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Principles of

OPERATIONS
MANAGEMENT
Seventh Edition

r
Jay Heizer
Jesse H. Jones Professor of Business Administration
Texas Lutheran University

Barry Render
Charles Harwood Professor of Operations Management
Crummer Graduate School of Business
Rollins College

PEARSON
Prentice
Hall Upper Saddle River, New Jersey 07458
About the Authors vi Developing Missions and Strategies 34
Foreword xx Mission 34
Preface xxi Strategy 35
Achieving Competitive Advantage
Through Operations 36
PART i l l 1, Competing on Differentiation 36
Introduction to Operations Competing on Cost 37
Management 1 Competing on Response 37
Ten Strategic OM Decisions 39
Operations and Productivity 1 Issues in Operations Strategy 42
Global Company Profile: Hard Rock Cafe 2 Research 42
What Is Operations Management? 4 Preconditions 43
Organizing to Produce Goods and Services 4 Dynamics 43
Why Study OM? 4 Strategy Development and Implementation 43
What Operations Managers Do 7 Critical Success Factors and Core Competencies 44
How This Book Is Organized 7 Build and Staff the Organization 46
The Heritage of Operations Management 8 Integrate OM with Other Activities 47
Operations in the Service Sector 9 Global Operations Strategy Options 47
Differences between Goods and Services 10 International Strategy 47
Growth of Services 11 Multidomestic Strategy 47
Service Pay 12 Global Strategy 48
Exciting New Trends in Operations Management 12 Transnational Strategy 49
The Productivity Challenge 14 Summary 49 • Key Terms 50 • Solved Problem 50 •
Productivity Measurement 15 Discussion Questions 50 • Self-Test 51 • Internet
and Student CD-ROM/DVD Exercises 51 • Ethical
Productivity Variables 17
Dilemma 51 • Problems 52 • Case Study: Minit-
Productivity and the Service Sector 19 Lube 52 • Video Case Studies: Strategy at Regal
Ethics and Social Responsibility 20 Marine 53; Hard Rock Cafe's Global Strategy 53 •
Summary 20 • Key Terms 21 • Solved Problems 21 < Additional Case Studies 54 • Bibliography 54 •
Self-Test 22 • Internet and Student CD-ROM/DVD Internet Resources 54
Exercises 22 • Discussion Questions 22 • Ethical
Dilemma 23 • Problems 23 • Case Studies: 3. Project Management 55
J
National Air Express 24; Zychol Chemicals
Corporation 25 • Video Case Study: Hard Rock Global Company Profile: Bechtel Group 56
Cafe: Operations Management in Services 25 • The Importance of Project Management 58
Additional Case Study 26 • Bibliography 26 • Project Planning 59
Internet Resources 26 The Project Manager 59
Work Breakdown Structure 60
2.| Operations Strategy in a
Project Scheduling 61
Global Environment 27
Project Controlling 62
Global Company Profile: Boeing 28 Project Management Techniques: PERT and CPM 63
A Global View of Operations 31 The Framework of PERT and CPM 63
Cultural and Ethical Issues 33 Network Diagrams and Approaches 63
Xli Contents

