Operations
Management
THIRTEENTH
EDITION
William J. Stevenson
Saunders College of Business
Rochester Institute of Technology
Mc
Graw
Hill
Education
Contents
Preface
vii
2
Competitiveness, Strategy, and
Productivity
1
Introduction to Operations
Management 2
Introduction
Introduction
Why Learn About Operations Management?
10
Operations Strategy
Productivity
56
Readings:
Why Productivity Matters 59
Operations Management and Decision
Making 18
Dutch Tomato Growers' Productivity
Advantage 60
Reading:
Analytics 20
Productivity Improvement 62
Summary 62
Key Points 63
Key Terms 63
Soived Problems 63
Discussion and Review Ouestions 64
Taking Stock 64
Critical Thinking Exercises 65
Problems 65
Case
An American Tragedy: How a Good Company
Died 67
The Historical Evolution of Operations
Management 21
24
26
Key issues for Today's Business Operations
27
28
Diet andthe Environment: Vegetarian i/s.
Nonvegetarian 29
Operations Tour
Wegmans Food Markets 33
Summary 36
Key Points 36
Key Terms 36
Discussion and Review Ouestions 36
Taking Stock 37
Critical Thinking Exercises 37
Gase
Hazel 38
Selected Bibliography & Further Readings 38
Problem-Solving Guide 39
51
Transforming Strategy into Action: The Balanced
Scorecard 54
14
17
Readings:
Universities Embrace Sustainability
45
Implications of Organization Strategy for Operations
Management 54
Process Management 13
Reading:
Agility Creates a Competitive Edge
44
Reading:
Amazon Tops in Customer Service
Career Opportunities and Professional
Societies 12
Operations Today
42
Mission and Strategies
Production of Goods Versus Providing
Services 8
Reading:
Why Manufacturing Matters
41
Competitiveness
4
The Scope of Operations Management
40
Home-Styie Cookies
Hazel Revisited
68
69
"Your Garden Gloves" 70
Operations Tour
The U.S. Postal Service 70
Selected Bibliography and Further Readings 73
3
Forecasting
Introduction
74
76
Features Common to All Forecasts
Elements of a Good Forecast
77
78
XXV
xxvi
Contents
Forecasting and the Supply Chain
Steps in the Forecasting Process
Forecast Accuracy
78
Cultural Factors
79
Global Product and Service Design
79
Approaches to Forecasting
Readings:
Best Buy Wants Your Junk
80
82
Associative Forecasting Techniques
Monitoring Forecast Error
Using Forecast Information
101
Recycle City: Maria's Market
Other Design Considerations
110
Readings:
Lego A/S in the Pink
111
Computer Software in Forecasting 112
Reading:
Gazing at the Crystal Ball 113
Summary 114
Key Points 116
Key Terms 117
Solved Problems 117
Discussion and Review Ouestions 123
Taking Stock 124
Critical Thinking Exercises 124
Problems 124
Gase
M&L Manufacturing 134
Service Design
136
138
SUPPLEMENT TO CHAPTER 4: Reliability
5
140
190
Capacity Decisions are Strategie 191
Defining and Measuring Capacity 192
143
Determinants of Effective Capacity 193
144
Reading:
Do You Want Pickled Beets with That?
189
Reading:
Excess Capacity Can Be Bad News!
142
Strategy Formulation
145
174
Strategie Capacity Flanning for Products
and Services 188
Introduction
140
Reading:
Vlasic on a Roll with Huge Pickte Slices
Human Factors
165
Reading:
The Challenges of Managing Services 169
Summary 170
Key Points 170
Key Terms 170
Discussion and Review Ouestions 170
Taking Stock 171
Critical Thinking Exercises 171
Problems 172
Operations Tour
High Acres Landfill 173
Selected Bibliography and Further Readings 173
Readings:
Product Redesign, Not Offshoring,
Holds Cost Advantage for U.S.
