Brief Contents

FROM THE AUTHORS   v 11 Work System Design  363

MAKING OPERATIONS MANAGEMENT PERSONAL   vi
CHANGES TO THIS EDITION   viii 12 Inventory Management  399
IMPROVED LEARNING OUTCOMES WITH WILEYPLUS   x
ACKNOWLEDGMENTS   xii 13 Aggregate Planning  447
ABOUT THE AUTHORS   xiv
14 Resource Planning  480
1 Introduction to Operations Management  1
15 Scheduling  517
2 Operations Strategy and Competitiveness  25
16 Project Management  550

AL
3 Product Design and Process Selection  49
A P P E NDIX A   Solutions to Odd Problems  584

RI
4 Supply Chain Management  89
A P P E NDIX B  The Standard Normal

TE
5 Total Quality Management  135 Distribution  608

6 Statistical Quality Control  167 A P P E NDIX C  

p-Chart  609
MA
7 Just-in-Time and Lean Systems  214
COMPANY INDEX  613
ED

8 Forecasting  245
SUBJECT INDEX  615
9 Capacity Planning and Facility Location  293
HT

10 Facility Layout  329

R IG

Available in WileyPLUS and Wiley Custom:

PY

S U PP L EMEN T A Spreadsheet Modeling: An Introduction  A1

CO

S U PP L EMEN T B Introduction to Optimization  B1

S U PP L EMEN T C Waiting Line Models  C1

S U PP L EMEN T D Master Scheduling and Rough-Cut Capacity Planning  D1

xv
Contents
FROM THE AUTHORS   v
MAKING OPERATIONS MANAGEMENT PERSONAL   vi
CHANGES TO THIS EDITION   viii
IMPROVED LEARNING OUTCOMES WITH WILEYPLUS   x
ACKNOWLEDGMENTS   xii
ABOUT THE AUTHORS  xiv
1 Introduction to Operations
Management  1
Chapter Overview 1
What Is Operations Management? 2
Differences between Manufacturing and Service
Organizations 4
Operations Management Decisions 6
Historical Development 9
Why OM?  9
Historical Milestones  9
The Industrial Revolution  10
Scientific Management  11
The Human Relations Movement  11
Management Science  12
The Computer Age  12
Just-in-Time  12
Total Quality Management  13
Business Process Reengineering  13
Flexibility  13
Time-Based Competition  13
Supply Chain Management  14
Global Marketplace  15
Sustainability and Green Operations  15
Electronic Commerce  15
Outsourcing and Flattening of the World  16
Big Data Analytics  16
Today’s OM Environment 17
Operations Management in Practice 17
Within OM: How It All Fits Together 18
OM across the Organization  18
The Supply Chain Link  20
The Sustainability Link  20
Case:  Hightone Electronics, Inc.  21
Case:  Creature Care Animal Clinic (A)  21
Case:  Analytics in Decision Making  22
Interactive Case:  Virtual Company  22
Internet Challenge:  Demonstrating Your
Knowledge of OM  23
xvi
Chapter Highlights / Key Terms / Discussion Questions /
Selected Bibliography
2 Operations Strategy and
Competitiveness  25
Chapter Overview 25
The Role of Operations Strategy 26
The Importance of Operations
Strategy  27
Developing a Business Strategy 27
Mission  27
Environmental Scanning  28
Core Competencies  29
Putting It Together  30
Developing an Operations Strategy 31
Competitive Priorities  31
The Need for Trade-Offs  34
Order Winners and Qualifiers  34
Translating Competitive Priorities into
Production Requirements  35
Strategic Role of Technology 36
Types of Technologies  36
Technology as a Tool for Competitive
Advantage  36
Productivity 37
Measuring Productivity  37
Interpreting Productivity Measures  39
Productivity and Competitiveness  39
Productivity and the Service Sector  40
Operations Strategy within OM: How It All Fits
Together 40
Operations Strategy across the
Organization  41
The Supply Chain Link  41
The Sustainability Link  42
Solved Problems  42
Case:  Prime Bank of Massachusetts  43
Case:  Boseman Oil and Petroleum (BOP)  44
Case:  Analytics in Decision Making  45
Interactive Case: Virtual Company  45
Internet Challenge:  Understanding Strategic
Differences  46
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems /
Selected Bibliography
 Contents   xvii

