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PART Ⅰ Using Operations to Complete2

CHAPTER 1 Operations As a Competitive Weapon3

FedEx3

Operations Management Across the Organization4

A Process View5

How Processes Work5

Nested Processes6

Customer-Supplier Relationships7

Service and Manufacturing Processes7

Adding Value：The Value Chain8

Core Processes9

Support Processes10

Adding Value with Processes10

Operations Management As a Set of Decisions10

Managerial Practice 1.1 Operational Innovation Is a Competitive Weapon at Progressive Insurance11

Decision-Making Tools12

Supporting the Firm’s Goals12

Trends in Operations Management12

Productivity Improvement13

Global Competition14

Rapid Technological Change15

Ethical，Workforce Diversity，and Environmental Issues16

Addressing the Challenges in Operations Management17

Managerial Practice 1.2 High-Tech Operations Help Recycle High-Tech Equipment17

Part 1：Using Operations to Compete17

Part 2：Managing Processes18

Part 3：Managing Value Chains18

Student CD-ROM and Internet Resources18

Key Equation18

Managerial Challenge Operations As a Competitive Weapon at Starwood19

Key Terms19

Solved Problems20

Discussion Questions20

Problems21

Active Model Exercise22

Case Chad’s Creative Concepts23

Selected References24

SUPPLEMENT A Decision Making25

Break-Even Analysis26

Evaluating Services or Products26

Evaluating Processes28

Preference Matrix29

Decision Theory30

Decision Making Under Certainty31

Decision Making Under Uncertainty32

Decision Making Under Risk33

Decision Trees34

Student CD-ROM and Internet Resources36

Key Equations36

Key Terms36

Solved Problems36

Problems39

Selected References43

CHAPTER 2 Operations Strategy45

Starbucks45

Operations Strategy Across the Organization47

Developing a Customer-Driven Operations Strategy47

Corporate Strategy47

Global Strategies49

Market Analysis50

Competitive Priorities and Capabilities50

Cost51

Quality51

Managerial Practice 2.1 Using Operations for Profit at Costco52

Time52

Flexibility52

Managerial Practice 2.2 Building Aircraft Carriers to Customer Order54

Order Winners and Qualifiers54

Using Competitive Priorities：An Airline Example55

New Service or Product Development56

Development Strategies57

Service and Product Definition57

Development Process59

Operations Strategy As a Pattern of Decisions61

Student CD-ROM and Internet Resources63

Key Terms63

Discussion Questions63

Case BSB，Inc.，The Pizza Wars Come to Campus65

Selected References67

CHAPTER 3 Project Management69

Bechtel Group，Inc.69

Project Management Across the Organization70

Using Projects to Implement Operations Strategy71

Cross-Functional Interaction71

Defining and Organizing Projects72

Defining the Scope and Objectives of a Project72

Selecting the Project Manager and Team72

Organizational Structure73

Managerial Practice 3.1 Virtual Global Teaming at Baxter International74

Planning Projects75

Defining the Work Breakdown Structure75

Diagramming the Network76

Developing the Schedule78

Analyzing Cost-Time Trade-Offs84

Managerial Challenge Project Management at the Phoenician85

Assessing Risks91

Managerial Practice 3.2 Boston’s Big Dig Project Poses Many Challenges92

Critical Chain97

Resource-Related Problems97

The Critical Chain Approach98

Monitoring and Controlling Projects98

Monitoring Project Status98

Monitoring Project Resources99

Controlling Projects100

Student CD-ROM and Internet Resources101

Key Equations101

Key Terms102

Solved Problems102

Discussion Questions106

Problems106

Active Model Exercise113

Case The Pert Studebaker115

Selected References117

PART Ⅱ Managing Processes118

CHAPTER 4 Process Strategy119

Duke Power119

Process Strategy Across the Organization120

Process Strategy121

Major Process Decisions121

Process Structure in Services122

Nature of Service Processes：Customer Contact122

Customer-Contact Matrix125

Service Process Structuring126

Embedding Strategy into Service Processes127

Managerial Practice 4.1 Processes in the Front and Back Office at the Ritz-Carlton128

