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Operations Management: Processes and Supply Chains, Ninth Edition

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Operations Management: Processes and Supply Chains, Ninth Edition

by Lee J. Krajewski; Larry P. Ritzman; Manoj K. Malhotra

Publisher: Prentice Hall

Copyright Year: 2010

Publishing Date: 2009/01/12

eText ISBN-10: 0-13-606577-5

eText ISBN-13: 978-0-13-606577-7

Print ISBN-10: 0-13-606576-7

Print ISBN-13: 978-0-13-606576-0

Course: Industrial Engineering, Production/Operations Management

Pages: 672

eTextbook $81.06

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Table of Contents | Description

Instructor Resources | Student Resources

ABOUT THIS TITLE - TABLE OF CONTENTS

About the Authors, iv

Part 1. Using Operations to Compete, 2

1. Competing with Operations, 2

Scholastic and Harry Potter, 2

Operations and Supply Chain Management Across the Organization, 4

A Process View, 5

How Processes Work, 5

Nested Processes, 6

Service and Manufacturing Processes, 6

The Supply Chain View, 7

Core Processes, 8

Support Processes, 8

Adding Value with Process Innovation in Supply Chains, 8

Managerial Practice 1.1: Operational Innovation is a Competitive Weapon at Progressive Insurance, 9