3 Product Design and Process 4 Supply Chain Management  89

Selection  49
Chapter Overview 89
Chapter Overview 49 Basic Supply Chains 90
Product Design 50 Components of a Supply Chain for a Manufacturer  91
Design of Services versus Goods  51 A Supply Chain for a Service Organization  93
The Product Design Process 51 The Bullwhip Effect  94
Idea Development  51 Issues Affecting Supply Chain Management 96
Product Screening  52 E-commerce and Supply Chains  96
Preliminary Design and Testing  55 Consumer Expectations and Competition Resulting
Final Design  55 from E-commerce  98
Factors Impacting Product Design 55 Globalization  99
Design for Manufacture  55 Infrastructure Issues  101
Product Life Cycle  56 Government Regulation and E-commerce  102
Concurrent Engineering  57 Green Supply Chain Management  102
Remanufacturing  58 The Role of Purchasing 105
Process Selection 58 Traditional Purchasing and E-purchasing  105
Types of Processes  58 Sourcing Decisions 108
Designing Processes 61 Insourcing versus Outsourcing Decisions  109
Process Performance Metrics 64 Developing Supplier Relationships  111
Linking Product Design and Process How Many Suppliers?  111
Selection 65 Developing Partnerships  112
Product Design Decisions  66 Supplier Management Ethics  115
Competitive Priorities  67 The Role of Warehouses 116
Facility Layout  67 Crossdocking  118
Product and Service Strategy  68 Radio Frequency Identification Technology (RFID)  119
Degree of Vertical Integration  69 Third-Party Service Providers  120
Technology Decisions 70 Implementing Supply Chain Management 121
Information Technology  70 Strategies for Leveraging Supply Chain
Automation  71 Management  122
E-manufacturing  73 Supply Chain Performance Metrics  123
Designing Services 74 Supply Chain Management within OM:
How Are Services Different from Manufacturing?  75 How It All Fits Together 124
How Are Services Classified?  75 SCM Across the Organization  125
The Service Package  76 The Supply Chain Link  125
Differing Service Designs  77 The Sustainability Link  125
Product Design and Process Selection Solved Problems  126
within OM: How It All Fits Together 79 Case: Electronic Personal Heart Rate Monitors Supply
Product Design and Process Selection Chain Management Game  127
Across the Organization  79 Case: Supply Chain Management at Durham International
The Supply Chain Link  80 Manufacturing Company (DIMCO)  129
The SustainabilIty Link  80 Case:  Analytics in Decision Making  130
Solved Problems  81 Interactive Case: Virtual Company  130
Case:  Biddy’s Bakery (BB)  83 Internet Challenge:  Global Shopping  131
Case:  Creature Care Animal Clinic (B)  83 Chapter Highlights / Key Terms / Formula Review /
Case:  Analytics in Decision Making  84 Discussion Questions / Problems / Selected Bibliography
Interactive Case: Virtual Company  84
Internet Challenge:  Country Comfort Furniture  85 5 Total Quality Management  135
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Chapter Overview 135
Selected Bibliography Defining Quality 136
xviii  Conte n ts