Activity-on-Node Example 65 Seasonal Variations in Data 123


Activity-on-Arrow Example 68 Cyclical Variations in Data 128
Determining the Project Schedule 68 Associative Forecasting Methods: Regression
Forward Pass 69 and Correlation Analysis 128
Backward Pass 71 Using Regression Analysis for Forecasting 128
Calculating Slack Time and Identifying Standard Error of the Estimate 130
the Critical Path(s) 72 Correlation Coefficients for Regression Lines 131
Variability in Activity Times 73 Multiple-Regression Analysis 133
Three Time Estimates in PERT 74 Monitoring and Controlling Forecasts 133
Probability of Project Completion 76 Adaptive Smoothing 135
Cost-Time Trade-Offs and Project Crashing 79 Focus Forecasting 135
A Critique of PERT and CPM 81 Forecasting in the Service Sector 136
Using Microsoft Project to Manage Projects 82 Summary 137 • Key Terms 139 • Using Software
Creating a Project Schedule Using in Forecasting 139 • Solved Problems 140 • Active
Microsoft Project 82 Model Exercise 142 • Self-Test 143 • Internet and
Tracking Progress and Managing Costs Using Student CD-ROM/DVD Exercises 143 • Discussion
Microsoft Project 86 Questions 143 • Ethical Dilemma 144 • Problems
Summary 87 • Key Terms 87 • Using Software to 144 • Case Studies: Southwestern University: (B)
Solve Project ManagemenfProblems 88 • Solved 151; Digital Cell Phone, Inc. 151 • Video Case
Problems 88 • Active Model Exercise 91 • Self-Test Study: Forecasting at Hard Rock Cafe 152 •
92 • Internet and Student CD-ROM/DVD Exercises Additional Case Studies 153 • Bibliography 153 •
93 • Discussion Questions 93 • Ethical Dilemma 93 • Internet Resources 153
Problems 93 • Case Study: Southwestern University
(A) 99 • Video Case Studies: Project Management at
Arnold Palmer Hospital 100; Managing Hard Rock's
Rockfest 101 'Additional Case Studies 102 •
Bibliography 102 • Internet Resources 102
Designing Operations 1 5 5
J
4.1 Forecasting 103 @ Design of Goods and Services 155
Global Company Profile: Disney World 104 Global Company Profile: Regal Marine 156
What Is Forecasting? 106 Goods and Services Selection 158
Forecasting Time Horizons 106 Product Strategy Options Support
The Influence of Product Life Cycle 107 Competitive Advantage 158
Types of Forecasts 107 Product Life Cycles 159
The Strategic Importance of Forecasting 107 Life Cycle and Strategy 159
Human Resources 107 Product-by-Value Analysis 160
Capacity 107 Generating New Products 160
Supply Chain Management 107 New Product Opportunities 160
Seven Steps in the Forecasting System 108 Importance of New Products 161
Forecasting Approaches 108 Product Development 162
Overview of Qualitative Methods 108 Product Development System 162
Overview of Quantitative Methods 109 Quality Function Deployment (QFD) 162
Time-Series Forecasting 109 Organizing for Product Development 165
Decomposition of a Time Series 110 Manufacturability and Value Engineering 166
Naive Approach 110 Issues for Product Design 167
Moving Averages 111 Robust Design 167
Exponential Smoothing 113 Modular Design 167
Measuring Forecast Error 115 Computer-Aided Design (CAD) 167
Exponential Smoothing with Trend Adjustment 118 Computer-Aided Manufacturing (CAM) 168
Trend Projections 121 Virtual Reality Technology 169
Contents xiii