Operations Strategy, 9

Corporate Strategy, 10

Market Analysis, 12

Competitive Priorities and Capabilities, 13

Order Winners and Qualifiers, 13

Managerial Practice 1.2: Changing Competitive Priorities at FedEx, 15

Using Competitive Priorities: an Airline Example, 16

Operations Strategy as a Pattern of Decisions, 17

Trends in Operations Management, 18

Productivity Improvement, 19

Global Competition, 20

Managerial Practice 1.3: Impact of Globalization on Sonoco, 20

Ethical, Workforce Diversity, and Environmental Issues, 22

Operations Management as a Set of Decisions, 22

Computerized Decision-Making Tools, 23

Addressing the Challenges in Operations Management, 23

Part 1: Using Operations to Compete, 24

Part 2: Managing Processes, 24

Part 3: Managing Supply Chains, 24

Internet Resources, 25

Key Equation, 25

Solved Problems 1, 25

Discussion Questions, 26

Active Model Exercise, 29

Video Case: Operations as a Competitive Weapon at Starwood, 30

Case: Chad’s Creative Concepts, 30

Selected References, 31

Supplement A. Decision Making, 33

Break-Even Analysis, 34

Evaluating Services or Products, 34

Evaluating Processes, 36

Preference Matrix, 37

Decision Theory, 38

Decision Making Under Certainty, 39

Decision Making Under Uncertainty, 40

Decision Making Under Risk, 41

Decision Trees, 42

Internet Resources, 44

Key Equations, 44

Solved Problems 1, 44

Selected References, 50

2. Project Management, 52

Development, 53

Project Management across the Organization, 54

Defining and Organizing Projects, 55

Defining the Scope and Objectives of a Project, 55

Selecting the Project Manager and Team, 55

Organizational Structure, 55

Planning Projects, 56

Defining the Work Breakdown Structure, 56

Diagramming the Network, 57

Developing the Schedule, 59

Analyzing Cost–Time Trade-Offs, 63

Assessing Risks, 67

Managerial Practice 2.1: Boston’s Big Dig Project Poses Many Challenges, 68

Monitoring and Controlling Projects, 72

Monitoring Project Status, 72

Monitoring Project Resources, 72

Controlling Projects, 73

Internet Resources, 74

Key Equations, 74

Solved Problems 1, 74

Discussion Questions, 79

Active Model Exercise, 88

Video Case: Project Management at the Phoenician, 88

Case: The Pert Mustang, 90

Selected References, 91

Part 2. Managing Processes, 92

3. Process Strategy, 92

Process Strategy across the Organization, 94

Process Strategy Decisions, 94

Process Structure in Services, 95

Nature of Service Processes: Customer Contact, 95

Customer-Contact Matrix, 95

Service Process Structuring, 96

Process Structure in Manufacturing, 97

Product-Process Matrix, 98

Manufacturing Process Structuring, 98

Production and Inventory Strategies, 100

Customer Involvement, 105

Possible Disadvantages, 105

Possible Advantages, 105

Resource Flexibility, 106

Capital Intensity, 107

Automating Manufacturing Processes, 107

Automating Service Processes, 108

Managerial Practice 3.1: Flexible Automation at R.R. Donnelley, 109

Economies of Scope, 109

Strategic Fit, 110

Decision Patterns for Service Processes, 110

Decision Patterns for Manufacturing Processes, 111

Gaining Focus, 112

Strategies for Change, 113

Process Reengineering, 113

Process Improvement, 113

Internet Resources, 113

Key Equation, 114

Solved Problems 1, 114

Discussion Questions, 115

Active Model Exercise, 118

Case: Custom Molds, Inc., 119

Selected References, 121

4. Process Analysis, 122

Baptist Memorial Hospital, 122

Process Analysis across the Organization, 124

A Systematic Approach, 124

Step 1: Identify Opportunities, 125

Step 2: Define the Scope, 125

Step 3: Document the Process, 125

Step 4: Evaluate Performance, 126

Step 5: Redesign the Process, 126

Step 6: Implement Changes, 126

Documenting the Process, 126

Flowcharts, 126

Managerial Practice 4.1: Process Improvement at McDonald’s, 127

Service Blueprints, 129

Process Charts, 130

Work Measurement Techniques, 131

Time Study Method, 131

Elemental Standard Data Approach, 131

Predetermined Data Approach, 132

Work Sampling Method, 132

Evaluating Performance, 133

Data Analysis Tools, 133

Data Snooping, 137

Simulation, 137

Redesigning the Process, 137

Generating Ideas: Questioning and Brainstorming, 137

Benchmarking, 139

Managing Processes, 140

Internet Resources, 141

Solved Problems 1, 141

Discussion Questions, 145

Active Model Exercise, 152

Video Case: Process Analysis at Starwood, 152

Case: José’s Authentic Mexican Restaurant, 154

Selected References, 155

Supplement B. Simulation, 156

Reasons for Using Simulation, 157

The Simulation Process, 157

Data Collection, 157

Random-Number Assignment, 159

Model Formulation, 159

Computer Simulation, 162

Simulation with Excel Spreadsheets, 162

Simulation with More Advanced Software, 165

Internet Resources, 166

Solved Problems 1, 166

Selected References, 173

5. Quality and Performance, 174

Verizon Wireless, 174

Quality and Performance across the Organization, 176

Costs of Quality, 176

Prevention Costs, 176

Appraisal Costs, 177

Internal Failure Costs, 177

External Failure Costs, 177

Ethics and Quality, 177

Total Quality Management, 178

Customer Satisfaction, 178

Managerial Practice 5.1: Quality and Performance at Steinway & Sons, 179

Employee Involvement, 180

Continuous Improvement, 180

Six Sigma Improvement Model, 182

Acceptance Sampling, 183

Statistical Process Control, 184

Variation of Outputs, 184

Control Charts, 187

Statistical Process Control Methods, 188

Control Charts for Variables, 188

Control Charts for Attributes, 193

Process Capability, 195

Defining Process Capability, 196

Using Continuous Improvement to Determine the Capability of a Process, 197

Quality Engineering, 199

International Quality Documentation Standards, 199

The ISO 9000:2000 Documentation Standards, 200

ISO 14000:2004 Environmental Management System, 200

Benefits of ISO Certification, 200

Malcolm Baldrige National Quality Award, 201

Internet Resources, 202

Key Equations, 202

Solved Problems 1, 203

Discussion Questions, 206

Active Model Exercise, 214

Video Case: Process Performance and Quality at Starwood Hotels & Resorts, 215

Experiential Learning: Statistical Process Control with a Coin Catapult, 216

Selected References, 217

6. Capacity Planning, 218

Sharp Corporation, 218

Planning Capacity across the Organization, 220

Planning Long-Term Capacity, 220

Measures of Capacity and Utilization, 221

Economies of Scale, 221

Diseconomies of Scale, 222

Capacity Timing and Sizing Strategies, 222

Sizing Capacity Cushions, 222

Timing and Sizing Expansion, 223

Managerial Practice 6.1: Downsizing Capacity in the Airline Industry, 224

Managerial Practice 6.2: Expansionist Capacity Strategy in the Ethanol Industry, 225

