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Customizing

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Just-In-Time

THE PRENTICE HALL


Just-In-Time program

YOU CAN CUSTOMIZE YOUR TEXTBOOK WITH CHAPTERS FROM ANY OF THE FOLLOWING PRENTICE HALL TITLES: *
BUSINESS STATISTICS
Berenson/Levine/Krehbiel, BASIC BUSINESS STATISTICS, 10/e
Groebner/Shannon/Fry/Smith, BUSINESS STATISTICS: A DECISIONMAKING APPROACH, 6/e
Levine/Stephan/Krehbiel/Berenson, STATISTICS FOR MANAGERS USING MICROSOFT EXCEL, 4/e
Levine/Krehbiel/Berenson, BUSINESS STATISTICS: A FIRST COURSE, 4/e
Newbold/Carlson/Thorne, STATISTICS FOR BUSINESS AND ECONOMICS, 5/e
Groebner/Shannon/Fry/Smith, A COURSE IN BUSINESS STATISTICS, 4/e

OPERATIONS MANAGEMENT
Anupindi/Chopra/Deshmukh/Van Mieghem/Zemel, MANAGING BUSINESS PROCESS FLOWS, 2/e
Bozarth/Handfield, INTRODUCTION TO OPERATIONS
AND SUPPLY CHAIN MANAGEMENT
Chopra/Meindl, SUPPLY CHAIN MANAGEMENT, 2e
Foster, MANAGING QUALITY, 2/e
Handfield/Nichols, Jr., SUPPLY CHAIN MANAGEMENT
Heineke/Meile, GAMES AND EXERCISES FOR OPERATIONS MANAGEMENT
Heizer/Render, OPERATIONS MANAGEMENT, 8/e
Heizer/Render, PRINCIPLES OF OPERATIONS MANAGEMENT, 6/e
Krajewski/Ritzman, OPERATIONS MANAGEMENT, 7/e
Latona/Nathan, CASES AND READINGS IN PRODUCTION
AND OPERATIONS MANAGEMENT
Ritzman/Krajewski, FOUNDATIONS OF OPERATIONS MANAGEMENT
Schmenner, PLANT AND SERVICE TOURS IN OPERATIONS MANAGEMENT, 5/e

MANAGEMENT SCIENCE/SPREADSHEET MODELING


Eppen/Gould/Schmidt/Moore/Weatherford, INTRODUCTORY
MANAGEMENT SCIENCE, 5/e
Render/Stair/Hanna, QUANTITATIVE ANALYSIS FOR MANAGEMENT, 9/e
Render/Stair/Balakrishnan, MANAGERIAL DECISION MODELING
WITH SPREADSHEETS
Render/Greenberg/Stair, CASES AND READINGS IN MANAGEMENT
SCIENCE, 2e
Taylor, INTRODUCTION TO MANAGEMENT SCIENCE, 8/e
For more information, or to speak to a customer service representative, contact us at 1-800-777-6872.
www.prenhal l.com/custombusiness

* Selection of titles on the JIT program is subject to change.

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Page iii

OPERATIONS
MANAGEMENT
Eighth Edition

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

Upper Saddle River, New Jersey 07458

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Library of Congress Cataloging-in-Publication Data


Heizer, Jay H.
Operations management / Jay Heizer, Barry Render.8th ed.
p. cm.
ISBN 0-13-185755-X
1. Production management. I. Render, Barry. II. Title.
TS155.H3726 2006
658.5dc22
2005045918
AVP/Executive Editor: Mark Pfaltzgraff
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10 9 8 7 5 4 3 2 1
ISBN 0-13-185755-X

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Page v

To Donna, Kira, and Jane, in honor of the women


you have become.
JH
To my family
BR

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A B O U T T H E AU T H O R S

Jay Heizer

holds the Jesse H. Jones Chair of Business Administration at Texas Lutheran


University in Seguin, Texas. He received his B.B.A. and M.B.A. from the University of North Texas
and his Ph.D. in Management and Statistics from Arizona State University (1969). He was previously a member of the faculty at the University of Memphis, the University of Oklahoma, Virginia
Commonwealth University, and the University of Richmond. He has also held visiting positions at
Boston University, George Mason University, the Czech Management Center, and the Otto-VonGuericka University Magdeburg.
Dr. Heizers industrial experience is extensive. He learned the practical side of operations management as a machinist apprentice at Foringer and Company, production planner for Westinghouse
Airbrake, and at General Dynamics, where he worked in engineering administration. Additionally,
he has been actively involved in consulting in the OM and MIS areas for a variety of organizations
including Philip Morris, Firestone, Dixie Container Corporation, Columbia Industries, and
Tenneco. He holds the CPIM certification from APICSthe Association for Operations
Management.

Professor Heizer has co-authored five books and has published over thirty articles on a variety of
management topics. His papers have appeared in the Academy of Management Journal, Journal of
Purchasing, Personnel Psychology, Production & Inventory Control Management, APICS-The
Performance Advantage, Journal of Management History, IIE Solutions and Engineering
Management, among others. He has taught operations management courses in undergraduate, graduate, and executive programs.

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Barry Render holds the Charles Harwood Endowed Professorship in Operations


Management at the Crummer Graduate School of Business at Rollins College, in Winter Park,
Florida. He received his B.S. in Mathematics and Physics at Roosevelt University, and his M.S. in
Operations Research and Ph.D. in Quantitative Analysis at the University of Cincinnati. He previously taught at George Washington University, University of New Orleans, Boston University, and
George Mason University, where he held the GM Foundation Professorship in Decision Sciences
and was Chair of the Decision Science Department. Dr. Render has also worked in the aerospace
industry for General Electric, McDonnell Douglas, and NASA.
Professor Render has co-authored ten textbooks with Prentice Hall, including Managerial Decision
Modeling with Spreadsheets, Quantitative Analysis for Management, Service Management,
Introduction to Management Science, and Cases and Readings in Management Science.
Quantitative Analysis for Management is now in its 9th edition and is a leading text in that discipline
in the U.S. and globally. His more than one hundred articles on a variety of management topics have
appeared in Decision Sciences, Production and Operations Management, Interfaces, Information
and Management, Journal of Management Information Systems, Socio-Economic Planning
Sciences, IIE Solutions, and Operations Management Review, among others.
Dr. Render has also been honored as an AACSB Fellow and was twice named as a Senior Fullbright
Scholar. He was vice-president of the Decision Science Institute Southwest Region and served as
Software Review Editor for Decision Line for 6 years. He has also served as Editor of the New York
Times Operations Management special issues from 1996 to 2001. Finally, Professor Render has
been actively involved in consulting for government agencies and for many corporations, including
NASA, FBI, U.S. Navy, Fairfax County, Virginia, and C&P Telephone.
He teaches operations management courses in Rollins Colleges MBA and Executive MBA programs. He has been named as that schools Professor of the Year, and was recently selected by
Roosevelt University to receive the St. Claire Drake Award for Outstanding Scholarship.

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Brief Contents

PAR T ONE
Introduction to Operations
Management 1
1. Operations and Productivity 1
2. Operations Strategy in a Global
Environment 25
3. Project Management 53
4. Forecasting 103
PAR T TWO
Designing Operations 1 5 5
5. Design of Goods and Services 155
6. Managing Quality 191
Supplement 6: Statistical Process Control 221
7. Process Strategy 253
Supplement 7: Capacity Planning 285
8. Location Strategies 309
9. Layout Strategy 339
10. Human Resources and Job Design 381
Supplement 10: Work Measurement 407
PAR T THREE
Managing Operations 4 2 9
11. Supply-Chain Management 429
Supplement 11: E-Commerce and Operations
Management 459

12. Inventory Management 473


13. Aggregate Planning 515
14. Material Requirements Planning (MRP)
and ERP 549
15. Short-Term Scheduling 587
16. Just-in-Time and Lean Production
Systems 625
17. Maintenance and Reliability 653
PAR T FOUR
Quantitative Modules 6 7 3
A.
B.
C.
D.
E.
F.

Decision-Making Tools 673


Linear Programming 691
Transportation Models 723
Waiting-Line Models 743
Learning Curves 771
Simulation 785

CD-ROM Tutorials
1. Statistical Tools for Managers T1-1
2. Acceptance Sampling T2-1
3. The Simplex Method of Linear
Programming T3-1
4. The MODI and VAM Methods of Solving
Transportation Problems T4-1
5. Vehicle Routing and Scheduling T5-1

ix

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Contents

About the Authors vi


Preface xxi

PAR T ONE
Introduction to Operations
Management 1
1. Operations and Productivity 1
Global Company Profile: Hard Rock Cafe 2
What Is Operations Management? 4
Organizing to Produce Goods and Services 4
Why Study OM? 4
What Operations Managers Do 6
How This Book Is Organized 6
The Heritage of Operations Management 7
Operations in the Service Sector 9
Differences between Goods and Services 9
Growth of Services 10
Service Pay 11
Exciting New Trends in Operations Management 12
The Productivity Challenge 13
Productivity Measurement 14
Productivity Variables 16
Productivity and the Service Sector 17
Ethics and Social Responsibility 18
Summary 19 Key Terms 19 Solved Problems 19
Internet and Student CD-ROM Exercises 20
Discussion Questions 20 Ethical Dilemma 21
Problems 21 Internet Homework Problems 23
Case Study: National Air Express 23 Case Study:
Zychol Chemicals Corporation 23 Video Case
Study: Hard Rock Cafe: Operations Management in
Services 24 Additional Case Study 24
Bibliography 24 Internet Resources 24

2. Operations Strategy in a Global


Environment 25
Global Company Profile: Boeing 26
A Global View of Operations 28
Cultural and Ethical Issues 31
Developing Missions and Strategies 31
Mission 31
Strategy 32

Achieving Competitive Advantage Through


Operations 33
Competing on Differentiation 34
Competing on Cost 34
Competing on Response 35
Ten Strategic OM Decisions 36
Issues in Operations Strategy 39
Research 39
Preconditions 40
Dynamics 40
Strategy Development and Implementation 41
Identify Critical Success Factors 41
Build and Staff the Organization 42
Integrate OM with Other Activities 43
Global Operations Strategy Options 43
International Strategy 44
Multidomestic Strategy 44
Global Strategy 45
Transnational Strategy 45
Summary 46 Key Terms 46 Solved Problem 47
Internet and Student CD-ROM Exercises 47
Discussion Questions 47 Ethical Dilemma 48
Problems 48 Case Study: Minit-Lube,
Inc. 49 Video Case Study: Strategy at Regal
Marine 49 Video Case Study: Hard Rock
Cafes Global Strategy 49 Additional Case
Studies 50 Bibliography 51 Internet
Resources 51