Process Structure in Manufacturing128

Product-Process Matrix129

Manufacturing Process Structuring129

Production and Inventory Strategies131

Embedding Strategy into Manufacturing Processes132

Customer Involvement133

Possible Disadvantages133

Possible Advantages134

Resource Flexibility134

Workforce135

Equipment135

Capital Intensity136

Automating Manufacturing Processes136

Automating Service Processes137

Managerial Practice 4.2 Flexible Automation at R.R.Donnelley137

Economies of Scope138

Strategic Fit138

Decision Patterns for Service Processes139

Decision Patterns for Manufacturing Processes139

Gaining Focus140

Strategies for Change141

Process Reengineering141

Process Improvement142

Student CD-ROM and Internet Resources142

Key Terms143

Discussion Questions143

Problems143

Case Custom Molds，Inc.145

Selected References148

CHAPTER 5 Process Analysis151

Omgeo151

Process Analysis Across the Organization153

A Systematic Approach153

Step 1：Identify Opportunities153

Step 2：Define the Scope154

Step 3：Document the Process154

Step 4：Evaluate Performance154

Step 5：Redesign the Process155

Step 6：Implement Changes155

Documenting the Process155

Flowcharts155

Managerial Practice 5.1 Evaluating Performance at McDonald’s156

Service Blueprints158

Process Charts159

Evaluating Performance161

Data Analysis Tools161

Managerial Challenge Process Analysis at Starwood162

Data Snooping166

Simulation168

Redesigning the Process169

Generating Ideas：Questioning and Brainstorming169

Managerial Practice 5.2 Redesigning Processes at Baptist Memorial Hospital170

Benchmarking171

Managing Processes172

Student CD-ROM and Internet Resources173

Key Terms173

Solved Problems173

Discussion Questions176

Problems177

Active Model Exercise183

Case Jose’s Authentic Mexican Restaurant184

Selected References185

SUPPLEMENT B Simulation187

Reasons for Using Simulation188

The Simulation Process188

Data Collection188

Random-Number Assignment190

Model Formulation191

Analysis192

Computer Simulation193

Simulation with Excel Spreadsheets193

Simulation with More Advanced Software196

Student CD-ROM and Internet Resources198

Key Terms198

Solved Problem198

Problems199

Selected References203

CHAPTER 6 Process Performance and Quality205

Crowne Plaza Christchurch205

Process Performance and Quality Across the Organization206

Costs of Poor Process Performance and Quality206

Prevention Costs207

Appraisal Costs207

Internal Failure Costs207

External Failure Costs207

Total Quality Management208

Customer Satisfaction208

Employee Involvement210

Continuous Improvement211

Statistical Process Control213

Variation of Outputs213

Managerial Practice 6.1 TQM and SPC Help ADM Cocoa Maintain a Sweet Business214

Managerial Practice 6.2 Quality Measures in the Health Care Industry215

Control Charts218

Statistical Process Control Methods220

Control Charts for Variables220

Control Charts for Attributes224

Process Capability227

Defining Process Capability227

Using Continuous Improvement to Determine the Capability of a Process229

Quality Engineering230

Six Sigma230

Managerial Practice 6.3 Applying the Six-Sigma Process at Scottsdale Healthcare’s Osborn Hospital232