Linking Capacity and Other Decisions, 225

A Systematic Approach to Long-Term Capacity Decisions, 226

Step 1: Estimate Capacity Requirements, 226

Step 2: Identify Gaps, 228

Step 3: Develop Alternatives, 228

Step 4: Evaluate the Alternatives, 228

Tools for Capacity Planning, 229

Waiting-Line Models, 229

Simulation, 230

Decision Trees, 230

Internet Resources, 231

Key Equations, 231

Solved Problems 1, 232

Discussion Questions, 234

Video Case: Gate Turnaround at Southwest Airlines, 239

Case: Fitness Plus, Part A, 240

Selected References, 241

Supplement C. Waiting Lines, 242

Why Waiting Lines Form, 243

Uses of Waiting-Line Theory, 243

Structure of Waiting-Line Problems, 243

Customer Population, 243

The Service System, 244

Priority Rule, 246

Probability Distributions, 246

Arrival Distribution, 246

Service Time Distribution, 247

Using Waiting-Line Models to Analyze Operations, 248

Single-Server Model, 249

Multiple-Server Model, 251

Little’s Law, 252

Finite-Source Model, 253

Decision Areas for Management, 255

Internet Resources, 255

Key Equations, 256

Solved Problems 1, 256

Selected References, 260

7. Constraint Management, 262

Eastern Financial Florida Credit Union, 262

Managing Constraints across the Organization, 264

The Theory of Constraints, 264

Key Principles of the TOC, 265

Identification and Management of Bottlenecks, 266

Managing Bottlenecks in Service Processes, 266

Managerial Practice 7.1: Constraint Management in Health Care, 268

Managing Bottlenecks in Manufacturing Processes, 268

Managerial Practice 7.2: The Drum-Buffer-Rope System at a U.S. Marine Corps Maintenance Center, 274

Managing Constraints in a Line Process, 274

Line Balancing, 274

Managerial Considerations, 278

Internet Resources, 279

Key Equations, 279

Solved Problems 1, 279

Discussion Questions, 281

Experiential Learning: Min-Yo Garment Company, 288

Video Case: Constraint Management at Southwest Airlines, 291

Selected References, 292

8. Lean Systems, 294

Toyota Production System, 294

Lean Systems across the Organization, 296

Continuous Improvement Using a Lean Systems Approach, 296

Supply Chain Considerations in Lean Systems, 298

Close Supplier Ties, 298

Managerial Practice 8.1: Continuous Improvement at Panasonic Corporation, 298

Small Lot Sizes, 299

Process Considerations in Lean Systems, 299

Pull Method of Work Flow, 300

Quality at the Source, 300

Uniform Workstation Loads, 301

Standardized Components and Work Methods, 302

Flexible Workforce, 302

Automation, 303

Five S Practices, 303

Total Preventive Maintenance (TPM), 304

Designing Lean System Layouts, 304

One Worker, Multiple Machines, 305

Group Technology, 305

The Kanban System, 306

Managerial Practice 8.2: Lean Systems at New Balance Athletic Shoe Company, 307

General Operating Rules, 308

Determining the Number of Containers, 308

Other Kanban Signals, 310

Value Stream Mapping, 310

Managerial Practice 8.3: Lean Systems at the University of Pittsburgh Medical Center Shadyside, 311