3. Project Management 53
Global Company Profile: Bechtel Group 54
The Importance of Project Management 56
Project Planning 56
The Project Manager 57
Work Breakdown Structure 58
Project Scheduling 59
Project Controlling 60
Project Management Techniques: PERT and CPM 61
The Framework of PERT and CPM 61
Network Diagrams and Approaches 61
Activity-on-Node Example 63
Activity-on-Arrow Example 65
Determining the Project Schedule 65
Forward Pass 66
Backward Pass 68

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CONTENTS
Calculating Slack Time and Identifying the Critical
Path(s) 69
Variability in Activity Times 70
Three Time Estimates in PERT 71
Probability of Project Completion 73
Cost-Time Trade-Offs and Project Crashing 75
A Critique of PERT and CPM 78
Using Microsoft Project to Manage Projects 79
Creating a Project Schedule Using MS Project 79
Tracking Progress and Managing Costs Using MS
Project 82
Summary 83 Key Terms 83 Using Software to
Solve Project Management Problems 83 Solved
Problems 84 Internet and Student CD-ROM
Exercises 88 Discussion Questions 88 Ethical
Dilemma 88 Active Model Exercise 89 Problems
90 Internet Homework Problems 97 Case Study:
Southwestern University: (A) 97 Video Case
Study: Project Management at Arnold Palmer
Hospital 98 Video Case Study: Managing Hard
Rocks Rockfest 99 Additional Case Studies 100
Bibliography 101 Internet Resources 101

Correlation Coefficients for Regression


Lines 130
Multiple-Regression Analysis 131
Monitoring and Controlling Forecasts 132
Adaptive Smoothing 134
Focus Forecasting 134
Forecasting in the Service Sector 134
Summary 135 Key Terms 137 Using Software
in Forecasting 137 Solved Problems 138 Internet
and Student CD-ROM Exercises 140 Discussion
Questions 140 Ethical Dilemma 141 Active
Model Exercise 141 Problems 142 Internet
Homework Problems 151 Case Study:
Southwestern University: (B) 151 Case Study:
Digital Cell Phone, Inc. 152 Video Case Study:
Forecasting at Hard Rock Cafe 152 Additional
Case Studies 153 Bibliography 153 Internet
Resources 154

PAR T TWO
Designing Operations 1 5 5

4. Forecasting 103
Global Company Profile: Tupperware
Corporation 104
What Is Forecasting? 106
Forecasting Time Horizons 106
The Influence of Product Life Cycle 107
Types of Forecasts 107
The Strategic Importance of Forecasting 107
Human Resources 107
Capacity 107
Supply-Chain Management 107
Seven Steps in the Forecasting System 108
Forecasting Approaches 108
Overview of Qualitative Methods 108
Overview of Quantitative Methods 109
Time-Series Forecasting 109
Decomposition of a Time Series 110
Naive Approach 110
Moving Averages 111
Exponential Smoothing 112
Measuring Forecast Error 114
Exponential Smoothing with Trend Adjustment 117
Trend Projections 120
Seasonal Variations in Data 122
Cyclical Variations in Data 127
Associative Forecasting Methods: Regression and
Correlation Analysis 127
Using Regression Analysis to Forecast 127
Standard Error of the Estimate 129

5. Design of Goods and Services 155


Global Company Profile: Regal Marine 156
Goods and Services Selection 158
Product Strategy Options Support Competitive
Advantage 158
Product Life Cycles 159
Life Cycle and Strategy 160
Product-by-Value Analysis 160
Generating New Products 160
New Product Opportunities 161
Importance of New Products 162
Product Development 162
Product Development System 162
Quality Function Deployment (QFD) 163
Organizing for Product Development 165
Manufacturability and Value Engineering 166
Issues for Product Design 167
Robust Design 167
Modular Design 167
Computer-Aided Design (CAD) 167
Computer-Aided Manufacturing (CAM) 168
Virtual Reality Technology 169
Value Analysis 169
Ethics and Environmentally Friendly Designs 169
Time-Based Competition 172
Purchasing Technology by Acquiring a Firm 173
Joint Ventures 173
Alliances 173

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CONTENTS
Defining the Product 174
Make-or-Buy Decisions 175
Group Technology 176
Documents for Production 176
Product Life-Cycle Management (PLM) 177
Service Design 178
Documents for Services 180
Application of Decision Trees to Product Design 181
Transition to Production 182
Summary 183 Key Terms 183 Solved Problem
183 Internet and Student CD-ROM Exercises 184
Discussion Questions 184 Ethical Dilemma 185
Active Model Exercise 185 Problems 186
Internet Homework Problems 188 Case Study: De
Mars Product Strategy 188 Video Case Study:
Product Design at Regal Marine 188 Additional
Case Studies 189 Bibliography 189 Internet
Resources 189

6. Managing Quality 191


Global Company Profile: Arnold Palmer Hospital 192
Quality and Strategy 194
Defining Quality 194
Implications of Quality 195
Malcolm Baldrige National Quality Award 195
Cost of Quality (COQ) 196
Ethics and Quality Management 196
International Quality Standards 197
ISO 9000 197
ISO 14000 198
Total Quality Management 198
Continuous Improvement 198
Six Sigma 199
Employee Empowerment 199
Benchmarking 200
Just-in-Time (JIT) 201
Taguchi Concepts 202
Knowledge of TQM Tools 203
Tools of TQM 203
Check Sheets 203
Scatter Diagrams 204
Cause-and-Effect Diagrams 204
Pareto Charts 205
Flowcharts 205
Histograms 206
Statistical Process Control (SPC) 206
The Role of Inspection 206
When and Where to Inspect 207
Source Inspection 207
Service Industry Inspection 208
Inspection of Attributes versus Variables 208

XIII

TQM in Services 209


Summary 211 Key Terms 211 Internet and
Student CD-ROM Exercises 211 Discussion
Questions 212 Ethical Dilemma 212 Active
Model Exercise 212 Problems 213 Internet
Homework Problems 215 Case Study:
Southwestern University: (C) 215 Video Case
Study: The Culture of Quality at Arnold Palmer
Hospital 217 Video Case Study: Quality at the
Ritz-Carlton Hotel Company 217 Additional
Case Studies 218 Bibliography 218 Internet
Resources 219

Supplement 6: Statistical Process Control 221


Statistical Process Control (SPC) 222
Control Charts for Variables 224
The Central Limit Theorem 225
Setting Mean Chart Limits ( x -Charts) 226
Setting Range Chart Limits (R-Charts) 228
Using Mean and Range Charts 228
Control Charts for Attributes 230
Managerial Issues and Control Charts 233
Process Capability 235
Process Capability Ratio (Cp) 235
Process Capability Index (Cpk) 236
Acceptance Sampling 237
Operating Characteristic Curve 237
Average Outgoing Quality 238
Summary 240 Key Terms 240 Using Software for
SPC 240 Solved Problems 242 Internet and
Student CD-ROM Exercises 243 Discussion
Questions 243 Active Model Exercise 244
Problems 244 Internet Homework Problems 250
Case Study: Bayfield Mud Company 250 Case
Study: Alabama Airlines On-Time Schedule 251
Additional Case Studies 252 Bibliography 252
Internet Resources 252

7. Process Strategy 253


Global Company Profile: Dell Computer Corp. 254
Four Process Strategies 256
Process Focus 256
Repetitive Focus 258
Product Focus 259
Mass Customization Focus 260
Comparison of Process Choices 262
Process Analysis and Design 265
Flow Diagrams 265
Time-Function Mapping 266
Value-Stream Mapping 266
Process Charts 266
Service Blueprinting 267

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CONTENTS
Service Process Design 268
Customer Interaction and Process Design 269
More Opportunities to Improve Service
Processes 270
Selection of Equipment and Technology 271
Production Technology 271
Machine Technology 271
Automatic Identification System (AIS) 272
Process Control 272
Vision Systems 273
Robots 273
Automated Storage and Retrieval System
(ASRS) 273
Automated Guided Vehicle (AGV) 274
Flexible Manufacturing System (FMS) 274
Computer-Integrated Manufacturing (CIM) 274
Technology in Services 275
Process Redesign 276
Ethics and Environmentally Friendly Processes 277
Summary 279 Key Terms 279 Solved Problem 279
Internet and Student CD-ROM Exercises 279
Discussion Questions 280 Ethical Dilemma 280
Active Model Exercise 280 Problems 281 Case
Study: Rochester Manufacturing Corporation 282
Video Case Study: Process Analysis at Arnold Palmer
Hospital 282 Video Case Study: Process Strategy at
Wheeled Coach 283 Additional Case Studies 283
Bibliography 284 Internet Resources 284

Supplement 7: Capacity Planning 285


Capacity 286
Design and Effective Capacity 287
Capacity and Strategy 288
Capacity Considerations 288
Managing Demand 289
Capacity Planning 290
Break-Even Analysis 291
Single-Product Case 293
Multiproduct Case 293
Applying Decision Trees to Capacity Decisions 295
Applying Investment Analysis to Strategy-Driven
Investments 296
Investment, Variable Cost, and Cash Flow 296
Net Present Value 296
Summary 299 Key Terms 300 Using Software for
Break-Even Analysis 300 Solved Problems 301
Internet and Student CD-ROM Exercises 302
Discussion Questions 302 Problems 302 Internet
Homework Problems 306 Video Case Study:
Capacity Planning at Arnold Palmer Hospital 307
Additional Case Studies 307 Bibliography 308
Internet Resources 308

8. Location Strategies 309


Global Company Profile: Federal Express 310
The Strategic Importance of Location 312
Factors that Affect Location Decisions 313
Labor Productivity 314
Exchange Rates and Currency Risk 314
Costs 315
Attitudes 316
Proximity to Markets 316
Proximity to Suppliers 316
Proximity to Competitors (Clustering) 316
Methods of Evaluating Location Alternatives 317
The Factor-Rating Method 317
Locational Break-Even Analysis 318
Center-of-Gravity Method 319
Transportation Model 321
Service Location Strategy 322
How Hotel Chains Select Sites 322
The Telemarketing Industry 324
Geographic Information Systems 324
Summary 325 Key Terms 326 Using Software to
Solve Location Problems 326 Solved Problems
327 Internet and Student CD-ROM Exercises 328
Discussion Questions 328 Ethical Dilemma 329
Active Model Exercise 329 Problems 330
Internet Homework Problems 336 Case Study:
Southern Recreational Vehicle Company 336
Video Case Study: Where to Place Hard Rocks Next
Cafe 336 Additional Case Studies 337
Bibliography 338 Internet Resources 338