Value Analysis 169 Histograms 208


Ethics and Environmentally Friendly Statistical Process Control (SPC) 208
Designs 169 The Role of Inspection 208
Time-Based Competition 172 When and Where to Inspect 208
Purchasing Technology by Acquiring a Firm 174 Source Inspection 209
Joint Ventures 174 Service Industry Inspection 210
Alliances 174 Inspection ofAttributes versus Variables 210
Defining a Product 174 TQM in Services 210
Make-or-Buy Decisions 176 Summary 213 • Key Terms 213 * Active Model
Group Technology 176 Exercise 213 * Self-Test 214 • Internet and Student
Documents for Production 176 CD-ROM/DVD Exercises 214 * Discussion
Product Life-Cycle Management (PLM) 178 Questions 214 * Ethical Dilemma 215 * Problems
215 * Case Study: Southwestern University (C)
Service Design 178
217* Video Case Studies: The Culture of Quality
Documents for Services 180 at Arnold Palmer Hospital 218; Quality at the
Application of Decision Trees to Product Design 182 Ritz-Carlton Hotel Company 218 * Additional
Transition to Production 183 Case Studies 219 • Bibliography 219 * Internet
Summary 184 • Key Terms 184 * Solved Problem Resources 219
184 * Self-Test 185 • Active Model Exercise 186 •
Internet and Student CD-ROM/DVD Exercises 186 •
Discussion Questions 187 • Ethical Dilemma 187 * Statistical Process Control 221
Problems 187 * Case Study: De Mar's Product Statistical Process Control (SPC) 222
Strategy 189* Video Case Study: Product Design Control Charts for Variables 224
at Regal Marine 189 * Additional Case Studies 190* The Central Limit Theorem 224
Bibliography 190 * Internet Resources 190
Setting Mean Chart Limits (x-Charts) 225
Setting Range Chart Limits (R-Charts) 228
Using Mean and Range Charts 229
6.) Managing Quality 191 Control Charts for Attributes 230
Global Company Profile: Arnold Palmer Hospital 192 Managerial Issues and Control Charts 233
Quality and Strategy 194 Process Capability 235
Defining Quality 194 Process Capability Ratio (Cp) 235
Implications of Quality 195 Process Capability Index (C k) 236
Malcolm Baldrige National Quality Award 195 Acceptance Sampling 237
Cost of Quality (COQ) 196 Operating Characteristic Curve 238
Ethics and Quality Management 196 Average Outgoing Quality 239
International Quality Standards 198 Summary 240 * Key Terms 240 * Using Software
ISO 9000198 for SPC 240 * Solved Problems 241 * Active Model
ISO 14000198 Exercise 242 * Self-Test 243 * Internet and Student
Total Quality Management 198 CD-ROM/DVD Exercises 244 • Discussion
Questions 244 • Problems 244 * Case Studies:
Continuous Improvement 198
Bayfield Mud Company 248; Alabama Airlines'
Six Sigma 199
On-Time Schedule 249 * Video Case Study: Farm
Employee Empowerment 200 to Fork: Quality at Darden Restaurants 250 *
Benchmarking 201 Additional Case Studies 251 * Bibliography 251 *
Just-in-Time (JIT) 202 Internet Resources 251
Taguchi Concepts 203
Knowledge of TQM Tools 204
Tools of TQM 204 7.1 Process Strategy 253
Check Sheets 204 Global Company Profile: Dell Computer Corp. 254
Scatter Diagrams 205 Four Process Strategies 256
Cause-and-Effect Diagrams 205 Process Focus 256
Pareto Charts 206 Repetitive Focus 258
Flowcharts 207 Product Focus 259
XIV Contents

Mass Customization Focus 260 Applying Investment Analysis to Strategy-Driven


Comparison of Process Choices 263 Investments 301
Process Analysis and Design 266 Investment, Variable Cost, and Cash Flow 302
Flow Diagrams 266 Net Present Value 302
Time-Function Mapping 266 Summary 305 • Key Terms 305 * Using Software
Value-Stream Mapping 267 for Break-Even Analysis 305 • Solved Problems
Process Charts 268 306 * Self-Test 308 * Internet and Student CD-ROM/
DVD Exercises 308 * Discussion Questions 308 *
Service Blueprinting 269
Problems 309 • Video Case Study: Capacity
Service Process Design 270 Planning at Arnold Palmer Hospital 312 •
Customer Interaction and Process Design 270 Additional Case Studies 312 * Bibliography 313 *
More Opportunities to Improve Service Internet Resources 313
Processes 271
Selection of Equipment and Technology 271
Production Technology 272
F I D Location Strategies 315
LJLJ
Machine Technology 272 Global Company Profile: FedEx 316
Automatic Identification System (AISs) and RFID 273 The Strategic Importance of Location 318
Process Control 273 Factors That Affect Location Decisions 319
Vision Systems 274 Labor Productivity 320
Robots 274 Exchange Rates and Currency Risk 320
Automated Storage and Retrieval System (ASRSs) 274 Costs 321
Automated Guided Vehicles (AGVs) 275 Political Risk, Values, and Culture 322
Flexible Manufacturing Systems (FMSs) 275 Proximity to Markets 322
Computer-Integrated Manufacturing (CIM) 275 Proximity to Suppliers 322
Technology in Services 275 Proximity to Competitors (Clustering) 322
Process Redesign 277 Methods of Evaluating Location Alternatives 323
Ethics and Environmentally Friendly Processes 279 The Factor-Rating Method 323
Summary 279 * Key Terms 280 * Solved Problem Locational Break-Even Analysis 324
280 * Active Model Exercise 280 * Self-Test 281 • Center-of-Gravity Method 326
Internet and Student CD-ROM/DVD Exercises Transportation Model 328
281 * Discussion Questions 281 • Ethical
Service Location Strategy 328
Dilemma 282 * Problems 282 * Case Study:
Rochester Manufacturing Corporation 283 • How Hotel Chains Select Sites 329
Video Case Studies: Process Analysis at Arnold The Call Center Industry 330
Palmer Hospital 283; Process Strategy at Wheeled Geographic Information Systems 331
Coach 284 * Additional Case Studies 285 * Summary 332 * Key Terms 332 * Using Software
Bibliography 285 * Internet Resources 285 to Solve Location Problems 333 * Solved
Problems 333 * Self-Test 335 * Active Model
Exercise 335 • Internet and Student CD-ROM/
Supplement 7: Capacity Planning 287 DVD Exercises 336 * Discussion Questions 336 •
Ethical Dilemma 336 * Problems 337 • Case
Capacity 288 Study: Southern Recreational Vehicle Company
Design and Effective Capacity 289 341 * Video Case Studies: Locating the Next Red
Capacity and Strategy 290 Lobster Restaurant 342; Where to Place the Hard
Capacity Considerations 290 Rock Cafe 343 • Additional Case Studies 343 *
Managing Demand 291 Bibliography 344 * Internet Resources 344
Demand and Capacity Management
in the Service Sector 293
Capacity Planning 295 9. | Layout Strategies 345
Break-Even Analysis 296 Global Company Profile: McDonald's 346
Single-Product Case 298 The Strategic Importance of Layout Decisions 348
Multiproduct Case 298 Types of Layout 348
Applying Decision Trees to Capacity Decisions 300 Office Layout 350
Contents XV

