Operations Management

Book Reviews 213
William J. Stevenson, Operations Management (Ninth Edition). Tata

McGraw-Hill Publishing Company Limited (7 West Patel Nagar, New
Delhi), 2009, xvi + 908. (Price not given) paperback.
This book is intended as an introduction to the filed of operations

management. The topics covered include both strategic issues and practical
applications. Among the topics are forecasting, product and service design,
capacity planning, management is quality and quantity control, inventory
management, scheduling, supply chain management, and project
management. The book deals with concepts, tools and applications of the
field of operations management.
The book places emphasis on problem solving by including a number of

case examples and solve problems illustrating solutions.
Downloaded From IP - 115.248.73.67 on dated 1-Dec-2010
Chapter 1 entitled 'Introduction to Operations Management' introduces

Members Copy, Not for Commercial Sale
field of operations management. It describes the nature and scope of

www.IndianJournals.com
operations management and how operations management relates to other

parts of the organization. Among the important topics it covers are a
comparison of manufacturing and service operations, a brief history of
operations management, and a list of trends business that relates to operations.
Chapters 2 entitled 'Competitiveness Strategy and Productivity' discusses

operations management in a border context and presents the issues of
competitions, strategy, and productivity. This chapter describes time-based
strategies, which many organizations are now adopting as they seek to
become more competitive and serve their customers more efficiently.
Chapter 3 entitled 'Forecasting' provides important insights on business

forecasting as well as information on how to develop and monitor forecasts.
In fact, forecasts are basic inputs for many kinds of decisions in business
organizations. Consequently, it is important for all managers to be able to
understand and use forecasts. It also identifies major factors to consider
when choosing a forecasting technique.
Chapter 4 entitled 'Product and Service Design' explains the strategic

importance and identifies main objectives of product and service design. It
discusses the importance of standardization; reviews importance of legal,
ethical, and environmental issues, and lists characteristics of well-designed
service systems.
Management & Change, Volume 13, Number 1 (2009)

214 Book Reviews
Chapter 5 entitled 'Strategic Capacity Planning for Products and Services'

explains the importance of capacity planning, discusses ways of defining
and measuring capacity, describes determinants of effective capacity,
discusses major considerations related to developing capacity alternatives,
and briefly describes approaches that are useful for evaluating capacity
alternatives.
Chapter 6 entitled 'Process Selection and Facility Layout' explains the

strategic importance and the influence that process selection has on
organization. It also includes types of basic processing and reviews automated
approaches to processing. It also describes advantages and disadvantages
of product and process layouts.
Supplement to Chapter 6 entitled 'Linear Programming' describes types

of problem that are amenable for solution using linear programming. Linear
programming is a powerful quantitative tool used by operations mangers and

other managers to obtain optimal solutions to problems that involve restrictions

or limitations, such as budgets and available material, labour, and machine time.
These problems are referred to as constrained optimization problem.
Chapter 7 entitled 'Design of Work Systems' explains importance of

work design involving job design, work measurement and the establishment
of time standards, and worker motivation and compensation. Various topics
described in this chapter all have an impact on productivity. It also reviews
advantages and disadvantages of specialization and knowledge based pay.
The chapter covers a very comprehensive discussion on work study involving
both method study and work measurement. Ergonomics is an important
part of job design, which relates to incorporation of human factors in
workplace design. Ergonomics helps minimize common workplace ailments
that result in result in lower productivity, lost workdays, and increase in
health premiums.
Supplement to Chapter 7 entitled 'Learning Curves' deals with concepts

of learning curves highlighting relationship between illustrate the basic
relationship between increasing repetitions and decreasing time per repetition.
This relationship is also referred to as an experience curve, a progress
function, or an improvement function. Learning curve projections help
managers to plan costs and labor, purchasing and inventory needs. As
productivity increases higher efficiency levels enable usage of raw materials
and purchase parts keep pace with output. Failure to account for learning
effect may result in over estimate of labour needs an underestimates of the
Book Reviews 215
rate of the material usage.
Chapter 8 entitled 'Location Planning and Analysis' deals with main

reasons and explains why location decisions are important. Location decisions
represent a key part of the strategic planning process of virtually every
organization. This chapter examines locations analysis. It begins with a brief
overview of the reason firms must make location decisions, the nature of
these decisions, and a general procedure for developing and evaluating
location alternatives.
Location decisions are closely tied to an organization's strategies. For

example, a strategy of being a low-cost procedure might result in location
where labour or materials costs are low, or locating near market share raw
materials to reduce transportation costs. A strategy of increasing profile by
increasing market share might result in locating in high-traffic areas, and a
strategy that emphasizes convenience for the customer might result in having
many locations where customers can transact their business or make

purchases (e.g., branch banks, ATMs, service stations, fast-food outlets).
Location criteria can depend on where a business is in the supply chain.