Manufacturers 139
Legal and Ethical Considerations
162
Operations Strategy 169
138
Idea Generation
152
Designing for Production
Product and Service Design
Dutch Boy Brushes up Its Points
151
Phases in Product Design and
Development 161
Highline Financial Services, Ltd. 135
Selected Bibliography and Further Readings 135
Introduction
149
Fast-Food Chains Adopt Mass
Customization 155
Operations Strategy 112
Reading:
Design as a Business Strategy
148
Xerox Diverts 2 Billion Pounds of
Waste From Landfills Through Green
Initiatives 149
84
106
Choosing a Forecasting Technique
147
Kraft Foods' Recipe for Sustainability
82
Forecasts Based on Time-Series Data
4
145
Environmental Factors: Sustainability 146
Reading:
High Forecasts Can Be Bad News
Qualitative Forecasts
145
195
Forecasting Capacity Requirements
196
Contents
Critical Thinking Exercises 288
Problems 288
Selected Bibliography and Further Readings 295
Additional Challenges of Flanning Service
Capacity 198
Do it in-House or Outsource it? 199
7
Reading:
My Compliments to the Chef, er, Buyer 200
Developing Capacity Strategies
Constraint Management
Evaluating Alternatives
6
xxvii
Work Design and Measurement
Introduction
200
Job Design
205
297
297
Quality of Work Life
205
Methods Analysis
301
306
Operations Strategy 211
Summary 211
Key Points 212
Key Terms 212
Solved Problems 212
Discussion and Review Ouestions 215
Taking Stock 215
Critical Thinking Exercises 215
Problems 216
Gase
Outsourcing of Hospital Services 219
Selected Bibliography and Further Readings 219
Operations Strategy 322
Summary 323
Key Points 323
Key Terms 324
Solved Problems 324
Discussion and Review Ouestions 325
Taking Stock 326
Critical Thinking Exercises 326
Problems 326
Selected Bibliography and Further Readings 329
SUPPLEMENT TO CHAPTER 5: Decision
Theory 220
SUPPLEMENT TO CHAPTER 7: Learning
Curves 330
Motion Study
Introduction
242
243
Process Selection
244
Operations Tour
Morton Salt 248
Technology
257
The Need for Location Decisions
343
The Nature of Location Decisions
344
342
346
Service and Retail Locations
257
Strategie Resource Organization: Facilities Layout
267
Designing Product Layouts: Line Balancing
Designing Process Layouts 278
Summary 283
Key Points 283
Key Terms 283
Solved Problems 283
Discussion and Review Ouestions 287
Taking Stock 288
Location Flanning and Analysis
Identifying a Country, Region, Community, and
Site 349
252
Self-Driving Vehides are on the Horizon
Reading:
BMW's Strategy: Flexibility 278
311
General Procedure for Making Location
Decisions 348
Readings:
Foxconn Shifts its Focus to Automation
Reading:
A Safe Hospital Room ofthe Future
8
Global Locations
250
Process Strategy
310
Work Measurement
Process Selection and Facility Layout
296
269
257
356
Reading:
Site Selection Grows Up: Improved Tech Tools
Make the Process Faster, Better 357
Evaluating Location Alternatives 358
Summary 364
Key Points 364
Key Terms 364
Solved Problems 364
Discussion and Review Ouestions 366
Taking Stock 366
Critical Thinking Exercises 366
Problems 367
Gase
Hello, Walmart? 370
Selected Bibliography and Further Readings 370
xxviii
9
Contents
Management of Quality
Introduction
Reading:
Making Potato Chips
372
373
Reading:
Whatever Happened to Quality?
