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Operations Management
An Integrated Approach ^
INTERNATIONAL STUDENT VERSION
R. Dan Reid
Nada R. Sanders
C 0 N T E N T S
C H A P T E R 1
Basics of Operations Management l 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 1 1
WhyOM? 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 2 0
OPERATIONS MANAGEMENT IN PRACTICE 2 1 WITHIN OM: HOW IT ALL FITS TOGETHER 2 1 OM ACROSS THE ORGANIZATION 2 2
THE SUPPLY CHAIN LINK 2 4 THE SUSTAINABILITY LINK 2 4
Chapter Highlights 25 Key Terms 25
Discussion Questions 25 Selected Bibliography 26
C H A P T E R 2
Strategy and Productivity 27 THE ROLE OF OPERATIONS STRATEGY 29
The Importance of Operations Strategy 29 DEVELOPING A BUSINESS STRATEGY 3 0
Mission 30
Environmental Scanning 31 Core Competencies 33 Putting It Together 34
Links to Practice: Dell Computer Corporation 3 4
DEVELOPING AN OPERATIONS STRATEGY 35
Competitive Priorities 35
Links to Practice: Southwest Airlines Company 3 6 Links to Practice: FedEx Corporation 3 8
The Need for Trade-Offs 38 Order Winners and Qualifiers 39
Translating Competitive Priorities into Production Requirements 40
STRATEGIC ROLE OF TECHNOLOGY 4 1 Types of Technologies 41
Technology as a Tool for Competitive Advantage 42 PRODUCTIVITY 4 2
Measuring Productivity 42
Interpreting Productivity Measures 45 Productivity and Competitiveness 45 Productivity and the Service Sector 46 OPERATIONS STRATEGY WITHIN OM:
HOW IT ALL FITS TOGETHER 46 OPERATIONS STRATEGY ACROSS
THE ORGANIZATION 4 7 THE SUPPLY CHAIN LINK 4 7 THE SUSTAINABILITY LINK 4 8
Chapter Highlights 48 Key Terms 49 Formula Review 49 Solved Problems 49 Discussion Questions 50 Problems 50 Selected Bibliography 51 XV
xvi • CONTENTS
C H A P T E R 3
Product and Process Design 53 PRODUCT DESIGN 55
Design of Services versus Goods 55
THE PRODUCT DESIGN PROCESS 56
Idea Development 56
Links to Practice: IBM Corporation 5 7
Product Screening 58
Preliminary Design and Testing 60
Final Design 60
FACTORS IMPACTING PRODUCT DESIGN 6 1
Design for Manufacture 61 Product Life Cycle 62 Concurrent Engineering 63
Remanufacturing 64
PROCESS SELECTION 6 4
Types of Processes 64
DESIGNING PROCESSES 6 8
PROCESS PERFORMANCE METRICS 7 0 LINKING PRODUCT DESIGN AND PROCESS
SELECTION 73
Product Design Decisions 74
Links to Practice: The Babcock & Wilcox Company 74
Competitive Priorities 75 Facility Layout 75
Product and Service Strategy 77 Degree of Vertical Integration 77 TECHNOLOGY DECISIONS 7 8
Information Technology 78
Links to Practice: Using GPS Technology in Product Advertising 79
Automation 79
Links to Practice: Performing Robotic Surgery 8 1
e-Manufacturing 8 2 DESIGNING SERVICES 83
How Are Services Different from Manufacturing? 83 How Are Services Classified? 84
The Service Package 85
Differing Service Designs 86
PRODUCT DESIGN AND PROCESS SELECTION WITHIN OM: HOW IT ALL FITS TOGETHER 8 7
PRODUCT DESIGN AND PROCESS SELECTION ACROSS THE ORGANIZATION 8 8
THE SUPPLY CHAIN LINK 8 9 THE SUSTAINABILITY LINK 89
Chapter Highlights 90 Key Terms 91 Formula Review 91 Solved Problems 91 Discussion Questions 93 Problems 93 Selected Bibliography 95 C H A P T E R 4
