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
