PART Ⅰ Using Operations to Complete 2
CHAPTER 1 Operations As a Competitive Weapon 3
FedEx 3
Operations Management Across the Organization 4
A Process View 5
How Processes Work 5
Nested Processes 6
Customer-Supplier Relationships 7
Service and Manufacturing Processes 7
Adding Value：The Value Chain 8
Core Processes 9
Support Processes 10
Adding Value with Processes 10
Operations Management As a Set of Decisions 10
Managerial Practice 1.1 Operational Innovation Is a Competitive Weapon at Progressive Insurance 11
Decision-Making Tools 12
Supporting the Firm’s Goals 12
Trends in Operations Management 12
Productivity Improvement 13
Global Competition 14
Rapid Technological Change 15
Ethical，Workforce Diversity，and Environmental Issues 16
Addressing the Challenges in Operations Management 17
Managerial Practice 1.2 High-Tech Operations Help Recycle High-Tech Equipment 17
Part 1：Using Operations to Compete 17
Part 2：Managing Processes 18
Part 3：Managing Value Chains 18
Student CD-ROM and Internet Resources 18
Key Equation 18
Managerial Challenge Operations As a Competitive Weapon at Starwood 19
Key Terms 19
Solved Problems 20
Discussion Questions 20
Problems 21
Active Model Exercise 22
Case Chad’s Creative Concepts 23
Selected References 24
SUPPLEMENT A Decision Making 25
Break-Even Analysis 26
Evaluating Services or Products 26
Evaluating Processes 28
Preference Matrix 29
Decision Theory 30
Decision Making Under Certainty 31
Decision Making Under Uncertainty 32
Decision Making Under Risk 33
Decision Trees 34
Student CD-ROM and Internet Resources 36
Key Equations 36
Key Terms 36
Solved Problems 36
Problems 39
Selected References 43
CHAPTER 2 Operations Strategy 45
Starbucks 45
Operations Strategy Across the Organization 47
Developing a Customer-Driven Operations Strategy 47
Corporate Strategy 47
Global Strategies 49
Market Analysis 50
Competitive Priorities and Capabilities 50
Cost 51
Quality 51
Managerial Practice 2.1 Using Operations for Profit at Costco 52
Time 52
Flexibility 52
Managerial Practice 2.2 Building Aircraft Carriers to Customer Order 54
Order Winners and Qualifiers 54
Using Competitive Priorities：An Airline Example 55
New Service or Product Development 56
Development Strategies 57
Service and Product Definition 57
Development Process 59
Operations Strategy As a Pattern of Decisions 61
Student CD-ROM and Internet Resources 63
Key Terms 63
Discussion Questions 63
Case BSB，Inc.，The Pizza Wars Come to Campus 65
Selected References 67
CHAPTER 3 Project Management 69
Bechtel Group，Inc. 69
Project Management Across the Organization 70
Using Projects to Implement Operations Strategy 71
Cross-Functional Interaction 71
Defining and Organizing Projects 72
Defining the Scope and Objectives of a Project 72
Selecting the Project Manager and Team 72
Organizational Structure 73
Managerial Practice 3.1 Virtual Global Teaming at Baxter International 74
Planning Projects 75
Defining the Work Breakdown Structure 75
Diagramming the Network 76
Developing the Schedule 78
Analyzing Cost-Time Trade-Offs 84
Managerial Challenge Project Management at the Phoenician 85
Assessing Risks 91
Managerial Practice 3.2 Boston’s Big Dig Project Poses Many Challenges 92
Critical Chain 97
Resource-Related Problems 97
The Critical Chain Approach 98
Monitoring and Controlling Projects 98
Monitoring Project Status 98
Monitoring Project Resources 99
Controlling Projects 100
Student CD-ROM and Internet Resources 101
Key Equations 101
Key Terms 102
Solved Problems 102
Discussion Questions 106
Problems 106
Active Model Exercise 113
Case The Pert Studebaker 115
Selected References 117
PART Ⅱ Managing Processes 118
CHAPTER 4 Process Strategy 119
Duke Power 119
Process Strategy Across the Organization 120
Process Strategy 121
Major Process Decisions 121
Process Structure in Services 122
Nature of Service Processes：Customer Contact 122
Customer-Contact Matrix 125
Service Process Structuring 126
Embedding Strategy into Service Processes 127
Managerial Practice 4.1 Processes in the Front and Back Office at the Ritz-Carlton 128
Process Structure in Manufacturing 128
Product-Process Matrix 129
Manufacturing Process Structuring 129
Production and Inventory Strategies 131