Global Supply Chain Management 97 WHAT IS A SUPPLY CHAIN? 9 8
COMPONENTS OF A SUPPLY CHAIN FOR A MANUFACTURER 1 0 0
External Suppliers 100 Internal Functions 102 External Distributors 102
THE BULLWHIP EFFECT 102
Causes oftheBullwhip Effect 103 Counteracting the Bullwhip Effect 104
SUPPLY CHAINS FOR SERVICE ORGANIZATIONS 1 0 4
Internal Operations 105 The External Distributors 106
MAJOR ISSUES AFFECTING SUPPLY CHAIN MANAGEMENT 1 0 6
Information Technology 106 E-Commerce 106
Business-to-Business (B2B) E-Commerce 107 The Evolution of B2B Commerce 107 The Benefits of B2B E-Commerce 108
Business-to-Consumer (B2C) E-Commerce 108 Consumer Expectations and Competition Resulting
from E-Commerce 109
Links to Practice: Lands' End, Inc. 109
Globalization 110
Government Regulations and E-Commerce 112 Green Supply Chain Management 112
Infrastructure Issues 115 Product Proliferation 116
THE ROLE OF PURCHASING 1 1 6
The Traditional Purchasing Process 116
The E-purchasing Process 118 ~
SOURCING ISSUES 1 2 1
Insourcing versus Outsourcing Decisions 122 Developing Supplier Relationships 124 How Many Suppliers? 124
Developing Partnerships 125
Links to Practice: The Bama Companies 1 2 6
Critical Factors in Successful Partnering 127
CONTENTS • XVii
Georgia-Pacific Corporation 127 Benefits of Partnering 129 Ethics in Supply Management 130 SUPPLY CHAIN DISTRIBUTION 1 3 1
The Role of Warehouses 131
Links to Practice: Fingerhut Direct Marketing, Inc. 132 Crossdocking 133
Links to Practice: FedEx Freight 133
Radio Frequency Identification Technology (RFID) 135
Third-Party Service Providers 136
IMPLEMENTING SUPPLY CHAIN MANAGEMENT 1 3 7
Strategies for Leveraging Supply Chain Management 138
SUPPLY CHAIN PERFORMANCE METRICS 139 TRENDS IN SUPPLY CHAIN MANAGEMENT 1 4 1 SUPPLY CHAIN MANAGEMENT WITHIN OM:
HOW IT ALL FITS TOGETHER 1 4 3 SCM ACROSS THE ORGANIZATION 1 4 3 THE SUPPLY CHAIN LINK 1 4 4 THE SUSTAINABILITY LINK 1 4 4
Chapter Highlights 145 Key Terms 146 Formula Review 146 Solved Problems 146 ^ Discussion Questions 148 Problems 148 Selected Bibliography 149 / C H A P T E R 5
Managing Quality 151
DEFINING QUALITY 152Differences between Manufacturing and Service Organizations 153
Links to Practice: General Electric Company/Motorola, Inc. 154
COST OF QUALITY 155
THE EVOLUTION OF TOTAL QUALITY MANAGEMENT
(TQM) 1 5 6 Quality Gurus 157 THE PHILOSOPHY OF TQM 1 6 1 Customer Focus 161 Continuous Improvement 161 Employee Empowerment 163
Links to Practice: The Walt Disney Company 1 6 4 Use of Quality Tools 164
Links to Practice: The Kroger Company/Meijer Stores Limited Partnership 167
Product Design 167 Process Management 172
Managing Supplier Quality 172
QUALITY AWARDS AND STANDARDS 173
The Malcolm Baldrige National Quality Award (MBNQA) 173
The Deming Prize 174 ISO 9000 Standards 174
ISO 14000 Standards 175
WHY TQM EFFORTS FAIL 1 7 6
TOTAL QUALITY MANAGEMENT (TQM) WITHIN 0 M : HOW IT ALL FITS TOGETHER 1 7 6
TOTAL QUALITY MANAGEMENT (TQM) ACROSS THE
ORGANIZATION 1 7 7 THE SUPPLY CHAIN LINK 1 7 8 THE SUSTAINABILITY LINK 1 7 8
Chapter Highlights 179 Key Terms 179 Formula Review 180 Solved Problems 180 Discussion Questions 181 Problems 181 Selected Bibliography 182 C H A P T E R 6