Six Sigma Improvement Model233

Implementation233

International Quality Documentation Standards234

The ISO 9000 Documentation Standards234

ISO 14000：An Environmental Management System234

Managerial Challenge Process Performance and Quality at Starwood235

Benefits of ISO Certification236

Malcolm Baldrige National Quality Award236

Student CD-ROM and Internet Resources237

Key Equations237

Key Terms237

Solved Problems238

Discussion Questions240

Problems240

Active Model Exercise248

Experiential Learning Statistical Process Control with a Coin Catapult249

Selected References251

CHAPTER 7 Constraint Management253

Eastern Financial Florida Credit Union253

Managing Constraints Across the Organization254

The Theory of Constraints255

Measuring Capacity，Utilization，and Performance in TOC255

Key Principles of TOC256

Managerial Practice 7.1 Using TOC Principles Profits Bal Seal Engineering258

Identification and Management of Bottlenecks259

Managerial Practice 7.2 Constraint Management in Health Care262

Product Mix Decisions Using Bottlenecks263

Capacity Planning Over Longer Time Horizons265

Economies of Scale265

Managerial Practice 7.3 Economies of Scale at Work266

Diseconomies of Scale267

Capacity Timing and Sizing Strategies268

Sizing Capacity Cushions268

Timing and Sizing Expansion268

Linking Process Capacity and Other Decisions269

A Systematic Approach to Long-Term Capacity Decisions270

Step 1：Estimate Capacity Requirements270

Step 2：Identify Gaps272

Step 3：Develop Alternatives272

Step 4：Evaluate the Alternatives272

Tools for Capacity Planning273

Waiting-Line Models273

Simulation274

Decision Trees274

Student CD-ROM and Internet Resources275

Key Equations275

Key Terms275

Solved Problems275

Discussion Questions278

Problems279

Experiential Learning Min-Yo Garment Company285

Case Fitness Plus，Part A289

Selected References290

SUPPLEMENT C Waiting Lines291

Why Waiting Lines Form292

Uses of Waiting-Line Theory292

Structure of Waiting-Line Problems292

Customer Population292

The Service System293

Priority Rule295

Probability Distributions295

Arrival Distribution296

Service Time Distribution296

Using Waiting-Line Models to Analyze Operations297

Single-Server Model298

Multiple-Server Model300

Little’s Law301

Finite-Source Model302

Decision Areas for Management303

Student CD-ROM and Internet Resources304

Key Equations304

Key Terms305

Solved Problems305

Problems307

Selected References309

CHAPTER 8 Process Layout311

RiverTown Crossings311

Managing Process Layout Across the Organization312

Layout Planning313

Strategic Issues313

Managerial Practice 8.1 Retailers Match Layouts to Strategies314

Layout Types314

Performance Criteria316

Creating Hybrid Layouts317

One Worker，Multiple Machines317

Group Technology318

Designing Flexible-Flow Layouts319

Step 1：Gather Information320

Step 2：Develop a Block Plan321

Applying the Weighted-Distance Method322

Step 3：Design a Detailed Layout323

Other Decision Support Tools324

Warehouse Layouts324

Office Layouts325

Designing Line-Flow Layouts326

Managerial Practice 8.2 Transitioning from Traditional Layout to Activity Settings at ABB327

Line Balancing328

Other Considerations331

Student CD-ROM and Internet Resources332

Key Equations332

Key Terms332

Solved Problems332

Discussion Questions335

Problems335

Active Model Exercise340

Case 1 Hightec，Inc.341

Case 2 The Pizza Connection343

Selected References345

CHAPTER 9 Lean Systems347

Toyota Production System347

Lean Systems Across the Organization349

Characteristics of Lean Systems for Services and Manufacturing349

Pull Method of Work Flow349

Quality at the Source350

Small Lot Sizes350

Uniform Workstation Loads351

Standardized Components and Work Methods351

Close Supplier Ties352

Flexible Workforce352

Line Flows353

Automation353

Five S353

Preventive Maintenance354

Continuous Improvement Using a Lean Systems Approach354

Managerial Practice 9.1 Lean Systems at New Balance Athletic Shoe Company355

The Kanban System356

General Operating Rules357

Determining the Number of Containers357

Other Kanban Signals359

Managerial Practice 9.2 Lean Systems at University of Pittsburgh Medical Center Shadyside359

Value Stream Mapping360

JIT II362

Operational Benefits and Implementation Issues362

Organizational Considerations362

Managerial Practice 9.3 Implementing Manufacturing Principles at Cessna363

Process Considerations364

Inventory and Scheduling364

Student CD-ROM and Internet Resources365

Key Equation365

Key Terms365

Solved Problem365

Discussion Questions366

Problems366

Case Copper Kettle Catering368

Selected References369

PART Ⅲ Managing Value Chains370

CHAPTER 10 Supply Chain Strategy371

Dell Inc.371

Supply Chain Strategy Across the Organization372

Supply Chains for Services and Manufacturing373

Services373

Manufacturing374

Managerial Practice 10.1 Supply Chain Excellence at 7-Eleven Japan375

Measures of Supply Chain Performance376

Inventory Measures376

Process Measures379

Links to Financial Measures379

Supply Chain Dynamics380

External Causes381

Internal Causes382

Integrated Supply Chains383

The Customer Relationship Process383

E-Commerce and the Marketing Process383

E-Commerce and the Order Placement Process384

The Order Fulfillment Process385

Inventory Placement386

Vendor-Managed Inventories386

Continuous Replenishment Program387

Radio Frequency Identification387

Distribution Processes387

Managerial Practice 10.2 Continuous Replenishment at the Campbell Soup Company388

