Introduction to Operations Management 27 CASE STUDY: CONVEX PRODUCTIONS Convex Productions produces full-length motion pictures for distribution...

 Introduction to Operations Management 27

Convex Productions produces full-length motion pictures for distribution worldwide. Convex has just purchased the rights to a movie script entitled Native Sun, which it intends to develop as its next project. Native Sun is the story of an orphaned human raised by an alien race, visiting Earth on business and becoming entangled in intrigue there. Its simultaneous classification as science fiction/fantasy and action/adventure is expected to draw a broad audience, and Convex hopes to minimize production costs by recruiting the best business partners early. Convex cannot start until it raises the funding necessary to film Native Sun. At this point, Convex is confident it can finance most of Native Sun through a combination of its own cash and a substantial outside investment from executive production company and long-time partner Malomar Pictures. Bringing in Malomar Pictures as a silent partner also secures its subsidary Malomar Worldwide as the distributor of Native Sun to theaters upon its release. Other early agreements, providing smaller amounts of initial cash, are listed in the Tentative Licensees table below.

Tentative Licensees in Addition to Malomar Worldwide Licensee Subject of License Stratospheric LLC Nontheatrical distribution, primarily airlines. Does not include home distribution. Manta Distribution All home distribution rights, including the sale of physical formats, video-ondemand, and eventual syndication to television. Main House Gaming Permission to create and sell Native Sun module for existing Solar Twilight multiplayer computer game. JAZ Events Production and distribution of all nonelectronic merchandise, including Native Sun-themed toys and apparel.

With this combined funding, Convex Productions can launch the preproduction phase of Native Sun. Convex intends to run the Native Sun production office out of its own organization, so it must begin its search for a director, assistant director, casting director, and production designer immediately. Convex will also contribute a unit production manager, legal services, and storyboard artists from its own staff. Convex hopes this combined group will then complete all preproduction work in no more than 6 months, recruiting the cast and crew and creating the detailed plans to follow during filming. Although Convex is a producer of major motion pictures, it does not itself own any of the infrastructure required for filming. Before the preproduction work of Native Sun is finished, Convex must finalize negotiations with several key contractors listed in the Tentative Contracts table, below, to move forward.

Tentative Contractors for Native Sun Contractor Services Provided Lamplight Studios Three sound stages for filming and all associated equipment. Also provides filming equipment and support on location. Epic Scenery Studios Scenery and costume construction. Visual Effects Factory Special effects, computer-generated imagery, and postproduction filming editing. Rayburn Logistics All ground transportation and fleet management, including shipment of scenery pieces from Epic to Lamplight Studios and diesel generators for electricity on location. Great Plains Catering All food service, all locations. Includes catering of promotional events and edibles used in the film.

Ideally, all filming and postproduction would be completed within a year of the conclusion of preproduction, although the exact finish time is difficult to estimate this early in the preproduction process. Because investors in Native Sun won't receive any return until the finished film starts selling tickets at Palomar Worldwide's theater outlets, Convex Production must use part of its own cash now to purchase a completion insurance policy. This policy covers part of the risk of Convex's business partners should Native Sun not finish as planned, which is vital to winning their confidence and investment at this stage in the process.

Questions 1.write a paragraph describing Convex Production as an operation. Does Convex produce goods or services? What type of operation is it? What does it control and what are its uncertainties?

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