Retail Layout 351 Summary 404 * Key Terms 404 • Solved Problem
Servicescapes 352 404 * Self-Test 405 • Internet and Student CD-ROM/
Warehousing and Storage Layouts 353 DVD Exercises 405 * Discussion Questions 405 *
Ethical Dilemma 406 • Problems 406 • Case Study:
Cross-Docking 354
The Fleet That Wanders 407 • Video Case Study:
Random Stocking 354 Hard Rock's Human Resource Strategy 407 •
Customizing 354 Additional Case Studies 408 • Bibliography 408 *
Fixed-Position Layout 355 Internet Resources 409
Process-Oriented Layout 356
Computer Software for Process-Oriented
Supplement 10: Work Measurement 411
Layouts 360
Work Cells 360 Labor Standards and Work Measurement 412
Requirements of Work Cells 361 Historical Experience 413
Staffing and Balancing Work Cells 361 Time Studies 413
The Focused Work Center and the Focused Predetermined Time Standards 418
Factory 364 Work Sampling 420
Repetitive and Product-Oriented Layout 364 Summary 423 * Key Terms 423 * Solved Problems
Assembly-Line Balancing 366 423 * Active Model Exercise 425 * Self-Test 425 •
Summary 370 * Key Terms 371 • Using Software to Internet and Student CD-ROM/DVD Exercises 426«
Solve Layout Problems 371 • Solved Problems 372 * Discussion Questions 426 • Problems 426 * Case
Self-Test 375 * Active Model Exercise 375 • Internet Study: Jackson Manufacturing Company 429 •
and Student CD-ROM/DVD Exercises 376 • Additional Case Studies 430 • Bibliography 430 *
Discussion Questions 376 * Ethical Dilemma 377 * Internet Resources 430
Problems 377* Case Study: State Automobile
License Renewals 382 * Video Case Studies: Laying
Out Arnold Palmer Hospital's New Facility 383;
Facility Layout at Wheeled Coach 384 * Additional
Case Studies 384 • Bibliography 385 * Internet
Managing Operations 4 3 1
Resources 385