Embedding Strategy into Manufacturing Processes 132
Customer Involvement 133
Possible Disadvantages 133
Possible Advantages 134
Resource Flexibility 134
Workforce 135
Equipment 135
Capital Intensity 136
Automating Manufacturing Processes 136
Automating Service Processes 137
Managerial Practice 4.2 Flexible Automation at R.R.Donnelley 137
Economies of Scope 138
Strategic Fit 138
Decision Patterns for Service Processes 139
Decision Patterns for Manufacturing Processes 139
Gaining Focus 140
Strategies for Change 141
Process Reengineering 141
Process Improvement 142
Student CD-ROM and Internet Resources 142
Key Terms 143
Discussion Questions 143
Problems 143
Case Custom Molds，Inc. 145
Selected References 148
CHAPTER 5 Process Analysis 151
Omgeo 151
Process Analysis Across the Organization 153
A Systematic Approach 153
Step 1：Identify Opportunities 153
Step 2：Define the Scope 154
Step 3：Document the Process 154
Step 4：Evaluate Performance 154
Step 5：Redesign the Process 155
Step 6：Implement Changes 155
Documenting the Process 155
Flowcharts 155
Managerial Practice 5.1 Evaluating Performance at McDonald’s 156
Service Blueprints 158
Process Charts 159
Evaluating Performance 161
Data Analysis Tools 161
Managerial Challenge Process Analysis at Starwood 162
Data Snooping 166
Simulation 168
Redesigning the Process 169
Generating Ideas：Questioning and Brainstorming 169
Managerial Practice 5.2 Redesigning Processes at Baptist Memorial Hospital 170
Benchmarking 171
Managing Processes 172
Student CD-ROM and Internet Resources 173
Key Terms 173
Solved Problems 173
Discussion Questions 176
Problems 177
Active Model Exercise 183
Case Jose’s Authentic Mexican Restaurant 184
Selected References 185
SUPPLEMENT B Simulation 187
Reasons for Using Simulation 188
The Simulation Process 188
Data Collection 188
Random-Number Assignment 190
Model Formulation 191
Analysis 192
Computer Simulation 193
Simulation with Excel Spreadsheets 193
Simulation with More Advanced Software 196
Student CD-ROM and Internet Resources 198
Key Terms 198
Solved Problem 198
Problems 199
Selected References 203
CHAPTER 6 Process Performance and Quality 205
Crowne Plaza Christchurch 205
Process Performance and Quality Across the Organization 206
Costs of Poor Process Performance and Quality 206
Prevention Costs 207
Appraisal Costs 207
Internal Failure Costs 207
External Failure Costs 207
Total Quality Management 208
Customer Satisfaction 208
Employee Involvement 210
Continuous Improvement 211
Statistical Process Control 213
Variation of Outputs 213
Managerial Practice 6.1 TQM and SPC Help ADM Cocoa Maintain a Sweet Business 214
Managerial Practice 6.2 Quality Measures in the Health Care Industry 215
Control Charts 218
Statistical Process Control Methods 220
Control Charts for Variables 220
Control Charts for Attributes 224
Process Capability 227
Defining Process Capability 227
Using Continuous Improvement to Determine the Capability of a Process 229
Quality Engineering 230
Six Sigma 230
Managerial Practice 6.3 Applying the Six-Sigma Process at Scottsdale Healthcare’s Osborn Hospital 232
Six Sigma Improvement Model 233
Implementation 233
International Quality Documentation Standards 234
The ISO 9000 Documentation Standards 234
ISO 14000：An Environmental Management System 234
Managerial Challenge Process Performance and Quality at Starwood 235
Benefits of ISO Certification 236
Malcolm Baldrige National Quality Award 236
Student CD-ROM and Internet Resources 237
Key Equations 237
Key Terms 237
Solved Problems 238
Discussion Questions 240
Problems 240
Active Model Exercise 248
Experiential Learning Statistical Process Control with a Coin Catapult 249
Selected References 251
CHAPTER 7 Constraint Management 253
Eastern Financial Florida Credit Union 253
Managing Constraints Across the Organization 254
The Theory of Constraints 255
Measuring Capacity，Utilization，and Performance in TOC 255
Key Principles of TOC 256
Managerial Practice 7.1 Using TOC Principles Profits Bal Seal Engineering 258
Identification and Management of Bottlenecks 259
Managerial Practice 7.2 Constraint Management in Health Care 262
Product Mix Decisions Using Bottlenecks 263
Capacity Planning Over Longer Time Horizons 265