Statistical Process Control
374
The Evolution of Quality Management
374
The Foundations of Modern Quality Management:
The Gurus 375
Insights on Quality Management
378
Readings:
The Sounds of Quality 380
Hyundai: Kissing Clunkers Goodbye
Rework and Morale
Quality Awards
384
386
386
Quality Certification
387
Quality and the Supply Chain
389
Reading:
Improving Quality and Reducing Risk in
Offshoring 390
Total Quality Management
390
Problem Solving and Process
Improvement 394
Reading:
What Keeps Six Sigma Practitioners up at
Night? 397
Quality Tools
398
Operations Strategy 406
Summary 406
Key Points 407
Key Terms 407
Solved Problem 407
Discussion and Review Ouestions 408
Taking Stock 409
Critical Thinking Exercises 409
Problems 409
Gase
Chick-N-Gravy Dinner Line 411
Tip Top Markets 412
Selected Bibliography and Further Readings 414
Introduction
Inspection
417
418
Process Capability
423
441
Operations Strategy 446
Reading:
Bar Codes Might Cut Drug Errors in
Hospitals 447
Summary 447
Key Points 447
Key Terms 449
Solved Problems 449
Discussion and Review Ouestions 453
Taking Stock 454
Critical Thinking Exercises 454
Problems 454
Gase
Toys, Inc. 460
Tiger Tools 460
Selected Bibliography and Further Readings 461
11 Aggregate Flanning and Master
Scheduling 462
Introduction
464
Reading:
Duplicate Orders Can Lead to Excess
Capacity 468
Basic Strategies for Meeting Uneven Demand
Reading:
Benchmarking Corporate Websites of Fortune 500
Companies 406
10 Quality Control
422
416
Techniques for Aggregate Flanning
Aggregate Flanning in Services
481
Disaggregating the Aggregate Plan
Master Scheduling
474
483
483
The Master Scheduling Process 484
Summary 489
Key Points 489
Key Terms 490
Solved Problems 490
Discussion and Review Ouestions 493
Taking Stock 493
Critical Thinking Exercises 493
Problems 493
Gase
Eight Glasses a Day (EGAD) 498
Selected Bibliography and Further Readings 498
12 MRP and ERP
Introduction
500
501
An Overview of MRP
501
Contents
MRP Inputs
MRP Outputs
506
513
Other Considerations
MRP in Services
514
516
Benefits and Requirements of MRP
MRP II
516
517
Capacity Requirements Flanning
ERP
Summary 585
Key Points 586
Key Terms 587
Solved Problem 587
Discussion and Review Ouestions 592
Taking Stock 592
Critical Thinking Exercises 592
Problems 593
Gase
UPD Manufacturing 600
502
MRP Processing
519
Harvey Industries 601
521
Grill Rite
Readings:
The ABCs of ERP
14 JIT and Lean Operations
Introduction
Reading:
Toyota Recalls
612
Supporting Goals
613
614
Readings:
General Mills Turns to Nascarto Reduce
Changeover Time 617
"People" Firms Boost Profits, Study
Shows 621
550
551
Lean Tools
Reading:
$$$ 552
631
Reading:
Nearby Suppliers Match Ford's Mix 633
The Nature and Importance of Inventories
552
Transitioning to a Lean System
Requirements for Effective Inventory
Management 555
Lean Services
Inventory Ordering Policies
JIT II
561
How Much to Order: Economic Order Quantity
Models 561
573
How Much to Order: Fixed-Order-interval Model
The Single-Period Model
Operations Strategy 585
580
633
634
Reading:
To Build a Better Hospital, Virginia Mason Takes
Lessons from Toyota Plants 636
Reading:
Radio Frequency Identification (RFID)
Tags 557
Reorder Point Ordering
608
610
Building Blocks
Operations Tour
Stickley Furniture 546
Selected Bibliography and Further Readings 549
Introduction
604
PSC, Inc. 605
Selected Bibliography and Further Readings 607
546
13 Inventory Management
603
Operations Tour
Bruegger's Bagel Bakery
527
Operations Strategy 529
Summary 529
Key Points 529
Key Terms 530
Solved Problems 530
Discussion and Review Ouestions 539
Taking Stock 539
Critical Thinking Exercises 540
Problems 540
Gase
Promotional Novelties 545
Dmd Enterprises
602
Farmers Restaurant
523
The Top 10 ERP Mistakes
xxix
577
637
Operations Strategy 637
Summary 638
Key Points 639
Key Terms 639
Solved Problems 639