Differences between Manufacturing and p-Charts  180

Service Organizations  137 c-Charts  180
Cost of Quality 138 Process Capability 185
The Evolution of Total Quality Measuring Process Capability  185
Management (TQM) 139 Six Sigma Quality 189
Quality Gurus  140 Acceptance Sampling 190
The Philosophy of TQM 143 Sampling Plans  191
Customer Focus  144 Operating Characteristic (OC) Curves  192
Continuous Improvement  144 Developing OC Curves  193
Employee Empowerment  145 Average Outgoing Quality  194
Use of Quality Tools  146 Implications for Managers 196
Product Design  149 How Much and How Often to Inspect  196
Process Management  153 Where to Inspect  197
Managing Supplier Quality  153 Which Tools to Use  197
Quality Awards and Standards 154 Statistical Quality Control in Services 198
The Malcolm Baldrige National Quality Award (MBNQA)  154 Statistical Quality Control (SQC) within OM: How It All Fits
The Deming Prize  155 Together 199
ISO 9000 Standards  155 Statistical Quality Control (SQC) Across the
ISO Standards for Sustainability Reporting  156 Organization  199
Why TQM Efforts Fail 156 The Supply Chain Link  200
Total Quality Management (TQM) within OM: How It All The SustainabilIty Link  200
Fits Together 157 Solved Problems  201
Total Quality Management (TQM) across Case: Scharadin Hotels  206
the Organization  157 Case: Delta Plastics, Inc. (B)  207
The Supply Chain Link  158 Case: Analytics in Decision Making  207
The Sustainability Link  159 Interactive Case: Virtual Company  208
Solved Problems  159 Internet Challenge: Safe-Air  208
Case: Gold Coast Advertising (GCA)  160 Chapter Highlights / Key Terms / Formula Review /
Case: Delta Plastics, Inc. (A)  160 Discussion Questions / Problems / Selected Bibliography
Case: Analytics in Decision Making  162
Interactive Case: Virtual Company  162
Internet Challenge:  Snyder Bakeries  163
7 Just-in-Time and Lean
Chapter Highlights / Key Terms / Formula Review / Systems  214
Discussion Questions / Problems / Selected Bibliography
Chapter Overview 214
The Philosophy of JIT 215
6 Statistical Quality Control  167 Eliminate Waste  215
A Broad View of Operations  216
Chapter Overview 167 Simplicity  216
What Is Statistical Quality Control? 168 Continuous Improvement  216
Sources of Variation: Common and Assignable Visibility  216
Causes 169 Flexibility  217
Descriptive Statistics 169 Elements of JIT 217
The Mean  170 Just-in-Time Manufacturing  218
The Range and Standard Deviation  170 Total Quality Management (TQM)  219
Distribution of Data  170 Respect for People  219
Statistical Process Control Methods 171 Just-in-Time Manufacturing 220
Developing Control Charts  171 The Pull System  220
Types of Control Charts  172 Kanban Production  221
Control Charts for Variables 173 Variations of Kanban Production  223
Mean (x-Bar) Charts  173 Small Lot Sizes and Quick Setups  224
Range (R) Charts  176 Uniform Plant Loading  225
Using Mean and Range Charts Together  178 Flexible Resources  226
Control Charts for Attributes 179 Facility Layout  226
 Contents   xix