Economies of Scale 265
Managerial Practice 7.3 Economies of Scale at Work 266
Diseconomies of Scale 267
Capacity Timing and Sizing Strategies 268
Sizing Capacity Cushions 268
Timing and Sizing Expansion 268
Linking Process Capacity and Other Decisions 269
A Systematic Approach to Long-Term Capacity Decisions 270
Step 1：Estimate Capacity Requirements 270
Step 2：Identify Gaps 272
Step 3：Develop Alternatives 272
Step 4：Evaluate the Alternatives 272
Tools for Capacity Planning 273
Waiting-Line Models 273
Simulation 274
Decision Trees 274
Student CD-ROM and Internet Resources 275
Key Equations 275
Key Terms 275
Solved Problems 275
Discussion Questions 278
Problems 279
Experiential Learning Min-Yo Garment Company 285
Case Fitness Plus，Part A 289
Selected References 290
SUPPLEMENT C Waiting Lines 291
Why Waiting Lines Form 292
Uses of Waiting-Line Theory 292
Structure of Waiting-Line Problems 292
Customer Population 292
The Service System 293
Priority Rule 295
Probability Distributions 295
Arrival Distribution 296
Service Time Distribution 296
Using Waiting-Line Models to Analyze Operations 297
Single-Server Model 298
Multiple-Server Model 300
Little’s Law 301
Finite-Source Model 302
Decision Areas for Management 303
Student CD-ROM and Internet Resources 304
Key Equations 304
Key Terms 305
Solved Problems 305
Problems 307
Selected References 309
CHAPTER 8 Process Layout 311
RiverTown Crossings 311
Managing Process Layout Across the Organization 312
Layout Planning 313
Strategic Issues 313
Managerial Practice 8.1 Retailers Match Layouts to Strategies 314
Layout Types 314
Performance Criteria 316
Creating Hybrid Layouts 317
One Worker，Multiple Machines 317
Group Technology 318
Designing Flexible-Flow Layouts 319
Step 1：Gather Information 320
Step 2：Develop a Block Plan 321
Applying the Weighted-Distance Method 322
Step 3：Design a Detailed Layout 323
Other Decision Support Tools 324
Warehouse Layouts 324
Office Layouts 325
Designing Line-Flow Layouts 326
Managerial Practice 8.2 Transitioning from Traditional Layout to Activity Settings at ABB 327
Line Balancing 328
Other Considerations 331
Student CD-ROM and Internet Resources 332
Key Equations 332
Key Terms 332
Solved Problems 332
Discussion Questions 335
Problems 335
Active Model Exercise 340
Case 1 Hightec，Inc. 341
Case 2 The Pizza Connection 343
Selected References 345
CHAPTER 9 Lean Systems 347
Toyota Production System 347
Lean Systems Across the Organization 349
Characteristics of Lean Systems for Services and Manufacturing 349
Pull Method of Work Flow 349
Quality at the Source 350
Small Lot Sizes 350
Uniform Workstation Loads 351
Standardized Components and Work Methods 351
Close Supplier Ties 352
Flexible Workforce 352
Line Flows 353
Automation 353
Five S 353
Preventive Maintenance 354
Continuous Improvement Using a Lean Systems Approach 354
Managerial Practice 9.1 Lean Systems at New Balance Athletic Shoe Company 355
The Kanban System 356
General Operating Rules 357
Determining the Number of Containers 357
Other Kanban Signals 359
Managerial Practice 9.2 Lean Systems at University of Pittsburgh Medical Center Shadyside 359
Value Stream Mapping 360
JIT II 362
Operational Benefits and Implementation Issues 362
Organizational Considerations 362
Managerial Practice 9.3 Implementing Manufacturing Principles at Cessna 363
Process Considerations 364
Inventory and Scheduling 364
Student CD-ROM and Internet Resources 365
Key Equation 365
Key Terms 365
Solved Problem 365
Discussion Questions 366
Problems 366
Case Copper Kettle Catering 368
Selected References 369
PART Ⅲ Managing Value Chains 370
CHAPTER 10 Supply Chain Strategy 371
Dell Inc. 371
Supply Chain Strategy Across the Organization 372
Supply Chains for Services and Manufacturing 373
Services 373
Manufacturing 374
Managerial Practice 10.1 Supply Chain Excellence at 7-Eleven Japan 375
Measures of Supply Chain Performance 376
Inventory Measures 376
Process Measures 379
Links to Financial Measures 379
Supply Chain Dynamics 380
External Causes 381
Internal Causes 382
Integrated Supply Chains 383
The Customer Relationship Process 383
E-Commerce and the Marketing Process 383
E-Commerce and the Order Placement Process 384