For instance at the retail end of a chain, site selection tends to focus more
on accessibility, consumer demographics (population density, age distribution,
average buyer income), traffic pattern, and local custom. Businesses at the
beginning of a supply chain, if they are involved in supplying raw materials,
are often located near their markets, depending on a variety of circumstances.
For example, business involved in storing and distributing goods often choose
a central location to minimize distribution costs. Web-based retail business
are much less dependent on location decisions; they can exist just about
anywhere.
Supplement to Chapter 8 entitled 'The Transportation Model' provides

detailed account of the transportation method. The transportation problems
involve finding the lowest-cost plan for distributing stocks of goods or supplies
from multiple origins to multiple destinations that demand the goods. The
transportation model can be used to determine how to allocate the supplies
available from the various factories to the warehouses that stock or demand
those goods, in such a way that total shipping cost is minimized (i.e., the
optimal shipping plan). The transportation model can be used to compare
location alternative in terms of their impact on the total distribution costs for
a system. The procedure involves working through a separate problem for
each location being considered and then comparing the resulting total costs.
216 Book Reviews
Chapter 9 entitled 'Management of Quality' covers evolution of quality

management, the dimensions of product and service quality, philosophies of
several quality "gurus", quality awards and quality certification, total quality
management, and quality tools. Successful management of quality requires
that managers have insights on various aspects of quality. These include
defining quality in operational terms, understanding the costs and benefits of
quality, recognizing the consequences of poor quality, and recognizing the
need for ethical behaviour. The chapter includes a description of the key
contributors to quality management, and its outline the ISO 9000 and ISO
14000 international standards.
One way to describe to quality is the degree to which performance of a

product or service meets or exceeds customer expectations. Quality of
design refers to the intention of designers to include or exclude certain
feature in a product or service. 'Quality of the conformance' refers to the
degree to which goods and services conform to (i.e., achieve) the intent of
the designers. Failure to devote adequate attention to quality can damage a

profit-oriented organization's reputation and lead a decreased share of the

markets, or it can lead to increased criticism and/or controls for a government
agency or nonprofit organization. Poor designs or defective or service can
result on loss if business. It is important for management to recognize the
different ways in which the quality of a firm's products or services can
affect organization and to take these into account in developing and
maintaining a quality assurance programme.
Total quality management is a never-ending pursuit of quality that involves

everyone in an organization. The driving force is customer satisfaction; a
key philosophy is continuous improvement. Training of managers and workers
in quality concepts, tools, and procedures is an important aspects of the
approach. Teams are an integral part of TQM. Two major aspects of the
TQM approach are problem solving and process improvement. Six-sigma
programme are a form of TQM. They emphasize the use of statistical and
management science tools on selected projects to achieve business results.
Chapter 10 entitled 'Quality Control' explains the elements of the control

process, and how control charts can be used to monitor processes in order
that they are performing in an acceptable manner. Quality control is a process
that measures output relative to a standard and takes corrective action when
output does not meet standard. Inspection can be used as part of an effort
to improve process yield. One measure of process yield is the ratio of output
of good product to the total output.
Book Reviews 217
Inspection at key points can help guide process improvement efforts to

reduce the scrap rate and improve the overall process yield, and reduce or
eliminate the need of inspection. In the service sector, inspection points are
incoming purchased materials and supplies, personal, service, interfaces
(e.g., service counter), and outgoing completed work. Sampling and
corrective action are part of the control process.
In a nutshell, control achieved by checking a portion of the goods or

services, comparing the result to a predetermined standard, evaluating
departures from the standard, taking corrective action when necessary, and
following up to ensure that problems have been corrected. Capability analysis
is the determination of whether the variability inherent in the output of the
process is within the acceptable range of variability allowed by the designed
specification for the process output. Organization should continually seek to
increase the capability of the processes they use, so that they can move from a
position of using of using inspection or extensive use of control charts to achieve