Quality Control and Six Sigma 183 WHAT IS STATISTICAL QUALITY CONTROL? 184
Links to Practice: Intel Corporation 185
SOURCES OF VARIATION: COMMON AND ASSIGNABLE CAUSES 1 8 6
DESCRIPTIVE STATISTICS 1 8 6
The Mean 186
The Range and Standard Deviation 187
Distribution of Data 187
STATISTICAL PROCESS CONTROL METHODS 187
Developing Control Charts 188
Types of Control Charts 189
CONTROL CHARTS FOR V A R I A B L E ^ \
Mean (x-Bar) Charts 190 Range (R) Charts 1r Using Mean ?~ CONTROL CHAf^ P-Charts 197X C-Charts 200 PROCESS CAPABILIt Measuring ProcessN SIX SIGMA QUALITY 2fc
XVlii • CONTENTS
Links to Practice: Motorola, Inc. 2 0 8
ACCEPTANCE SAMPLING 209
Sampling Plans 209
Operating Characteristic (OC) Curves 210 Developing OC Curves 212
Average Outgoing Quality 213
IMPLICATIONS FOR MANAGERS 215
How Much and How Often to Inspect 215 Where to Inspect 215
W h i c h Tools to Use 216
STATISTICAL QUALITY CONTROL I N SERVICES 2 1 6
Links to Practice: The Ritz-Carlton Hotel Company, L.L.C./ Nordstrom, Inc. 217
Links to Practice: Marriott International, Inc. 2 1 7
STATISTICAL QUALITY CONTROL (SQC) WITHIN OM: HOW IT ALL FITS TOGETHER 2 1 8
STATISTICAL QUALITY CONTROL (SQC) ACROSS THE
ORGANIZATION 218 THE SUPPLY CHAIN LINK 219 THE SUSTAINABILITY LINK 219
Chapter Highlights 220 Key Terms 220 Formula Review 221 Solved Problems 221 Discussion Questions 226 Problems 226 Selected Bibliography 229 C H A P T E R 7 Lean Systems 230 THE PHILOSOPHY OF JIT 2 3 2
Eliminate Waste 233
A Broad View of Operations 233 Simplicity 233 Continuous Improvement 234 Visibility 234 Flexibility 234 ELEMENTS OF JIT 235 Just-in-Time Manufacturing 235 Total Quality Management (TQM) 237 Respect for People 237
Links to Practice: Texas Instruments 2 3 8
JUST-IN-TIME MANUFACTURING 2 3 8
The Pull System 238 Kanban Production 239
Variations of Kanban Production 242
Small Lot Sizes and Quick Setups 242 Uniform Plant Loading 243
Flexible Resources 244 Facility Layout 245
Links to Practice: Ryder Integrated Logistics 2 4 5
TOTAL QUALITY MANAGEMENT 2 4 6
Product versus Process 247 Quality at the Source 247 Preventive Maintenance 248
Work Environment 248
RESPECT FOR PEOPLE 2 4 9
The Role of Production Employees 249 Lifetime Employment 250
The Role of Management 251 Supplier Relationships 252
BENEFITS OF JIT 253
Links to Practice: Alcoa, Inc. 253
IMPLEMENTING JIT 2 5 4 JIT I N SERVICES 2 5 5
Improved Quality 255 Uniform Facility Loading 255 Use of Multifunction Workers 256 Reductions in Cycle Time 256
Minimizing Setup Times and Parallel Processing 256
Workplace Organization 256
JIT AND LEAN SYSTEMS WITHIN 0 M : HOW IT ALL FITS TOGETHER 2 5 6
JIT AND LEAN SYSTEMS ACROSS THE
ORGANIZATION 256 THE SUPPLY CHAIN LINK 257 THE SUSTAINABILITY LINK 258
Chapter Highlights 258 Key Terms 259 Formula Review 259 Solved Problems 259 Discussion Questions 260 Problems 260 ' . c-v ' Selected Bibliography 260 ^ C H A P T E R 8
Forecasting and Demand Planning 262 PRINCIPLES OF FORECASTING 263
STEPS I N THE FORECASTING PROCESS 2 6 4
Links to Practice: Intel Corporation 2 6 5
TYPES OF FORECASTING METHODS 2 6 5
CONTENTS • XIX
Qualitative Methods 266 Quantitative Methods 268
TIME SERIES MODELS 270