The Order Fulfillment Process 385
Inventory Placement 386
Vendor-Managed Inventories 386
Continuous Replenishment Program 387
Radio Frequency Identification 387
Distribution Processes 387
Managerial Practice 10.2 Continuous Replenishment at the Campbell Soup Company 388
Supplier Relationship Process 389
Supplier Selection and Certification 390
Supplier Relations 390
Electronic Purchasing 391
Centralized Versus Localized Buying 392
Value Analysis 393
Supply Chain Strategies 393
Strategic Focus 393
Managerial Challenge Supply Chain Strategy at Starvvood 394
Managerial Practice 10.3 A Responsive Supply Chain Helps a European Clothing Retailer Delight Customers 396
Mass Customization 397
Managerial Practice 10.4 Mass Customization at Lands’End 399
Lean Supply Chains 400
Outsourcing and Offshoring 401
Virtual Supply Chains 403
Managerial Practice 10.5 HCL Corporation Provides Service Processes in Virtual Value Chains 405
Student CD-ROM and Internet Resources 406
Key Equations 406
Key Terms 406
Solved Problem 406
Discussion Questions 407
Problems 408
Experiential Learning Sonic Distributors 410
Case 1 Wolf Motors 412
Case 2 Brunswick Distribution，Inc. 412
Selected References 417
CHAPTER 11 Location 419
Bavarian Motor Works（BMW） 419
Location Decisions Across the Organization 421
Factors Affecting Location Decisions 422
Dominant Factors in Manufacturing 422
Managerial Practice 11.1 Relocating General Electric’s Energy Division 423
Dominant Factors in Services 424
Geographical Information Systems and Location Decisions 424
Managerial Practice 11.2 How Fast-Food Chains Use GIS to Select Their Sites 425
Using GIS to Identify Locations and Demographic Customer Segments 426
Managerial Practice 11.3 Location Challenges at Starbucks 427
Choosing Between an Onsite Expansion，New Location，or Relocation 427
Locating a Single Facility 431
Comparing Several Sites 431
Applying the Load-Distance Method 432
Using Break-Even Analysis 434
Locating a Facility Within a Network of Facilities 436
The GIS Method for Locating Multiple Facilities 436
The Transportation Method 441
Other Methods of Location Analysis 444
Student CD-ROM and Internet Resources 444
Key Equations 444
Key Terms 445
Solved Problems 445
Discussion Questions 448
Problems 448
Active Model Exercise 454
Case 1 Industrial Repair，Inc. 455
Case 2 R.U.Reddie for Location 456
Selected References 459
CHAPTER 12 Inventory Management 461
Inventory Management at Wal-Mart 461
Inventory Management Across the Organization 462
Inventory Basics 463
Pressures for Low Inventories 463
Pressures for High Inventories 464
Types of Inventory 465
Inventory Reduction Tactics 466
Managerial Practice 12.1 Improving Customer Service Through Inventory Management at Amazon.com 467
Placement of Inventories 468
Identifying Critical Inventory Items with ABC Analysis 469
Economic Order Quantity 470
Calculating the EOQ 471
Understanding the Effect of Changes 474
EOQ and Lean Systems 475
Inventory Control Systems 475
Continuous Review System 475
Periodic Review System 484
Managerial Practice 12.2 Implementing a Periodic Review Inventory System at Hewlett-Packard 486
Comparative Advantages of the Q and P Systems 488
Hybrid Systems 489
Inventory Record Accuracy 489
Student CD-ROM and Internet Resources 489
Key Equations 490
Key Terms 490
Solved Problems 490
Discussion Questions 496
Problems 496
Active Model Exercise 501
Experiential Learning Swift Electronic Supply，Inc. 502
Case Parts Emporium 504
Selected References 506
SUPPLEMENT D Special Inventory Models 507
Noninstantaneous Replenishment 508
Quantity Discounts 510
One-Period Designs 512
Student CD-ROM and Internet Resources 515
Key Equations 515
Key Term 515
Solved Problems 515
Problems 517
Selected References 519
CHAPTER 13 Forecasting 521
Unilever 521
Forecasting Across the Organization 523
Demand Patterns 523
Designing the Forecasting System 524
Deciding What to Forecast 524
Choosing the Type of Forecasting Technique 525
Forecasting with Computers 525
Judgment Methods 526
Salesforce Estimates 526
Managerial Practice 13.1 Wal-Mart Uses CPFR and the Internet to Improve Forecast Performance 527
Executive Opinion 528
Market Research 528
Delphi Method 528
Guidelines for Using Judgment Forecasts 528
