Operations Management
5th Edition
Published on 15. October 2012
Book
Hardback
720 pages
978-1-118-12267-9 (ISBN)
Description
In the 5th Edition of Operations Management, Dan Reid and Nada Sanders have strengthened their commitment to improve the teaching and learning experience in the introductory operations management course. The text provides a solid foundation of Operations Management with clear, guided instruction and a balance between quantitative and qualitative concepts. Through an integrated approach, the authors illustrate how all business students will interact with Operations Management in future careers. And, with increased support for students through new pedagogy, worked out examples and WileyPLUS, the 5th Edition provides the help students need to complete the course with greater success.
WileyPLUS sold separately from text.
WileyPLUS sold separately from text.
More details
Edition
5th edition
Language
English
Place of publication
New York
United States
Target group
Professional and scholarly
Dimensions
Height: 257 mm
Width: 206 mm
Thickness: 31 mm
Weight
1429 gr
ISBN-13
978-1-118-12267-9 (9781118122679)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Other editions
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Loose-leaf edition
09/2015
Wiley
€165.54
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Content
CHAPTER 1 Introduction to Operations Management 1
WHAT IS OPERATIONS MANAGEMENT? 2
Links to Practice: The E-tailers 4
DIFFERENCES BETWEEN MANUFACTURING AND SERVICE ORGANIZATIONS 5
Links to Practice: U.S. Postal Service 6
OPERATIONS MANAGEMENT DECISIONS 7
Links to Practice: Texas Instruments Incorporated 9
PLAN OF THIS BOOK 10
HISTORICAL DEVELOPMENT 11
Why OM? 11
Historical Milestones 11
The Industrial Revolution 12
Scientific Management 13
The Human Relations Movement 14
Management Science 14
The Computer Age 15
Just-in-Time 15
Total Quality Management 15
Business Process Reengineering 16
Flexibility 16
Time-Based Competition 16
Supply Chain Management 16
Links to Practice: The Publishing Industry 17
Global Marketplace 18
Sustainability and Green Operations 18
Electronic Commerce 18
Outsourcing and Flattening of the World 19
TODAY'S OM ENVIRONMENT 20
OPERATIONS MANAGEMENT IN PRACTICE 21
WITHIN OM: HOW IT ALL FITS TOGETHER 21
OM ACROSS THE ORGANIZATION 22
THE SUPPLY CHAIN LINK 24
THE SUSTAINABILITY LINK 24
Chapter Highlights 25
Key Terms 25
Discussion Questions 25
CASE: HIGHTONE ELECTRONICS, INC. 26
CASE: CREATURE CARE ANIMAL CLINIC (A) 26
INTERACTIVE CASE: VIRTUAL COMPANY 27
INTERNET CHALLENGE 28
ONLINE RESOURCES 28
Selected Bibliography 28
CHAPTER 2 Operations Strategy and Competitiveness 29
THE ROLE OF OPERATIONS STRATEGY 31
The Importance of Operations Strategy 31
DEVELOPING A BUSINESS STRATEGY 32
Mission 32
Environmental Scanning 33
Core Competencies 35
Putting It Together 36
Links to Practice: Dell Computer Corporation 36
DEVELOPING AN OPERATIONS STRATEGY 37
Competitive Priorities 37
Links to Practice: Southwest Airlines Company 38
Links to Practice: FedEx Corporation 40
The Need for Trade-Off s 40
Order Winners and Qualifiers 41
Translating Competitive Priorities into Production Requirements 42
STRATEGIC ROLE OF TECHNOLOGY 43
Types of Technologies 43
Technology as a Tool for Competitive Advantage 44
PRODUCTIVITY 44
Measuring Productivity 44
Interpreting Productivity Measures 47
Productivity and Competitiveness 47
Productivity and the Service Sector 48
OPERATIONS STRATEGY WITHIN OM: HOW IT ALL FITS TOGETHER 48
OPERATIONS STRATEGY ACROSS THE ORGANIZATION 49
THE SUPPLY CHAIN LINK 49
THE SUSTAINABILITY LINK 50
Chapter Highlights 50
Key Terms 51
Formula Review 51
Solved Problems 51
Discussion Questions 52
Problems 52
CASE: PRIME BANK OF MASSACHUSETTS 53
CASE: BOSEMAN OIL AND PETROLEUM (BOP) 54
INTERACTIVE CASE: VIRTUAL COMPANY 54
INTERNET CHALLENGE 55
ONLINE RESOURCES 55
Selected Bibliography 56
CHAPTER 3 Product Design and Process Selection 57
PRODUCT DESIGN 59
Design of Services versus Goods 59
THE PRODUCT DESIGN PROCESS 60
Idea Development 60
Links to Practice: IBM Corporation 61
Product Screening 62
Preliminary Design and Testing 64
Final Design 64
FACTORS IMPACTING PRODUCT DESIGN 65
Design for Manufacture 65
Product Life Cycle 66
Concurrent Engineering 67
Remanufacturing 68
PROCESS SELECTION 68
Types of Processes 68
DESIGNING PROCESSES 72
PROCESS PERFORMANCE METRICS 74
LINKING PRODUCT DESIGN AND PROCESS
SELECTION 77
Product Design Decisions 78
Links to Practice: The Babcock & Wilcox Company 78
Competitive Priorities 79
Facility Layout 79
Product and Service Strategy 81
Degree of Vertical Integration 81
TECHNOLOGY DECISIONS 82
Information Technology 82
Links to Practice: Using GPS Technology in Product Advertising 83
Automation 83
Links to Practice: Performing Robotic Surgery 85
e-Manufacturing 86
DESIGNING SERVICES 87
How Are Services Different from Manufacturing? 87
How Are Services Classified? 88
The Service Package 89
Differing Service Designs 90
PRODUCT DESIGN AND PROCESS SELECTION WITHIN OM: HOW IT ALL FITS TOGETHER 91
PRODUCT DESIGN AND PROCESS SELECTION ACROSS THE ORGANIZATION 92
THE SUPPLY CHAIN LINK 93
THE SUSTAINABILITY LINK 93
Chapter Highlights 94
Key Terms 94
Formula Review 95
Solved Problems 95
Discussion Questions 97
Problems 97
CASE: BIDDY'S BAKERY (BB) 99
CASE: CREATURE CARE ANIMAL CLINIC (B) 100
INTERACTIVE CASE: VIRTUAL COMPANY 100
INTERNET CHALLENGE 101
ONLINE RESOURCES 101
Selected Bibliography 101
CHAPTER 4 Supply Chain Management 103
WHAT IS A SUPPLY CHAIN? 104
COMPONENTS OF A SUPPLY CHAIN FOR A MANUFACTURER 106
External Suppliers 106
Internal Functions 108
External Distributors 108
THE BULLWHIP EFFECT 108
Causes of the Bullwhip Effect 109
Counteracting the Bullwhip Effect 110
SUPPLY CHAINS FOR SERVICE ORGANIZATIONS 110
Internal Operations 111
The External Distributors 112
MAJOR ISSUES AFFECTING SUPPLY CHAIN
MANAGEMENT 112
Information Technology 112
E-Commerce 112
Business-to-Business (B2B) E-Commerce 113
The Evolution of B2B Commerce 113
The Benefits of B2B E-Commerce 114
Business-to-Consumer (B2C) E-Commerce 114
Consumer Expectations and Competition Resulting from E-Commerce 115
Links to Practice: Lands' End, Inc. 115
Globalization 116
Government Regulations and E-Commerce 118
Green Supply Chain Management 118
Infrastructure Issues 121
Product Proliferation 122
THE ROLE OF PURCHASING 122
The Traditional Purchasing Process 122
The E-purchasing Process 124
SOURCING ISSUES 127