Forecasting Level or Horizontal Pattern 271 Forecasting Trend 279
Forecasting Seasonality 282
Links to Practice: The Ski Industry Forecast 2 8 5
CAUSAL MODELS 285
Linear Regression 285 Correlation Coefficient 288 Multiple Regression 289
MEASURING FORECAST ACCURACY 289
Forecast Accuracy Measures 289 Tracking Signal 291
SELECTING THE RIGHT FORECASTING MODEL 292 FORECASTING SOFTWARE 293
Spreadsheets 293 Statistical Packages 293
Specialty Forecasting Packages 294
Guidelines for Selecting Forecasting Software 294
FOCUS FORECASTING 295 COMBINING FORECASTS 295
Links to Practice: Combining Methods in Weather Forecasting 296
COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR) 2 9 6 FORECASTING WITHIN OM: HOW IT ALL FITS
TOGETHER 297
FORECASTING ACROSS THE ORGANIZATION 297 THE SUPPLY CHAIN LINK 298
THE SUSTAINABILITY LINK 298
Chapter Highlights 299 Key Terms 299 Formula Review 300 Solved Problems 301 Discussion Questions 305 Problems 305 Selected Bibliography 309 C H A P T E R 9
Capacity and Location Decisions 311
CAPACITY PLANNING 313
Why Is Capacity Planning Important? 313
Links to Practice: Capacity Planning in the ER 313
Measuring Capacity 314 Capacity Considerations 316
Links to Practice: Focus in the Retail Industry 319
MAKING CAPACITY PLANNING DECISIONS 3 1 9
Identify Capacity Requirements 320 Develop Capacity Alternatives 321 Evaluate Capacity Alternatives 321
DECISION TREES 3 2 1 LOCATION ANALYSIS 3 2 4
What Is Facility Location? 325
Factors Affecting Location Decisions 325
Links to Practice: Locating in Silicon Valley 326
Globalization 327
MAKING LOCATION DECISIONS 329
Procedure for Making Location Decisions 329 Procedures for Evaluating Location Alternatives 329
CAPACITY PLANNING AND FACILITY LOCATION WITHIN
OM: HOW IT ALL FITS TOGETHER 3 4 0
CAPACITY PLANNING AND FACILITY LOCATION ACROSS
THE ORGANIZATION 3 4 0 THE SUPPLY CHAIN LINK 3 4 1 THE SUSTAINABILITY LINK 3 4 1
Chapter Highlights 341 Key Terms 342 Formula Review 342 Solved Problems 342 Discussion Questions 345 Problems 346 Selected Bibliography 348 C H A P T E R 1 0 Layout Planning 350
WHAT IS LAYOUT PLANNING? 3 5 1 TYPES OF LAYOUTS 3 5 2
Process Layouts 352
Links to Practice: Wal-Mart Stores, Inc. 3 5 4
Product Layouts 354
Links to Practice: Toyota Motor Corporation 3 5 6
Hybrid Layouts 356 Fixed-Position Layouts 357
DESIGNING PROCESS LAYOUTS 357
Step 1: Gather Information 357 Step 2: Develop a Block Plan 360 Step 3: Develop a Detailed Layout 363
SPECIAL CASES OF PROCESS LAYOUT 363
Warehouse Layouts 363 Office Layouts 366
XX • CONTENTS
Step 1: Identify Tasks and Their Immediate Predecessors 367
Step 2: Determine Output Rate 369 Step 3: Determine Cycle Time 369
Step 4: Compute the Theoretical Minimum Number of Stations 371
Step 5: Assign Tasks to Workstations (Balance the Line) 371
Step 6: Compute Efficiency, Idle Time, and Balance Delay 372
Other Considerations 373
GROUP TECHNOLOGY (CELL) LAYOUTS 3 7 4 FACILITY LAYOUT WITHIN OM: HOW IT ALL FITS
TOGETHER 375
FACILITY LAYOUT ACROSS THE ORGANIZATION 3 7 5 THE SUPPLY CHAIN LINK 3 7 6
THE SUSTAINABILITY LINK 3 7 6
Chapter Highlights 377 Key Terms 377 Formula Review 377 Solved Problems 378 Discussion Questions 380 Problems 380 Selected Bibliography 384 CHAPTER 1 1