Causal Methods：Linear Regression 528
Time-Series Methods 531
Naive Forecast 531
Estimating the Average 532
Including a Trend 536
Seasonal Patterns 538
Choosing a Time-Series Method 541
Forecast Error 541
Criteria for Selecting Time-Series Methods 545
Using Multiple Techniques 546
Combination Forecasts 547
Focus Forecasting 547
Putting It All Together：Forecasting As a Process 547
A Typical Forecasting Process 547
Forecasting As a Nested Process 548
Student CD-ROM and Internet Resources 549
Key Equations 549
Key Terms 549
Solved Problems 550
Discussion Questions 555
Problems 556
Active Model Exercise 562
Case Yankee Fork and Hoe Company 563
Selected References 565
CHAPTER 14 Sales and Operations Planning 567
Whirlpool Corporation 567
Sales and Operations Planning Across the Organization 568
The Purpose of Sales and Operations Plans 568
Aggregation 568
The Relationship of Sales and Operations Plans to Other Plans 569
The Decision Context 571
Information Inputs 571
Typical Objectives 571
Reactive Alternatives 572
Aggressive Alternatives 573
Planning Strategies 574
Relevant Constraints and Costs 574
Managerial Practice 14.1 Workforce Strategy and Commitment to Employees 575
Sales and Operations Planning As a Process 576
Decision Support Tools 578
Spreadsheets 578
Managerial Challenge Sales and Operations Planning at Starwood 579
The Transportation Method 583
Managerial Considerations 587
Student CD-ROM and Internet Resources 587
Key Terms 587
Solved Problems 587
Discussion Questions 591
Problems 591
Active Model Exercise 595
Case Memorial Hospital 596
Selected References 598
SUPPLEMENT E Linear Programming 599
Basic Concepts 600
Formulating a Problem 601
Graphic Analysis 602
Plot the Constraints 603
Identify the Feasible Region 604
Plot an Objective Function Line 606
Find the Visual Solution 606
Find the Algebraic Solution 607
Slack and Surplus Variables 608
Sensitivity Analysis 609
Computer Solution 610
Simplex Method 610
Computer Output 610
Applications 613
Student CD-ROM and Internet Resources 613
Key Terms 614
Solved Problem 614
Discussion Question 615
Problems 615
Selected References 621
CHAPTER 15 Resource Planning 623
Starwood 623
Resource Planning Across the Organization 624
Enterprise Resource Planning 624
What an ERP System Does 624
How ERP Systems Are Designed 625
Planning and Controlling Systems for Manufacturers 626
Dependent Demand 626
Managerial Practice 15.1 ERP at VF Corporation 627
Possible Planning and Control Systems 628
Material Requirements Planning 629
Bill of Materials 629
Master Production Scheduling 630
Inventory Record 636
Planning Factors 639
Outputs from MRP 642
MRP and the Environment 645
Drum-Buffer-Rope System 646
Resource Planning for Service Providers 647
Dependent Demand for Services 647
Managerial Practice 15.2 The Drum-Buffer-Rope System at a U.S.Marine Corps Maintenance Center 648
Bill of Resources 649
Student CD-ROM and Internet Resources 650
Key Terms 650
Solved Problems 651
Discussion Questions 655
Problems 655
Active Model Exercise 664
Case Flashy Flashers，Inc. 665
Selected References 669
CHAPTER 16 Scheduling 671
Air New Zealand 671
Scheduling Across the Organization 672
Scheduling Service and Manufacturing Processes 673
Performance Measures 673
Gantt Charts 674
Scheduling Customer Demand 675
Appointments 675
Reservations 675
Backlogs 676
Scheduling Employees 676
Constraints 676
Developing a Workforce Schedule 677
Computerized Workforce Scheduling Systems 679
Operations Scheduling 679
Managerial Practice 16.1 Scheduling Employees at Call Centers 680
Job Shop Dispatching 680
Scheduling Jobs for One Workstation 682
Scheduling Jobs for Multiple Workstations 686
Scheduling Jobs for a Two-Station Flow Shop 687
Labor-Limited Environments 689
Linking Operations Scheduling to the Supply Chain 690
Student CD-ROM and Internet Resources 690
Key Equations 690
Managerial Practice 16.2 Car Sequencing at Nissan’s Sunderland Plant 691
Key Terms 692
Solved Problems 692
Discussion Questions 697
Problems 697
Active Model Exercise 701
Case Food King 703
Selected References 705
Appendix 1 Normal Distribution 707
Appendix 2 Table of Random Numbers 708
Photo Credits 709
Name Index 711
Subject Index 717