Insourcing versus Outsourcing Decisions 128
Developing Supplier Relationships 130
How Many Suppliers? 130
Developing Partnerships 131
Links to Practice: The Bama Companies 132
Critical Factors in Successful Partnering 133
Links to Practice: Sweetheart Cup Company/
Georgia-Pacific Corporation 133
Benefits of Partnering 135
Ethics in Supply Management 136
SUPPLY CHAIN DISTRIBUTION 137
The Role of Warehouses 137
Links to Practice: Fingerhut Direct Marketing, Inc. 138
Crossdocking 139
Links to Practice: FedEx Freight 139
Radio Frequency Identification Technology (RFID) 141
Third-Party Service Providers 142
IMPLEMENTING SUPPLY CHAIN MANAGEMENT 143
Strategies for Leveraging Supply Chain Management 144
SUPPLY CHAIN PERFORMANCE METRICS 145
TRENDS IN SUPPLY CHAIN MANAGEMENT 147
SUPPLY CHAIN MANAGEMENT WIHTIN OM: HOW IT ALL FITS TOGETHER 149
SCM ACROSS THE ORGANIZATION 149
THE SUPPLY CHAIN LINK 150
THE SUSTAINABILITY LINK 150
Chapter Highlights 151
Key Terms 152
Formula Review 152
Solved Problems 152
Discussion Questions 153
Problems 154
CASE: ELECTRONIC POCKET CALENDARS SUPPLY CHAIN MANAGEMENT GAME 155
CASE: SUPPLY CHAIN MANAGEMENT AT DURHAM INTERNATIONAL MANUFACTURING COMPANY (DIMCO) 157
INTERACTIVE CASE: VIRTUAL COMPANY 158
INTERNET CHALLENGE 158
ONLINE RESOURCES 159
Selected Bibliography 159
CHAPTER 5 Total Quality Management 161
DEFINING QUALITY 162
Differences between Manufacturing and Service Organizations 163
Links to Practice: General Electric Company/Motorola, Inc. 164
COST OF QUALITY 165
THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM) 166
Quality Gurus 167
THE PHILOSOPHY OF TQM 171
Customer Focus 171
Continuous Improvement 171
Employee Empowerment 173
Links to Practice: The Walt Disney Company 174
Use of Quality Tools 174
Links to Practice: The Kroger Company/Meijer Stores
Limited Partnership 177
Product Design 177
Process Management 182
Managing Supplier Quality 182
QUALITY AWARDS AND STANDARDS 183
The Malcolm Baldrige National Quality Award
(MBNQA) 183
The Deming Prize 184
ISO 9000 Standards 184
ISO 14000 Standards 185
WHY TQM EFFORTS FAIL 186
TOTAL QUALITY MANAGEMENT (TQM) WITHIN OM:
HOW IT ALL FITS TOGETHER 186
TOTAL QUALITY MANAGEMENT (TQM) ACROSS THE
ORGANIZATION 187
THE SUPPLY CHAIN LINK 188
THE SUSTAINABILITY LINK 188
Chapter Highlights 189
Key Terms 189
Formula Review 190
Solved Problems 190
Discussion Questions 191
Problems 191
CASE: GOLD COAST ADVERTISING (GCA) 192
CASE: DELTA PLASTICS, INC. (A) 193
INTERACTIVE CASE: VIRTUAL COMPANY 194
INTERNET CHALLENGE 195
ONLINE RESOURCES 195
Selected Bibliography 196
CHAPTER 6 Statistical Quality Control 197
WHAT IS STATISTICAL QUALITY CONTROL? 198
Links to Practice: Intel Corporation 199
SOURCES OF VARIATION: COMMON AND ASSIGNABLE CAUSES 200
DESCRIPTIVE STATISTICS 200
The Mean 200
The Range and Standard Deviation 201
Distribution of Data 201
STATISTICAL PROCESS CONTROL METHODS 201
Developing Control Charts 202
Types of Control Charts 203
CONTROL CHARTS FOR VARIABLES 204
Mean (x-Bar) Charts 204
Range (R) Charts 208
Using Mean and Range Charts Together 209
CONTROL CHARTS FOR ATTRIBUTES 210
P-Charts 211
C-Charts 214
PROCESS CAPABILITY 216
Measuring Process Capability 216
SIX SIGMA QUALITY 221
Links to Practice: Motorola, Inc. 222
ACCEPTANCE SAMPLING 223
Sampling Plans 223
Operating Characteristic (OC) Curves 224
Developing OC Curves 226
Average Outgoing Quality 227
IMPLICATIONS FOR MANAGERS 229
How Much and How Oft en to Inspect 229
Where to Inspect 229
Which Tools to Use 230
STATISTICAL QUALITY CONTROL IN SERVICES 230
Links to Practice: The Ritz-Carlton Hotel Company, L.L.C./Nordstrom, Inc. 231
Links to Practice: Marriott International, Inc. 231
STATISTICAL QUALITY CONTROL (SQC) WITHIN OM: HOW IT ALL FITS TOGETHER 232
STATISTICAL QUALITY CONTROL (SQC) ACROSS THE ORGANIZATION 232
THE SUPPLY CHAIN LINK 233
THE SUSTAINABILITY LINK 233
Chapter Highlights 234
Key Terms 234
Formula Review 235
Solved Problems 235
Discussion Questions 240
Problems 240
CASE: SCHARADIN HOTELS 243
CASE: DELTA PLASTICS, INC. (B) 244
INTERACTIVE CASE: VIRTUAL COMPANY 244
INTERNET CHALLENGE 245
ONLINE RESOURCES 245
Selected Bibliography 245
CHAPTER 7 Just-in-Time and Lean Systems 246
THE PHILOSOPHY OF JIT 248
Eliminate Waste 249
A Broad View of Operations 249
Simplicity 249
Continuous Improvement 250
Visibility 250
Flexibility 250
ELEMENTS OF JIT 251
Just-in-Time Manufacturing 251
Total Quality Management (TQM) 253
Respect for People 253
Links to Practice: Texas Instruments 254
JUST-IN-TIME MANUFACTURING 254
The Pull System 254
Kanban Production 255
Variations of Kanban Production 258
Small Lot Sizes and Quick Setups 258
Uniform Plant Loading 259
Flexible Resources 260
Facility Layout 261
Links to Practice: Ryder Integrated Logistics 261
TOTAL QUALITY MANAGEMENT 262
Product versus Process 263
Quality at the Source 263
Preventive Maintenance 264
Work Environment 264
RESPECT FOR PEOPLE 265
The Role of Production Employees 265
Lifetime Employment 266
The Role of Management 267
Supplier Relationships 268
BENEFITS OF JIT 269
Links to Practice: Alcoa, Inc. 269
IMPLEMENTING JIT 270
JIT IN SERVICES 271
Improved Quality 271
Uniform Facility Loading 271
Use of Multifunction Workers 272
Reductions in Cycle Time 272
Minimizing Setup Times and Parallel Processing 272
Workplace Organization 272
JIT AND LEAN SYSTEMS WITHIN OM: HOW IT ALL FITS
TOGETHER 272
JIT AND LEAN SYSTEMS ACROSS THE
ORGANIZATION 272
THE SUPPLY CHAIN LINK 273
THE SUSTAINABILITY LINK 274
Chapter Highlights 274
Key Terms 275
Formula Review 275
Solved Problems 275
Discussion Questions 275
Problems 276
CASE: KATZ CARPETING 276
CASE: DIXON AUDIO SYSTEMS 277
INTERACTIVE CASE: VIRTUAL COMPANY 278
INTERNET CHALLENGE 279
ONLINE RESOURCES 279
Selected Bibliography 279
CHAPTER 8 Forecasting 280
PRINCIPLES OF FORECASTING 281
STEPS IN THE FORECASTING PROCESS 282
Links to Practice: Intel Corporation 283
TYPES OF FORECASTING METHODS 283
Links to Practice: Improving Sales Forecasting 284
Qualitative Methods 284
Quantitative Methods 286
TIME SERIES MODELS 288
Forecasting Level or Horizontal Pattern 289
Forecasting Trend 297
Forecasting Seasonality 300
Links to Practice: The Ski Industry Forecast 303
CAUSAL MODELS 303
Linear Regression 303
Correlation Coefficient 306
Multiple Regression 307
MEASURING FORECAST ACCURACY 307
Forecast Accuracy Measures 307
Tracking Signal 309
SELECTING THE RIGHT FORECASTING MODEL 310
FORECASTING SOFTWARE 311
Spreadsheets 311
Statistical Packages 311
Specialty Forecasting Packages 312