9. Layout Strategy 339


Global Company Profile: McDonalds 340
The Strategic Importance of Layout Decisions 342
Types of Layout 342
Office Layout 343
Retail Layout 344
Servicescapes 345
Warehousing and Storage Layouts 346
Cross-Docking 346
Random Stocking 347
Customizing 347
Fixed-Position Layout 348
Process-Oriented Layout 349
Computer Software for Process-Oriented
Layouts 353
Work Cells 354
Requirements of Work Cells 354
Staffing and Balancing Work Cells 356
The Focused Work Center and the Focused
Factory 357

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CONTENTS
Repetitive and Product-Oriented Layout 358
Assembly-Line Balancing 359
Summary 363 Key Terms 363 Using Software to
Solve Layout Problems 364 Solved Problems 365
Internet and Student CD-ROM Exercises 368
Discussion Questions 368 Ethical Dilemma 368
Active Model Exercise 368 Problems 369 Internet
Homework Problems 376 Case Study: State
Automobile License Renewals 376 Video Case
Study: Laying Out Arnold Palmer Hospitals New
Facility 377 Video Case Study: Facility Layout at
Wheeled Coach 378 Additional Case Studies 379
Bibliography 379 Internet Resources 379

10. Human Resources and Job Design 381


Global Company Profile: Southwest Airlines 382
Human Resource Strategy for Competitive
Advantage 384
Constraints on Human Resource Strategy 384
Labor Planning 385
Employment-Stability Policies 385
Work Schedules 385
Job Classifications and Work Rules 386
Job Design 386
Labor Specialization 386
Job Expansion 387
Psychological Components of Job Design 388
Self-Directed Teams 389
Motivation and Incentive Systems 390
Ergonomics and Work Methods 391
The Visual Workplace 396
Ethics and The Work Environment 398
Labor Standards 398
Summary 398 Key Terms 399 Solved Problem
399 Internet and Student CD-ROM Exercises 401
Discussion Questions 401 Ethical Dilemma 401
Problems 402 Internet Homework Problems 402
Case Study: Karstadt versus J.C. Penney 403 Case
Study: The Fleet That Wanders 403 Video Case
Study: Hard Rocks Human Resource Strategy 404
Additional Case Studies 405 Bibliography 405
Internet Resources 405

Supplement 10: Work Measurement 407


Labor Standards and Work Measurement 408
Historical Experience 409
Time Studies 409
Predetermined Time Standards 413
Work Sampling 415
Summary 418 Key Terms 418 Solved Problems
418 Internet and Student CD-ROM Exercises 420
Discussion Questions 420 Active Model Exercise
421 Problems 421 Internet Homework Problems

XV

425 Case Study: Jackson Manufacturing Company


426 Additional Case Studies 426 Bibliography
426 Internet Resources 427

PAR T THREE
Managing Operations 4 2 9
11. Supply-Chain Management 429
Global Company Profile: Volkswagen 430
The Strategic Importance of the Supply Chain 432
Global Supply-Chain Issues 433
Supply-Chain Economics 434
Make-or-Buy Decisions 434
Outsourcing 435
Ethics in the Supply Chain 437
Supply-Chain Strategies 438
Many Suppliers 438
Few Suppliers 438
Vertical Integration 438
Keiretsu Networks 440
Virtual Companies 440
Managing the Supply Chain 441
Issues in an Integrated Supply Chain 441
Opportunities in an Integrated Supply Chain 443
Internet Purchasing 445
Vendor Selection 446
Vendor Evaluation 446
Vendor Development 447
Negotiations 447
Logistics Management 448
Distribution Systems 448
Cost of Shipping Alternatives 450
Logistics, Security, and JIT 450
Benchmarking Supply-Chain Management 450
Summary 451 Key Terms 451 Internet and
Student CD-ROM Exercises 451 Discussion
Questions 452 Ethical Dilemma 452 Problems
452 Internet Homework Problem 453 Case
Study: Dells Supply Chain and the Impact of
E-Commerce 453 Video Case Study: Arnold
Palmer Hospitals Supply Chain 454 Video Case
Study: Supply-Chain Management at Regal Marine
455 Additional Case Studies 456 Bibliography
456 Internet Resources 457

Supplement 11: E-Commerce and Operations


Management 459
The Internet 460
Electronic Commerce 461
E-Commerce Definitions 462

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CONTENTS
Economics of E-Commerce 462
Product Design 463
Collaborative Project Management 464
E-Procurement 464
Online Catalogs 464
RFQs and Bid Packaging 465
Internet Outsourcing 465
Online Auctions 466
Inventory Tracking 466
Inventory Reduction 467
Warehousing for E-Commerce 467
Just-in-Time Delivery for E-Commerce 468
Scheduling and Logistics Improvements 468
Coordinated Pickup and Delivery 468
Logistics Cost Reduction 469
Summary 469 Key Terms 469 Internet and Student
CD-ROM Exercises 469 Discussion Questions 469
Problems 469 Case Study: E-Commerce at
Amazon.com 470 Additional Case Studies 471
Bibliography 471 Internet Resources 471

12. Inventory Management 473


Global Company Profile: Amazon.com 474
Functions of Inventory 476
Types of Inventory 476
Inventory Management 477
ABC Analysis 477
Record Accuracy 478
Cycle Counting 479
Control of Service Inventories 480
Inventory Models 480
Independent versus Dependent Demand 480
Holding, Ordering, and Setup Costs 481
Inventory Models for Independent Demand 481
The Basic Economic Order Quantity (EOQ)
Model 482
Minimizing Costs 482
Reorder Points 486
Production Order Quantity Model 487
Quantity Discount Models 490
Probabilistic Models and Safety Stock 492
Other Probabilistic Models 495
Fixed-Period (P) Systems 497
Summary 498 Key Terms 499 Using Software to
Solve Inventory Problems 500 Solved Problems
501 Internet and Student CD-ROM Exercises 503
Discussion Questions 504 Ethical Dilemma 504
Active Model Exercise 504 Problems 505
Internet Homework Problems 511 Case Study:
Zhou Bicycle Company 511 Case Study:
Sturdivant Sound Systems 511 Video Case Study:

Inventory Control at Wheeled Coach 512


Additional Case Studies 512 Bibliography 512
Internet Resources 513

13. Aggregate Planning 515


Global Company Profile: Anheuser-Busch 516
The Planning Process 518
The Nature of Aggregate Planning 518
Aggregate Planning Strategies 520
Capacity Options 520
Demand Options 521
Mixing Options to Develop a Plan 523
Methods for Aggregate Planning 524
Graphical and Charting Methods 524
Mathematical Approaches to Planning 527
Comparison of Aggregate Planning Methods 530
Aggregate Planning in Services 530
Restaurants 531
Hospitals 531
National Chains of Small Service Firms 531
Miscellaneous Services 531
Airline Industry 532
Yield Management 532
Summary 535 Key Terms 535 Using Software for
Aggregate Planning 535 Solved Problems 536
Internet and Student CD-ROM Exercises 538
Discussion Questions 538 Ethical Dilemma 538
Active Model Exercise 539 Problems 540
Internet Homework Problems 545 Case Study:
Southwestern University: (G) 545 Case Study:
Andrew-Carter, Inc. 546 Additional Case Studies
547 Bibliography 547 Internet Resources 547

14. Material Requirements Planning (MRP)


and ERP 549
Global Company Profile: Collins Industries 550
Dependent Inventory Model Requirements 552
Master Production Schedule 552
Bills of Material 555
Accurate Inventory Records 556
Purchase Orders Outstanding 556
Lead Times for Each Component 557
MRP Structure 558
MRP Management 561
MRP Dynamics 561
MRP and JIT 562
Lot-Sizing Techniques 563
Extensions of MRP 566
Closed-Loop MRP 567
Capacity Planning 567
Material Requirements Planning II (MRP II) 568

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CONTENTS
MRP in Services 568
Distribution Resource Planning (DRP) 570
Enterprise Resource Planning (ERP) 570
Advantages and Disadvantages of ERP Systems 573
ERP in the Service Sector 573
Summary 574 Key Terms 574 Using Software to
Solve MRP Problems 574 Solved Problems 575
Internet and Student CD-ROM Exercises 578
Discussion Questions 578 Ethical Dilemma 578
Active Model Exercise 578 Problems 579
Internet Homework Problems 584 Case Study:
Ikons Attempt at ERP 584 Video Case Study:
MRP at Wheeled Coach 585 Additional Case
Studies 585 Bibliography 586 Internet
Resources 586

15. Short-Term Scheduling 587


Global Company Profile: Delta Airlines 588
The Strategic Importance of Short-Term
Scheduling 590
Scheduling Issues 590
Forward and Backward Scheduling 591
Scheduling Criteria 593
Scheduling Process-Focused Facilities 593
Loading Jobs 594
Input-Output Control 594
Gantt Charts 595
Assignment Method 597
Sequencing Jobs 599
Priority Rules for Dispatching Jobs 599
Critical Ratio 602
Sequencing N Jobs on Two Machines: Johnsons
Rule 603
Limitations of Rule-Based Dispatching Systems 604
Finite Capacity Scheduling (FCS) 605
Theory of Constraints 606
Bottlenecks 606
Drum, Buffer, Rope 607
Scheduling Repetitive Facilities 608
Scheduling Services 608
Scheduling Service Employees with Cyclical
Scheduling 609
Summary 611 Key Terms 611 Using Software for
Short-Term Scheduling 611 Solved Problems 613
Internet and Student CD-ROM Exercises 616
Discussion Questions 616 Ethical Dilemma 617
Active Model Exercise 617 Problems 618
Internet Homework Problems 622 Case Study:
Payroll Planning, Inc. 622 Video Case Study:
Scheduling at Hard Rock Cafe 623 Additional
Case Studies 624 Bibliography 624 Internet
Resources 624

XVII

16. Just-in-Time and Lean Production


Systems 625
Global Company Profile: Green Gear Cycling 626
Just-in-Time and Lean Production 628
Suppliers 629
Goals of JIT Partnerships 630
Concerns of Suppliers 632
JIT Layout 632
Distance Reduction 632
Increased Flexibility 632
Impact on Employees 632
Reduced Space and Inventory 633
Inventory 633
Reduce Variability 633
Reduce Inventory 634
Reduce Lot Sizes 634
Reduce Setup Costs 636
Scheduling 637
Level Schedules 637
Kanban 637
Quality 641
Employee Empowerment 641
Lean Production 641
Building a Lean Organization 642
5 Ss 643
Seven Wastes 644
JIT in Services 644
Summary 645 Key Terms 645 Solved Problem
646 Internet and Student CD-ROM Exercises 646
Discussion Questions 646 Ethical Dilemma 647
Problems 647 Internet Homework Problems 648
Case Study: Mutual Insurance Company of Iowa
649 Case Study: JIT After the Fire 650 Video
Case Study: JIT at Arnold Palmer Hospital 650
Additional Case Studies 651 Bibliography 651
Internet Resources 652