Supplier Relationship Process389

Supplier Selection and Certification390

Supplier Relations390

Electronic Purchasing391

Centralized Versus Localized Buying392

Value Analysis393

Supply Chain Strategies393

Strategic Focus393

Managerial Challenge Supply Chain Strategy at Starvvood394

Managerial Practice 10.3 A Responsive Supply Chain Helps a European Clothing Retailer Delight Customers396

Mass Customization397

Managerial Practice 10.4 Mass Customization at Lands’End399

Lean Supply Chains400

Outsourcing and Offshoring401

Virtual Supply Chains403

Managerial Practice 10.5 HCL Corporation Provides Service Processes in Virtual Value Chains405

Student CD-ROM and Internet Resources406

Key Equations406

Key Terms406

Solved Problem406

Discussion Questions407

Problems408

Experiential Learning Sonic Distributors410

Case 1 Wolf Motors412

Case 2 Brunswick Distribution，Inc.412

Selected References417

CHAPTER 11 Location419

Bavarian Motor Works（BMW）419

Location Decisions Across the Organization421

Factors Affecting Location Decisions422

Dominant Factors in Manufacturing422

Managerial Practice 11.1 Relocating General Electric’s Energy Division423

Dominant Factors in Services424

Geographical Information Systems and Location Decisions424

Managerial Practice 11.2 How Fast-Food Chains Use GIS to Select Their Sites425

Using GIS to Identify Locations and Demographic Customer Segments426

Managerial Practice 11.3 Location Challenges at Starbucks427

Choosing Between an Onsite Expansion，New Location，or Relocation427

Locating a Single Facility431

Comparing Several Sites431

Applying the Load-Distance Method432

Using Break-Even Analysis434

Locating a Facility Within a Network of Facilities436

The GIS Method for Locating Multiple Facilities436

The Transportation Method441

Other Methods of Location Analysis444

Student CD-ROM and Internet Resources444

Key Equations444

Key Terms445

Solved Problems445

Discussion Questions448

Problems448

Active Model Exercise454

Case 1 Industrial Repair，Inc.455

Case 2 R.U.Reddie for Location456

Selected References459

CHAPTER 12 Inventory Management461

Inventory Management at Wal-Mart461

Inventory Management Across the Organization462

Inventory Basics463

Pressures for Low Inventories463

Pressures for High Inventories464

Types of Inventory465

Inventory Reduction Tactics466

Managerial Practice 12.1 Improving Customer Service Through Inventory Management at Amazon.com467

Placement of Inventories468

Identifying Critical Inventory Items with ABC Analysis469

Economic Order Quantity470

Calculating the EOQ471

Understanding the Effect of Changes474

EOQ and Lean Systems475

Inventory Control Systems475

Continuous Review System475

Periodic Review System484

Managerial Practice 12.2 Implementing a Periodic Review Inventory System at Hewlett-Packard486

Comparative Advantages of the Q and P Systems488

Hybrid Systems489

Inventory Record Accuracy489

Student CD-ROM and Internet Resources489

Key Equations490

Key Terms490

Solved Problems490

Discussion Questions496

Problems496

Active Model Exercise501

Experiential Learning Swift Electronic Supply，Inc.502

Case Parts Emporium504

Selected References506

SUPPLEMENT D Special Inventory Models507

Noninstantaneous Replenishment508

Quantity Discounts510

One-Period Designs512

Student CD-ROM and Internet Resources515

Key Equations515

Key Term515

Solved Problems515

Problems517

Selected References519

CHAPTER 13 Forecasting521

Unilever521

Forecasting Across the Organization523

Demand Patterns523

Designing the Forecasting System524

Deciding What to Forecast524

Choosing the Type of Forecasting Technique525

Forecasting with Computers525

Judgment Methods526

Salesforce Estimates526

Managerial Practice 13.1 Wal-Mart Uses CPFR and the Internet to Improve Forecast Performance527