Guidelines for Selecting Forecasting Software 312
FOCUS FORECASTING 313
COMBINING FORECASTS 313
Links to Practice: Combining Methods in Weather Forecasting 314
COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR) 314
FORECASTING WITHIN OM: HOW IT ALL FITS TOGETHER 315
FORECASTING ACROSS THE ORGANIZATION 315
THE SUPPLY CHAIN LINK 316
THE SUSTAINABILITY LINK 316
Chapter Highlights 317
Key Terms 317
Formula Review 318
Solved Problems 319
Discussion Questions 323
Problems 323
CASE: BRAM-WEAR 327
CASE: THE EMERGENCY ROOM (ER) AT NORTHWEST GENERAL (A) 328
INTERACTIVE CASE: VIRTUAL COMPANY 329
INTERNET CHALLENGE 329
ONLINE RESOURCES 330
Selected Bibliography 330
CHAPTER 9 Capacity Planning and Facility Location 331
CAPACITY PLANNING 333
Why Is Capacity Planning Important? 333
Links to Practice: Capacity Planning in the ER 333
Measuring Capacity 334
Capacity Considerations 336
Links to Practice: Focus in the Retail Industry 339
MAKING CAPACITY PLANNING DECISIONS 339
Identify Capacity Requirements 340
Develop Capacity Alternatives 341
Evaluate Capacity Alternatives 341
DECISION TREES 341
LOCATION ANALYSIS 344
What Is Facility Location? 345
Factors Affecting Location Decisions 345
Links to Practice: Locating in Silicon Valley 346
Globalization 347
MAKING LOCATION DECISIONS 349
Procedure for Making Location Decisions 349
Procedures for Evaluating Location Alternatives 349
CAPACITY PLANNING AND FACILITY LOCATION WITHIN OM: HOW IT ALL FITS TOGETHER 360
CAPACITY PLANNING AND FACILITY LOCATION ACROSS THE ORGANIZATION 360
THE SUPPLY CHAIN LINK 361
THE SUSTAINABILITY LINK 361
Chapter Highlights 361
Key Terms 362
Formula Review 362
Solved Problems 362
Discussion Questions 365
Problems 365
CASE: DATA TECH, INC. 368
CASE: THE EMERGENCY ROOM (ER) AT NORTHWEST GENERAL (B) 369
INTERACTIVE CASE: VIRTUAL COMPANY 369
INTERNET CHALLENGE 370
ONLINE RESOURCES 370
Selected Bibliography 371
CHAPTER 10 Facility Layout 372
WHAT IS LAYOUT PLANNING? 373
TYPES OF LAYOUTS 374
Process Layouts 374
Links to Practice: Wal-Mart Stores, Inc. 376
Product Layouts 376
Links to Practice: Toyota Motor Corporation 378
Hybrid Layouts 378
Fixed-Position Layouts 379
DESIGNING PROCESS LAYOUTS 379
Step 1: Gather Information 379
Step 2: Develop a Block Plan 382
Step 3: Develop a Detailed Layout 385
SPECIAL CASES OF PROCESS LAYOUT 385
Warehouse Layouts 385
Office Layouts 388
DESIGNING PRODUCT LAYOUTS 389
Step 1: Identify Tasks and Their Immediate Predecessors 389
Step 2: Determine Output Rate 391
Step 3: Determine Cycle Time 391
Step 4: Compute the Theoretical Minimum Number of Stations 393
Step 5: Assign Tasks to Workstations (Balance the
Line) 393
Step 6: Compute Efficiency, Idle Time, and Balance Delay 394
Other Considerations 395
GROUP TECHNOLOGY (CELL) LAYOUTS 396
FACILITY LAYOUT WITHIN OM: HOW IT ALL FITS TOGETHER 397
FACILITY LAYOUT ACROSS THE ORGANIZATION 397
THE SUPPLY CHAIN LINK 398
THE SUSTAINABILITY LINK 398
Chapter Highlights 399
Key Terms 399
Formula Review 399
Solved Problems 400
Discussion Questions 402
Problems 403
CASE: SAWHILL ATHLETIC CLUB (A) 407
CASE: SAWHILL ATHLETIC CLUB (B) 408
INTERACTIVE CASE: VIRTUAL COMPANY 409
INTERNET CHALLENGE 409
ONLINE RESOURCES 410
Selected Bibliography 410
CHAPTER 10 Work System Design 411
DESIGNING A WORK SYSTEM 412
JOB DESIGN 413
Designing a Job 413
Links to Practice: Google 413
Machines or People? 414
Level of Labor Specialization 415
Eliminating Employee Boredom 416
Team Approaches to Job Design 416
Links to Practice: The SCO Group 417
The Alternative Workplace 417
Links to Practice: AT&T 418
METHODS ANALYSIS 419
THE WORK ENVIRONMENT 421
WORK MEASUREMENT 422
Costing 422
Performance 423
Planning 423
SETTING STANDARD TIMES 423
How to Do a Time Study 423
Elemental Time Data 429
Predetermined Time Data 429
Work Sampling 431
Links to Practice: Pace Productivity 433
COMPENSATION 433
Time-Based Systems 433
Output-Based Systems 433
Group Incentive Plans 434
Links to Practice: Accounatable Care Organizations (ACO) 434
Incentive Plan Trends 435
LEARNING CURVES 435
WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS TOGETHER 438
WORK SYSTEM DESIGN ACROSS THE ORGANIZATION 438
THE SUPPLY CHAIN LINK 439
THE SUSTAINABILITY LINK 439
Chapter Highlights 440
Key Terms 440
Formula Review 441
Solved Problems 441
Discussion Questions 444
Problems 444
CASE: THE NAVIGATOR III 447
CASE: NORTHEAST STATE UNIVERSITY 447
INTERACTIVE CASE: VIRTUAL COMPANY 448
INTERNET CHALLENGE 449
ONLINE RESOURCES 450
Selected Bibliography 450
CHAPTER 12 Inventory Management 451
TYPES OF INVENTORY 452
HOW COMPANIES USE THEIR INVENTORY 453
OBJECTIVES OF INVENTORY MANAGEMENT 455
Customer Service 455
Cost-Efficient Operations 456
Minimum Inventory Investment 457
RELEVANT INVENTORY COSTS 459
Item Costs 459
Holding Costs 459
Ordering Costs 461
Shortage Costs 461
ABC INVENTORY CLASSIFICATION 461
Procedure for an ABC Inventory Analysis 463
Inventory Control Using ABC Classification 463
INVENTORY RECORD ACCURACY 464
Links to Practice: Cisco Systems, Inc. 464
INVENTORY IN SERVICE ORGANIZATIONS 466
DETERMINING ORDER QUANTITIES 467
MATHEMATICAL MODELS FOR DETERMINING ORDER QUANTITY 468
Economic Order Quantity (EOQ) 468
Calculating the EOQ 471
Economic Production Quantity (EPQ) 473
Quantity Discount Model 477
WHY COMPANIES DON'T ALWAYS USE THE OPTIMAL ORDER QUANTITY 481
JUSTIFYING SMALLER ORDER QUANTITIES 481
Links to Practice: Kenworth Trucks 481
Understanding the EPQ Factors 482
DETERMINING SAFETY STOCK LEVELS 483
How Much Safety Stock? 483
PERIODIC REVIEW SYSTEM 485
Comparison of Continuous Review Systems and Periodic Review Systems 487
THE SINGLE-PERIOD INVENTORY MODEL 488
INVENTORY MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 490
INVENTORY MANAGEMENT ACROSS THE ORGANIZATION 491
THE SUPPLY CHAIN LINK 491
THE SUSTAINABILITY LINK 492
Chapter Highlights 492
Key Terms 493
Formula Review 493
Solved Problems 494
Discussion Questions 497
Problems 498
CASE: FABQUAL LTD. 500
CASE: KAYAKS!INCORPORATED 501
INTERACTIVE CASE: VIRTUAL COMPANY 502
INTERNET CHALLENGE 503
ONLINE RESOURCES 503
Selected Bibliography 504
CHAPTER 13 Aggregate Planning 505
THE ROLE OF AGGREGATE PLANNING 507
Marketing Plan 507
Aggregate or Production Plan 507
Financial and Engineering Plans 508
Master Production Schedule 508
Links to Practice: Coca-Cola Midi (CCM) 509
TYPES OF AGGREGATE PLANS 509
Level Aggregate Plan 509
Chase Aggregate Plan 510
Hybrid Aggregate Plan 511
AGGREGATE PLANNING OPTIONS 511
Demand-Based Options 512