desired levels of quality to one where quality is built into products and processes,
so that little or no efforts are needed to assure quality.
In supplement Chapter 10 entitled 'Acceptance Sampling' the author

reviews the purpose acceptance sampling and contrasts it with process
control. The chapter also compares and contrasts single and multiple sampling
plans and discusses the concept of average outgoing quality level. A key
element of acceptance sampling is the sampling plan. In the single plan, one
random sample is drawn from each lot, and every item in the sample is
examined and classified as either "good" or "defective". A double-sampling
plan allows for the opportunity to take a second sample if the result of the
initial sample are inconclusive. A multiple-sampling plan is similar to a double-
sampling plan except that more than two samples may be required.
Chapter 11 entitled 'Supply Chain Management' deals with all important

aspects of the subject including need and elements of supply chain
management, bullwhip effect, global supply chain, role of outsourcing, logistics
and reverse logistics, purchasing and SCM, infrastructure and SCM, etc.
The elements of supply chain management include customers, forecasting,
product and service design, processing, inventory management, purchasing,
supplier management, location decisions, and logistics. Logistics involves
the movement of goods and materials in a supply chain. This includes incoming
materials, movement within a facility, and outgoing goods. It also includes
overseeing the two-way flow of information across the supply chain.
Purchasing the link between an organization and its suppliers. Purchasing
218 Book Reviews
involves selecting suppliers, negotiating contracts, forging alliances, and

serving as a link between the organization and its suppliers.
Chapter 12 entitled 'Inventory Management and Scheduling' relates to

the management and control of inventories, and scheduling, often key factors
of operation management to achieve profit and/or cost objectives while
satisfying customers. The basic issues are how to best manage resources
to effectively match supply and demand. Inventory management is a core
management activity, which has interface with marketing and finance
functions. This is because when inventory management is carried out
inefficiently it not only affects operations out also lowers customers
satisfaction and enhances operating cost.
The material presented in the chapter focuses primarily on management

of internal inventories. However, successful inventory management also
must include management of external inventories (i.e., inventory in the supply

chain). Sharing demand data throughout the supply chain can alleviate the
unnecessary buildup of safety stock in the supply chain that occurs when
information isn't shared. Manufacturers and suppliers can judge the timing
of orders from customers, and customers can use information about supplier
inventories to set reasonable lead time.
Chapter 13 entitled 'Aggregate Planning' deals with intermediate-range

capacity planning that typically covers a tine horizon of 2 to 12 months,
although in some companies it may extend to as much as 18 months. It is
particularly useful for organizations that experience seasonal or other
fluctuations in demand or capacity. The goal of aggregate planning is to
achieve a production plan that will effectively utilize the organization's
resources to satisfy expected demand.
After the aggregate plan has been developed it is disaggregated or

broken down into specific products requirements. This leads to a master
schedule, which indicates the planned quantities and timing of specific
outputs. Inputs to the master schedule are on-hand inventory amounts,
forecasts of demand, and customer orders. The outputs are projected
production and inventory requirements, and the projected uncommitted
inventory, which is referred to as available-to-promise (ATP) inventory.
Chapter 14 entitled 'MRP and ERP' describes material requirements

planning (MRP), manufacturing resources planning (MRP II) and enterprise
resource planning (ERP). MRP is planning and scheduling technique used
Book Reviews 219
for batch production of assembled items. Primary inputs of MRP are a bill
of materials, which indicates the composition of the finished product; a master
schedule which indicates how much finished products is desired and when;
and an inventory records file, which indicates how much inventory is on
hand or an order. ERP represents an expanded effort to integrate
standardized record keeping that will permit information sharing among
different areas of the organization in order to manage the system more
effectively. ERP is the third generation of manufacturing software that
encompasses all business functions, including order entry and an option for
financial management integrated with the manufacturing functions available
in MRP II.
Chapter 15 entitled ' JIT and Lean Operations' deal with operation system
in which materials are moved through the system and services are delivered
with precise timing so that they are delivered at each step of the process
just as they are needed - hence the name just-in-time. Over the years the
scope of JIT broadened and the term became synonym of lean operations.
Lean operation depends on having high-quality processes in place. Quality