Executive Opinion528

Market Research528

Delphi Method528

Guidelines for Using Judgment Forecasts528

Causal Methods：Linear Regression528

Time-Series Methods531

Naive Forecast531

Estimating the Average532

Including a Trend536

Seasonal Patterns538

Choosing a Time-Series Method541

Forecast Error541

Criteria for Selecting Time-Series Methods545

Using Multiple Techniques546

Combination Forecasts547

Focus Forecasting547

Putting It All Together：Forecasting As a Process547

A Typical Forecasting Process547

Forecasting As a Nested Process548

Student CD-ROM and Internet Resources549

Key Equations549

Key Terms549

Solved Problems550

Discussion Questions555

Problems556

Active Model Exercise562

Case Yankee Fork and Hoe Company563

Selected References565

CHAPTER 14 Sales and Operations Planning567

Whirlpool Corporation567

Sales and Operations Planning Across the Organization568

The Purpose of Sales and Operations Plans568

Aggregation568

The Relationship of Sales and Operations Plans to Other Plans569

The Decision Context571

Information Inputs571

Typical Objectives571

Reactive Alternatives572

Aggressive Alternatives573

Planning Strategies574

Relevant Constraints and Costs574

Managerial Practice 14.1 Workforce Strategy and Commitment to Employees575

Sales and Operations Planning As a Process576

Decision Support Tools578

Spreadsheets578

Managerial Challenge Sales and Operations Planning at Starwood579

The Transportation Method583

Managerial Considerations587

Student CD-ROM and Internet Resources587

Key Terms587

Solved Problems587

Discussion Questions591

Problems591

Active Model Exercise595

Case Memorial Hospital596

Selected References598

SUPPLEMENT E Linear Programming599

Basic Concepts600

Formulating a Problem601

Graphic Analysis602

Plot the Constraints603

Identify the Feasible Region604

Plot an Objective Function Line606

Find the Visual Solution606

Find the Algebraic Solution607

Slack and Surplus Variables608

Sensitivity Analysis609

Computer Solution610

Simplex Method610

Computer Output610

Applications613

Student CD-ROM and Internet Resources613

Key Terms614

Solved Problem614

Discussion Question615

Problems615

Selected References621

CHAPTER 15 Resource Planning623

Starwood623

Resource Planning Across the Organization624

Enterprise Resource Planning624

What an ERP System Does624

How ERP Systems Are Designed625

Planning and Controlling Systems for Manufacturers626

Dependent Demand626

Managerial Practice 15.1 ERP at VF Corporation627

Possible Planning and Control Systems628

Material Requirements Planning629

Bill of Materials629

Master Production Scheduling630

Inventory Record636

Planning Factors639

Outputs from MRP642

MRP and the Environment645

Drum-Buffer-Rope System646

Resource Planning for Service Providers647

Dependent Demand for Services647

Managerial Practice 15.2 The Drum-Buffer-Rope System at a U.S.Marine Corps Maintenance Center648

Bill of Resources649

Student CD-ROM and Internet Resources650

Key Terms650

Solved Problems651

Discussion Questions655

Problems655

Active Model Exercise664

Case Flashy Flashers，Inc.665

Selected References669

CHAPTER 16 Scheduling671

Air New Zealand671

Scheduling Across the Organization672

Scheduling Service and Manufacturing Processes673

Performance Measures673

Gantt Charts674

Scheduling Customer Demand675

Appointments675

Reservations675

Backlogs676

Scheduling Employees676

Constraints676

Developing a Workforce Schedule677

Computerized Workforce Scheduling Systems679

Operations Scheduling679

Managerial Practice 16.1 Scheduling Employees at Call Centers680

Job Shop Dispatching680

Scheduling Jobs for One Workstation682

Scheduling Jobs for Multiple Workstations686

Scheduling Jobs for a Two-Station Flow Shop687

Labor-Limited Environments689

Linking Operations Scheduling to the Supply Chain690

Student CD-ROM and Internet Resources690

Key Equations690

Managerial Practice 16.2 Car Sequencing at Nissan’s Sunderland Plant691

Key Terms692

Solved Problems692

Discussion Questions697

Problems697

Active Model Exercise701

Case Food King703

Selected References705

Appendix 1 Normal Distribution707

Appendix 2 Table of Random Numbers708

Photo Credits709

Name Index711

Subject Index717