Capacity-Based Options 512
EVALUATING THE CURRENT SITUATION 514
Links to Practice: UPS Hires Seasonal Workers 515
DEVELOPING THE AGGREGATE PLAN 515
AGGREGATE PLANS FOR COMPANIES WITH TANGIBLE PRODUCTS 517
AGGREGATE PLANS FOR SERVICE COMPANIES WITH NONTANGIBLE PRODUCTS 520
AGGREGATE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 524
AGGREGATE PLANNING ACROSS THE ORGANIZATION 525
THE SUPPLY CHAIN LINK 525
THE SUSTAINABILITY LINK 526
Chapter Highlights 526
Key Terms 526
Solved Problems 527
Discussion Questions 533
Problems 534
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (A) 535
CASE: JPC, INC.: KITCHEN COUNTERTOPS MANUFACTURER 536
INTERACTIVE CASE: VIRTUAL COMPANY 537
INTERNET CHALLENGE 537
ONLINE RESOURCES 538
Selected Bibliography 538
CHAPTER 14 Resource Planning 539
ENTERPRISE RESOURCE PLANNING 541
ERP Modules 542
THE EVOLUTION OF ERP 542
First-Generation ERP 542
Second-Generation ERP 543
Links to Practice: Arapahoe County Government 544
THE BENEFITS OF ERP 545
Links to Practice: i2 Technologies 545
Links to Practice: SAP AG 546
THE COST OF ERP SYSTEMS 546
MATERIAL PLANNING SYSTEMS 547
AN OVERVIEW OF MRP 547
TYPES OF DEMAND 548
OBJECTIVES OF MRP 550
MRP INPUTS 550
Authorized MPS 550
Inventory Records 550
Bills of Material 552
THE MRP EXPLOSION PROCESS 555
ACTION NOTICES 559
COMPARISON OF LOT SIZE RULES 559
THE ROLE OF CAPACITY REQUIREMENTS
PLANNING (CRP) 560
RESOURCE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 562
RESOURCE PLANNING ACROSS THE ORGANIZATION 563
THE SUPPLY CHAIN LINK 564
THE SUSTAINABILITY LINK 564
Chapter Highlights 565
Key Terms 565
Formula Review 566
Solved Problems 566
Discussion Questions 569
Problems 569
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (B) 571
CASE: DESSERTS BY J.B. 573
INTERACTIVE CASE: VIRTUAL COMPANY 573
INTERNET CHALLENGE 574
ONLINE RESOURCES 574
Selected Bibliography 575
CHAPTER 15 Scheduling 576
SCHEDULING OPERATIONS 578
HIGH-VOLUME OPERATIONS 578
Characteristics of Flow Operations 578
LOW-VOLUME OPERATIONS 579
Gantt Chart 579
SCHEDULING WORK 580
Infinite Loading 580
Finite Loading 581
Forward Scheduling 581
Backward Scheduling 582
Monitoring Workflow 582
HOW TO SEQUENCE JOBS 584
Priority Rules 584
How to Use Priority Rules 585
MEASURING PERFORMANCE 586
Links to Practice: Airline Scheduling 586
Job Flow Time 586
Average Number of Jobs in the System 587
Makespan 587
Job Lateness and Tardiness 587
COMPARING PRIORITY RULES 588
Comparing SPT and S/RO 591
SEQUENCING JOBS THROUGH TWO WORK CENTERS 591
SCHEDULING BOTTLENECKS 593
Links to Practice: 1-800-FLOWERS.com 595
THEORY OF CONSTRAINTS 596
SCHEDULING FOR SERVICE ORGANIZATIONS 596
Scheduling Services Demanded 596
Scheduling Employees 598
DEVELOPING A WORKFORCE SCHEDULE 599
SCHEDULING WITHIN OM: PUTTING IT ALL TOGETHER 600
SCHEDULING ACROSS THE ORGANIZATION 601
THE SUPPLY CHAIN LINK 602
THE SUSTAINABILITY LINK 602
Chapter Highlights 602
Key Terms 603
Formula Review 603
Solved Problems 603
Discussion Questions 607
Problems 607
CASE: AIR TRAFFIC CONTROLLER SCHOOL (ATCS) 610
CASE: SCHEDULING AT RED, WHITE AND BLUE FIREWORKS COMPANY 610
INTERACTIVE CASE: VIRTUAL COMPANY 611
INTERNET CHALLENGE 611
ONLINE RESOURCES 612
Selected Bibliography 612
CHAPTER 16 Project Management 613
PROJECT LIFE CYCLE 615
Conception 615
Feasibility Analysis or Study 615
Planning 616
Execution 616
Termination 616
NETWORK PLANNING TECHNIQUES 616
Links to Practice: PERT and the Polaris Missile 616
Step 1: Describe the Project 617
Step 2: Diagram the Network 618
Step 3: Estimate the Project's Completion Time 619
Step 3 (a): Deterministic Time Estimates 620
Step 3 (b): Probabilistic Time Estimates 622
Step 4: Monitor the Project's Progression 628
Links to Practice: Managing the Olympic Games 628
ESTIMATING THE PROBABILITY OF COMPLETION DATES 629
REDUCING PROJECT COMPLETION TIME 631
Crashing Projects 631
THE CRITICAL CHAIN APPROACH 634
Adding Safety Time 634
Wasting Safety Time 634
PROJECT MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 636
PROJECT MANAGEMENT OM ACROSS THE ORGANIZATION 636
THE SUPPLY CHAIN LINK 637
THE SUSTAINABILITY LINK 637
Chapter Highlights 637
Key Terms 638
Formula Review 638
Solved Problems 638
Discussion Questions 642
Problems 642
CASE: THE RESEARCH OFFICE MOVES 645
CASE: WRITING A TEXTBOOK 645
INTERACTIVE CASE: VIRTUAL COMPANY 646
INTERNET CHALLENGE 647
ONLINE RESOURCES 647
Selected Bibliography 648
APPENDIX A Solutions to Odd-Numbered Problems 649
APPENDIX B The Standard Normal Distribution 671
APPENDIX C P-Chart 672
NAME INDEX 675
SUBJECT INDEX 678
SUPPLEMENT A Spreadsheet Modeling: An Introduction A1
WHAT ARE MODELS? A2
THE SPREADSHEET MODELING PROCESS A4
EVALUATING SPREADSHEET MODELS A5
Planning the Model A7
Implementing the Model in Excel A8
Assessing the Model A9
Using the Model for Analysis A11
Adding Data Tables A14
Graphing the Model Results A17
Planning the Model A18
Constructing the Model in Excel A19
Reviewing Relative and Absolute Cell Referencing A20
Entering Formulas in the Model A21
USEFUL SPREADSHEET TIPS A26
IMPORTANT EXCEL FORMULAS A27
SPREADSHEET MODELING WITHIN OM: HOW IT ALL FITS TOGETHER A28
Supplement Highlights A29
Key Terms A29
Discussion Questions A29
Problems A30
CASE: DIET PLANNING A31
ONLINE RESOURCES A32
Selected Bibliography A32
SUPPLEMENT B Introduction to Optimization B1
INTRODUCTION B2
ALGEBRAIC FORMULATION B4
Examining the Formulation B6
SPREADSHEET MODEL DEVELOPMENT B7
Testing the Model B8
SOLVER BASICS B9
SETTING UP AND RUNNING SOLVER B9
Solving the Problem B12
INTERPRETING THE SOLUTION B13
SOLVER SOLUTION REPORTS B14
RECAP B16
OUTCOMES OF LINEAR PROGRAMMING PROBLEMS B16
OPTIMIZATION WITHIN OM: HOW IT ALL FITS TOGETHER B18
Supplement Highlights B18
Key Terms B19
Solved Problems B19
Discussion Questions B23
Problems B24
CASE: EXETER ENTERPRISES B25
ONLINE RESOURCES B26
Selected Bibliography B26
SUPPLEMENT C Waiting Line Models C1
ELEMENTS OF WAITING LINES C2
Links to Practice: Waiting for Fast Food C3
The Customer Population C3
The Service System C4
Arrival and Service Patterns C6
Waiting Line Priority Rules C6
WAITING LINE PERFORMANCE MEASURES C7
SINGLE-SERVER WAITING LINE MODEL C7
MULTISERVER WAITING LINE MODEL C10
CHANGING OPERATIONAL CHARACTERISTICS C13
LARGER-SCALE WAITING LINE SYSTEMS C14
WAITING LINE MODELS WITHIN OM: HOW IT ALL FITS TOGETHER C15
Supplement Highlights C15
Key Terms C16
Formula Review C16
Solved Problems C16
Discussion Questions C18
Problems C19
CASE: THE COPY CENTER HOLDUP C19