17. Maintenance and Reliability 653


Global Company Profile: Orlando Utilities
Commission 654
The Strategic Importance of Maintenance and
Reliability 656
Reliability 657
Improving Individual Components 657
Providing Redundancy 659
Maintenance 660
Implementing Preventive Maintenance 660
Increasing Repair Capabilities 663
Total Productive Maintenance 664
Techniques for Establishing Maintenance
Policies 664

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CONTENTS
Summary 664 Key Terms 665 Using Software to
Solve Reliability Problems 665 Solved Problems
665 Internet and Student CD-ROM Exercises 666
Discussion Questions 666 Ethical Dilemma 666
Problems 666 Internet Homework Problems 669
Case Study: Worldwide Chemical Company 669
Additional Case Studies 670 Bibliography 670
Internet Resources 671

PAR T FOUR
Quantitative Modules 6 7 3
A. Decision-Making Tools 673
The Decision Process in Operations 674
Fundamentals of Decision Making 675
Decision Tables 675
Types of Decision-Making Environments 676
Decision Making Under Uncertainty 676
Decision Making Under Risk 677
Decision Making Under Certainty 677
Expected Value of Perfect Information (EVPI) 678
Decision Trees 678
A More Complex Decision Tree 680
Using Decision Trees in Ethical Decision Making 681
Summary 682 Key Terms 682 Using Software for
Decision Models 683 Solved Problems 683
Internet and Student CD-ROM Exercises 684
Discussion Questions 684 Problems 685 Internet
Homework Problems 689 Case Study: Tom
Tuckers Liver Transplant 689 Case Study: Ski
Right Corp. 689 Additional Case Studies 690
Bibliography 690

B. Linear Programming 691


Requirements of a Linear Programming Problem 693
Formulating Linear Programming Problems 693
Shader Electronics Example 693
Graphical Solution to a Linear Programming
Problem 694
Graphical Representation of Constraints 694
Iso-Profit Line Solution Method 696
Corner-Point Solution Method 698
Sensitivity Analysis 699
Sensitivity Report 699
Changes in the Resources or Right-Hand-Side
Values 700
Changes in the Objective Function Coefficient 701
Solving Minimization Problems 701
Linear Programming Applications 703
Production-Mix Example 703
Diet Problem Example 704

Production Scheduling Example 705


Labor Scheduling Example 706
The Simplex Method of LP 708
Summary 708 Key Terms 708 Using Software to
Solve LP Problems 708 Solved Problems 710
Internet and Student CD-ROM Exercises 712
Discussion Questions 712 Active Model Exercise
713 Problems 713 Internet Homework Problems
720 Case Study: Golding Landscaping and Plants,
Inc. 720 Additional Case Studies 720
Bibliography 721

C. Transportation Models 723


Transportation Modeling 724
Developing an Initial Solution 725
The Northwest-Corner Rule 726
The Intuitive Lowest-Cost Method 726
The Stepping-Stone Method 727
Special Issues in Modeling 730
Demand Not Equal to Supply 730
Degeneracy 731
Summary 732 Key Terms 732 Using Software
to Solve Transportation Problems 732 Solved
Problems 734 Internet and Student CD-ROM
Exercises 735 Discussion Questions 736
Problems 736 Internet Homework Problems 740
Case Study: Custom Vans, Inc. 740 Additional
Case Studies 742 Bibliography 742

D. Waiting-Line Models 743


Characteristics of a Waiting-Line System 745
Arrival Characteristics 745
Waiting-Line Characteristics 746
Service Characteristics 747
Measuring the Queues Performance 747
Queuing Costs 749
The Variety of Queuing Models 750
Model A: Single-Channel Queuing Model with
Poisson Arrivals and Exponential Service Times 750
Model B: Multiple-Channel Queuing Model 753
Model C: Constant-Service-Time Model 756
Model D: Limited-Population Model 756
Other Queuing Approaches 758
Summary 759 Key Terms 759 Using Software to
Solve Queuing Problems 759 Solved Problems
760 Internet and Student CD-ROM Exercises 762
Discussion Questions 762 Active Model
Exercise 763 Problems 763 Internet Homework
Problems 767 Case Study: New England Foundry
767 Case Study: The Winter Park Hotel 768
Additional Case Study 768 Bibliography 769
Internet Resources 769

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E. Learning Curves 771


Learning Curves in Services and Manufacturing 773
Applying the Learning Curve 774
Arithmetic Approach 774
Logarithmic Approach 774
Learning-Curve Coefficient Approach 775
Strategic Implications of Learning Curves 776
Limitations of Learning Curves 777
Summary 777 Key Term 778 Using Software for
Learning Curves 778 Solved Problems 778
Internet and Student CD-ROM Exercises 779
Discussion Questions 779 Active Model Exercise
780 Problems 780 Internet Homework Problems
783 Case Study: SMTs Negotiation with IBM 783
Bibliography 784 Internet Resources 784

F. Simulation 785
What is Simulation? 786
Advantages and Disadvantages of Simulation 787
Monte Carlo Simulation 787
Simulation of a Queuing Problem 791
Simulation and Inventory Analysis 792
Summary 795 Key Terms 795 Using Software in
Simulation 795 Solved Problems 797 Internet
and Student CD-ROM Exercises 798 Discussion
Questions 798 Problems 799 Internet Homework
Problems 805 Case Study: Alabama Airlines
Call Center 806 Additional Case Studies 806
Bibliography 806

Appendices A1
Indices I1
Photo Credits C1
CD-ROM Tutorials
1. Statistical Tools for Managers T1-1
Discrete Probability Distributions T1-2
Expected Value of a Discrete Probability
Distribution T1-3
Variance of a Discrete Probability
Distribution T1-3
Continuous Probability Distributions T1-4
The Normal Distribution T1-4
Summary T1-7 Key Terms T1-7 Discussion
Questions T1-7 Problems T1-7 Bibliography T1-8

2. Acceptance Sampling T2-1


Sampling Plans T2-2
Single Sampling T2-2

XIX

Double Sampling T2-2


Sequential Sampling T2-2
Operating Characteristic (OC) Curves T2-2
Producers and Consumers Risk T2-3
Average Outgoing Quality T2-5
Summary T2-6 Key Terms T2-6 Solved Problem
T2-7 Discussion Questions T2-7 Problems T2-7

3. The Simplex Method of Linear


Programming T3-1
Converting the Constraints to Equations T3-2
Setting Up the First Simplex Tableau T3-2
Simplex Solution Procedures T3-4
Summary of Simplex Steps for Maximization
Problems T3-6
Artificial and Surplus Variables T3-7
Solving Minimization Problems T3-7
Summary T3-8 Key Terms T3-8 Solved
Problem T3-8 Discussion Questions T3-8
Problems T3-9

4. The MODI and VAM Methods of Solving


Transportation Problems T4-1
MODI Method T4-2
How to use the MODI Method T4-2
Solving the Arizona Plumbing Problem with
MODI T4-2
Vogels Approximation Method: Another Way to Find
an Initial Solution T4-4
Discussion Questions T4-8 Problems T4-8

5. Vehicle Routing and Scheduling T5-1


Introduction T5-2
Service Delivery Example: Meals-for-ME T5-2
Objectives of Routing and Scheduling Problems T5-2
Characteristics of Routing and Scheduling
Problems T5-3
Classifying Routing and Scheduling Problems T5-3
Solving Routing and Scheduling Problems T5-4
Routing Service Vehicles T5-5
The Traveling Salesman Problem T5-5
Multiple Traveling Salesman Problem T5-8
The Vehicle Routing Problem T5-9
Cluster First, Route Second Approach T5-10
Scheduling Service Vehicles T5-11
The Concurrent Scheduler Approach T5-13
Other Routing and Scheduling Problems T5-13
Summary T5-14 Key Terms T5-15 Discussion
Questions T5-15 Problems T5-15 Case Study:
Routing and Scheduling of Phlebotomists T5-17
Bibliography T5-17

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Preface
Welcome to your Operations Management (OM) course. In this book, we present a state-of-the-art
view of the activities of the operations function. Operations is an exciting area of management that
has a profound effect on the productivity of both manufacturing and services. Indeed, few activities
have as much impact on the quality of our lives. The goal of this text is to present a broad introduction to the field of operations in a realistic, practical manner. Operations management includes a
blend of topics from accounting, industrial engineering, management, management science, and
statistics. Even if you are not planning on a career in the operations area, you will likely be interfacing with people who are. Therefore, having a solid understanding of the role of operations in an
organization is of substantial benefit to you. This book will also help you understand how OM
affects society and your life. Certainly, you will better understand what goes on behind the scenes
when you buy a meal at Hard Rock Cafe, place an order through Amazon.com, buy a customized
Dell Computer over the Internet, or enter Arnold Palmer Hospital for medical care.
Although many of our readers are not OM majors, we know that marketing, finance, accounting, and MIS students will find the material both interesting and useful because we develop a fundamental working knowledge of the firm. Over 400,000 readers of our earlier editions seem to have
endorsed this premise.

THREE VERSIONS ARE AVAILABLE


This text is available in the three versions: Operations Management, Eighth edition, which is hardcover, Principles of Operations Management, Sixth Edition, a paperback, and Operations
Management, Flexible Edition, a package of a paperback text and a unique Student Lecture Guide.
All three books include the identical core chapters 117. However, Operations Management, Eighth
Edition and the Flexible Edition also include six quantitative modules in Part IV.

xxi

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O P E R A T I O N S M A N A G E M E N T,
EIGHTH EDITION
ISBN: 0-13-185755-X

PRINCIPLES OF OPERATIONS
M A N A G E M E N T, S I X T H E D I T I O N
ISBN: 0-13-186512-9

PA R T I I N T R O D U C T I O N

PA R T I I N T R O D U C T I O N

1. Operations and Productivity


2. Operations Strategy in a Global
Environment
3. Project Management
4. Forecasting

1. Operations and Productivity


2. Operations Strategy in a Global
Environment
3. Project Management
4. Forecasting

PA R T I I D E S I G N I N G O P E R A T I O N S
5.
6.
S6.
7.
S7.
8.
9.
10.
S10.

