Matching Supply with Demand : An Introduction to Operations Management

  • ISBN13:


  • ISBN10:


  • Edition: 2nd
  • Format: Hardcover
  • Copyright: 2008-04-07
  • Publisher: McGraw-Hill/Irwin
  • View Upgraded Edition

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

Purchase Benefits

  • Free Shipping On Orders Over $35!
    Your order must be $35 or more to qualify for free economy shipping. Bulk sales, PO's, Marketplace items, eBooks and apparel do not qualify for this offer.
  • Get Rewarded for Ordering Your Textbooks! Enroll Now
List Price: $194.74 Save up to $106.24
  • Buy Used
    Add to Cart Free Shipping


Supplemental Materials

What is included with this book?

  • The Used copy of this book is not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.


MATCHING SUPPLY WITH DEMAND by Cachon and Terwiesch is the most authoritative, cutting-edge book for operations management MBAs. The book demands rigorous analysis on the part of students without requiring consistent use of sophisticated mathematical modeling to perform it. When the use of quantitative tools or formal modeling is indicated, it is only to perform the necessary analysis needed to inform and support a practical business solution.

Author Biography

Christian Terwiesch teaches MBA and executive classes in the areas of operations management and product development at The Wharton School of the University of Pennsylvania.

Table of Contents

Introductionp. 1
Learning Objectives and Frameworkp. 3
Road Map of the Bookp. 6
The Process View of the Organizationp. 10
Presbyterian Hospital in Philadelphiap. 10
Three Measures of Process Performancep. 15
Little's Lawp. 16
Inventory Turns and Inventory Costsp. 19
Five Reasons to Hold Inventoryp. 23
Pipeline Inventoryp. 23
Seasonal Inventoryp. 24
Cycle Inventoryp. 25
Decoupling Inventory/Buffersp. 26
Safety Inventoryp. 26
The Product-Process Matrixp. 27
Summaryp. 29
Further Readingsp. 29
Practice Problemsp. 29
Understanding the Supply Process: Evaluating Process Capacityp. 32
How to Draw a Process Flow Diagramp. 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 Utilizationp. 41
Workload and Implied Utilizationp. 43
Multiple Types of Flow Unitsp. 44
Summaryp. 48
Practice Problemsp. 50
Estimating and Reducing Labor Costsp. 56
Analyzing an Assembly Operationp. 56
Time to Process a Quantity X Starting with an Empty Processp. 58
Labor Content and Idle Timep. 60
Increasing Capacity by Line Balancingp. 63
Scale Up to Higher Volumep. 66
Increasing Capacity by Replicating the Linep. 67
Increasing Capacity by Selectively Adding Workersp. 67
Increasing Capacity by Further Specializing Tasksp. 69
Summaryp. 72
Further Readingsp. 74
Practice Problemsp. 74
The Link between Operations and Financep. 80
Paul Downs Cabinetmakersp. 81
Building an ROIC Treep. 82
Valuing Operational Improvementsp. 87
Analyzing Operations Based on Financial Datap. 90
Summaryp. 95
Further Readingsp. 95
Practice Problemp. 95
Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Modelp. 97
The Impact of Setups on Capacityp. 98
Interaction between Batching and Inventoryp. 101
Choosing a Batch Size in the Presence of Setup Timesp. 103
Balancing Setup Costs with Inventory Costs: The EOQ Modelp. 106
Observations Related to the Economic Order Quantityp. 110
Transfer Batchesp. 114
Setup Time Reductionp. 114
Other Flow Interruptions: Buffer or Sufferp. 115
Summaryp. 117
Further Readingp. 119
Practice Problemsp. 119
Variability and Its Impact on Process Performance: Waiting Time Problemsp. 124
Motivating Example: A Somewhat Unrealistic Call Centerp. 125
Variability: Where It Comes From and How It Can Be Measuredp. 127
Analyzing an Arrival Processp. 129
Stationary Arrivalsp. 131
Exponential Interarrival Timesp. 133
Nonexponential Interarrival Timesp. 134
Summary: Analyzing an Arrival Processp. 135
Service Time Variabilityp. 135
Predicting the Average Waiting Time for the Case of One Resourcep. 137
Predicting the Average Waiting Time for the Case of Multiple Resourcesp. 141
Service Levels in Waiting Time Problemsp. 144
Economic Implications: Generating a Staffing Planp. 145
Impact of Pooling: Economies of Scalep. 148
Priority Rules in Waiting Linesp. 152
Service-Time-Dependent Priority Rulesp. 152
Service-Time-Independent Priority Rulesp. 152
Reducing Variabilityp. 153
Ways to Reduce Arrival Variabilityp. 153
Ways to Reduce Service Time Variabilityp. 154
Summaryp. 156
Further Readingp. 157
Practice Problemsp. 157
The Impact of Variability on Process Performance: Throughput Lossesp. 163
Motivating Examples: Why Averages Do Not Workp. 163
Ambulance Diversionp. 164
Throughput Loss for a Simple Processp. 165
Customer Impatience and Throughput Lossp. 169
Several Resources with Variability in Sequencep. 171
The Role of Buffersp. 172
Summaryp. 174
Further Readingp. 175
Practice Problemsp. 175
Quality Management, Statistical Process Control, and Six-Sigma Capabilityp. 178
