OPM 770

OPERATION MANAGEMENT

INDIVIDUAL ASSIGNMENT
ANALYTICAL REFLECTIVE REPORT

PREPARED BY

NOOR ARZIEANA ISMAIL

2022605038

PREPARED FOR
DR SHATINA BINTI SAAD

SUBMISSION DATE
20TH APRIL 2023
 OPERATIONS MANAGEMENT IN THE AGE OF THE SHARING ECONOMY:
WHAT IS OLD AND WHAT IS NEW?
By: Saif Benjaafar , Ming Hu

1. Introduction

This paper will provide a comprehensive review of the article “Operations Management
in the Age of the Sharing Economy: What Is Old and What Is New?” This article was written
by Saif Benjaafar and Ming Hu. This article was published in advance in the year 2019 in
August. In this article, the writers aimed to connect issues that occur in the business model
which was referred to sharing economy to the classical operation management issues or
problems. In the introduction section, the writers explained the definition of sharing economy.
According to this article, it can be defined as a business model that developed around
on-demand access to products and services online. It connects many service providers with
many small buyers. It also can be understood as a type of business in which a single entity
or provider supplies products and services to many small customers. In this paper, the writers
focused on independent riders in ride-hailing and short-term vehicle rentals service.

2. Statement of Issue

In terms of ethics in operations management, some issues were found in this article.
Firstly, supply and demand were not matched. This problem is due to the demand at each
rental location, where the rental vehicle is returned, as well as the period of rental is random.
As a result, the process of replenishment became uncontrollable because there is uncertainty
in terms of the place where the resources or vehicle will be returned.
The second issue in this article was related to queuing networks. According to the
writers, upon completion, instead of returning to its original queue, it may be routed to one of
the other queues. Furthermore, the number of servers related to each queue is now random
and no longer fix as before.
The third issue that the writers pointed out was regarding the timing of supply. Most
of the riders were independent and work according to their own time. Therefore, in this article,
the writers stated that the decisions of the platform now are less about orchestrating the timing
of supply and more about how best to match each unit of demand with each unit of supply
(e.g., which drivers to dispatch to which riders given their respective geographic locations).
These three issues caused resources or inventory shortages and the failure of the service
providers to fulfill customers’ demands.

3. Methodology and Discussion

The last issue in this article was regarding the price, which is related to revenue
management. According to the writers, the price charged to the consumers was adjustable.
It depends on the availability or the capacity of the resources. Limited capacity will cause an
increase in price charges to the customers.
There are two types of dynamic pricing: wages paid to workers and prices charged to
consumers. Usually, the riders will focus on the locations that offer high wages and high
demand from customers to gain maximum profit. Plus, some service providers in e-haling
allow customers to pay extra to increase their chance of being matched or being matched
faster. In other words, customers must pay more to increase their chances to be served and
getting speedy service. It is shown that the price charge could be higher than usual.
 4. Lessons Learnt

From this article as well as the cases, I learned that in doing business, operation
management is a critical aspect to be considered. In e-hailing and vehicle rental services, the
consumer is really concerned about the price they paid for service and the speed of service
by the service providers. I strongly believe that consumers are crucial to maintaining a
business in whatever field.
Therefore, it is important to ensure customer satisfaction. So, they will continue to use
the service. As service providers, they should try their best to fulfill their customers’ demands
at their best effort to offer the best quality of service. Consumers may need to arrive at their
destination on time to ensure everything runs smoothly. Failure to fulfill their demand will
cause frustration and turnover to other service providers that offer a better quality of service.
Then, it is crucial for the service providers to install an integrated system to ensure that
supply and demand will be successfully matched, reduce long queues, and ensure that none
of the customers’ demands are left behind as well as solve other weaknesses such as
inventory system and delay in service. Lastly, it is important to ensure that every company
develops a win-win policy that gives benefit sellers and buyers. All these elements are
beneficial to a business operation to run smoothly and generate more income.

5. Conclusion

In operation management, it involves three theories. The theories are inventory theory,
queuing theory, and revenue management. Inventory theory is about how best supply can
meet or fulfill uncertain demands on time. In reality, supply must according to the customers'
demand because supply only exists if there is demand. The supply must according to how
much, when, and where the demand is requested from the consumers. When there is no
demand, means there will more revenue and we cannot sustain the business. In queuing
theory, it involves time waiting, turns, and delays in service. In revenue management, of
course, a business wants to generate maximum profit with minimum costs. The same goes
for reality. They want to maximize their profit and reduce their costs.
References

Benjaafar, S., & Hu, M. (2020) Operations Management in the Age of the Sharing Economy: What Is
Old and What Is New? Manufacturing & Service Operations Management, 22(1), 93-101.
https://doi.org/10.1287/msom.2019.0803

Hu M, ed. (2019). Sharing Economy: Making Supply Meet Demand,

(Springer, Cham, Switzerland).

Ibrahim R (2018) Managing queuing systems where capacity is random and customers are impatient.
Production Oper. Management 27(2):234-250

Ming L, Tunca TI, Xu Y, Zhu W (2019) An empirical analysis of the market formation, pricing, and
revenue sharing in ride-hailing services. Working paper, Chinese University of Hong Kong,
Shenzhen, Guangdong, China

Bellos I, Ferguson M, Toktay LB (2017) The car sharing economy: Interaction of business model
choice and product line design. Manufacturing Service Oper. Management, 19(2):185–201.

Benjaafar S, Bernhard H, Courcoubetis C (2017) Drivers, riders and service providers: The impact of
the sharing economy on mobility. Working paper, University of Minnesota, Minneapolis.