Design of Goods and Services


Managing Quality
Statistical Process Control
Process Strategy
Capacity Planning
Location Strategies
Layout Strategy
Human Resources and Job Design
Work Measurement

PA R T I I D E S I G N I N G O P E R A T I O N S
5.
6.
S6.
7.
S7.
8.
9.
10.
S10.

PA R T I I I M A N A G I N G O P E R A T I O N S
11.
S11.
12.
13.
14.

Supply-Chain Management
E-Commerce and Operations Management
Inventory Management
Aggregate Planning
Material Requirements Planning (MRP)
and ERP
15. Short-Term Scheduling
16. Just-in-Time and Lean Production
Systems
17. Maintenance and Reliability

Design of Goods and Services


Managing Quality
Statistical Process Control
Process Strategy
Capacity Planning
Location Strategies
Layout Strategy
Human Resources and Job Design
Work Measurement

PA R T I I I M A N A G I N G O P E R A T I O N S
11.
S11.
12.
13.
14.

Supply-Chain Management
E-Commerce and Operations Management
Inventory Management
Aggregate Planning
Material Requirements Planning (MRP)
and ERP
15. Short-Term Scheduling
16. Just-in-Time and Lean Production
Systems
17. Maintenance and Reliability

PA R T I V Q U A N T I T A T I V E M O D U L E S
A.
B.
C.
D.
E.
F.

Decision-Making Tools
Linear Programming
Transportation Models
Waiting-Line Models
Learning Curves
Simulation

FOCUS OF THE NEW EDITION


The new edition continues to place a special focus on important aspects of Operations Management
including:

Strategy and Ethicsas our unifying themes in every chapter.


Global Operationsand how this impacts product and process design, location, human
resources, and other issues.
Service Operationsrecognizing the dominant proportion of jobs and operations decisions in services.
Software for OMour free Excel OM add-in, POM for Windows, and Lekin Flexible Job
Shop Scheduling System software are included on the student CD-ROM packaged with the
text. Microsoft Project 2003 is also available on a separate free value pack CD upon request.
Modern topical coveragewith coverage of Supply Chains, Six Sigma, the Internet,
Microsoft Project, E-Commerce, ERP, yield management, and mass customization.
Real world examples of operations managementto maximize student interest and
excitement.
Active Model Exercisesto use interactive Excel spreadsheets of examples in the book
for what-if analysis.

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XXIII

NEW TO THIS EDITION


Service Integration with the Arnold Palmer Hospital and Seven New Video Case
Studies In this edition, we illustrate how operations management is put into practice at Arnold
Palmer Hospital, one of the top hospitals in the world. Arnold Palmer Hospital invited us to shoot
behind the scenes operations functions of their organization, giving students an inside look at
such issues as project management, quality, process analysis, capacity planning, facility layout, supply chain management, and just-in-time inventory. This exciting and renowned facility, located in
Orlando, Florida, emphasizing operations in a service environment, is featured throughout the text
in examples, photos, video cases, and a Global Company Profile in Chapter 6. A VHS tape or DVD
is available to adopters which includes seven 810 minute segments of each topic. The student
CD-ROM also contains a 2-minute version of each of these videos. The videos have just received
major awards in the annual Telly Award Competitions. Out of over 10,000 entries, the Quality video
was chosen as Winner and the Process Analysis video as Finalist.
Our previous edition focused on the Hard Rock Cafe, one of the most widely recognized company names in the world. The seven video case studies we created for Hard Rock also appear in this
edition, making the combination of Hard Rock and Arnold Palmer Hospital the perfect way to integrate service applications into the OM course.

VIDEO CASE STUDY


Arnold Palmer Hospitals
Supply Chain
Arnold Palmer Hospital, one of the nations top hospitals dedicated to serving women and children, is a large business with
over 2,000 employees working in a 431-bed facility totaling
676,000 square feet in Orlando, Florida. Like many other hospitals, and other companies, Arnold Palmer Hospital had been a
long-time member of a large buying group, one servicing 900
members. But the group did have a few limitations. For example,
it might change suppliers for a particular product every year
(based on a new lower-cost bidder) or stock only a product that
was not familiar to the physicians at Arnold Palmer Hospital. The
buying group was also not able to negotiate contracts with local
manufacturers to secure the best pricing.
So in 2003, Arnold Palmer Hospital, together with seven
other partner hospitals in central Florida, formed its own much
smaller, but still powerful (with $200 million in annual purchases) Healthcare Purchasing Alliance (HPA) corporation. The
new alliance saved the HPA members $7 million in its first year
from two main changes. First, it was structured and staffed to
assure that the bulk of the savings associated with its contracting
efforts went to its eight members. Second, it struck even better
deals with vendors by guaranteeing a committed volume and
signing not 1-year deals but 35 year contracts. Even with a
new internal cost of $400,000 to run HPA, the savings and ability to contract for what our member hospitals really want makes
the deal a winner, says George DeLong, head of HPA.
Effective supply-chain management in manufacturing
often focuses on development of new product innovations and
efficiency through buyervendor collaboration. However, the
approach in a service industry has a slightly different emphasis.
At Arnold Palmer Hospital, supply-chain opportunities often
manifest themselves through the Medical Economic Outcomes
Committee. This committee (and its subcommittees) consists of
users (including the medical and nursing staff) who evaluate

purchase options with a goal of better medicine while achieving economic targets. For instance, the heart pacemaker negotiation by the
cardiology subcommittee allowed for the standardization to two manufacturers, with annual savings of $2 million for just this one product.
Arnold Palmer Hospital is also able to develop custom products
that require collaboration down to the third tier of the supply chain.
This is the case with custom packs that are used in the operating room.
The custom packs are delivered by a distributor, McKesson General
Medical, but assembled by a pack company that uses materials the
hospital wanted purchased from specific manufacturers. The HPA
allows Arnold Palmer Hospital to be creative in this way. With major
cost savings, standardization, blanket purchase orders, long-term contracts, and more control of product development, the benefits to the
hospital are substantial.

Discussion Questions*
1. How does this supply chain differ from that in a manufacturing
firm?
2. What are the constraints on making decisions based on economics
alone at Arnold Palmer Hospital?
3. What role do doctors and nurses play in supply-chain decisions in a
hospital? How is this participation handled at Arnold Palmer
Hospital?
4. Doctor Smith just returned from the Annual Physician's Orthopedic
Conference, where she saw a new hip joint replacement demonstrated. She decides she wants to start using the replacement joint at
Arnold Palmer Hospital. What process will Dr. Smith have to go
through at the hospital to introduce this new product into the supply
chain for future surgical use?
*You may wish to view this case on your CD-ROM before answering the
questions.
Source: Written by Professors Barry Render (Rollins College), Jay Heizer
(Texas Lutheran University), and Beverly Amer (Northern Arizona State
University).

Homework Problem Material This text has long been known for its broad spectrum of material that can be assigned as homework. We offer Active Model Exercises, Discussion Questions,
Homework Problems, Internet Homework Problems, Case Studies, Internet Case Studies, and Video
Case Studies. With this edition, we add the following five new features:
1. Ethics in Operations Management. Ethical decision-making is more important than ever in our
exciting and dynamic field of study. Operations managers, like other top executives, face a plethora
of difficult choices that stretch their ethical fibers every day. Each chapter features a new Ethical

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P R E FAC E
Dilemma and most chapters have more integrated discussions of ethics as well. These exercises
make an ideal way to generate thought and discussion of this issue.

ETHICAL DILEMMA
John Edwards, president of Edwards Toy Company, Inc. in South
Carolina, has just reviewed the design of a new pull-toy locomotive
for 1- to 3-year-olds. Johns design and marketing staff are very
enthusiastic about the market for the product and the potential of
follow-on circus train cars. The sales manager is looking forward to a
very good reception at the annual toy show in Dallas next month.
John, too, is delighted, as he is faced with a layoff if orders do not
improve.
Johns production people have worked out the manufacturing
issues and produced a successful pilot run. However, the quality testing staff suggests that under certain conditions, a hook to attach cars to
the locomotive and the crank for the bell can be broken off. This is an
issue because children can choke on small parts such as these. In the
quality test, 1- to 3-year-olds were unable to break off these parts;

there were no failures. But when the test simulated the force of an
adult tossing the locomotive into a toy box or a 5-year-old throwing it
on the floor, there were failures. The estimate is that one of the two
parts can be broken off four times out of 100,000 throws. Neither the
design nor the material people know how to make the toy safer and
still perform as designed. The failure rate is low and certainly acceptable for this type of toy, but not at the six-sigma level that Johns firm
strives for. And, of course, someone, someday may sue. A child choking on the broken part is a serious matter. Also, John was recently
reminded in a discussion with legal counsel that U.S. case law suggests that new products may not be produced if there is actual or foreseeable knowledge of a problem with the product.
The design of successful, ethically produced, new products, as
suggested in this chapter, is a complex task. What should John do?

2. More Challenging Homework Problems Added. One of the trademarks of our text has always
been the large selection of examples, solved problems, Internet and text homework problems. Our
763 homework problems provide the largest, clearest, and now most diverse problem sets of any
OM text. With this edition, we increase from a 1, 2, 3 dot level of difficulty for each of these problems, to a 1, 2, 3, 4 system having added challenging 4-dot problems to each chapter. These new
homework problems are intended to stretch the thinking of students.
3. Excel Spreadsheets. OM is an ideal field in which spreadsheet analysis can help determine the
best solution to a problem. Excel OM, our Excel add-in, is found on the student CD-ROM, and may
be used to tackle many of the problems in this text. But many professors prefer to let students build
their own Excel models. New to this edition are examples of how to do this. An inventory example
from Chapter 12 is illustrated below:
PROGRAM 12.1
Using Excel for a
Production Model, with
Data from Example 8

COMPUTATIONS
VALUE

CELL

EXCEL FORMULA

Optimal production quantity, Q*


Maximum Inventory
Average Inventory
Number of Setups
Time (days) between production runs
Holding cost
Setup cost
Unit costs
Total cost, Tc

B12
B13
B14
B15
B16
B18
B19
B21
B22

=SQRT(2*B3*B4/B5)*SQRT(B6/(B6-B7))
=B12*(B6-B7)/B6
=B13/2
=B3/B12
=B8/B15
=B14*B5
=B15*B4
=B9*B3
=B18+B19+B21

Other Excel model building exercises are found throughout the text.