Controlling Variation: Practical Motivationp. 179
The Two Types of Variationp. 180
Constructing Control Chartsp. 182
Control Chart Example from a Service Settingp. 185
Design Specifications and Process Capabilityp. 188
Attribute Control Chartsp. 190
Robust Process Designp. 192
Impact of Yields and Defects on Process Flowp. 194
Reworkp. 195
Eliminating Flow Units from the Processp. 196
Cost Economics and Location of Test Pointsp. 196
Defects and Variabilityp. 197
A Process for Improvementp. 198
Further Readingp. 200
Practice Problemsp. 200
Lean Operations and the Toyota Production Systemp. 202
The History of Toyotap. 202
TPS Frameworkp. 204
The Seven Sources of Wastep. 205
JIT: Matching Supply with Demandp. 208
Achieve One-Unit-at-a-Time Flowp. 208
Produce at the Rate of Customer Demandp. 209
Implement Pull Systemsp. 209
Quality Managementp. 211
Exposing Problems through Inventory Reductionp. 213
Flexibilityp. 214
Standardization of Work and Reduction of Variabilityp. 215
Human Resource Practicesp. 216
Lean Transformationp. 217
Further Readingp. 218
Practice Problemsp. 218
Betting on Uncertain Demand: The Newsvendor Modelp. 220
O'Neill Inc.p. 221
An Introduction to the Newsvendor Modelp. 223
Constructing a Demand Forecastp. 223
The Expected Profit-Maximizing Order Quantityp. 232
Performance Measuresp. 236
Expected Lost Salesp. 237
Expected Salesp. 239
Expected Leftover Inventoryp. 239
Expected Profitp. 240
Fill Ratep. 240
In-Stock Probability and Stockout Probabilityp. 241
Other Objectives for Choosing an Order Quantityp. 242
Managerial Lessonsp. 244
Summaryp. 246
Further Readingp. 248
Practice Problemsp. 248
Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacityp. 256
Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Costp. 257
When Is the Mismatch Cost High?p. 259
Reducing Mismatch Costs with Make-to-Orderp. 262
Quick Response with Reactive Capacityp. 263
Unlimited, but Expensive, Reactive Capacityp. 263
Limited Reactive Capacityp. 267
Summaryp. 274
Further Readingp. 276
Practice Problemsp. 276
Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Modelp. 283
Medtronic's Supply Chainp. 284
The Order-up-to Model Design and Implementationp. 287
The End-of-Period Inventory Levelp. 290
Choosing Demand Distributionsp. 291
Performance Measuresp. 295
In-Stock and Stockout Probabilityp. 295
Expected Back Orderp. 297
Fill Ratep. 298
Expected On-Hand Inventoryp. 299
Pipeline Inventory/Expected On-Order Inventoryp. 300
Choosing an Order-up-to Level to Meet a Service Targetp. 300
An In-Stock Probability Targetp. 301
A Fill Rate Targetp. 301
Choosing an Appropriate Service Levelp. 304
Controlling Ordering Costsp. 307
Medtronic Wrap-upp. 310
Managerial Insightsp. 312
Summaryp. 315
Further Readingp. 316
Practice Problemsp. 316
Risk-Pooling Strategies to Reduce and Hedge Uncertaintyp. 321
Location Poolingp. 321
Pooling Medtronic's Field Inventoryp. 322
Medtronic's Distribution Center(s)p. 326
Electronic Commercep. 328
Product Poolingp. 330
Lead Time Pooling: Consolidated Distribution and Delayed Differentiationp. 336
Consolidated Distributionp. 336
Delayed Differentiationp. 341
Capacity Pooling with Flexible Manufacturingp. 344
Summaryp. 349
Further Readingp. 352
Practice Problemsp. 352
Revenue Management with Capacity Controlsp. 357
Revenue Management and Margin Arithmeticp. 357
Protection Levels and Booking Limitsp. 359
Overbookingp. 365
Implementation of Revenue Managementp. 367
Demand Forecastingp. 368
Dynamic Decisionsp. 368
Variability in Available Capacityp. 368
Reservations Coming in Groupsp. 368
Effective Segmenting of Customersp. 368
Multiple Fare Classesp. 369
Software Implementationp. 369
Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacityp. 369
Summaryp. 371
Further Readingp. 372
Practice Problemsp. 372
Supply Chain Coordinationp. 377
The Bullwhip Effect: Causes and Consequencesp. 377
Order Synchronizationp. 380
Order Batchingp. 382
Trade Promotions and Forward Buyingp. 383
Reactive and Overreactive Orderingp. 386
Shortage Gamingp. 387
Bullwhip Effect: Mitigating Strategiesp. 388
Sharing Informationp. 389
Smoothing the Flow of Productp. 389
Eliminating Pathological Incentivesp. 390
Using Vendor-Managed Inventoryp. 390
Incentive Conflicts in a Sunglasses Supply Chainp. 392
Buy-Back Contractsp. 395
More Supply Chain Contractsp. 401
Quantity Discountsp. 401
Options Contractsp. 401
Revenue Sharingp. 401
Quantity Flexibility Contractsp. 402
Price Protectionp. 402
Summaryp. 403
Further Readingp. 403
Practice Problemsp. 403
Statistics Tutorialp. 406
Tablesp. 415
Evaluation of the Loss Functionp. 427
Equations and Approximationsp. 430
Solutions to Selected Practice Problemsp. 437
Glossaryp. 462
Referencesp. 471
Index of Key "How to" Exhibitsp. 474
Summary of Key Notation and Equationsp. 475
Indexp. 479
Table of Contents provided by Ingram. All Rights Reserved.

Rewards Program

Write a Review