[ i l l ] Supply Chain Management 431


10.J Human Resources and Job Design 387 Global Company Profile: Darden Restaurants 432
Global Company Profile: Rusty Wallace's The Supply Chain's Strategic Importance 434
NASCAR Racing Team 388 Global Supply Chain Issues 435
Human Resource Strategy for Competitive" Supply Chain Economics 436
Advantage 390 Make-or-Buy Decisions 437
Constraints on Human Resource Strategy 390 Outsourcing 438
Labor Planning 391 Ethics in the Supply Chain 438
Employment-Stability Policies 391 Supply Chain Strategies 438
Work Schedules 391 Many Suppliers 439
Job Classifications and Work Rules 392 Few Suppliers 439
Job Design 392 Vertical Integration 439
Labor Specialization 392 Keiretsu Networks 440
Job Expansion 393 Virtual Companies 440
Psychological Components of Job Design 394 Managing the Supply Chain 441
Self-Directed Teams 394 Issues in an Integrated Supply Chain 441
Motivation and Incentive Systems 395 Opportunities in an Integrated Supply Chain 442
Ergonomics and the Work Environment 397 E-Procurement 445
Methods Analysis 399 Online Catalogs 445
The Visual Workplace 402 Auctions 446
Ethics and the Work Environment 403 RFQs 446
Labor Standards 403 Real-Time Inventory Tracking 446
XVI Contents

Vendor Selection 447 Inventory Management 485


Vendor Evaluation 447 ABC Analysis 485
Vendor Development 448 Record Accuracy 486
Negotiations 448 Cycle Counting 487
Logistics Management 448 Control of Service Inventories 488
Distribution Systems 449 Inventory Models 489
Third-Party Logistics 450 Independent vs. Dependent Demand 489
Cost of Shipping Alternatives 451 Holding, Ordering, and Setup Costs 490
Logistics, Security, and JIT 452 Inventory Models for Independent Demand 490
Measuring Supply Chain Performance 452 The Basic Economic Order Quantity (EOQ)
Summary 455 * Key Terms 455 • Solved Problem
Model 490
455 * Self-Test 456 * Internet and Student CD-ROM/
DVD Exercises 456 • Discussion Questions 456 * Minimizing Costs 491
Ethical Dilemma 457 * Problems 457 * Case Study: Reorder Points 495
Dell's Value Chain 458 * Video Case Studies: Production Order Quantity Model 497
Darden's Global Supply Chains; Arnold Palmer Quantity Discount Models 500
Hospital's Supply Chain; Supply Chain
Probabilistic Models and Safety Stock 502
Management at Regal Marine 459 • Additional
Case Studies 461 • Bibliography 461 * Internet Other Probabilistic Models 505
Resources 461 Fixed-Period (P) Systems 507
Summary 509 * Key Terms 510 * Using Software
to Solve Inventory Problems 510 * Solved
Supplement 1 1 : Outsourcing as a Supply Problems 511 * Self-Test 515 * Active Model
Chain Strategy 463 Exercise 515 • Internet and Student CD-ROM/DVD
What Is Outsourcing? 464 Exercises 516 • Discussion Questions 516 •
Ethical Dilemma 516 • Problems 517 * Case
Types of Outsourcing 465
Studies: Zhou Bicycle Company; Sturdivant
Strategic Planning and Core Competencies 466 Sound Systems 521 * Video Case Study:
The Theory of Comparative Advantage 467 Inventory Control at Wheeled Coach 522 •
Outsourcing Trends and Political Repercussions 467 Additional Case Studies 522 * Bibliography 523 *
Risks in Outsourcing 468 Internet Resources 523
Methodologies for Outsourcing 470
Evaluating Multiple Criteria with Factor Rating 470
Break-even Analysis 472 13. Aggregate Planning 525
Advantages and Disadvantages of Outsourcing 473 Global Company Profile: Anheuser-Busch 526
Advantages of Outsourcing 473 The Planning Process 528
Disadvantages of Outsourcing 474 The Nature of Aggregate Planning 528
Audits and Metrics to Evaluate Outsourcing Aggregate Planning Strategies 530
Performance 475
Capacity Options 531
Ethical Issues in Outsourcing 475
Demand Options 532
Summary 476 * Key Terms 476 • Using Software to
Mixing Options to Develop a Plan 532
Solve Outsourcing Problems 476* Solved Problem
476 • Self-Test 477 * Internet and Student CD-ROM/ Methods for Aggregate Planning 533
DVD Exercises 477 • Discussion Questions 477 * Graphical Methods 534
Problems 478 • Case Study: Outsourcing to Tata Mathematical Approaches 538
479 * Video Case Study: Outsourcing Offshore Comparison ofAggregate Planning Methods 540
at Darden 479 * Bibliography 480 • Internet
Aggregate Planning in Services 541
Resources 480
Restaurants 542
Hospitals 542
[12.J Inventory Management 481 National Chains of Small Service Firms 542
Global Company Profile: Amazon.com 482 Miscellaneous Services 542
Functions of Inventory 484 Airline Industry 543
Types of Inventory 484 Yield Management 543
Contents xvii