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XXV

4. OneKey With PH Grade Assist. OneKey provides an easy-to-use site for all digital resources
available with our text, including our powerful new homework/exam feature called PH Grade
Assist. With PH Grade Assist, many of the homework problems in this text and problems/questions
from our Test Item File may now be assigned online to students. With dozens of options for randomizing the sequence, timing, and scoring, PH Grade Assist makes giving and grading homework
and exams an easy task. Scores of these problems have also been converted by the authors to an
algorithmic form, meaning that there are numerous (sometimes 100s) of versions of each problem, with the data different for each student. Solutions to each problem and its data set are provided,
if instructors wish, to the students immediately after they complete the assignment. Grades can be
recorded by the software directly into the instructors grade book.
5. Decision-Making Exercises. Four new classroom exercises and their data files are found on the
Instructors CD. The first is an MSProject exercise built as an expansion of the video case study
Managing Hard Rocks Rockfest (Chapter 3). The second is an Excel simulation of a Project
Management game called Rockn Bands. The third is a Dice Game for Statistical Process Control
(Supplement 6). The fourth is an inventory simulation, also Excel-based, called He Shoots, He
Scores (Chapters 12 and 14).
POM for Windows Included Free on All Student CDs POM for Windows, long the leading
OM decision support software for educational use, is now available free on every student CD-ROM.
The 24 OM programs in POM for Windows are shown below. All homework problems in the text
that can be solved with this program are labeled with a . With this addition, the book now offers
two choices of software for problem solving: POM for Windows and Excel OM.

Instruction notes are


here to help explain
what to do next.

PROGRAM IV.2 POM for Windows Module List

CHAPTER-BY-CHAPTER CHANGES
To highlight the extent of the revision of our previous edition, here are a few of the changes on a
chapter-by-chapter basis. Five of the chapters received major rewrites: Managing Quality (Chapter
6), Process Strategy (Chapter 7), Supply Chain Management (Chapter 11), Inventory Management
(Chapter 12), and Short-Term Scheduling (Chapter 15). A new Ethical Dilemma exercise is in every
chapter.
Chapter 1: Operations and Productivity. New material on the growth of services, productivity, and a section called Ethics and Social Responsibility are added.
Chapter 2: Operations Strategy in a Global Environment. A new Global Company Profile
highlighting the Boeing 787 opens the chapter and a new OM in Action box discusses strategy at
Belgiums food retailer Franz Colruyt.

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Chapter 3: Project Management. The chapter now includes a section on Ethical Issues in
Project management, a new OM in Action box on the Acela Amtrak project, and a new video case
study called Project Management at Arnold Palmer Hospital. We have also added a project crashing exercise using MSProject and the Hard Rock Rockfest case, and a project simulation game
called Rock n Bands. Both of these appear on the Instructors CD.
Chapter 4: Forecasting. We have added a section on how to create your own Excel Forecasting
models and have expanded the Hard Rock case study to include a data set for quantitative forecasting.
Chapter 5: Design of Goods and Services. Our treatment now includes a major section on
Ethics and Environmentally Friendly Designs, new OM in Action boxes on Chasing Fads in the
Cell Phone Industry and Toyota is Revving Up with PLM, as well as text material on Product
Lifecycle Management. There are also four new homework problems.
Chapter 6: Managing Quality. This chapter opens with a new Global Company Profile featuring Arnold Palmer Hospital and ends with a video case study of quality at that organization. There
is a new section of the chapter called Leaders in Quality, coverage of Ethics and Quality
Management, and a much expanded treatment of Six Sigma. We have also broadened our coverage
of TQM in services with new examples at UPS and Marriott.
Supplement to Chapter 6: Statistical Process Control. We have added a new section on
Creating Excel Spreadsheets to determine control limits, included 3 new homework problems, and
a Dice Game for Statistical Control.
Chapter 7: Process Strategy. This chapter contains several new topics, including the concept of
Build-to-Order, treatment of Focused Processes, more coverage of Value Stream Mapping, Ethics
and the Environmentally Friendly Processes, and new technology for remote control surgery. There
is also a new OM in Action box on process change in Japanese barber shops and a new video case
study called Process Analysis at Arnold Palmer Hospital, which requires the creation of three
process flow charts by students.
Supplement to Chapter 7: Capacity Planning. Our new video case study, Capacity
Planning at Arnold Palmer Hospital, requires the use of regression analysis to forecast when new
hospital floors should be opened. There is also a new 4-dot (challenging) homework problem added.
Chapter 8: Location Strategies. New topics include Location and Innovation, Ethical Issues in
location decisions, a new Table 8.3 on Clustering, a new OM in Action box dealing with Starbucks
entry into Japan, a new 4-dot homework problem, and a revision of the Hard Rock case study to
include data for quantitative analysis.
Chapter 9: Layout Strategy. We have extended coverage of Work Cells, included an example of
staffing and balancing with takt time, and resequenced treatment of seven types of layout.
Laying Out Arnold Palmers New Facility is a new video case study involving a quantitative comparison of two hospital layouts.
Chapter 10: Human Resources and Job Design. This chapter includes new sections on the
Visual Workplace and Ethics and the Work Environment.
Supplement to Chapter 10: Work Measurement. We have added a 4 dot (challenging)
homework problem to the 29 other problems.
Chapter 11: Supply Chain Management. This chapter sees major revisions and additions,
including a new Figure 11.1 illustrating the supply chain for beer, extensive new coverage of
Outsourcing including the OM in Action box Outsourcing Not to India, but to Remote Corners of
the U.S., a section in Ethics in the Supply Chain that includes the Principles of Conduct by the
Institute for Supply Management, new material on vertical integration, a new OM in Action box on
Penneys supply chain to Taiwan for shirts, expanded coverage of Internet Purchasing, and a section
called Logistics, Security, and JIT. Finally, we have added another new video case study called
Arnold Palmer Hospitals Supply Chain.

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XXVII

Supplement to Chapter 11: E-Commerce and Operations Management. We have


updated this timely supplement with a new section on Collaborative Project Management, new
material on Aribas B2B model, and a new OM in Action box called Mars Online Auctions Win the
Shipping Game.
Chapter 12: Inventory Management. We now include material on creating your own inventory Excel Spreadsheets. A new section called Probabilistic Models and Safety Stock contains
expanded coverage of probabilistic inventory. This includes models where (1) demand is variable
and lead time is constant, (2) only lead time is variable, and (3) both demand and lead time are variable. There are three new examples, two new Solved Problems, and four new homework problems,
including a 4-dot difficulty problem. We also added an OM in Action box dealing with AnheuserBuschs national system for controlling inventory, and a new case study called Zhou Bicycle
Company. Finally, we include an inventory simulation game called He Shoots, He Scores on the
Instructors CD.
Chapter 13: Aggregate Planning. Figure 13.5 and 13.6, dealing with yield management, have
been treated in more detail.
Chapter 14: Material Requirements Planning and ERP. We have added 3 new discussion questions and two new 4-dot, challenging homework problems. We have also added the topics of Finite
Capacity scheduling and supermarkets (which join MRP and JIT), expanded coverage of MRP in
Services, and doubled our treatment of ERP. There is a new figure detailing SAPs ERP modules.
Chapter 15: Short-Term Scheduling. The relationship between capacity planning, aggregate
planning, master schedule, and short-term scheduling is laid out graphically in a new Figure 15.1.
We now explain how 4 different processes suggest different approaches to scheduling (Table 15.2),
have added the topic of ConWIP cards, increased coverage of Finite Capacity Scheduling, added
Lekin software (for finite capacity scheduling) to our CD-ROM, and increased material on the
Theory of Constraints, including drum, buffer, rope. The section on Service Scheduling has been
expanded and a detailed example of Cyclical Scheduling (Example 8) has been added, along with 2
new homework problems on the topic.
Chapter 16: Just-in-time and Lean Production Systems. We have increased coverage on
Toyota Production System (TPS) and added the topics of the 5 Ss and Seven Wastes. A new video
case study is JIT at Arnold Palmer Hospital.
Chapter 17: Maintenance and Reliability. A new Global Company Profile for this chapter is
Orlando Utilities Commission, ranked the number 1 electric distribution system in the Southeast U.S.
Quantitative Module A: Decision-Making Tools. There is a new section on using decision
trees in ethical decision making, including an example of doing so (Example 8). There is also a new
4-dot, challenging, homework problem added.
Quantitative Module B: Linear Programming. Excels Solver is described in detail, as a tool
for solving LP problems and a challenging 4-dot homework problem has been added.
Quantitative Module C:Transportation Models. There is now a 4-dot problem in the homework set.
Quantitative Module D: Waiting Line Models. The New England Foundry case is a newer
version of the New England Castings case that we wrote many years ago, and we have added a new
homework problem and a 4-dot problem.
Quantitative Module E: Learning Curves. No changes.
Quantitative Module F: Simulation. We have expanded our section on Using Excel
Spreadsheets that shows students how to create their own formulas, and we have added a new 4-dot
(challenging) homework problem.

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CD-ROM Tutorials Five mini chapters from the previous edition are unchanged. The tutorials
are: Tutorial 1, Statistical Tools for Managers; Tutorial 2, Acceptance Sampling; Tutorial 3, The
Simplex Method of Linear Programming; Tutorial 4, The MODI and VAM Methods of Solving
Transportation Problems; Tutorial 5, Vehicle Routing and Scheduling.

TRADEMARK FEATURES
Our goal is to provide students with the finest pedagogical devices to help enhance learning and
teaching.

Balance between services and manufacturing. Both service and manufacturing examples are critical in an Operations Management course. We carefully blend the two together
throughout the text. To emphasize each, we follow two manufacturing organizations, a
restaurant chain, a hospital, and a university: Regal Marine (3 video cases and a Global
Company Profile in Chapter 5); Wheeled Coach (4 video cases and a Global Company
Profile in Chapter 14); Hard Rock Cafe (7 video cases and a Global Company Profile in
Chapter 1); Arnold Palmer Hospital (7 video cases and a Global Company Profile in
Chapter 6); Southwestern University (7 integrated case studies of issues facing this fictional college). In addition, we provide hundreds of other examples of service and manufacturing companies throughout the text, examples, and homework problems.
Worked Out Examples. Step-by-step worked out examples of OM problems are
extremely helpful in an analytical course such as this. The chapters contain 141 examples
which are reinforced by 66 end-of-chapter Solved Problems. Further, the student CD and
text web site each contain over a hundred Practice Problems.
Superb Homework Problems. As the leading OM text, we take pride in having the leading
homework problem set. The 597 problems in the text are coded on a 1, 2, 3, or 4 dot difficulty level. These are supplemented by 166 more homework problems on the books web
site. Solutions to all of these are in the Instructors Solution Manual, written by the authors.
Global Company Profiles Each chapter opens with a two-page, full-color analysis of a
leading global organization. These include Amazon, Volkswagen, Dell, Arnold Palmer
Hospital, Delta Airlines, McDonalds, Boeing, and many more.

