Dashboard Overview

Operations Focus

TQM & Quality

Inventory Model

EOQ System

Risk Factors

Pure & Market

Mitigation

Insurance Policies

Course Modules Synopsis

Module 3: Managing Operations
Focuses on the essential elements of Total Quality Management (TQM), operations processes, competitive strength through productivity, purchasing policies, and inventory management (including Economic Order Quantity).

Module 7: Risk Management
Explores business risk dimensions (Pure vs. Market), property risks, legal liability, risk management processes, and various types of insurance coverage vital for business continuity.

Quick Quotes

"In this world, nothing can be said to be certain, except death and taxes."
- Benjamin Franklin (Risk Management)

"Quality is not an act, it is a habit."
- Essential Elements of Successful Quality Management

Elements of TQM

  • Customer Focus of Quality Management
  • Organizational Culture oriented towards Quality
  • Statistical Methods of Quality Control
  • International Certification (e.g., ISO 9000)
  • Quality Management in Service Businesses

Purchasing Policies

Key considerations when managing business operations and purchasing:

Supplier Selection Quality Standards Inventory Costs Lead Times Bulk Discounts

Interactive EOQ Calculator

Inventory Management & Operations

The Economic Order Quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.

Optimal Order Quantity (EOQ): -- Units

Business Risk Dimensions

Pure Risk

The uncertainty associated with a situation where only loss or no loss can occur. There is no potential for gain.

  • Property Risks (Real & Personal)
  • Legal Liability Risks
  • Personnel Risks (Death, Disability)

Market Risk

The uncertainty associated with an investment decision where there is a possibility of either gain or loss.

  • Economic fluctuations
  • Changing consumer preferences
  • New competitor entering the market

Insurance Coverage Types

Key-Person Insurance
Coverage that protects a firm against losses due to the death of key personnel. Essential for small businesses heavily reliant on a founder or specific expert.
Disability Insurance
Coverage that provides benefits upon the disability of a firm’s partner or other key employees, ensuring business continuity during health crises.
Disability Buyout Insurance
Coverage that provides a healthy partner the cash to buy out a partner who becomes chronically ill or permanently disabled.

Case Study: H. Abbe International

Scenario: Herb Abbe owns a travel agency and freight forwarder in Minneapolis. The building suffered damage from arson, forcing the relocation of 11 employees and 2 computers to a client's office for a month.

Impact: The disruption cost about $70,000 in lost business and moving expenses. Abbe also had to lay off 4 employees.

Question 1

What major types of risk does H. Abbe International face?

Question 2

What kind of insurance would have helped cope with this loss?