ONLINE RESOURCES C20
Selected Bibliography C20
SUPPLEMENT D Master Scheduling and Rough-Cut Capacity Planning D1
MASTER PRODUCTION SCHEDULING D2
MPS AS A BASIS OF COMMUNICATION D3
OBJECTIVES OF MASTER SCHEDULING D4
DEVELOPING AN MPS D4
ROUGH-CUT CAPACITY PLANNING D6
EVALUATING AND ACCEPTING THE MPS D9
USING THE MPS D10
USING THE ATP RECORDS D11
STABILIZING THE MPS D14
MASTER PRODUCTION SCHEDULING AND ROUGH-CUT CAPACITY PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER D15
Supplement Highlights D16
Key Terms D16
Formula Review D16
Solved Problems D17
Discussion Questions D22
Problems D22
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (C) D23
ONLINE RESOURCES D24
Selected Bibliography D24
WHAT IS OPERATIONS MANAGEMENT? 2
Links to Practice: The E-tailers 4
DIFFERENCES BETWEEN MANUFACTURING AND SERVICE ORGANIZATIONS 5
Links to Practice: U.S. Postal Service 6
OPERATIONS MANAGEMENT DECISIONS 7
Links to Practice: Texas Instruments Incorporated 9
PLAN OF THIS BOOK 10
HISTORICAL DEVELOPMENT 11
Why OM? 11
Historical Milestones 11
The Industrial Revolution 12
Scientific Management 13
The Human Relations Movement 14
Management Science 14
The Computer Age 15
Just-in-Time 15
Total Quality Management 15
Business Process Reengineering 16
Flexibility 16
Time-Based Competition 16
Supply Chain Management 16
Links to Practice: The Publishing Industry 17
Global Marketplace 18
Sustainability and Green Operations 18
Electronic Commerce 18
Outsourcing and Flattening of the World 19
TODAY'S OM ENVIRONMENT 20
OPERATIONS MANAGEMENT IN PRACTICE 21
WITHIN OM: HOW IT ALL FITS TOGETHER 21
OM ACROSS THE ORGANIZATION 22
THE SUPPLY CHAIN LINK 24
THE SUSTAINABILITY LINK 24
Chapter Highlights 25
Key Terms 25
Discussion Questions 25
CASE: HIGHTONE ELECTRONICS, INC. 26
CASE: CREATURE CARE ANIMAL CLINIC (A) 26
INTERACTIVE CASE: VIRTUAL COMPANY 27
INTERNET CHALLENGE 28
ONLINE RESOURCES 28
Selected Bibliography 28
CHAPTER 2 Operations Strategy and Competitiveness 29
THE ROLE OF OPERATIONS STRATEGY 31
The Importance of Operations Strategy 31
DEVELOPING A BUSINESS STRATEGY 32
Mission 32
Environmental Scanning 33
Core Competencies 35
Putting It Together 36
Links to Practice: Dell Computer Corporation 36
DEVELOPING AN OPERATIONS STRATEGY 37
Competitive Priorities 37
Links to Practice: Southwest Airlines Company 38
Links to Practice: FedEx Corporation 40
The Need for Trade-Off s 40
Order Winners and Qualifiers 41
Translating Competitive Priorities into Production Requirements 42
STRATEGIC ROLE OF TECHNOLOGY 43
Types of Technologies 43
Technology as a Tool for Competitive Advantage 44
PRODUCTIVITY 44
Measuring Productivity 44
Interpreting Productivity Measures 47
Productivity and Competitiveness 47
Productivity and the Service Sector 48
OPERATIONS STRATEGY WITHIN OM: HOW IT ALL FITS TOGETHER 48
OPERATIONS STRATEGY ACROSS THE ORGANIZATION 49
THE SUPPLY CHAIN LINK 49
THE SUSTAINABILITY LINK 50
Chapter Highlights 50
Key Terms 51
Formula Review 51
Solved Problems 51
Discussion Questions 52
Problems 52
CASE: PRIME BANK OF MASSACHUSETTS 53
CASE: BOSEMAN OIL AND PETROLEUM (BOP) 54
INTERACTIVE CASE: VIRTUAL COMPANY 54
INTERNET CHALLENGE 55
ONLINE RESOURCES 55
Selected Bibliography 56
CHAPTER 3 Product Design and Process Selection 57
PRODUCT DESIGN 59
Design of Services versus Goods 59
THE PRODUCT DESIGN PROCESS 60
Idea Development 60
Links to Practice: IBM Corporation 61
Product Screening 62
Preliminary Design and Testing 64
Final Design 64
FACTORS IMPACTING PRODUCT DESIGN 65
Design for Manufacture 65
Product Life Cycle 66
Concurrent Engineering 67
Remanufacturing 68
PROCESS SELECTION 68
Types of Processes 68
DESIGNING PROCESSES 72
PROCESS PERFORMANCE METRICS 74
LINKING PRODUCT DESIGN AND PROCESS
SELECTION 77
Product Design Decisions 78
Links to Practice: The Babcock & Wilcox Company 78
Competitive Priorities 79
Facility Layout 79
Product and Service Strategy 81
Degree of Vertical Integration 81
TECHNOLOGY DECISIONS 82
Information Technology 82
Links to Practice: Using GPS Technology in Product Advertising 83
Automation 83
Links to Practice: Performing Robotic Surgery 85
e-Manufacturing 86
DESIGNING SERVICES 87
How Are Services Different from Manufacturing? 87
How Are Services Classified? 88
The Service Package 89
Differing Service Designs 90
PRODUCT DESIGN AND PROCESS SELECTION WITHIN OM: HOW IT ALL FITS TOGETHER 91
PRODUCT DESIGN AND PROCESS SELECTION ACROSS THE ORGANIZATION 92
THE SUPPLY CHAIN LINK 93
THE SUSTAINABILITY LINK 93
Chapter Highlights 94
Key Terms 94
Formula Review 95
Solved Problems 95
Discussion Questions 97
Problems 97
CASE: BIDDY'S BAKERY (BB) 99
CASE: CREATURE CARE ANIMAL CLINIC (B) 100
INTERACTIVE CASE: VIRTUAL COMPANY 100
INTERNET CHALLENGE 101
ONLINE RESOURCES 101
Selected Bibliography 101
CHAPTER 4 Supply Chain Management 103
WHAT IS A SUPPLY CHAIN? 104
COMPONENTS OF A SUPPLY CHAIN FOR A MANUFACTURER 106
External Suppliers 106
Internal Functions 108
External Distributors 108
THE BULLWHIP EFFECT 108
Causes of the Bullwhip Effect 109
Counteracting the Bullwhip Effect 110
SUPPLY CHAINS FOR SERVICE ORGANIZATIONS 110
Internal Operations 111
The External Distributors 112
MAJOR ISSUES AFFECTING SUPPLY CHAIN
MANAGEMENT 112
Information Technology 112
E-Commerce 112
Business-to-Business (B2B) E-Commerce 113
The Evolution of B2B Commerce 113
The Benefits of B2B E-Commerce 114
Business-to-Consumer (B2C) E-Commerce 114
Consumer Expectations and Competition Resulting from E-Commerce 115
Links to Practice: Lands' End, Inc. 115
Globalization 116
Government Regulations and E-Commerce 118
Green Supply Chain Management 118
Infrastructure Issues 121
Product Proliferation 122
THE ROLE OF PURCHASING 122
The Traditional Purchasing Process 122
The E-purchasing Process 124
SOURCING ISSUES 127
Insourcing versus Outsourcing Decisions 128
Developing Supplier Relationships 130
How Many Suppliers? 130
Developing Partnerships 131
Links to Practice: The Bama Companies 132
Critical Factors in Successful Partnering 133
Links to Practice: Sweetheart Cup Company/
Georgia-Pacific Corporation 133
Benefits of Partnering 135
Ethics in Supply Management 136
SUPPLY CHAIN DISTRIBUTION 137
The Role of Warehouses 137
Links to Practice: Fingerhut Direct Marketing, Inc. 138
Crossdocking 139
Links to Practice: FedEx Freight 139
Radio Frequency Identification Technology (RFID) 141
Third-Party Service Providers 142
IMPLEMENTING SUPPLY CHAIN MANAGEMENT 143
Strategies for Leveraging Supply Chain Management 144
SUPPLY CHAIN PERFORMANCE METRICS 145
