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Operations Management: An Integrated Approach

by ;
Edition:
5th
ISBN13:

9781118122679

ISBN10:
1118122674
Format:
Hardcover
Pub. Date:
10/23/2012
Publisher(s):
John Wiley & Sons Inc
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Summary

The 5th edition of Operations Management continues to incorporate more of a business/qualitative focus with less emphasis on a quantitative presentation to OM. This new edition is focused on offering more problem solving hints and tips as part of the solution to most examples and solved problems throughout the book. New content changes include an increased coverage of sustainability. Each chapter has a new section that features information on how sustainability is impacting the topic of that chapter. There is a new second virtual case on Healthcare and operations management. More coverage of technology and technology examples via operations and supply chain management as well as many new/current examples such as JIT and how the automotive industry/supply chain was disrupted from the Japan earthquake.

Table of Contents

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

ON LINE RESOURCES 28

Selected Bibliography 28

C H A P T E R 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

Th e Need for Trade-Off s 40

Order Winners and Qualifi ers 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

ON LINE RESOURCES 55

Selected Bibliography 56

C H A P T E R 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 Diff erent from Manufacturing? 87

How Are Services Classifi ed? 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

ON LINE RESOURCES 101

Selected Bibliography 101

C H A P T E R 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-Pacifi c 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 Identifi cation 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

ON LINE RESOURCES 159

Selected Bibliography 159

C H A P T E R 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

ON LINE RESOURCES 195

Selected Bibliography 196

C H A P T E R 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

ON LINE RESOURCES 245

Selected Bibliography 245

C H A P T E R 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

ON LINE RESOURCES 279

Selected Bibliography 279

C H A P T E R 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 Coeffi cient 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 Soft ware 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

ON LINE RESOURCES 330

Selected Bibliography 330

C H A P T E R 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

ON LINE RESOURCES 370

Selected Bibliography 371

C H A P T E R 1 0 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 Th eoretical 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

ON LINE RESOURCES 410

Selected Bibliography 410

C H A P T E R 1 1 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

ON LINE RESOURCES 450

Selected Bibliography 450

C H A P T E R 1 2 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 Classifi cation 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

ON LINE RESOURCES 503

Selected Bibliography 504

C H A P T E R 1 3 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

ON LINE RESOURCES 538

Selected Bibliography 538

C H A P T E R 1 4 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

ON LINE RESOURCES 574

Selected Bibliography 575

C H A P T E R 1 5 Scheduling 576

SCHEDULING OPERATIONS 578

HIGH-VOLUME OPERATIONS 578

Characteristics of Flow Operations 578

LOW-VOLUME OPERATIONS 579

Gantt Chart 579

SCHEDULING WORK 580

Infi nite 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

ON LINE RESOURCES 612

Selected Bibliography 612

C H A P T E R 1 6 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

ON LINE RESOURCES 647

Selected Bibliography 648

A P P E N D I X A Solutions to Odd-numbered Problems 649

A P P E N D I X B The Standard Normal Distribution 671

A P P E N D I X C P-Chart 672

C O M PA N Y I N D E X 000

S U B J E C T I N D E X 000

S U P P L E M E N T 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

ON LINE RESOURCES A32

Selected Bibliography A32

S U P P L E M E N T 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

ON LINE RESOURCES B26

Selected Bibliography B26

S U P P L E M E N T 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

ON LINE RESOURCES C20

Selected Bibliography C20

S U P P L E M E N T 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/Problems D22

CASE: NEWMARKET INTERNATIONAL MANUFACTURING COMPANY (C) D23

ON LINE RESOURCES D24

Selected Bibliography D24



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