Job Design and Work Measurement 385 DESIGNING A WORK SYSTEM 3 8 6
JOB DESIGN 387
Designing a Job 387 Links to Practice: Google 3 8 7 Machines or People? 388 Level of Labor Specialization 389 Eliminating Employee Boredom 390 Team Approaches to Job Design 390 Links to Practice: The SCO Group 3 9 1 The Alternative Workplace 391 Links to Practice: AT&T 392
METHODS ANALYSIS 393 THE WORK ENVIRONMENT 3 9 5 WORK MEASUREMENT 396
Costing 396 Performance 397
Planning 397
SETTING STANDARD TIMES 3 9 7
How to Do a Time Study 397 Elemental Time Data 403
Predetermined Time Data 403 Work Sampling 405
Links to Practice: Pace Productivity 4 0 7
COMPENSATION 4 0 7
Time-Based Systems 407 Output-Based Systems 407 Group Incentive Plans 408 Links to Practice: Accountable Care
Organizations (ACO) 4 0 8
Incentive Plan Trends 409
LEARNING CURVES 4 0 9
WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS TOGETHER 4 1 2
WORK SYSTEM DESIGN ACROSS THE ORGANIZATION 4 1 2 THE SUPPLY CHAIN LINK 4 1 3
THE SUSTAINABILITY LINK 4 1 3
Chapter Highlights 414 Key Terms 414 Formula Review 415 Solved Problems 415 Discussion Questions 418 Problems 418 Selected Bibliography 421 C H A P T E R 1 2
Inventory Management Policies 423 TYPES OF INVENTORY 4 2 4
HOW COMPANIES USE THEIR INVENTORY 4 2 5 OBJECTIVES OF INVENTORY MANAGEMENT 4 2 7
Customer Service 427 Cost-Efficient Operations 428 Minimum Inventory Investment 429 RELEVANT INVENTORY COSTS 4 3 1
Item Costs 431 Holding Costs 431 Ordering Costs 433
Shortage Costs 433
ABC INVENTORY CLASSIFICATION 4 3 3
Procedure for an ABC Inventory Analysis 435 Inventory Control Using ABC Classification 435 INVENTORY RECORD ACCURACY 4 3 6
Links to Practice: Cisco Systems^ Inc. 4 3 6
INVENTORY I N SERVICE ORGANIZATIONS 4 3 8 DETERMINING ORDER QUANTITIES 4 3 9
MATHEMATICAL MODELS FOR DETERMINING ORDER QUANTITY 4 4 0
Economic Order Quantity (EOQ) 440 Calculating the EOQ 443
CONTENTS • XXI
Economic Production Quantity (EPQ) 445
Quantity Discount Model 449
WHY COMPANIES DON'T ALWAYS USE THE OPTIMAL ORDER QUANTITY 4 5 3
JUSTIFYING SMALLER ORDER QUANTITIES 4 5 3
Links to Practice: Kenworth Trucks 4 5 3 Understanding the EPQ Factors 454 DETERMINING SAFETY STOCK LEVELS 4 5 5
How Much Safety Stock? 455 PERIODIC REVIEW SYSTEM 4 5 7
Comparison of Continuous Review Systems and c Periodic Review Systems 4 5 9
THE SINGLE-PERIOD INVENTORY MODEL 4 6 0 INVENTORY MANAGEMENT WITHIN OM: HOW IT ALL
FITS TOGETHER 462
INVENTORY MANAGEMENT ACROSS THE
ORGANIZATION 4 6 3 THE SUPPLY CHAIN LINK 4 6 3 THE SUSTAINABILITY LINK 4 6 4
Chapter Highlights 464 Key Terms 465 Formula Review 465 x Solved Problems 466 Discussion Questions 469 Problems 470 Selected Bibliography 4 7 2 ' ~~ f C H A P T E R 1 3
Sales and Operations Planning 473
THE ROLE OF AGGREGATE PLANNING 4 7 5
Marketing Plan 475
Aggregate or Production Plan 475 Financial and Engineering Plans 476 Master Production Schedule 476
Links to Practice: Coca-Cola Midi (CCM) 4 7 7
TYPES OF AGGREGATE PLANS 4 7 7
Level Aggregate Plan 477 Chase Aggregate Plan 478 Hybrid Aggregate Plan 479 AGGREGATE PLANNING OPTIONS 4 7 9
Demand-Based Options 480 Capacity-Based Options 480
