Introduction | p. 1 |

Learning Objectives and Framework | p. 3 |

Road Map of the Book | p. 6 |

The Process View of the Organization | p. 10 |

Presbyterian Hospital in Philadelphia | p. 10 |

Three Measures of Process Performance | p. 15 |

Little's Law | p. 16 |

Inventory Turns and Inventory Costs | p. 19 |

Five Reasons to Hold Inventory | p. 23 |

Pipeline Inventory | p. 23 |

Seasonal Inventory | p. 24 |

Cycle Inventory | p. 25 |

Decoupling Inventory/Buffers | p. 26 |

Safety Inventory | p. 26 |

The Product-Process Matrix | p. 27 |

Summary | p. 29 |

Further Readings | p. 29 |

Practice Problems | p. 29 |

Understanding the Supply Process: Evaluating Process Capacity | p. 32 |

How to Draw a Process Flow Diagram | p. 33 |

Bottleneck, Process Capacity, and Flow Rate (Throughput) | p. 38 |

How Long Does It Take to Produce a Certain Amount of Supply? | p. 40 |

Process Utilization and Capacity Utilization | p. 41 |

Workload and Implied Utilization | p. 43 |

Multiple Types of Flow Units | p. 44 |

Summary | p. 48 |

Practice Problems | p. 50 |

Estimating and Reducing Labor Costs | p. 56 |

Analyzing an Assembly Operation | p. 56 |

Time to Process a Quantity X Starting with an Empty Process | p. 58 |

Labor Content and Idle Time | p. 60 |

Increasing Capacity by Line Balancing | p. 63 |

Scale Up to Higher Volume | p. 66 |

Increasing Capacity by Replicating the Line | p. 67 |

Increasing Capacity by Selectively Adding Workers | p. 67 |

Increasing Capacity by Further Specializing Tasks | p. 69 |

Summary | p. 72 |

Further Readings | p. 74 |

Practice Problems | p. 74 |

The Link between Operations and Finance | p. 80 |

Paul Downs Cabinetmakers | p. 81 |

Building an ROIC Tree | p. 82 |

Valuing Operational Improvements | p. 87 |

Analyzing Operations Based on Financial Data | p. 90 |

Summary | p. 95 |

Further Readings | p. 95 |

Practice Problem | p. 95 |

Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model | p. 97 |

The Impact of Setups on Capacity | p. 98 |

Interaction between Batching and Inventory | p. 101 |

Choosing a Batch Size in the Presence of Setup Times | p. 103 |

Balancing Setup Costs with Inventory Costs: The EOQ Model | p. 106 |

Observations Related to the Economic Order Quantity | p. 110 |

Transfer Batches | p. 114 |

Setup Time Reduction | p. 114 |

Other Flow Interruptions: Buffer or Suffer | p. 115 |

Summary | p. 117 |

Further Reading | p. 119 |

Practice Problems | p. 119 |

Variability and Its Impact on Process Performance: Waiting Time Problems | p. 124 |

Motivating Example: A Somewhat Unrealistic Call Center | p. 125 |

Variability: Where It Comes From and How It Can Be Measured | p. 127 |

Analyzing an Arrival Process | p. 129 |

Stationary Arrivals | p. 131 |

Exponential Interarrival Times | p. 133 |

Nonexponential Interarrival Times | p. 134 |

Summary: Analyzing an Arrival Process | p. 135 |

Service Time Variability | p. 135 |

Predicting the Average Waiting Time for the Case of One Resource | p. 137 |

Predicting the Average Waiting Time for the Case of Multiple Resources | p. 141 |

Service Levels in Waiting Time Problems | p. 144 |

Economic Implications: Generating a Staffing Plan | p. 145 |

Impact of Pooling: Economies of Scale | p. 148 |

Priority Rules in Waiting Lines | p. 152 |

Service-Time-Dependent Priority Rules | p. 152 |

Service-Time-Independent Priority Rules | p. 152 |

Reducing Variability | p. 153 |

Ways to Reduce Arrival Variability | p. 153 |

Ways to Reduce Service Time Variability | p. 154 |

Summary | p. 156 |

Further Reading | p. 157 |

Practice Problems | p. 157 |

The Impact of Variability on Process Performance: Throughput Losses | p. 163 |

Motivating Examples: Why Averages Do Not Work | p. 163 |

Ambulance Diversion | p. 164 |

Throughput Loss for a Simple Process | p. 165 |

Customer Impatience and Throughput Loss | p. 169 |

Several Resources with Variability in Sequence | p. 171 |

The Role of Buffers | p. 172 |

Summary | p. 174 |

Further Reading | p. 175 |

Practice Problems | p. 175 |

Quality Management, Statistical Process Control, and Six-Sigma Capability | p. 178 |

