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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