If the bottleneck has nothing to work on, the overall capacity of the process will be lower than it could be.

2. If the bottleneck has nowhere to put its output, the overall capacity will be reduced.

3. Starving the bottleneck will increase the coefficient of variation of the arrival process, which decreases capacity.

4. Starving the bottleneck increases inventory turns, which increases the annual holding costs.

5. It is not good to starve the bottleneck because there are economies of scale in inventory management.

Question 3 (4 points)

Demand for 3M masks has increased significantly due to the Covid-19 outbreak, and the company needs to rapidly increase throughput. Currently these masks are made by hand in a four-step process:

In Step 1, the material is cut, in Step 2 the material is layered and sewn together to form the protective barrier, in Step 3, the wire is added to the mask to give it structure, in Step 4 the mask is bagged and sealed for shipping. The steps take 1 minute, 3 minutes, 5 minutes, and 2 minutes, respectively, for a total of 11 minutes per mask.

3M is approached by Elon Musk who offers to donate for free a machine that can perform steps 2 and 3 (the layering and adding of wire) in just 6 minutes, for a saving of 2 minutes per mask! Should 3M take Elon Musk up on this offer?

1. Yes

2. No

3. The answer cannot be determined based on the given information

Why?

Question 4 (2 points)

Val Thorens is a ski resort in France. One of their triple chair lifts unloads 1350 skiers per hour at the top of the slope. (A triple chair lift can carry three passengers per chair.) The ride from the bottom to the top takes 8 minutes. How many skiers are riding on the lift at any one time?

1. 60

2. 75

3. 180

4. 450

5. None of the above.

PART 4 – VACCINES AT GEORGIA TECH (25 POINTS)

In an unexpected turn of events, you are now part of an undergraduate student team responsible for designing the Covid-19 vaccination process at Georgia Tech. After some discussion, your team designs a process for each vaccination site that consists of four stages:

• Stage 1 (Check-in) – Employees and students (the patients) arrive to the vaccination site, present their IDs, are verified for eligibility and registered into a database. Based on data from other vaccination sites, you estimate that 15% of people that arrive will be turned away after the eligibility check and do not proceed to Stage 2.

• Stage 2 (Health Questionnaire) – After check-in, eligible patients a few basic health-related questions (if they had Covid-19 recently, if they have allergies, etc) and have their temperature measured. Depending on the outcome of the questionnaire, the patient might receive a recommendation to consult with their physician before taking the vaccine and leaves the vaccination process. You estimate that 5% of patients that enter Stage 2 are recommended to consult with a physician before taking the vaccine and do not proceed to Stage 3 (they leave the vaccination process).

• Stage 3 (Vaccination) – After responding to the health questionnaire in Stage 2 and being cleared for the vaccination, the patient proceeds to the vaccination area where the vaccine is applied.

• Stage 4 (Recovery and Observation) – Vaccinated patients are then taken to a rest area where they are observed for some time to make sure no allergic reaction occurs, answer some follow-up questions, and schedule their second vaccine appointment if needed.

Each vaccination site will be managed and run by a team of 6 employees with basic healthcare training. These employees are completely cross-trained and can work at any stage. Due to social distancing guidelines, each stage occurs in a separate room and there is no “inventory” of people between stages (the vaccination process is a continuous flow process like the questions in Assignment 3). Furthermore, if an employee is allocated to a stage at the beginning of the day, they cannot switch stages on the same day. For example, an employee allocated to Stage 2 at the start of the day cannot switch to Stage 4 until the next day. Furthermore, each employee will work in only one stage per day.

You estimate that: a single employee can:

• Check-in 40 people per hour if they work in Stage 1 (thus, x employees can check-in x*40 people per hour),

• Conduct 18 health questionnaires per hour if they work in Stage 2,

• Vaccinate 10 patients per hour if they work in Stage 3, or

• Observe 15 patients per hour if they work in Stage 4.

Assume that each stage must have at least one employee. Given this set-up, please answer the following questions.

Question 1 (12 points)

How many of the 6 employees would you allocate to each of the four stages to maximize the output capacity of this process? What is the vaccine process capacity (in patients per hour) for this allocation? Recall that each stage must have at least one employee.

Note: An example of an employee allocation would be two employees in Stage 1, one employee in Stage 2, one employee in Stage 3, and two employees in Stage 4. Another example is one employee in Stage 1, one employee in Stage 2, one employee in Stage 3, and three employees in Stage 4. Your goal is to propose an allocation that maximizes system capacity.

Question 2 (8 points)

For your employee allocation in Question 1, what stage is the bottleneck? What is the utilization of each stage when the process when it is running at maximum capacity?

Question 3 (5 points)

One of your teammates proposes two potential improvements for the process:

1. Reduce the number of people turned away in Stage 1 by improving the vaccine scheduling process. You estimate that this improvement would reduce the fraction of people that do not continue from Stage 1 to Stage 2 from 15% to 10%;

2. Create a pre-screening health questionnaire with a few questions. You estimate that the pre-screening questionnaire would reduce the fraction of patients that leave at Stage 2 (i.e. they enter Stage 2 but do not continue to Stage 3) from 5% to 0%.

Assume the implementation cost of option (A) is the same as option (B). Which is the best option? Why? If you think both options are equivalent, explain why.

PART 5 – GTUX: FANCY TUXEDOS (25 POINTS)

Noticing the vaccine roll-out and considering that most people spent the last year in their pajamas, you and your colleagues expect a return of fancy events in the Spring. As a result, you launch GTUX a small company specialized in renting tuxedos to college students.

GTUX’s operating model is as follows. When a customer finds a tuxedo on GTUX’s website and decides to rent it, they put it in a virtual shopping cart. If a tuxedo is available, it is shipped directly to the customer (assume it can be shipped during weekends and holidays too). If not available, the customer enters a queue and waits until a tuxedo is available. When a tuxedo is returned to GTUX, it is shipped to the customer next in line to receive it. GTUX manages this queue such that a returned tuxedo is shipped to the first customer in the queue (which is the customer that has been waiting for the longest).

Since you are currently experimenting with the business model, GTUX only owns one tuxedo. The average time between requests for the tuxedo is 10 days, with a coefficient of variation of 1.

On average, a customer keeps the tuxedo for 6 days before returning it. It also takes 1 day to ship the tuxedo to the customer and 1 day to ship it from the customer back to GTUX. Thus, it takes 8 days on average between GTUX shipping the tuxedo to a customer and receiving it back. The standard deviation of the time between shipping the tuxedo to a customer from GTUX and receiving it back in 8 days (thus the coefficient of variation is 1).

Question 1 (10 points)

What is the average time that a customer has to wait to receive the tuxedo after the request? Recall that it takes 1 day for a shipped tuxedo to arrive at a customer address.

Question 2 (5 points)

On average, how many customers are in GTUX’s internal queue for a tuxedo? Assume customers do not cancel their items in their shopping carts.

Question 3 (10 points)

Thanks to a very successful advertisement campaign featuring Buzz in a tuxedo, the demand for tuxedos has increased. Now the average interarrival time for tuxedo requests at GTUX is 3 days, with a coefficient of variation of 1. Other numbers remain unchanged. To satisfy the increased demand, GTUX is considering acquiring more tuxedos to rent.

How many tuxedos should GTUX own (whether in GTUX’s internal stock, in customer’s possession, or in transition) so that a customer waits, on average, less than 3 days to receive the tuxedo at home? Assume all tuxedos are identical. Recall that it takes 1 day for a shipped tuxedo to arrive at a customer address.