TRENDS IN SUPPLY CHAIN MANAGEMENT 147
SUPPLY CHAIN MANAGEMENT WIHTIN OM: HOW IT ALL FITS TOGETHER 149
SCM ACROSS THE ORGANIZATION 149
THE SUPPLY CHAIN LINK 150
THE SUSTAINABILITY LINK 150
Chapter Highlights 151
Key Terms 152
Formula Review 152
Solved Problems 152
Discussion Questions 153
Problems 154
CASE: ELECTRONIC POCKET CALENDARS SUPPLY CHAIN MANAGEMENT GAME 155
CASE: SUPPLY CHAIN MANAGEMENT AT DURHAM INTERNATIONAL MANUFACTURING COMPANY (DIMCO) 157
INTERACTIVE CASE: VIRTUAL COMPANY 158
INTERNET CHALLENGE 158
ONLINE RESOURCES 159
Selected Bibliography 159
CHAPTER 5 Total Quality Management 161
DEFINING QUALITY 162
Differences between Manufacturing and Service Organizations 163
Links to Practice: General Electric Company/Motorola, Inc. 164
COST OF QUALITY 165
THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM) 166
Quality Gurus 167
THE PHILOSOPHY OF TQM 171
Customer Focus 171
Continuous Improvement 171
Employee Empowerment 173
Links to Practice: The Walt Disney Company 174
Use of Quality Tools 174
Links to Practice: The Kroger Company/Meijer Stores
Limited Partnership 177
Product Design 177
Process Management 182
Managing Supplier Quality 182
QUALITY AWARDS AND STANDARDS 183
The Malcolm Baldrige National Quality Award
(MBNQA) 183
The Deming Prize 184
ISO 9000 Standards 184
ISO 14000 Standards 185
WHY TQM EFFORTS FAIL 186
TOTAL QUALITY MANAGEMENT (TQM) WITHIN OM:
HOW IT ALL FITS TOGETHER 186
TOTAL QUALITY MANAGEMENT (TQM) ACROSS THE
ORGANIZATION 187
THE SUPPLY CHAIN LINK 188
THE SUSTAINABILITY LINK 188
Chapter Highlights 189
Key Terms 189
Formula Review 190
Solved Problems 190
Discussion Questions 191
Problems 191
CASE: GOLD COAST ADVERTISING (GCA) 192
CASE: DELTA PLASTICS, INC. (A) 193
INTERACTIVE CASE: VIRTUAL COMPANY 194
INTERNET CHALLENGE 195
ONLINE RESOURCES 195
Selected Bibliography 196
CHAPTER 6 Statistical Quality Control 197
WHAT IS STATISTICAL QUALITY CONTROL? 198
Links to Practice: Intel Corporation 199
SOURCES OF VARIATION: COMMON AND ASSIGNABLE CAUSES 200
DESCRIPTIVE STATISTICS 200
The Mean 200
The Range and Standard Deviation 201
Distribution of Data 201
STATISTICAL PROCESS CONTROL METHODS 201
Developing Control Charts 202
Types of Control Charts 203
CONTROL CHARTS FOR VARIABLES 204
Mean (x-Bar) Charts 204
Range (R) Charts 208
Using Mean and Range Charts Together 209
CONTROL CHARTS FOR ATTRIBUTES 210
P-Charts 211
C-Charts 214
PROCESS CAPABILITY 216
Measuring Process Capability 216
SIX SIGMA QUALITY 221
Links to Practice: Motorola, Inc. 222
ACCEPTANCE SAMPLING 223
Sampling Plans 223
Operating Characteristic (OC) Curves 224
Developing OC Curves 226
Average Outgoing Quality 227
IMPLICATIONS FOR MANAGERS 229
How Much and How Oft en to Inspect 229
Where to Inspect 229
Which Tools to Use 230
STATISTICAL QUALITY CONTROL IN SERVICES 230
Links to Practice: The Ritz-Carlton Hotel Company, L.L.C./Nordstrom, Inc. 231
Links to Practice: Marriott International, Inc. 231
STATISTICAL QUALITY CONTROL (SQC) WITHIN OM: HOW IT ALL FITS TOGETHER 232
STATISTICAL QUALITY CONTROL (SQC) ACROSS THE ORGANIZATION 232
THE SUPPLY CHAIN LINK 233
THE SUSTAINABILITY LINK 233
Chapter Highlights 234
Key Terms 234
Formula Review 235
Solved Problems 235
Discussion Questions 240
Problems 240
CASE: SCHARADIN HOTELS 243
CASE: DELTA PLASTICS, INC. (B) 244
INTERACTIVE CASE: VIRTUAL COMPANY 244
INTERNET CHALLENGE 245
ONLINE RESOURCES 245
Selected Bibliography 245
CHAPTER 7 Just-in-Time and Lean Systems 246
THE PHILOSOPHY OF JIT 248
Eliminate Waste 249
A Broad View of Operations 249
Simplicity 249
Continuous Improvement 250
Visibility 250
Flexibility 250
ELEMENTS OF JIT 251
Just-in-Time Manufacturing 251
Total Quality Management (TQM) 253
Respect for People 253
Links to Practice: Texas Instruments 254
JUST-IN-TIME MANUFACTURING 254
The Pull System 254
Kanban Production 255
Variations of Kanban Production 258
Small Lot Sizes and Quick Setups 258
Uniform Plant Loading 259
Flexible Resources 260
Facility Layout 261
Links to Practice: Ryder Integrated Logistics 261
TOTAL QUALITY MANAGEMENT 262
Product versus Process 263
Quality at the Source 263
Preventive Maintenance 264
Work Environment 264
RESPECT FOR PEOPLE 265
The Role of Production Employees 265
Lifetime Employment 266
The Role of Management 267
Supplier Relationships 268
BENEFITS OF JIT 269
Links to Practice: Alcoa, Inc. 269
IMPLEMENTING JIT 270
JIT IN SERVICES 271
Improved Quality 271
Uniform Facility Loading 271
Use of Multifunction Workers 272
Reductions in Cycle Time 272
Minimizing Setup Times and Parallel Processing 272
Workplace Organization 272
JIT AND LEAN SYSTEMS WITHIN OM: HOW IT ALL FITS
TOGETHER 272
JIT AND LEAN SYSTEMS ACROSS THE
ORGANIZATION 272
THE SUPPLY CHAIN LINK 273
THE SUSTAINABILITY LINK 274
Chapter Highlights 274
Key Terms 275
Formula Review 275
Solved Problems 275
Discussion Questions 275
Problems 276
CASE: KATZ CARPETING 276
CASE: DIXON AUDIO SYSTEMS 277
INTERACTIVE CASE: VIRTUAL COMPANY 278
INTERNET CHALLENGE 279
ONLINE RESOURCES 279
Selected Bibliography 279
CHAPTER 8 Forecasting 280
PRINCIPLES OF FORECASTING 281
STEPS IN THE FORECASTING PROCESS 282
Links to Practice: Intel Corporation 283
TYPES OF FORECASTING METHODS 283
Links to Practice: Improving Sales Forecasting 284
Qualitative Methods 284
Quantitative Methods 286
TIME SERIES MODELS 288
Forecasting Level or Horizontal Pattern 289
Forecasting Trend 297
Forecasting Seasonality 300
Links to Practice: The Ski Industry Forecast 303
CAUSAL MODELS 303
Linear Regression 303
Correlation Coefficient 306
Multiple Regression 307
MEASURING FORECAST ACCURACY 307
Forecast Accuracy Measures 307
Tracking Signal 309
SELECTING THE RIGHT FORECASTING MODEL 310
FORECASTING SOFTWARE 311
Spreadsheets 311
Statistical Packages 311
Specialty Forecasting Packages 312
Guidelines for Selecting Forecasting Software 312
FOCUS FORECASTING 313
COMBINING FORECASTS 313
Links to Practice: Combining Methods in Weather Forecasting 314
COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR) 314
FORECASTING WITHIN OM: HOW IT ALL FITS TOGETHER 315
FORECASTING ACROSS THE ORGANIZATION 315
THE SUPPLY CHAIN LINK 316
THE SUSTAINABILITY LINK 316
Chapter Highlights 317
Key Terms 317
Formula Review 318
Solved Problems 319
Discussion Questions 323
Problems 323
CASE: BRAM-WEAR 327
CASE: THE EMERGENCY ROOM (ER) AT NORTHWEST GENERAL (A) 328
INTERACTIVE CASE: VIRTUAL COMPANY 329
INTERNET CHALLENGE 329
ONLINE RESOURCES 330
Selected Bibliography 330
CHAPTER 9 Capacity Planning and Facility Location 331