EVALUATING THE CURRENT SITUATION 4 8 2 Links to Practice: UPS Hires Seasonal Workers 4 8 3
DEVELOPING THE AGGREGATE PLAN 4 8 3
AGGREGATE PLANS FOR COMPANIES WITH TANGIBLE PRODUCTS 485
AGGREGATE PLANS FOR SERVICE COMPANIES WITH NONTANGIBLE PRODUCTS 4 8 8
AGGREGATE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 4 9 2
AGGREGATE PLANNING ACROSS THE
ORGANIZATION 4 9 3 THE SUPPLY CHAIN LINK 4 9 3 THE SUSTAINABILITY LINK 4 9 4
Chapter Highlights 494 Key Terms 494 Solved Problems 495 Discussion Questions 501 Problems 502 Selected Bibliography 504 C H A P T E R 1 4 Materials Planning 505
ENTERPRISE RESOURCE PLANNING 5 0 7
ERP Modules 508 THE EVOLUTION OF ERP 5 0 8
First-Generation ERP 508 Second-Generation ERP 509
Links to Practice: Arapahoe County Government 5 1 0
THE BENEFITS OF ERP 5 1 1
Links to Practice: i2 Technologies 5 1 1 Links to Practice: SAP AG 5 1 2
THE COST OF ERP SYSTEMS 5 1 2 MATERIAL PLANNING SYSTEMS 5 1 3 AN OVERVIEW OF MRP 5 1 3 TYPES OF DEMAND 5 1 4 OBJECTIVES OF MRP 5 1 6 MRP INPUTS 5 1 6 Authorized MPS 516 Inventory Records 516 Bills of Material 518
THE MRP EXPLOSION PROCESS 5 2 1 ACTION NOTICES 5 2 5
COMPARISON OF LOT SIZE RULES 5 2 5 THE ROLE OF CAPACITY REQUIREMENTS
PLANNING (CRP) 5 2 6
RESOURCE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 5 2 8
RESOURCE PLANNING ACROSS THE ORGANIZATION 5 2 9 THE SUPPLY CHAIN LINK 5 3 0
THE SUSTAINABILITY LINK 5 3 0
Chapter Highlights 531 Key Terms 531
XXii • CONTENTS Solved Problems 532 Discussion Questions 535 Problems 535 * Selected Bibliography 537 C H A P T E R 1 5
Operations Scheduling 538
SCHEDULING OPERATIONS 5 4 0 HIGH-VOLUME OPERATIONS 5 4 0Characteristics of Flow Operations 540 LOW-VOLUME OPERATIONS 5 4 1 Gantt Chart 541 SCHEDULING WORK 5 4 2 Infinite Loading 542 Finite Loading 543 Forward Scheduling 543 Backward Scheduling 544 Monitoring Workflow 544 HOW TO SEQUENCE JOBS 5 4 6
Priority Rules 546
How to Use Priority Rules 547 MEASURING PERFORMANCE 5 4 8
Links to Practice: Airline Scheduling 5 4 8
Job Flow Time 548
Average Number of Jobs in the System 549 Makespan 549
Job Lateness and Tardiness 549 / COMPARING PRIORITY RULES 5 5 0
Comparing SPT and S/RO 55,3 SEQUENCING JOBS THROUGH TWO
WORK CENTERS 553
SCHEDULING BOTTLENECKS 5 5 5
Links to Practice: l-800-FL0WERS.com 5 5 7
THEORY OF CONSTRAINTS 5 5 8
SCHEDULING FOR SERVICE ORGANIZATIONS 5 5 8
Scheduling Services Demanded 558 Scheduling Employees 560
DEVELOPING A WORKFORCE SCHEDULE 5 6 1 SCHEDULING WITHIN OM: PUTTING IT ALL
TOGETHER 5 6 2
SCHEDULING ACROSS THE ORGANIZATION 5 6 3 THE SUPPLY CHAIN LINK 5 6 4
THE SUSTAINABILITY LINK 5 6 4
Chapter Highlights 564 Key Terms 565 Formula Review 565 Solved Problems 565 Discussion Questions 569 Problems 569 Selected Bibliography 572 C H A P T E R 1 6
PERT, CPM and Critical Chain 573
PROJECT LIFE CYCLE 5 7 5
Conception 575
Feasibility Analysis or Study 575 Planning 576
Execution 576
Termination 576
NETWORK PLANNING TECHNIQUES 5 7 6
Links to Practice: PERT and the Polaris Missile 5 7 6 Step 1: Describe the Project 577
Step 2: Diagram the Network 578 Step 3: Estimate the Project's Completion
Time 579