Discussion and Review Ouestions 640
Taking Stock 640
Critical Thinking Exercises 640
Problems 640
XXX
Contents
Key Terms 685
Discussion and Review Ouestions 685
Taking Stock 686
Critical Thinking Exercises 686
Problems 686
Case
Master Tag 687
Selected Bibliography and Further Readings 688
Case
Level Operations 641
Operations Tour
Boeing 642
Selected Bibliography and Further Readings 643
SUPPLEMENT TO CHAPTER 14:
Maintenance 644
15 Supply Chain Management
Introduction
16 Scheduling
652
Scheduling Operations
654
Trends in Supply Chain Management
Global Supply Chains
Ethics and the Supply Chain
Small Businesses
Scheduling Services
658
659
ERP and Supply Chain Management
659
660
660
Management Responsibilities
661
662
Reading:
IBMs Supply Chain Social Responsibility 665
E-Business
695
713
Operations Strategy 717
Summary 717
Key Points 717
Key Terms 718
Solved Problems 718
Discussion and Review Ouestions 722
Taking Stock 722
Critical Thinking Exercises 722
Problems 723
Case
Hi-Ho, Yo-Yo, Inc. 729
Selected Bibliography and Further Readings 729
666
Reading:
E-Procurement at IBM
Supplier Management
17 Project Management
668
Introduction
669
Reading:
NestleUSA and Ocean Spray Form Strategie
Operations Alliance 671
Inventory Management
Order Fulfillment
Logistics
692
Scheduling in Low-Volume Systems
655
Reading:
At 3M, a Long Road Became a Shorter Road
Procurement
690
672
673
Operations Tour
Wegmans' Shipping System
Readings:
Springdale Farm
Project Life Cyde
732
Behavioral Aspects of Project Management
PERT and CPM
675
739
A Computing Algorithm
Active RFID t/s. Passive RFID
678
Creating An Effective Supply Chain
Reading:
Clicks or Bricks, or Both? 681
680
678
743
744
Probabilistic Time Estimates
751
Determining Path Probabilities
Simulation
739
740
Deterministic Time Estimates
677
733
Reading:
Project Managers Have Never Been More
Critical 738
Flanning and Scheduling with Gantt Charts
RFID Tags: Keeping the Shelves Stocked
Strategy 684
Summary 685
Key Points 685
732
Work Breakdown Structure
674
730
754
756
Budget Control
757
Time-Cost Trade-offs: Crashing
757
Advantages of Using PERT and Potential Sources of
Error 760
Critical Chain Project Management
761
Contents
Other Topics in Project Management
Project Management Software
Operations Strategy
761
762
763
Risk Management 763
Summary 764
Key Points 765
Key Terms 765
Solved Problems 765
Discussion and Review Ouestions 772
Taking Stock 772
Critical Thinking Exercises 772
Problems 772
Case
The Case ofthe Mexican Crazy Ouilt 779
Time, Please 781
Selected Bibliography and Further Readings 781
18 Management ofWaiting Lines
Why is There Waiting?
785
Reading:
New Yorkers Do Not Like Waiting in Line 785
CharacteristicsofWaiting Lines
785
786
Measures of Waiting-Line Performance
Queuing Models: Infinite-Source
Queuing Model: Finite-Source
Constraint Management
The PsychologyofWaiting
790
790
805
811
811
Reading:
David H. Maister on the Psychology of
Waiting 812
Operations Strategy
19 Linear Programming
Introduction
822
823
824
Graphical Linear Programming
784
Goal of Waiting-Line Management
Summary 813
Key Points 814
Key Terms 814
Solved Problems 814
Discussion and Review Ouestions 816
Taking Stock 816
Critical Thinking Exercises 816
Problems 816
Case
Big Bank 820
Selected Bibliography and Further Readings 820
Linear Programming Models
782
Managerial Implications ofWaiting Lines
xxxi
The Simplex Method
838
Computer Solutions
838
Sensitivity Analysis 841
Summary 844
Key Points 844
Key Terms 844
Solved Problems 844
Discussion and Review Ouestions 847
Problems 847
Case
Son, Ltd. 851
Custom Cabinets, Inc.© 852
Selected Bibliography and Further
Readings 853
APPENDIX A
Answers to Selected Problems
APPENDIX B
Tables
APPENDIX C
Working with the Normal
Distribution 872
812
Reading:
Managing Waiting Lines at Disney World 813
826
Company Index 877
Subject Index 879
866
854