CAPACITY PLANNING 333
Why Is Capacity Planning Important? 333
Links to Practice: Capacity Planning in the ER 333
Measuring Capacity 334
Capacity Considerations 336
Links to Practice: Focus in the Retail Industry 339
MAKING CAPACITY PLANNING DECISIONS 339
Identify Capacity Requirements 340
Develop Capacity Alternatives 341
Evaluate Capacity Alternatives 341
DECISION TREES 341
LOCATION ANALYSIS 344
What Is Facility Location? 345
Factors Affecting Location Decisions 345
Links to Practice: Locating in Silicon Valley 346
Globalization 347
MAKING LOCATION DECISIONS 349
Procedure for Making Location Decisions 349
Procedures for Evaluating Location Alternatives 349
CAPACITY PLANNING AND FACILITY LOCATION WITHIN OM: HOW IT ALL FITS TOGETHER 360
CAPACITY PLANNING AND FACILITY LOCATION ACROSS THE ORGANIZATION 360
THE SUPPLY CHAIN LINK 361
THE SUSTAINABILITY LINK 361
Chapter Highlights 361
Key Terms 362
Formula Review 362
Solved Problems 362
Discussion Questions 365
Problems 365
CASE: DATA TECH, INC. 368
CASE: THE EMERGENCY ROOM (ER) AT NORTHWEST GENERAL (B) 369
INTERACTIVE CASE: VIRTUAL COMPANY 369
INTERNET CHALLENGE 370
ONLINE RESOURCES 370
Selected Bibliography 371
CHAPTER 10 Facility Layout 372
WHAT IS LAYOUT PLANNING? 373
TYPES OF LAYOUTS 374
Process Layouts 374
Links to Practice: Wal-Mart Stores, Inc. 376
Product Layouts 376
Links to Practice: Toyota Motor Corporation 378
Hybrid Layouts 378
Fixed-Position Layouts 379
DESIGNING PROCESS LAYOUTS 379
Step 1: Gather Information 379
Step 2: Develop a Block Plan 382
Step 3: Develop a Detailed Layout 385
SPECIAL CASES OF PROCESS LAYOUT 385
Warehouse Layouts 385
Office Layouts 388
DESIGNING PRODUCT LAYOUTS 389
Step 1: Identify Tasks and Their Immediate Predecessors 389
Step 2: Determine Output Rate 391
Step 3: Determine Cycle Time 391
Step 4: Compute the Theoretical Minimum Number of Stations 393
Step 5: Assign Tasks to Workstations (Balance the
Line) 393
Step 6: Compute Efficiency, Idle Time, and Balance Delay 394
Other Considerations 395
GROUP TECHNOLOGY (CELL) LAYOUTS 396
FACILITY LAYOUT WITHIN OM: HOW IT ALL FITS TOGETHER 397
FACILITY LAYOUT ACROSS THE ORGANIZATION 397
THE SUPPLY CHAIN LINK 398
THE SUSTAINABILITY LINK 398
Chapter Highlights 399
Key Terms 399
Formula Review 399
Solved Problems 400
Discussion Questions 402
Problems 403
CASE: SAWHILL ATHLETIC CLUB (A) 407
CASE: SAWHILL ATHLETIC CLUB (B) 408
INTERACTIVE CASE: VIRTUAL COMPANY 409
INTERNET CHALLENGE 409
ONLINE RESOURCES 410
Selected Bibliography 410
CHAPTER 10 Work System Design 411
DESIGNING A WORK SYSTEM 412
JOB DESIGN 413
Designing a Job 413
Links to Practice: Google 413
Machines or People? 414
Level of Labor Specialization 415
Eliminating Employee Boredom 416
Team Approaches to Job Design 416
Links to Practice: The SCO Group 417
The Alternative Workplace 417
Links to Practice: AT&T 418
METHODS ANALYSIS 419
THE WORK ENVIRONMENT 421
WORK MEASUREMENT 422
Costing 422
Performance 423
Planning 423
SETTING STANDARD TIMES 423
How to Do a Time Study 423
Elemental Time Data 429
Predetermined Time Data 429
Work Sampling 431
Links to Practice: Pace Productivity 433
COMPENSATION 433
Time-Based Systems 433
Output-Based Systems 433
Group Incentive Plans 434
Links to Practice: Accounatable Care Organizations (ACO) 434
Incentive Plan Trends 435
LEARNING CURVES 435
WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS TOGETHER 438
WORK SYSTEM DESIGN ACROSS THE ORGANIZATION 438
THE SUPPLY CHAIN LINK 439
THE SUSTAINABILITY LINK 439
Chapter Highlights 440
Key Terms 440
Formula Review 441
Solved Problems 441
Discussion Questions 444
Problems 444
CASE: THE NAVIGATOR III 447
CASE: NORTHEAST STATE UNIVERSITY 447
INTERACTIVE CASE: VIRTUAL COMPANY 448
INTERNET CHALLENGE 449
ONLINE RESOURCES 450
Selected Bibliography 450
CHAPTER 12 Inventory Management 451
TYPES OF INVENTORY 452
HOW COMPANIES USE THEIR INVENTORY 453
OBJECTIVES OF INVENTORY MANAGEMENT 455
Customer Service 455
Cost-Efficient Operations 456
Minimum Inventory Investment 457
RELEVANT INVENTORY COSTS 459
Item Costs 459
Holding Costs 459
Ordering Costs 461
Shortage Costs 461
ABC INVENTORY CLASSIFICATION 461
Procedure for an ABC Inventory Analysis 463
Inventory Control Using ABC Classification 463
INVENTORY RECORD ACCURACY 464
Links to Practice: Cisco Systems, Inc. 464
INVENTORY IN SERVICE ORGANIZATIONS 466
DETERMINING ORDER QUANTITIES 467
MATHEMATICAL MODELS FOR DETERMINING ORDER QUANTITY 468
Economic Order Quantity (EOQ) 468
Calculating the EOQ 471
Economic Production Quantity (EPQ) 473
Quantity Discount Model 477
WHY COMPANIES DON'T ALWAYS USE THE OPTIMAL ORDER QUANTITY 481
JUSTIFYING SMALLER ORDER QUANTITIES 481
Links to Practice: Kenworth Trucks 481
Understanding the EPQ Factors 482
DETERMINING SAFETY STOCK LEVELS 483
How Much Safety Stock? 483
PERIODIC REVIEW SYSTEM 485
Comparison of Continuous Review Systems and Periodic Review Systems 487
THE SINGLE-PERIOD INVENTORY MODEL 488
INVENTORY MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 490
INVENTORY MANAGEMENT ACROSS THE ORGANIZATION 491
THE SUPPLY CHAIN LINK 491
THE SUSTAINABILITY LINK 492
Chapter Highlights 492
Key Terms 493
Formula Review 493
Solved Problems 494
Discussion Questions 497
Problems 498
CASE: FABQUAL LTD. 500
CASE: KAYAKS!INCORPORATED 501
INTERACTIVE CASE: VIRTUAL COMPANY 502
INTERNET CHALLENGE 503
ONLINE RESOURCES 503
Selected Bibliography 504
CHAPTER 13 Aggregate Planning 505
THE ROLE OF AGGREGATE PLANNING 507
Marketing Plan 507
Aggregate or Production Plan 507
Financial and Engineering Plans 508
Master Production Schedule 508
Links to Practice: Coca-Cola Midi (CCM) 509
TYPES OF AGGREGATE PLANS 509
Level Aggregate Plan 509
Chase Aggregate Plan 510
Hybrid Aggregate Plan 511
AGGREGATE PLANNING OPTIONS 511
Demand-Based Options 512
Capacity-Based Options 512
EVALUATING THE CURRENT SITUATION 514
Links to Practice: UPS Hires Seasonal Workers 515
DEVELOPING THE AGGREGATE PLAN 515
AGGREGATE PLANS FOR COMPANIES WITH TANGIBLE PRODUCTS 517
AGGREGATE PLANS FOR SERVICE COMPANIES WITH NONTANGIBLE PRODUCTS 520
AGGREGATE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 524
AGGREGATE PLANNING ACROSS THE ORGANIZATION 525
THE SUPPLY CHAIN LINK 525
THE SUSTAINABILITY LINK 526
Chapter Highlights 526
Key Terms 526
Solved Problems 527
Discussion Questions 533
Problems 534
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (A) 535
CASE: JPC, INC.: KITCHEN COUNTERTOPS MANUFACTURER 536
INTERACTIVE CASE: VIRTUAL COMPANY 537
INTERNET CHALLENGE 537