is an integral part of lean operation; without high process quality, lean operation
cannot exist. A central theme of a true just-in-time approach is to work
towards continual improvement of the system - reducing inventories, reducing
setup cost and time, improving quality, increasing the output rate, and generally
cutting waste and inefficiency.
Supplement to chapter 15 covers maintenance aspects in operations

management. Maintaining the productivity capability of an organization is
an important function. Maintenance includes all of the activities related to
keeping facilities and equipment in good operating order and maintaining the
appearance of building and grounds. The goal of maintenance is to minimize
the total cost of keeping the facilities and equipments in good working order.
Maintenance decision typically reflects a trade-off between preventive
maintenance, which seeks to reduce the incidence of breakdown and failure,
and breakdown maintenance, which seeks to reduce the impact of breakdown
when they occur.
Scheduling (Chapter 16) is important for every organization regardless

of the nature of activities. Business farms need to develop schedules for
workers, equipment, procurement, maintenance, etc. Hospitals need to
schedule admissions, surgery, nursing assignment, and support services such
as meal preparation, security, maintenance, and cleaning. Lawyers, doctors,
dentists, hairdressers, and auto repair shops need to schedule appointments
220 Book Reviews
for their clients, patients and customers. In hospitals scheduling can save
lives and improve patient care. In educational institutions scheduling can
reduce the need for expansion of facilities. In business effective scheduling
can lead to competitive advantage in terms of customer service (shorter
wait time for their orders).
Chapter 17 entitled 'Project Management' deals with some behavioural

and implementation aspects besides introducing the basic concepts of project
management. Projects typically bring together people with diverse knowledge
and skills, most of whom remain associated with the project for less than its
full life. The project manager is overall in-charge for project implementation,
who needs ability to adapt to changing circumstances that may involve
changes to project goals, technical requirements, and project team
composition. PERT and CPM are two commonly used technique for
developing and monitoring projects.
Chapter 18 entitled 'Management of Waiting Lines' deals with waiting

lines which commonly occur in all service systems. Management of queues

is governed by a theory what has come to be known as 'queuing theory'.
Queuing theory is directly applicable to a wide range of service operations,
including call centers, banks, post offices, restaurants, theme parks,
telecommunications systems, and traffic management. In a queuing system
customers enter a waiting line of service facility, receive service when their
turn comes, and then leave the system. The number of customers in the
system (awaiting service or being served) will vary randomly over time.
The goal of waiting-line management is essentially to minimize total costs
comprising cost of waiting and cost of providing additional service.
Supplement to Chapter 18 deals with simulation in which a model of a

process is developed and then experiments are conducted on the model to
evaluate its behaviour under various conditions. Simulation enables decision
makers to test their models that reasonably duplicates a real process.
Simulation models unable decision makers to experiments with alternative

choices using policy experimentation by answering 'what if' type of questions.
Simulations have very wide range of application for instance, space engineers
simulate space flights in laboratories to permit future astronauts to become
accustomed to working in a weightless environment. Similarly, airline pilots
often undergo extensive training with simulated landing and takeoffs before
being allowed to try the real thing. Many video games are simulations, and
universities use management games as a means of simulating business
Book Reviews 221
environments. Tire designers evaluate alternative tread designs using machine

that simulate conditions that produce tire wear handling problems.
The book is indeed highly reader friendly, which appropriately introduces

the entire filed of operations management. The topics covered include both
strategic issues and practical applications. The author provides a very
comprehensive coverage of topics in easy-to-learn manner. The author has
done a good balancing act by including information from plethora of new
developments, while facing the prazctical limits on the length of the book.
The author has placed considerable significance on problem solving.
The book covers all important topics on strategic issues and practical
applications - productivity, forecasting, product/service design, capacity
planning, quality management and control, etc. The book provides clearly
written explanations of concepts as well as methods. It includes large number
of solved problems, examples, questions, practice problems, and cases to

facilitate 'learning by doing'. The text features recent concepts and

applications and in the rapidly going field of operations management.