House of Toyota, 313

Operational Benefits and Implementation Issues, 313

Organizational Considerations, 314

Process Considerations, 315

Inventory and Scheduling, 315

Internet Resources, 316

Key Equations, 316

Solved Problems 1, 316

Discussion Questions, 317

Video Case: Lean Systems at Autoliv, 318

Case: Copper Kettle Catering, 320

Selected References, 321

Part 3. Managing Supply Chains, 322

9. Supply Chain Design, 322

Supply Chain Design across the Organization, 324

Supply Chains for Services and Manufacturing, 325

Manufacturing, 326

Inventory and Supply Chains, 326

Pressures for Small Inventories, 327

Pressures for Large Inventories, 328

Types of Inventory, 329

Inventory Reduction Tactics, 331

Inventory Placement, 332

Measures of Supply Chain Performance, 332

Inventory Measures, 332

Financial Measures, 334

Mass Customization, 335

Competitive Advantages, 336

Supply Chain Design for Mass Customization, 336

Managerial Practice 9.1: Mass Customization at Lands’ End, 337

Outsourcing Processes, 338

Vertical Integration, 339

Outsourcing, 339

Managerial Practice 9.2: Building a Supply Chain for the Dreamliner, 341

Strategic Implications, 342

Efficient Supply Chains, 342

Responsive Supply Chains, 342

The Design of Efficient and Responsive Supply Chains, 343

Internet Resources, 344

Key Equations, 344

Solved Problems 1, 344

Discussion Questions, 345

Experiential Learning: Sonic Distributors, 348

Video Case: Supply Chain Design at Clif Bar & Company, 349

Case: Brunswick Distribution, Inc., 350

Selected References, 352

10. Supply Chain Integration, 354

Eastman Kodak, 354

Supply Chain Integration across the Organization, 356

Supply Chain Dynamics, 356

External Causes, 357

Internal Causes, 358

Integrated Supply Chains, 358

New Service or Product Development Process, 359

Development, 360

Full Launch, 360

Supplier Relationship Process, 361

Design Collaboration, 364

Negotiation, 364

Information Exchange, 367

The Order Fulfillment Process, 368

Customer Demand Planning, 368

Supply Planning, 369

Production, 369

The Customer Relationship Process, 372

Order Placement, 373

Customer Service, 374

Levers for Improved Supply Chain Performance, 374

The Levers, 374

Performance Measures, 375

Supply Chains and the Environment, 376

Sustainability, 376

Reverse Logistics, 376

Managerial Practice 10.1: Reverse Logistics at Citiraya Industries Helps Recycle High-Tech Equipment, 378

Internet Resources, 378

Key Equations, 378

Solved Problems 1, 379

Discussion Questions, 380

Video Case: Sourcing Strategy at Starwood, 384

Case: Wolf Motors, 385

Selected References, 386

11. Location, 388

Bavarian Motor Works (BMW), 388

Location Decisions across the Organization, 390

Factors Affecting Location Decisions, 391

Dominant Factors in Manufacturing, 391

Dominant Factors in Services, 392

Geographical Information Systems and Location Decisions, 393

Managerial Practice 11.1: How Fast-Food Chains Use GIS to Select Their Sites, 394

Locating a Single Facility, 394

Comparing Several Sites, 395

Applying the Load–Distance Method, 396

Using Break-Even Analysis, 398

Locating a Facility within a Network of Facilities, 399

The GIS Method for Locating Multiple Facilities, 400

Other Methods of Location Analysis, 403

Internet Resources, 404

Key Equations, 404

Solved Problems 1, 404

Discussion Questions, 407

Active Model Exercise, 411

Case: Industrial Repair, Inc., 412

Selected References, 412

12. Inventory Management, 414

Inventory Management at Wal-Mart, 414

Inventory Management across the Organization, 416

ABC Analysis, 416

Economic Order Quantity, 417

Calculating the EOQ, 418

Managerial Insights from the EOQ, 422

Inventory Control Systems, 422

Continuous Review System, 423

Periodic Review System, 429

Comparative Advantages of the Q and P Systems, 431

Managerial Practice 12.1: The Supply Chain Implications of Periodic Review Inventory Systems at Celanese, 432

Hybrid Systems, 433

Internet Resources, 433

Key Equations, 433

Solved Problems 1, 434

Discussion Questions, 439

Active Model Exercise, 444

Experiential Learning: Swift Electronic Supply, Inc., 445

Case: Parts Emporium, 447

Selected References, 448

Supplement D. Special Inventory Models, 450

Noninstantaneous Replenishment, 451

Quantity Discounts, 453

One-Period Decisions, 455

Internet Resources, 457

Key Equations, 457

Solved Problems 1, 458

Selected References, 461

13. Forecasting, 462

Forecasting across the Organization, 464

Demand Patterns, 464

Key Decisions on Making Forecasts, 465

Deciding What to Forecast, 465

Choosing a Forecasting System, 466

Choosing the Type of Forecasting Technique, 466

Judgment Methods, 466

Managerial Practice 13.1: Wal-Mart Uses CPFR and the Internet to Improve Demand Planning Performance, 467