Total Quality Management 227 Predictive Analytics and Forecasting  275

Product versus Process  228 Combining Forecasting  276
Quality at the Source  228 Collaborative Planning, Forecasting, and Replenishment
Preventive Maintenance  229 (CPFR) 276
Work Environment  229 Forecasting within OM: How It All Fits Together 277
Respect for People 230 Forecasting across the Organization  278
The Role of Production Employees  230 The Supply Chain Link  278
Lifetime Employment  231 The Sustainability Link  278
The Role of Management  231 Solved Problems  279
Supplier Relationships  232 Case: Bram-Wear  284
Benefits of JIT 233 Case:  The Emergency Room (ER) at Northwest
Implementing JIT 234 General (A)  285
JIT in Services 236 Case:  Analytics in Decision Making  286
Improved Quality  236 Interactive Case: Virtual Company  286
Uniform Facility Loading  236 Internet Challenge:  Online Data Access  286
Use of Multifunction Workers  236 Chapter Highlights / Key Terms / Formula Review /
Reductions in Cycle Time  236 Discussion Questions / Problems / Selected Bibliography
Minimizing Setup Times and Parallel Processing  236
Workplace Organization  237
JIT and Lean Systems within OM:
9 Capacity Planning and Facility
How It All Fits Together 237 Location  293
JIT and Lean Systems across the Organization  237
The Supply Chain Link  238 Chapter Overview 293
The Sustainability Link  238 Capacity Planning 294
Solved Problems  239 Why is Capacity Planning Important?  294
Case: Katz Carpeting  239 Measuring Capacity  295
Case:  Dixon Audio Systems  240 Capacity Considerations  296
Case:  Analytics in Decision Making  241 Making Capacity Planning Decisions 299
Interactive Case: Virtual Company  241 Identify Capacity Requirements  300
Internet Challenge:  Truck-Fleet, Inc.  242 Develop Capacity Alternatives  300
Chapter Highlights / Key Terms / Formula Review / Evaluate Capacity Alternatives  301
Discussion Questions / Problems / Selected Bibliography Decision Trees 301
Location Analysis 304
What is Facility Location?  304
8 Forecasting  245 Factors Affecting Location Decisions  304
Globalization  306
Chapter Overview 245 Making Location Decisions 308
Principles of Forecasting 246 Procedure for Making Location Decisions  308
Steps in the Forecasting Process 246 Procedures for Evaluating Location Alternatives  308
Types of Forecasting Methods 247 Capacity Planning and Facility Location within OM: How It
Qualitative Methods  248 All Fits Together 318
Quantitative Methods  249 Capacity Planning and Facility Location across the
Time Series Models 251 Organization 318
Forecasting Level or Horizontal Pattern  252 The Supply Chain Link  318
Forecasting Trend  260 The Sustainability Link  319
Forecasting Seasonality  263 Solved Problems  319
Causal Models 266 Case: Data Tech, Inc.  322
Linear Regression  266 Case:  The Emergency Room (ER) at Northwest
Multiple Regression  269 General (B)  323
Measuring Forecast Accuracy 270 Case:  Analytics in Decision Making  323
Forecast Accuracy Measures  270 Interactive Case:  Virtual Company  323
Tracking Signal  272 Internet Challenge:  EDS Office Supplies, Inc.  324
Selecting the Right Forecasting Model 273 Chapter Highlights / Key Terms / Formula Review /
Forecasting Software  274 Discussion Questions / Problems / Selected Bibliography
xx  Conte nts
10 Facility Layout  329
Chapter Overview 329
What Is Layout Planning? 330
Types of Layouts 330
Process Layouts  330
Product Layouts  331
Hybrid Layouts  333
Fixed-Position Layouts  333
Designing Process Layouts 333
Step 1: Gather Information  334
Step 2: Develop a Block Plan  336
Step 3: Develop a Detailed Layout  339
Special Cases of Process Layout 339
Warehouse Layouts  340
Office Layouts  342
Designing Product Layouts 343
Step 1: Identify Tasks and Their Immediate
Predecessors  344
Step 2: Determine Output Rate  345
Step 3: Determine Cycle Time  345
Step 4: Compute the Theoretical Minimum Number of
Stations  347
Step 5: Assign Tasks to Workstations (Balance the
Line)  347
Step 6: Compute Efficiency, Idle Time, and Balance
Delay  348
Other Considerations  348
Group Technology (Cell) Layouts 349
Facility Layout within OM: How It All Fits Together 350
Facility Layout across the Organization  350
The Supply Chain Link  351
The Sustainability Link  351
Solved Problems  352
Case:  Sawhill Athletic Club (A)  354
Case:  Sawhill Athletic Club (B)  355
Case:  Analytics in Decision Making  356
Interactive Case: Virtual Company  356
Internet Challenge: DJ and Associates, Inc.  356
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
11 Work System Design  363
Chapter Overview 363
Work System Design 364
Job Design 364
Job Design  364
Machines or People?  365
Level of Labor Specialization  366
Eliminating Employee Boredom  366
Team Approaches to Job Design  367
The Alternative Workplace  368
The Work Environment  370
Methods Analysis  370
Work Measurement 372
Developing Standards  374
Developing a Standard Work Sampling  381
Learning Curve Theory  382
Compensation 385
Group Incentive Plans  385
Incentive Plan Trends  386
Work System Design within OM: How It All Fits
Together 386
Work System Design across the Organization  387
The Supply Chain Link  387
The Sustainability Link  388
Solved Problems  388
Case:  The Navigator III  391
Case: Northeast State University  391
Case:  Analytics in Decision Making  392
Interactive Case: Virtual Company  392
Internet Challenge: E-commerce Job Design  393
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
12 Inventory Management  399
Chapter Overview 399
Basic Inventory Principles 400
How Manufacturers Use Inventory  400
Inventory in Service Organizations  401
Inventory Management Objectives 402
Customer Service  403
Cost-Efficient Operations  404
Minimum Inventory Investment  404
Relevant Inventory Costs 406
ABC Inventory Classification 408
Inventory Record Accuracy 411
Determining Order Quantities 413
Nonmathematical Techniques for Determining Order
Quantity  413
Mathematical Models for Determining Order
Quantity  414
The Single-Period Inventory Model  424
Why Companies Don’t Always Use the Optimal Order
Quantity  426
How a Company Justifies Smaller Order
Quantities  426
Determining Safety Stock Levels 428
The Periodic Review System 430
Comparing Continuous Review Systems and Periodic
Review Systems  432
Inventory Management within OM: How It All Fits
Together 433
Inventory Management across the Organization  433