Inclusion of a number of chapter as supplement to existing chapters shows
that authors has always accorded priority for its updation though it is very
uphill task as developments in this field are really enormous. The book has
all merit to be used as text book for courses on operations management in
business schools both at under-graduate and post-graduate levels. The book
is 'must' for libraries of all business schools wherever they are.
S.S Yadav, Professor of Operations Management, IILM Institute for Higher

Education.
A.C. Fernando, Business Ethics: An Indian Perspective. New Delhi:

Pearson Education (482, F.I.E., Patparganj, Delhi 110092), 2009,
xviii + 514 (Price not given) paperback.
Ethics differentiates between right and wrong behaviour, i.e., when the
actions are moral and when they are immoral. The word 'ethics' is derived
from the Greek word ethikos meaning custom or character. Business ethics
on the other hand are applications of ethical concepts to business behaviour.
Society expects only ethical business behaviour, which is conducive for
social good and prevents it from indulging in unscrupulous conduct. Business
ethics is applied ethics that studies moral standard and shows how these
apply to the system and organization involved in business. Business ethics
studies moral norms and values, and aims to apply the conclusions gleaned

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Book Reviews 213

William J. Stevenson, Operations Management (Ninth Edition). Tata

This book is intended as an introduction to the filed of operations

The book places emphasis on problem solving by including a number of

Chapter 1 entitled 'Introduction to Operations Management' introduces

field of operations management. It describes the nature and scope of

operations management and how operations management relates to other

Chapters 2 entitled 'Competitiveness Strategy and Productivity' discusses

Chapter 3 entitled 'Forecasting' provides important insights on business

Chapter 4 entitled 'Product and Service Design' explains the strategic

Management & Change, Volume 13, Number 1 (2009)

Chapter 5 entitled 'Strategic Capacity Planning for Products and Services'

Chapter 6 entitled 'Process Selection and Facility Layout' explains the

Supplement to Chapter 6 entitled 'Linear Programming' describes types

programming is a powerful quantitative tool used by operations mangers and

other managers to obtain optimal solutions to problems that involve restrictions

Chapter 7 entitled 'Design of Work Systems' explains importance of

Supplement to Chapter 7 entitled 'Learning Curves' deals with concepts

rate of the material usage.

Chapter 8 entitled 'Location Planning and Analysis' deals with main

Location decisions are closely tied to an organization's strategies. For

many locations where customers can transact their business or make

purchases (e.g., branch banks, ATMs, service stations, fast-food outlets).

Location criteria can depend on where a business is in the supply chain.

Supplement to Chapter 8 entitled 'The Transportation Model' provides

Chapter 9 entitled 'Management of Quality' covers evolution of quality

One way to describe to quality is the degree to which performance of a

the designers. Failure to devote adequate attention to quality can damage a

profit-oriented organization's reputation and lead a decreased share of the

Total quality management is a never-ending pursuit of quality that involves

Chapter 10 entitled 'Quality Control' explains the elements of the control

Inspection at key points can help guide process improvement efforts to

In a nutshell, control achieved by checking a portion of the goods or

position of using of using inspection or extensive use of control charts to achieve

so that little or no efforts are needed to assure quality.

In supplement Chapter 10 entitled 'Acceptance Sampling' the author

Chapter 11 entitled 'Supply Chain Management' deals with all important

involves selecting suppliers, negotiating contracts, forging alliances, and

Chapter 12 entitled 'Inventory Management and Scheduling' relates to

The material presented in the chapter focuses primarily on management

must include management of external inventories (i.e., inventory in the supply

Chapter 13 entitled 'Aggregate Planning' deals with intermediate-range

After the aggregate plan has been developed it is disaggregated or

Chapter 14 entitled 'MRP and ERP' describes material requirements

Lean operation depends on having high-quality processes in place. Quality

Supplement to chapter 15 covers maintenance aspects in operations

Scheduling (Chapter 16) is important for every organization regardless

Chapter 17 entitled 'Project Management' deals with some behavioural

Chapter 18 entitled 'Management of Waiting Lines' deals with waiting

lines which commonly occur in all service systems. Management of queues

Supplement to Chapter 18 deals with simulation in which a model of a

Simulation models unable decision makers to experiments with alternative

environments. Tire designers evaluate alternative tread designs using machine

The book is indeed highly reader friendly, which appropriately introduces

of solved problems, examples, questions, practice problems, and cases to

facilitate 'learning by doing'. The text features recent concepts and

applications and in the rapidly going field of operations management.

S.S Yadav, Professor of Operations Management, IILM Institute for Higher

A.C. Fernando, Business Ethics: An Indian Perspective. New Delhi:

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