Summary 546 • Key Terms 547 * Using Software Scheduling Process-Focused Facilities 605
for Aggregate Planning 547 • Solved Problems Loading Jobs 606
548 • Self-Test 550 * Active Model Exercise 550 • Input-Output Control 606
Internet and Student CD-ROM/DVD Exercises
Gantt Charts 607
551 • Discussion Questions 551 * Ethical
Assignment Method 609
Dilemma 552 * Problems 552 * Case Studies:
Southwestern University: (G); Andrew-Carter, Sequencing Jobs 612
Inc. 556 • Additional Case Studies 558 * Priority Rules for Dispatching Jobs 612
Bibliography 558 * Internet Resources 558 Critical Ratio 615
Sequencing N Jobs on Two Machines:
Johnson's Rule 616
14.J Material Requirements Planning (MRP) Limitations of Rule-Based Dispatching Systems 618
andERP 559 Finite Capacity Scheduling (FCS) 618
Global Company Profile: Wheeled Coach 560 Theory of Constraints 619
Dependent Demand 562 Bottlenecks 620
Dependent Inventory Model Requirements 562 Drum, Buffer, Rope 620
Scheduling Repetitive Facilities 621
Master Production Schedule 562
Scheduling Services 621
Bills of Material 565
Scheduling Service Employees with Cyclical
Accurate Inventory Records 567 L
Scheduling 623
Purchase Orders Outstanding 567
Summary 625 * Key Terms 625 * Using Software for
Lead Times for Components 567 Short-Term Scheduling 625 • Solved Problems 627 *
MRP Structure 568 Active Model Exercise 630 * Self-Test 631 • Internet
MRP Management 572 and Student CD-ROM/DVD Exercises 631 •
MRP Dynamics 572 Discussion Questions 631 * Ethical Dilemma 632 *
Problems 632 * Case Study: Old Oregon Wood
MRP and JIT 572
Store 635 • Video Case Study: Scheduling at Hard
Lot-Sizing Techniques 574 Rock Cafe 636 * Additional Case Studies 637 *
Extensions of MRP 578 Bibliography 637 • Internet Resources 637
Material Requirements Planning II (MRP II) 578
Closed-Loop MRP 579 JIT and Lean Operations 639
Capacity Planning 579 Global Company Profile: Toyota Motor Corporation 640
MRP in Services 580 Just-in-Time, the Toyota Production System,
Distribution Resource Planning (DRP) 581 and Lean Operations 642
Enterprise Resource Planning (ERP) 582 Eliminate Waste 642
Advantages and Disadvantages of ERP Systems 585 Remove Variability 643
ERP in the Service Sector 585 Improve Throughout 644
Summary 586 * Key Terms 586 * Using Software to
Just-in-Time (JIT) 644
Solve MRP Problems 586 * Solved Problems 587 *
Self-Test 590 * Active Model Exercise 590 * Internet JIT Partnerships 645
and Student CD-ROM/DVD Exercises 591 * Concerns of Suppliers 646
Discussion Questions 591 • Ethical Dilemma 592 • JIT Layout 647
Problems 592 • Case Study: Ikon's Attempt at Distance Reduction 647
ERP 595 * Video Case Study: MRP at Wheeled Increased Flexibility 647
Coach 596 • Additional Case Studies 597 * Impact on Employees 647
Bibliography 597 * Internet Resources 597 Reduced Space and Inventory 647
JIT Inventory 648
Reduce Variability 648
15. Short-Term Scheduling 599 Reduce Inventory 649
Global Company Profile: Delta Air Lines 600 Reduce Lot Sizes 649
The Strategic Importance of Short-Term Scheduling 602 Reduce Setup Costs 650
Scheduling Issues 602 JIT Scheduling 651
Forward and Backward Scheduling 603 Level Schedules 652
Scheduling Criteria 605 Kanban 652
xviii Contents