GLOBAL COMPANY PROFILE:

Boeings Global Strategy Yields Competitive Advantage

oeings strategy for its 787


Dreamliner is unique from both an engineering and global perspective.
The Dreamliner incorporates the latest in a wide range of aerospace technologies, from airframe and engine
design to superlightweight titanium
graphite laminate, carbon fiber and
epoxy, and composites. Another innovation is the electronic monitoring system
that allows the airplane to report maintenance requirements to ground-based
computer systems. Boeing is also working with General Electric and Rolls-Royce
to develop more efficient engines. The
expected advances in engine technology
will contribute as much as 8% of the
increased fuel/payload efficiency of the
new airplane, representing a nearly twogeneration jump in technology.
This state-of-the-art Boeing 787 is
also global. Led by Boeing at its Everett,
Washington, facility, an international team
of aerospace companies developed the
airplane. New technologies, new design,

With the 787s state-of the-art design, more spacious interior, and global suppliers, Boeing is
garnering sales worldwide.

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XXIX

OM in Action Boxes Fifty-eight half-page examples of recent OM practices are drawn


from a wide variety of sources, including The Wall Street Journal, New York Times,
Fortune, Forbes, and Harvard Business Review. These boxes bring OM to life.

OM IN ACTION
Outsourcing Not to India, but to
Remote Cor ner s of the U.S.
U.S. companies continue their global search for efficiency by outsourcing call centers and back-office
operations, but many find they need to look no farther
than a place like Nacogdoches, Texas.
To U.S. firms facing quality problems with their outsourcing operations in India and bad publicity at home,
small-town America is emerging as a pleasant alternative. Nacogdoches (population 29,914) or Twin Falls,
Idaho (population 34,469), may be the perfect callcenter locations. Even though the pay is only $7.00 an
hour, the jobs are some of the best available to smalltown residents.
By moving out of big cities to the cheaper labor and
real estate of small towns, companies can save millions

and still increase productivity. A call center in a town


that just lost its major manufacturing plant finds the jobs
easy to fill. U.S. Bank just picked Coeur d'Alene, Idaho, for
its credit card call center. The city has pretty serious
unemployment, says VP Scott Hansen. We can go in
with 500 jobs and really make a difference in the community.
Dell just opened its corporate-customer call center in
Twin Falls after closing a similar center in India, following
customer complaints. Lehman Brothers likewise just canceled its outsourcing contract to India. But taking advantage of dirt-cheap wages will not stop soon. IBM bought
Daksh eServices Ltd., a 9,000-employee Indian callcenter firm for $170 million.
Sources: The Wall Street Journal (June 9, 2004): B1, B8, and (June 14,
2001): A1; Risk Management (July 2004): 24-29; and Business Week (April
26, 2004): 56.

Active Model Exercises Active Model Exercises are interactive Excel spreadsheets of
examples in the textbook that allow the student to explore and better understand these
important quantitative concepts. Students and instructors can adjust inputs to the model
and, in effect, answer a whole series of what if questions that is provided (e.g., What if
one activity in a PERT network takes 3 days longer? Chapter 3. What if holding cost or
demand in an inventory model doubles? Chapter 12. What if the exponential smoothing
constant is 0.3 instead of 0.5? Chapter 4). These Active Models are great for classroom
presentation and/or homework. Twenty-eight of these models are included on the student
CD-ROM and many are featured in the text.

ACTIVE MODEL EXERCISE


Milwaukee Paper Manufacturing. This Active Model allows you to evaluate changes in important elements on
the hospital network we saw in this chapter, using your CD-ROM. See Active Model 3.1.

ACTIVE MODEL 3.1


Project Management

Other student resources include Marginal Notes and Definitions and Solutions to EvenNumbered Problems.

FREE STUDENT CD-ROM WITH EVERY NEW TEXT


Packaged free with every new copy of the text is a student CD-ROM that contains exciting
resources to liven up the course and help students learn the content material.

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PowerPoint Lecture Notes Based on an extensive set of over 1,000 newly revamped
PowerPoint slides, these lecture notes provide reinforcement to the main points of each
chapter and allow students to review chapter material. All the Powerpoints have been
redrawn for clarity.
Twenty-two Exciting Video Cases These video cases feature real companies (Regal
Marine, Hard Rock Cafe, Ritz Carlton, Wheeled Coach, and Arnold Palmer Hospital) and
allow students to watch short video clips, read about the key topics, answer questions, and
then e-mail their answers to their instructors. These case studies can also be assigned without using class time to show the videos. Each of these was developed and written by the
text authors to specifically supplement the books content.
CD-ROM Video Clips Another expanded feature on the student CD-ROM is thirty-four
1- to 2-minute videos, which appear throughout the book and are noted in the margins.
These video clips illustrate chapter-related topics with videos at Harley-Davidson, Ritz
Carlton, Hard Rock Cafe, and other firms.
Active Models The 28 Active Models, described earlier, appear in files on the student
CD-ROM. Samples of the Models appear in most text chapters.
Practice Problems Provide problem-solving experience. They supplement the examples
and solved problems found in each chapter.
Self-Study Quizzes For each chapter, a link is provided to our texts Companion Web site,
where these quizzes allow students to test their understanding of each topic. Plant tours can
also be accessed through this link.
POM for Windows Software POM for Windows is a powerful tool for easily solving OM
problems. Its 24 modules can be used to solve most of the homework problems in the text.
Problem-Solving Software Excel OM is our exclusive user-friendly Excel add-in. Excel
OM automatically creates worksheets to model and solve problems. Users select a topic
from the pull-down menu, fill in the data, and then Excel will display and graph (where
appropriate) the results. This software is great for student homework, what if analysis, or
classroom demonstrations.

Do not change this cell without changing


the number of rows in the data table.

Enter the size for each of the


hourly samples taken.
Enter the mean
weight for each
of the 12
samples.

= B22
Enter the desired
number of standard
deviations.
= B7/SQRT(B6)

Use the overall average as the center line; add and subtract the
desired number of standard deviations in order to create upper
and lower control limits (e.g., LCL = F10 F11*F12).
Calculate x bar the overall average weight
of all the samples = AVERAGE (B10:B21).

PROGRAM S6.2 Excel OM Input and Selected Formulas for the Oat Flakes Example S1

Excel OM Data Files Examples in the text that can be solved with Excel OM appear on
data files on the CD-ROM. They are identified by an icon in the margin of the text.
CD-ROM Tutorial Chapters Statistical Tools for Managers, Acceptance Sampling, The
Simplex Method of Linear Programming, The MODI and VAM Methods of Solving
Transportation Problems, and Vehicle Routing and Scheduling are provided as additional
material.
Microsoft Project 2003 MSProject, the most popular and powerful project management
package, is now available on a second (free Value-Pack) student CD-ROM. This version is
documented in Chapter 3 and is activated to work for 120 days.

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XXXI

INSTRUCTORS RESOURCES
Test Item File The test item file, extensively updated by Professor L. Wayne Shell, contains a
variety of true/false, multiple choice, fill-in-the-blank, short answer, and problem-solving questions for each chapter. The test item file can also be downloaded by instructors from Prentice
Halls Companion Web site at http://www.prenhall.com/heizer.
New TestGen Software The print Test Banks are designed for use with the TestGen test-generating software. This computerized package allows instructors to custom design, save, and generate classroom tests. The test program permits instructors to edit, add, or delete questions from
the test banks; edit existing graphics and create new graphics; analyze test results; and organize a
database of tests and student results. This new software allows for greater flexibility and ease of
use. It provides many options for organizing and displaying tests, along with a search and sort
feature.
Instructors Solutions Manual The Instructors Solutions Manual, written by the authors,
contains the answers to all of the discussion questions, ethical dilemmas, active models, and
cases in the text, as well as worked-out solutions to all of the end-of-chapter problems, internet
problems, and internet cases. The Instructors Solutions Manual can also be downloaded by
instructors from Prentice Halls Companion Web site at http://www.prenhall.com/heizer.
PowerPoint Presentations An extensive new set of PowerPoint presentations, created by
Professor Jeff Heyl of Lincoln University, is available for each chapter. Comprising well over 2,000
slides, Professor Heyl has created this new set with excellent color and clarity. We have also
included hundreds of Personal Response System slides, created by Professor Bill Swart of East
Carolina University, enabling interactive exercises and discussion. These slides can also be downloaded from Prentice Halls Companion Web site at http://www.prenhall.com/heizer.
Instructors Resource Manual The Instructors Resource Manual, updated by Professor Jeff
Heyl, contains many useful resources for the instructorcourse outlines, video notes, Internet
exercises, additional teaching resources, and faculty notes. The Instructors Resource Manual
can also be downloaded by instructors from Prentice Halls Companion Web site at
http://www.prenhall.com/heizer.
Instructors Resource CD-ROM The Instructors Resource CD-ROM provides the electronic
files for the entire Instructors Solutions Manual (in MS Word), PowerPoint presentations (in
PowerPoint), Test Item File (in MS Word), and computerized test bank (TestGen). These files can
also be downloaded off the Instructor Catalog page.
Video Package Designed specifically for the Heizer/Render texts, the video package contains the
following 32 videos:
Operations Management at Hard Rock
(Ch. 1)
A Plant Tour of Winnebago Industries
(Ch. 1)
Regal Marine: Operations Strategy
(Ch. 2)
Hard Rock Cafes Global Strategy (Ch. 2)
Overview of OM and Strategy at
Whirlpool (Ch. 2)
Project Management at Arnold Palmer
Hospital (Ch. 3)
Managing Hard Rocks Rockfest (Ch. 3)
Forecasting at Hard Rock Cafe (Ch. 4)
Regal Marine: Product Design (Ch. 5)
Product Design and Supplier
Partnerships at Motorola (Ch. 5)
The Culture of Quality at Arnold Palmer
Hospital (Ch. 6)

Ritz Carlton: Quality (Ch. 6)