The Supply Chain Link  434
The Sustainability Link  434
Solved Problems  434
Case:  FabQual Ltd.  438
Case: Kayaks!Incorporated  438
Case:  Analytics in Decision Making  439
Interactive Case: Virtual Company  440
Internet Challenge:  Community Fundraiser (A)  440
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
13 Aggregate Planning  447
Chapter Overview 447
Business Planning 448
Aggregate Planning Options 450
Demand-Based Options  450
Capacity-Based Options  451
Evaluating the Current Situation  452
Aggregate Plan Strategies 454
Level Aggregate Plan  454
Chase Aggregate Plan  455
Hybrid Aggregate Plan  455
Developing the Aggregate Plan 456
Aggregate Plans for Companies with Tangible
Products  457
Aggregate Plans for Companies with Nontangible
Products  461
Aggregate Planning within OM: How It All Fits
Together 465
Aggregate Planning across the Organization  465
The Supply Chain Link  466
The Sustainability Link  466
Solved Problems  467
Case: Newmarket International Manufacturing
Company (A)  473
Case:  JPC, Inc.: Kitchen Countertops Manufacturer  474
Interactive Case: Virtual Company  474
Case:  Analytics in Decision Making  475
Internet Challenge: Cruising  475
Chapter Highlights / Key Terms / Discussion Questions /
Problems / Selected Bibliography
14 Resource Planning  480
Chapter Overview 480
Enterprise Resource Planning 481
The Evolution of ERP Systems  482
The Benefits and Costs of ERP  484
The Benefits of ERP Systems  484
The Costs of ERP Systems  485
Material Planning Systems 486
An Overview of Material Planning Systems  487
Contents   xxi
Objectives of MRP  487
Types of Demand  488
The Operating Logic of MRP  489
How MRP Works 494
Action Notices  498
Comparing Different Lot Size Rules  499
Capacity Requirements Planning (CRP) 500
Resource Planning within OM:
How It All Fits Together 502
Resource Planning across the Organization 503
The Supply Chain Link  504
The Sustainability Link  504
Solved Problems  504
Case: Newmarket International Manufacturing
Company (B)  508
Case: Desserts by J.B.  510
Case:  Analytics in Decision Making  510
Interactive Case: Virtual Company  511
Internet Challenge:  The Gourmet Dinner  512
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
15 Scheduling  517
Chapter Overview 517
Basic Scheduling Concepts 518
Scheduling High-Volume Operations  518
Scheduling Low-Volume Operations  519
Shop Loading Methods  520
Developing a Schedule of Operations 523
Scheduling Performance Measures  525
Using Different Priority Rules  527
Sequencing Jobs through Two Work Centers  530
Optimized Production Technology 532
Scheduling Bottlenecks  532
Theory of Constraints  534
Scheduling Issues for Service Organizations 534
Scheduling Techniques for Service Organizations  535
Scheduling Employees  535
Developing a Workforce Schedule  536
Scheduling within OM: Putting It All Together 538
Scheduling across the Organization  538
The Supply Chain Link  539
The SustainabilIty Link  539
Solved Problems  539
Case: Air Traffic Controller School (ATCS)  543
Case: Scheduling at Red, White, and Blue Fireworks
Company  544
Interactive Case: Virtual Company  544
Case:  Analytics in Decision Making  545
Internet Challenge:  Batter Up  545
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
xxii  Conte n ts

16 Project Management  550

Chapter Overview 550
The Project Life Cycle 551
Project Management Concepts 552
Step 1: Describe the Project  553
Step 2: Diagram the Network  553
Step 3: Estimate the Project’s Completion Time  555
Step 3 (a): Deterministic Time Estimates  555
Step 3 (b): Probabilistic Time Estimates  558
Step 4: Monitor the Project’s Progression  563
Estimating the Probability
of Completion Dates 564
Reducing Project Completion Time 566
Crashing Projects  567
The Critical Chain Approach 569
Adding Safety Time  569
Wasting Safety Time  569
Project Management within OM: How It All Fits
Together 570
Project Management OM Across the Organization  571
The Supply Chain Link  571
The Sustainability Link  572
Solved Problems  572
Case:  The Research Office Moves  576
Case: Writing a Textbook  576
Case:  Analytics in Decision Making  577
Interactive Case: Virtual Company  578
Internet Challenge: Creating Memories  578
Chapter Highlights / Key Terms / Formula Review /
Discussion Questions / Problems / Selected Bibliography
A P P E NDIX A  Solutions to Odd Problems  584
A P P E NDIX B   The Standard Normal Distribution  608
A P P E NDIX C   p-Chart  609
COMPANY INDEX  613
SUBJECT INDEX  615

Available in WileyPLUS and Wiley Custom:

S U PPL E MEN T A  Spreadsheet Modeling: An Introduction  A1

S U PPL E MEN T B  Introduction to Optimization  B1

S U PPL E MEN T C  Waiting Line Models  C1

S U PPL E MEN T D  Master Scheduling and Rough-Cut Capacity Planning  D1