Causal Methods: Linear Regression, 468

Time-Series Methods, 470

Naive Forecast, 470

Estimating the Average, 470

Including a Trend, 473

Seasonal Patterns, 475

Choosing a Time-Series Method, 477

Forecast Error, 477

Criteria for Selecting Time-Series Methods, 480

Using Multiple Techniques, 480

Putting It All Together: Forecasting As a Process, 481

A Typical Forecasting Process, 481

Managerial Practice 13.2: Combination Forecasts and the Forecasting Process, 482

Forecasting as a Nested Process, 483

Internet Resources, 483

Key Equations, 483

Solved Problems 1, 484

Discussion Questions, 489

Video Case: Forecasting and Supply Chain Management at Deckers Outdoor Corporation, 497

Case: Yankee Fork and Hoe Company, 498

Experiential Learning: Forecasting with Holdout Sample, 500

Selected References, 500

14. Operations Planning and Scheduling, 502

Air New Zealand, 502

Operations Planning and Scheduling across the Organization, 504

Stages in Operations Planning and Scheduling, 505

Aggregation, 505

The Relationship of Operations Plans and Schedules to Other Plans, 505

Managing Demand, 506

Demand Options, 507

Managerial Practice 14.1: Revenue Management in Airlines and Casino Industries, 508

Sales and Operations Plans, 509

Information Inputs, 509

Supply Options, 509

Managerial Practice 14.2: Anticipation Inventory at Whirlpool Corporation, 510

Planning Strategies, 511

Constraints and Costs, 512

Sales and Operations Planning as a Process, 512

Using Spreadsheets, 514

Scheduling, 518

Gantt Charts, 518

Scheduling Employees, 519

Sequencing Jobs at a Workstation, 523

Software Support, 525

Internet Resources, 526

Solved Problems 1, 526

Discussion Questions, 530

Active Model Exercise, 535

Video Case: Sales and Operations Planning at Starwood, 536

Case: Memorial Hospital, 537

Selected References, 538

15. Resource Planning, 540

Dow Corning, 540

Resource Planning across the Organization, 542

Enterprise Resource Planning, 542

How ERP Systems Are Designed, 542

Material Requirements Planning, 544

Dependent Demand, 544

Bill of Materials, 545

Master Production Scheduling, 547

Inventory Record, 550

Managerial Practice 15.1: Master Production Scheduling at Cypress Semiconductor, 551

Planning Factors, 553

Outputs from MRP, 556

Managerial Practice 15.2: Material Requirements Planning at Winnebago Industries, 560

MRP and the Environment, 560

Resource Planning for Service Providers, 561

Dependent Demand for Services, 561

Bill of Resources, 562

Internet Resources, 563

Solved Problems 1, 564

Discussion Questions, 568

Active Model Exercise, 578

Case: Flashy Flashers, Inc., 578

Selected References, 581

Supplement E. Linear Programming, 582

Basic Concepts, 583

Formulating a Problem, 584

Graphic Analysis, 585

Plot the Constraints, 585

Identify the Feasible Region, 587

Plot an Objective Function Line, 588

Find the Visual Solution, 589

Find the Algebraic Solution, 589

Slack and Surplus Variables, 590

Sensitivity Analysis, 591

Computer Solution, 591

Simplex Method, 592

Computer Output, 592

The Transportation Method, 595

Transportation Method for Location, 595

Transportation Method for Production Planning, 597

Applications, 601

Internet Resources, 601

Solved Problems 1, 602

Discussion Questions, 605

Case: R.U. Reddie for Location, 614

Selected References, 616

Appendix 1. Normal Distribution, 619

Appendix 2. Table of Random Numbers, 620

Photo Credits, 631

Name Index, 633

Subject Index, 637

Supplement F. Financial Analysis, F-1

Supplement G. Acceptance Sampling Plans, G-1

Supplement H. Measuring Output Rates, H-1

Supplement I. Learning Curve Analysis, I-1

Supplement J. Operations Scheduling, J-1

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ABOUT THIS TITLE - DESCRIPTION

For undergraduate and graduate Operations Management courses Creating value through Operations Management. Operations Management provides students with a comprehensive framework for addressing operational process and supply chain issues. This text uses a systemized approach while focusing on issues of current interest. The latest edition of this text has been revised to integrate a supply chain orientation.

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