Competitiveness and Continuous
Improvement at Xerox (Ch. 6)
Service Quality and Design at Marriott
(Ch. 6)
Statistical Process Control at Kurt
Manufacturing (Supp. 6)
Wheeled Coach: Process Strategy (Ch. 7)
Process Analysis at Arnold Palmer
Hospital (Ch. 7)
Process Strategy and Selection (Ch. 7)
Technology and Manufacturing: Flexible
Manufacturing Systems (Ch. 7)
Capacity Planning at Arnold Palmer
Hospital (Supp. 7)
Where to Place Hard Rocks Next Cafe
(Ch. 8)
Wheeled Coach: Facility Layout (Ch. 9)

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Laying Out Arnold Palmer Hospitals New
Facility (Ch. 9)
Hard Rock Cafes Human Resource
Strategy (Ch. 10)
Teams and Employee Involvement at
Hewlett Packard (Ch. 10)
Regal Marine: Supply Chain Management
(Ch. 11)
Arnold Palmer Hospitals Supply Chain
(Ch. 11)

E-Commerce and Teva Sports Sandals


(Supp. 11)
Wheeled Coach: Inventory Control
(Ch. 12)
Wheeled Coach: Materials Requirements
Planning (Ch. 14)
Scheduling at Hard Rock Cafe (Ch. 15)
JIT at Arnold Palmer Hospital (Ch. 16)

COMPANION WEB SITE


Visit our Companion Web site at www.prenhall.com/heizer, to find text-specific resources for
students and faculty. Some of the resources you will find include:

For Students:
Self-Study Quizzes These extensive quizzes contain a broad assortment of questions, 2025
per chapter, which include multiple choice, true or false, and Internet essay questions. The quiz
questions are graded and can be transmitted to the instructor for extra credit or serve as practice
exams.
Virtual Tours These company tours provide direct links to companies ranging from a hospital to
an auto manufacturer, that practice key concepts. After touring each Web site, students are asked
questions directly related to the concepts discussed in the chapter.
Internet Homework Problems A set of homework problems are available on the Companion
Web site to provide additional assignment material for students.
Internet Case Studies Assign additional free case study material from this web site.

For Faculty:
Instructor support materials can be downloaded from the Prentice Hall online catalog at
www.prenhall.com. This password-protected area provides faculty with the most current and
advanced support materials available: Instructors Solutions Manual, Instructors Resource Manual,
PowerPoint slides, Personal Response System slides, and Test Questions.

ACKNOWLEDGMENTS
We thank the many individuals who were kind enough to assist us in this endeavor. The following
professors provided insights that guided us in this revision:
Shahid Ali
Rockhurst University
Stephen Allen
Truman State University
William Barnes
Emporia State University
Leon Bazil
Stevens Institute of Technology
Victor Berardi
Kent State University
Mark Berenson
Montclair State University

Joe Biggs
California Polytechnic State University
Peter Billington
Colorado State University-Pueblo
Lesley Buehler
Ohlone College
Darlene Burk
Western Michigan University
David Cadden
Quinnipiac College
James Campbell
University of Missouri-St. Louis

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P R E FAC E
William Christensen
Dixie State College of Utah
Roy Clinton
University of Louisiana at Monroe
Hugh Daniel
Lipscomb University
Anne Deidrich
Warner Pacific College
John Drabouski
DeVry University
Richard E. Dulski
Daemen College
Charles Englehardt
Salem International University
Wade Ferguson
Western Kentucky University
Rita Gibson
Embry-Riddle Aeronautical University
Eugene Hahn
Salisbury University
John Hoft
Columbus State University
Garland Hunnicutt
Texas State University
Wooseung Jang
University of Missouri-Columbia
Dana Johnson
Michigan Technological University
William Kime
University of New Mexico
Beate Klingenberg
Marist College
Jean Pierre Kuilboer
University of Massachusetts-Boston
Gregg Lattier
Lee College
Ronald Lau
Hong Kong University of Science
and Technology
Mary Marrs
University of Missouri-Columbia
Richard Martin
California State University-Long Beach
Gordon Miller
Portland State University
John Miller
Mercer University
Donna Mosier
SUNY Potsdam
Arunachalam Narayanan
Texas A&M University
Susan Norman
Northern Arizona University
Prafulla Oglekar
LaSalle University

David Pentico
Duquesne University
Elizabeth Perry
SUNY Binghamton
Frank Pianki
Anderson University
Michael Plumb
Tidewater Community College
Leonard Presby
William Paterson University
Zinovy Radovilsky
California State University, Hayward
William Reisel
St. Johns University
Spyros Reveliotis
Georgia Institute of Technology
Scott Roberts
Northern Arizona University
Stanford Rosenberg
LaRoche College
Edward Rosenthal
Temple University
Peter Rourke
Wentworth Institute of Technology
X. M. Safford
Milwaukee Area Technical College
Robert Schlesinger
San Diego State University
Daniel Shimshak
University of Massachusetts-Boston
Theresa A. Shotwell
Florida A&M University
Ernest Silver
Curry College
Samuel Y. Smith Jr.
University of Baltimore
Victor Sower
San Houston State University
John Stec
Oregon Institute of Technology
A. Lawrence Summers
University of Missouri
Rajendra Tibrewala
New York Institute of Technology
Ray Walters
Fayetteville Technical Community
College
Jianghua Wu
Purdue University
Lifang Wu
University of Iowa
Xin Zhai
Purdue University

XXXIII

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P R E FAC E
We also wish to acknowledge the help of the reviewers of the earlier editions of this text. Without
the help of these fellow professors, we would never have received the feedback needed to put
together a teachable text. The reviewers are listed in alphabetical order.
Sema Alptekin
University of Missouri-Rolla
Suad Alwan
Chicago State University
Jean-Pierre Amor
University of San Diego
Moshen Attaran
California State University-Bakersfield
Ali Behnezhad
California State University-Northridge
John H. Blackstone
University of Georgia
Theodore Boreki
Hofstra University
Rick Carlson
Metropolitan State University
Wen-Chyuan Chiang
University of Tulsa
Mark Coffin
Eastern California University
Henry Crouch
Pittsburgh State University
Warren W. Fisher
Stephen F. Austin State University
Larry A. Flick
Norwalk Community Technical College
Barbara Flynn
Wake Forest University
Damodar Golhar
Western Michigan University
Jim Goodwin
University of Richmond
James R. Gross
University of Wisconsin-Oshkosh
Donald Hammond
University of South Florida
John Harpell
West Virginia University
Marilyn K. Hart
University of Wisconsin-Oshkosh
James S. Hawkes
University of Charleston
George Heinrich
Wichita State University
Sue Helms
Wichita State University
Johnny Ho
Columbus State University
Zialu Hug
University of Nebraska-Omaha
Peter Ittig
University of Massachussetts

Paul Jordan
University of Alaska
Larry LaForge
Clemson University
Hugh Leach
Washburn University
B.P. Lingeraj
Indiana University
Andy Litteral
University of Richmond
Laurie E. Macdonald
Bryant College
Henry S. Maddux III
Sam Houston State University
Mike Maggard
Northeastern University
Mark McKay
University of Washington
Arthur C. Meiners, Jr.
Marymount University
Zafar Malik
Governors State University
Doug Moodie
Michigan Tech University
Philip F. Musa
University of Alabama at Birmingham
Joao Neves
Trenton State College
John Nicolay
University of Minnesota
Susan K. Norman
Northern Arizona University
Niranjan Pati
University of Wisconsin-LaCrosse
Michael Pesch
St. Cloud State University
David W. Pentico
Duquesne University
Leonard Presby
William Patterson State College-NJ
Zinovy Radovilsky
California State University-Hayward
Ranga V. Ramasesh
Texas Christian University
Emma Jane Riddle
Winthrop University
M.J. Riley
Kansas State University
Narendrea K. Rustagi
Howard University
Teresita S. Salinas
Washburn University

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Chris Sandvig
Western Washington University
Ronald K. Satterfield
University of South Florida
Robert J. Schlesinger
San Diego State University
Shane J. Schvaneveldt
Weber State University
Avanti P. Sethi
Wichita State University
Girish Shambu
Canisius Callege
L.Wayne Shell (retired)
Nicholls State University
Susan Sherer
Lehigh University
Vicki L. Smith-Daniels
Arizona State University
Vic Sower
Sam Houston State University
Stan Stockton
Indiana University

XXXV

John Swearingen
Bryant College
Susan Sweeney
Providence College
Kambiz Tabibzadeh
Eastern Kentucky University
Rao J. Taikonda
University of Wisconsin-Oshkosh
Cecelia Temponi
Texas State University
Madeline Thimmes
Utah State University
Doug Turner
Auburn University
V. Udayabhanu
San Francisco State University
John Visich-Disc
University of Houston
Rick Wing
San Francisco State University
Bruce M. Woodworth
University of Texas-El Paso

In addition, we appreciate the wonderful people at Prentice Hall who provided both help and
advice: Mark Pfaltzgraff, our decision sciences executive editor; Debbie Clare, our executive marketing manager; Jane Avery, our senior editorial assistant; Nancy Welcher, our media project development manager; Cynthia Regan, our senior managing editor; and Karen Misler, our supplements
editor. Reva Shader developed the exemplary subject indexes for this text. Donna Render and Kay
Heizer provided the accurate typing and proofing so critical in a rigorous textbook. We are truly
blessed to have such a fantastic team of experts directing, guiding, and assisting us.
We also appreciate the efforts of colleagues who have helped to shape the entire learning package that accompanies this text. Professor L. Wayne Shell helped create our new problem set and
edited/checked the old one, Professor Howard Weiss (Temple University) developed the Active
Models, Excel OM, and POM for Windows microcomputer software; Professor Jeff Heyl (Lincoln
University) created the PowerPoints and also wrote the Instructors Resource Manual; Dr. Vijay
Gupta developed the Excel OM and POM for Windows Data Disks; Professor. L. Wayne Shell prepared the Test Bank; Beverly Amer (Northern Arizona University) produced and directed our video
and CD-ROM case series; Professors Keith Willoughby (Bucknell University) and Ken Klassen
(Brock University) contributed the two Excel-based simulation games; Prof. Gary LaPoint
(Syracuse University) developed the MS Project Crashing exercise; and the dice game for SPC; and
Professor Bill Swart (East Carolina University) created the Personal Response System PowerPoint
activities. We have been fortunate to have been able to work with all these people.
We wish you a pleasant and productive introduction to operations management.
BARRY RENDER
GRADUATE SCHOOL OF BUSINESS
ROLLINS COLLEGE
WINTER PARK, FL 32789
EMAIL: BARRY.RENDER@ROLLINS.EDU

JAY HEIZER
TEXAS LUTHERAN UNIVERSITY
1000 W. COURT STREET
SEGUIN, TX 78155
EMAIL: JHEIZER@TLU.EDU

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