Controlling Variation: Practical Motivation | p. 179 |

The Two Types of Variation | p. 180 |

Constructing Control Charts | p. 182 |

Control Chart Example from a Service Setting | p. 185 |

Design Specifications and Process Capability | p. 188 |

Attribute Control Charts | p. 190 |

Robust Process Design | p. 192 |

Impact of Yields and Defects on Process Flow | p. 194 |

Rework | p. 195 |

Eliminating Flow Units from the Process | p. 196 |

Cost Economics and Location of Test Points | p. 196 |

Defects and Variability | p. 197 |

A Process for Improvement | p. 198 |

Further Reading | p. 200 |

Practice Problems | p. 200 |

Lean Operations and the Toyota Production System | p. 202 |

The History of Toyota | p. 202 |

TPS Framework | p. 204 |

The Seven Sources of Waste | p. 205 |

JIT: Matching Supply with Demand | p. 208 |

Achieve One-Unit-at-a-Time Flow | p. 208 |

Produce at the Rate of Customer Demand | p. 209 |

Implement Pull Systems | p. 209 |

Quality Management | p. 211 |

Exposing Problems through Inventory Reduction | p. 213 |

Flexibility | p. 214 |

Standardization of Work and Reduction of Variability | p. 215 |

Human Resource Practices | p. 216 |

Lean Transformation | p. 217 |

Further Reading | p. 218 |

Practice Problems | p. 218 |

Betting on Uncertain Demand: The Newsvendor Model | p. 220 |

O'Neill Inc. | p. 221 |

An Introduction to the Newsvendor Model | p. 223 |

Constructing a Demand Forecast | p. 223 |

The Expected Profit-Maximizing Order Quantity | p. 232 |

Performance Measures | p. 236 |

Expected Lost Sales | p. 237 |

Expected Sales | p. 239 |

Expected Leftover Inventory | p. 239 |

Expected Profit | p. 240 |

Fill Rate | p. 240 |

In-Stock Probability and Stockout Probability | p. 241 |

Other Objectives for Choosing an Order Quantity | p. 242 |

Managerial Lessons | p. 244 |

Summary | p. 246 |

Further Reading | p. 248 |

Practice Problems | p. 248 |

Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity | p. 256 |

Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost | p. 257 |

When Is the Mismatch Cost High? | p. 259 |

Reducing Mismatch Costs with Make-to-Order | p. 262 |

Quick Response with Reactive Capacity | p. 263 |

Unlimited, but Expensive, Reactive Capacity | p. 263 |

Limited Reactive Capacity | p. 267 |

Summary | p. 274 |

Further Reading | p. 276 |

Practice Problems | p. 276 |

Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model | p. 283 |

Medtronic's Supply Chain | p. 284 |

The Order-up-to Model Design and Implementation | p. 287 |

The End-of-Period Inventory Level | p. 290 |

Choosing Demand Distributions | p. 291 |

Performance Measures | p. 295 |

In-Stock and Stockout Probability | p. 295 |

Expected Back Order | p. 297 |

Fill Rate | p. 298 |

Expected On-Hand Inventory | p. 299 |

Pipeline Inventory/Expected On-Order Inventory | p. 300 |

Choosing an Order-up-to Level to Meet a Service Target | p. 300 |

An In-Stock Probability Target | p. 301 |

A Fill Rate Target | p. 301 |

Choosing an Appropriate Service Level | p. 304 |

Controlling Ordering Costs | p. 307 |

Medtronic Wrap-up | p. 310 |

Managerial Insights | p. 312 |

Summary | p. 315 |

Further Reading | p. 316 |

Practice Problems | p. 316 |

Risk-Pooling Strategies to Reduce and Hedge Uncertainty | p. 321 |

Location Pooling | p. 321 |

Pooling Medtronic's Field Inventory | p. 322 |

Medtronic's Distribution Center(s) | p. 326 |

Electronic Commerce | p. 328 |

Product Pooling | p. 330 |

Lead Time Pooling: Consolidated Distribution and Delayed Differentiation | p. 336 |

Consolidated Distribution | p. 336 |

Delayed Differentiation | p. 341 |

Capacity Pooling with Flexible Manufacturing | p. 344 |

Summary | p. 349 |

Further Reading | p. 352 |

Practice Problems | p. 352 |

Revenue Management with Capacity Controls | p. 357 |

Revenue Management and Margin Arithmetic | p. 357 |

Protection Levels and Booking Limits | p. 359 |

Overbooking | p. 365 |

Implementation of Revenue Management | p. 367 |

Demand Forecasting | p. 368 |

Dynamic Decisions | p. 368 |

Variability in Available Capacity | p. 368 |

Reservations Coming in Groups | p. 368 |

Effective Segmenting of Customers | p. 368 |

Multiple Fare Classes | p. 369 |

Software Implementation | p. 369 |

Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacity | p. 369 |

Summary | p. 371 |

Further Reading | p. 372 |

Practice Problems | p. 372 |

Supply Chain Coordination | p. 377 |

The Bullwhip Effect: Causes and Consequences | p. 377 |

Order Synchronization | p. 380 |

Order Batching | p. 382 |

Trade Promotions and Forward Buying | p. 383 |

Reactive and Overreactive Ordering | p. 386 |

Shortage Gaming | p. 387 |

Bullwhip Effect: Mitigating Strategies | p. 388 |

Sharing Information | p. 389 |

Smoothing the Flow of Product | p. 389 |

Eliminating Pathological Incentives | p. 390 |

Using Vendor-Managed Inventory | p. 390 |

Incentive Conflicts in a Sunglasses Supply Chain | p. 392 |

Buy-Back Contracts | p. 395 |

More Supply Chain Contracts | p. 401 |

Quantity Discounts | p. 401 |

Options Contracts | p. 401 |

Revenue Sharing | p. 401 |

Quantity Flexibility Contracts | p. 402 |

Price Protection | p. 402 |

Summary | p. 403 |

Further Reading | p. 403 |

Practice Problems | p. 403 |

Statistics Tutorial | p. 406 |

Tables | p. 415 |

Evaluation of the Loss Function | p. 427 |

Equations and Approximations | p. 430 |

Solutions to Selected Practice Problems | p. 437 |

Glossary | p. 462 |

References | p. 471 |

Index of Key "How to" Exhibits | p. 474 |

Summary of Key Notation and Equations | p. 475 |

Index | p. 479 |

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