Step 3 (a): Deterministic Time Estimates 580 Step 3 (b): Probabilistic Time Estimates 582 Step 4: Monitor the Project's Progression 588 Links to Practice: Managing the Olympic Games 5 8 8
ESTIMATING THE PROBABILITY OF COMPLETION DATES 5 8 9
REDUCING PROJECT COMPLETION TIME 5 9 1
Crashing Projects 591
THE CRITICAL CHAIN APPROACH 5 9 4 Adding Safety Time 594
Wasting Safety Time 594
PROJECT MANAGEMENT WITHIN OM: HOW IT ALL FITS
TOGETHER 5 9 6
PROJECT MANAGEMENT OM ACROSS THE
ORGANIZATION 5 9 6 THE SUPPLY CHAIN LINK 5 9 7 THE SUSTAINABILITY LINK 5 9 7
Chapter Highlights 597 Key Terms 598 Formula Review 598 Solved Problems 598 Discussion Questions 602 t Problems 602 ^ Selected Bibliography 605 A P P E N D I X A
Solutions to Odd-Numbered Problems 607
A P P E N D I X BCONTENTS • X X l i i
The Standard Normal Distribution 629
A P P E N D I X C
P-Chartf 630
N A M E I N D E X 6 3 3 S U B J E C T I N D E X 6 3 6 S U P P L E M E N T A
Spreadsheet Modeling; An Introduction Ai
WHAT ARE MODELS? A2
THE SPREADSHEET MODELING PROCESS A4 EVALUATING SPREADSHEET MODELS A5
Planning the Model A 7
Implementing the Model in Excel A8 Assessing the Model A9
Using the Model for Analysis A l l 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 A 2 1 USEFUL SPREADSHEET TIPS A26 IMPORTANT EXCEL FORMULAS A27
SPREADSHEET MODELING WITHIN OM: HOW IT ALL
FITS TOGETHER A 2 8
Supplement Highlights A29 Key Terms A29
Discussion Questions A29 Problems A30
Case: Diet Planning A3 2 Online Resources A3 2 Selected Bibliography A3 2 S U P P L E M E N T B
Introduction to Optimization Bi
INTRODUCTION B2 ALGEBRAIC FORMULATION B4 Examining the Formulation B6 SPREADSHEET MODEL DEVELOPMENT B7Testing the Model B8 SOLVER BASICS B9
SETTING UP AND RUNNING SOLVER B9
Solving the Problem B12
INTERPRETING THE SOLUTION B 1 3
SOLVER SOLUTION REPORTS B14 RECAP B16
OUTCOMES OF LINEAR PROGRAMMING PROBLEMS B16 OPTIMIZATION WITHIN OM: HOW IT ALL FITS
TOGETHER B 1 8 Supplement Highlights B18 Key Terms B19 Solved Problems B19 Discussion Questions B23 Problems B24
Case: Exeter Enterprises B 2 5 Online Resources B26 Selected Bibliography B26
S U P P L E M E N T C
Waiting Line Models ci
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 CIO CHANGING OPERATIONAL CHARACTERISTICS C13 LARGER-SCALE WAITING LINE SYSTEMS C14
WAITING LINE MODELS WITHIN OM: HOW IT ALL FITS
TOGETHER C 1 5 Supplement Highlights C15 Key Terms C16 Formula Review C16 Solved Problems C16 Discussion Questions C18 Problems C19
Case: The Copy Center Holdup C19 Online Resources C20
Selected Bibliography C20
S U P P L E M E N T D
Master Scheduling and Rough-Cut
Capacity Planning Di
MASTER PRODUCTION SCHEDULING D2 MPS AS A BASIS OF COMMUNICATION D3 OBJECTIVES OF MASTER SCHEDULING D4 DEVELOPING AN MPS D4
XXiv • CONTENTS
ROUGH-CUT CAPACITY PLANNING D6 Formula Review D16 EVALUATING AND ACCEPTING THE MPS D9 Solved Problems D17 USING THE MPS D10 Discussion Questions D22 USING THE ATP RECORDS D l l Problems D22
STABILIZING THE MPS D14 Case: Newmarket International Manufacturing MASTER PRODUCTION SCHEDULING AND ROUGH-CUT Company (c) D23
CAPACITY PLANNING WITHIN OM: HOW IT ALL FITS Online Resources D24 TOGETHER D15 Selected Bibliography D24
Supplement Highlights D16 Key Terms D16