ONLINE RESOURCES 538
Selected Bibliography 538
CHAPTER 14 Resource Planning 539
ENTERPRISE RESOURCE PLANNING 541
ERP Modules 542
THE EVOLUTION OF ERP 542
First-Generation ERP 542
Second-Generation ERP 543
Links to Practice: Arapahoe County Government 544
THE BENEFITS OF ERP 545
Links to Practice: i2 Technologies 545
Links to Practice: SAP AG 546
THE COST OF ERP SYSTEMS 546
MATERIAL PLANNING SYSTEMS 547
AN OVERVIEW OF MRP 547
TYPES OF DEMAND 548
OBJECTIVES OF MRP 550
MRP INPUTS 550
Authorized MPS 550
Inventory Records 550
Bills of Material 552
THE MRP EXPLOSION PROCESS 555
ACTION NOTICES 559
COMPARISON OF LOT SIZE RULES 559
THE ROLE OF CAPACITY REQUIREMENTS
PLANNING (CRP) 560
RESOURCE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 562
RESOURCE PLANNING ACROSS THE ORGANIZATION 563
THE SUPPLY CHAIN LINK 564
THE SUSTAINABILITY LINK 564
Chapter Highlights 565
Key Terms 565
Formula Review 566
Solved Problems 566
Discussion Questions 569
Problems 569
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (B) 571
CASE: DESSERTS BY J.B. 573
INTERACTIVE CASE: VIRTUAL COMPANY 573
INTERNET CHALLENGE 574
ONLINE RESOURCES 574
Selected Bibliography 575
CHAPTER 15 Scheduling 576
SCHEDULING OPERATIONS 578
HIGH-VOLUME OPERATIONS 578
Characteristics of Flow Operations 578
LOW-VOLUME OPERATIONS 579
Gantt Chart 579
SCHEDULING WORK 580
Infinite Loading 580
Finite Loading 581
Forward Scheduling 581
Backward Scheduling 582
Monitoring Workflow 582
HOW TO SEQUENCE JOBS 584
Priority Rules 584
How to Use Priority Rules 585
MEASURING PERFORMANCE 586
Links to Practice: Airline Scheduling 586
Job Flow Time 586
Average Number of Jobs in the System 587
Makespan 587
Job Lateness and Tardiness 587
COMPARING PRIORITY RULES 588
Comparing SPT and S/RO 591
SEQUENCING JOBS THROUGH TWO WORK CENTERS 591
SCHEDULING BOTTLENECKS 593
Links to Practice: 1-800-FLOWERS.com 595
THEORY OF CONSTRAINTS 596
SCHEDULING FOR SERVICE ORGANIZATIONS 596
Scheduling Services Demanded 596
Scheduling Employees 598
DEVELOPING A WORKFORCE SCHEDULE 599
SCHEDULING WITHIN OM: PUTTING IT ALL TOGETHER 600
SCHEDULING ACROSS THE ORGANIZATION 601
THE SUPPLY CHAIN LINK 602
THE SUSTAINABILITY LINK 602
Chapter Highlights 602
Key Terms 603
Formula Review 603
Solved Problems 603
Discussion Questions 607
Problems 607
CASE: AIR TRAFFIC CONTROLLER SCHOOL (ATCS) 610
CASE: SCHEDULING AT RED, WHITE AND BLUE FIREWORKS COMPANY 610
INTERACTIVE CASE: VIRTUAL COMPANY 611
INTERNET CHALLENGE 611
ONLINE RESOURCES 612
Selected Bibliography 612
CHAPTER 16 Project Management 613
PROJECT LIFE CYCLE 615
Conception 615
Feasibility Analysis or Study 615
Planning 616
Execution 616
Termination 616
NETWORK PLANNING TECHNIQUES 616
Links to Practice: PERT and the Polaris Missile 616
Step 1: Describe the Project 617
Step 2: Diagram the Network 618
Step 3: Estimate the Project's Completion Time 619
Step 3 (a): Deterministic Time Estimates 620
Step 3 (b): Probabilistic Time Estimates 622
Step 4: Monitor the Project's Progression 628
Links to Practice: Managing the Olympic Games 628
ESTIMATING THE PROBABILITY OF COMPLETION DATES 629
REDUCING PROJECT COMPLETION TIME 631
Crashing Projects 631
THE CRITICAL CHAIN APPROACH 634
Adding Safety Time 634
Wasting Safety Time 634
PROJECT MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 636
PROJECT MANAGEMENT OM ACROSS THE ORGANIZATION 636
THE SUPPLY CHAIN LINK 637
THE SUSTAINABILITY LINK 637
Chapter Highlights 637
Key Terms 638
Formula Review 638
Solved Problems 638
Discussion Questions 642
Problems 642
CASE: THE RESEARCH OFFICE MOVES 645
CASE: WRITING A TEXTBOOK 645
INTERACTIVE CASE: VIRTUAL COMPANY 646
INTERNET CHALLENGE 647
ONLINE RESOURCES 647
Selected Bibliography 648
APPENDIX A Solutions to Odd-Numbered Problems 649
APPENDIX B The Standard Normal Distribution 671
APPENDIX C P-Chart 672
NAME INDEX 675
SUBJECT INDEX 678
SUPPLEMENT A Spreadsheet Modeling: An Introduction A1
WHAT ARE MODELS? A2
THE SPREADSHEET MODELING PROCESS A4
EVALUATING SPREADSHEET MODELS A5
Planning the Model A7
Implementing the Model in Excel A8
Assessing the Model A9
Using the Model for Analysis A11
Adding Data Tables A14
Graphing the Model Results A17
Planning the Model A18
Constructing the Model in Excel A19
Reviewing Relative and Absolute Cell Referencing A20
Entering Formulas in the Model A21
USEFUL SPREADSHEET TIPS A26
IMPORTANT EXCEL FORMULAS A27
SPREADSHEET MODELING WITHIN OM: HOW IT ALL FITS TOGETHER A28
Supplement Highlights A29
Key Terms A29
Discussion Questions A29
Problems A30
CASE: DIET PLANNING A31
ONLINE RESOURCES A32
Selected Bibliography A32
SUPPLEMENT B Introduction to Optimization B1
INTRODUCTION B2
ALGEBRAIC FORMULATION B4
Examining the Formulation B6
SPREADSHEET MODEL DEVELOPMENT B7
Testing the Model B8
SOLVER BASICS B9
SETTING UP AND RUNNING SOLVER B9
Solving the Problem B12
INTERPRETING THE SOLUTION B13
SOLVER SOLUTION REPORTS B14
RECAP B16
OUTCOMES OF LINEAR PROGRAMMING PROBLEMS B16
OPTIMIZATION WITHIN OM: HOW IT ALL FITS TOGETHER B18
Supplement Highlights B18
Key Terms B19
Solved Problems B19
Discussion Questions B23
Problems B24
CASE: EXETER ENTERPRISES B25
ONLINE RESOURCES B26
Selected Bibliography B26
SUPPLEMENT C Waiting Line Models C1
ELEMENTS OF WAITING LINES C2
Links to Practice: Waiting for Fast Food C3
The Customer Population C3
The Service System C4
Arrival and Service Patterns C6
Waiting Line Priority Rules C6
WAITING LINE PERFORMANCE MEASURES C7
SINGLE-SERVER WAITING LINE MODEL C7
MULTISERVER WAITING LINE MODEL C10
CHANGING OPERATIONAL CHARACTERISTICS C13
LARGER-SCALE WAITING LINE SYSTEMS C14
WAITING LINE MODELS WITHIN OM: HOW IT ALL FITS TOGETHER C15
Supplement Highlights C15
Key Terms C16
Formula Review C16
Solved Problems C16
Discussion Questions C18
Problems C19
CASE: THE COPY CENTER HOLDUP C19
ONLINE RESOURCES C20
Selected Bibliography C20
SUPPLEMENT D Master Scheduling and Rough-Cut Capacity Planning D1
MASTER PRODUCTION SCHEDULING D2
MPS AS A BASIS OF COMMUNICATION D3
OBJECTIVES OF MASTER SCHEDULING D4
DEVELOPING AN MPS D4
ROUGH-CUT CAPACITY PLANNING D6
EVALUATING AND ACCEPTING THE MPS D9
USING THE MPS D10
USING THE ATP RECORDS D11
STABILIZING THE MPS D14
MASTER PRODUCTION SCHEDULING AND ROUGH-CUT CAPACITY PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER D15
Supplement Highlights D16
Key Terms D16
Formula Review D16
Solved Problems D17
Discussion Questions D22
Problems D22
CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (C) D23
ONLINE RESOURCES D24
Selected Bibliography D24