JIT Quality 655 Continuous Probability Distributions Tl-4


Toyota Production System 656 The Normal Distribution Tl-4
Continuous Improvement 656 Summary Tl-7* Key Terms Tl-7* Discussion
Respect for People 656 Questions Tl-7* Problems Tl-7* Bibliography Tl-8
Standard Work Practice 656
Lean Operations 657
Building a Lean Organization 657 2. Acceptance Sampling T2-1
Lean Operations in Services 658 Sampling Plans T2-2
Summary 659 * Key Terms 659 * Solved Problem Single Sampling T2-2
659 • Self-Test 660 • Internet and Student CD-ROM/ Double Sampling T2-2
DVD Exercises 660 * Discussion Questions 660 * Sequential Sampling T2-2
Ethical Dilemma 661 • Problems 661 * Case
Operating Characteristic (OC) Curves T2-2
Studies: Mutual Insurance Company of Iowa; JIT
After the Fire 662 • Video Case Study: JIT at Arnold Producer's and Consumer's Risk T2-3
Palmer Hospital 664 * Additional Case Studies 664 * Average Outgoing Quality T2-5
Bibliography 665 • Internet Resources 665 Summary T2-6 * Key Terms T2-6 * Solved Problem
T2-7 • Discussion Questions T2-7 * Problems T2-7
17. Maintenance and Reliability 667
Global Company Profile: Orlando Utilities
Commission 668 3. The Simplex Method of Linear
The Strategic Importance of Maintenance Programming T3-1
and Reliability 670
Converting the Constraints to Equations T3-2
Reliability 671
Setting Up the First Simplex Tableau T3-2
Improving Individual Components 671 L
Simplex Solution Procedures T3-4
Providing Redundancy 673
Summary of Simplex Steps for Maximization
Maintenance 674
Problems T3-6
Implementing Preventive Maintenance 674
Artificial and Surplus Variables T3-7
Increasing Repair Capabilities 678
Solving Minimization Problems T3-7
Total Productive Maintenance 679 Summary T3-8 • Key Terms T3-8 • Solved Problem
Techniques for Enhancing Maintenance 679 T3-8 • Discussion Questions T3-8 • Problems T3-9
Summary 679 • Key Terms 680 * Using Software to
Solve Reliability Problems 680 • Solved Problems
680 * Internet and Student CD-ROM/DVD Exercises
4. The MODI and VAM Methods of Solving
680 * Self-Test 681 * Discussion Questions 681 •
Ethical Dilemma 681 * Problems 682 * Case Study: Transportation Problems T4-1
Worldwide Chemical Company 683 * Additional MODI Method T4-2
Case Studies 684 * Bibliography 684 * Internet How to Use the MODI Method T4-2
Resources 684
Solving the Arizona Plumbing Problem
with MODI T4-2
Appendices A l
Vogel's Approximation Method: Another Way
Indices I I to Find an Initial Solution T4-4
Photo Credits Cl Discussion Questions T4-8 • Problems T4-8

5. Vehicle Routing and Scheduling T5-1


CD-ROM Tutorials Introduction T5-2
Service Delivery Example: Meals-for-ME T5-2
1. Statistical Tools for Managers Tl-1 Objectives of Routing and Scheduling Problems T5-2
Discrete Probability Distributions Tl-2 Characteristics of Routing and Scheduling
Expected Value of a Discrete Probability Problems T5-3
Distribution Tl-3 Classifying Routing and Scheduling Problems T5-3
Variance of a Discrete Probability Distribution Tl-3 Solving Routing and Scheduling Problems T5-4
Contents xix

Routing Service Vehicles T5-5 Other Routing and Scheduling Problems T5-13
The Traveling Salesman Problem T5-5 Summary T5-14 • Key Terms T5-15 * Discussion
Multiple Traveling Salesman Problem T5-8 Questions T5-15 * Problems T5-15 * Case Study:
The Vehicle Routing Problem T5-9 Routing and Scheduling of Phlebotomists T5-17 *
Bibliography T5-17
Cluster First, Route Second Approach T5-10
Scheduling Service Vehicles T5-11
The Concurrent Scheduler Approach T5-13