Production and Operations Management: An Applied Modern Approach [2 Ed] 0471546321

Table of contents :
Front Cover
Title Page
Contents
Part 1: An Introduction to Operations and Strategy
1. Production Systems and Operations Management
2.Operations Strategy
3. Tours of Operations
Part 2: Designing Production Systems
4. Forecasting
T1: Optimization Models, Linear Programming and Heuristics
5. Product Design and Operations
Supplement: Product Reliability
6. Capacity Planning and Facility Location
T2: Decision Analysis
7. Selecting the Process Structure and Technology
8. Process Design and Facility Layout
9. Waiting Lines
T3: Simulation Analysis for Operations Management
10. Job Design, Work Methods and Organization
Supplement: Learning and Experience Curves
11. The Quality Management System
Supplemet: Acceptance Sampling
Part 3: Scheduling, Operating and Controlling the Production System
12. Aggregate Plaanning
13. Inventory Planning and Managing Materials with Independent Demands
14. Managing Materials with Dependent Demands
15. Just-In-Time, Lean and Synchronous Production Systems
16. Operations and Personnel Scheduling
17. Project Planning and Scheduling
Appendix A: The Standard Normal Distribution
Appendix B: Solutions to Selected Odd-Numbered Problems
Photo Credits
Company Index
Name Index
Subject Index
Back Cover

Citation preview

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Production and

Operations Management An Applied Modern Approach jOSEPH S.

Martinich

University of Missouri-St. Louis

New York

•

Chichester

•

John Wiley & Sons, Inc. Brisbane • Toronto •

Singapore

• Weinheim

Acijuisilions Editor Senior Developmental Editor Marveling Manager Production Manager Outside Production Management Senior Designer Manufacturing Manager Photo Editor Senior Illustration Coordinator

Beth Lang Golub Nancy Perry Leslie Hines Charlotte Hyland Suzanne Ingrao of Ingrao Associates Laura Nicholls Mark Cirillo Hilary Newman Anna Melhorn

Cover Pfiotos by. (top) Paul Chesley/Tony Stone Images, New York, Inc. (center) Mark loseph/Tony Stone Images. New York, Inc. (bottom) Charles Thatcher/Tony Stone Images, New York, Inc.

This book was set in 10/12 pt Noverese by Ruttie, Shaw, and Wetherill and printed and bound by Von Hoffmann Press. The cover was printed by Phoenix Color.

Recognizing the importance of preserving what has been written, it is a policy of lohn Wiley & Sons, Inc. to have books of enduring value published in the United States printed on acid-free paper, and we exert our best efforts to that end.

Copyright ©1997, by John Wiley & Sons, Inc. Ail rights reserved. Published simultaneously in Canada. Reproduction or translation of any part of this work beyond that per­ mitted by Sections 107 and 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Re­ quests for permission or futher information should be addressed to the Permissions Department, lohn Wiley & Sons, Inc.

Library of Congress Cataloging in Publication Data Martinich, loseph Stanislaus, 1950— Production and operations management : an applied modern approach / by loseph S. Martinich. p.

cm.

Includes bibliographical references and index. ISBN 0-471-54632-1 (cloth : alk. paper) 1. Production management. 2. Industrial engineering. 1. Title. TS155.M3345 1997 658.5—dc20 96-28170 CIP Printed in the United States of America

10 987654321

ABOUT

THE

AUTHOR

Uo Uic£i: JK'y a)i^e ancfpipefi'ne lo

co772yOtz/ez’

/ec/inolopp

Joseph S. Martinich

Louis), the Engineering Management Department

is Professor of Op­

of the University of Missouri-Rolla, and the Indus­

erations Manage­ ment at the Univer­

trial Engineering Department of California State Polytechnic University-Pomona.

sity of Missouri-St.

Dr. Martinich is the co-author (with Arthur P.

Louis. He holds a B.S. degree in In­

Hurter) of the book Facilitif Location and tfie Theory of Production (Kluwer Academic), and he is the au­

dustrial Engineer­

thor of nearly 20 scholarly articles and reviews.

North­

His work has appeared in leading journals, such

western University;

as Decision Sciences, European Journal of Operational

an M.A. in Eco­ nomics from Cali­

Research. Naval Researcii Logistics. American Economic

fornia State University-Fullerton; and a Ph.D. in In­

Forecasting and Social Change. His early research fo­

dustrial Engineering and Management Sciences

cused on the interrelationship between produc­

University. He has worked

tion technology, process selection, and facility lo­

and/or consulted for companies in the steel, oil

cation decisions, and the effects of uncertainty

and chemical, paperboard and packaging, retail,

and government intervention on these decisions.

ing

from Northwestern

from

Revieiv, Journal of Regional Science, and Technological

business services, and publishing industries, as

His current research includes the environmental

well as for governmental and not-for-profit organi­

aspects of operations management, and the ap­

zations. He has held visiting and adjunct faculty

plication of Lean Production methods to service

positions at the John M. Olin School of Business

systems, not-for-profit organizations, and small

Administration

of Washington

University

(St.

businesses.

III

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!

PREFACE

No one undertakes a five-year writing project with­

out compelling personal reasons. In my case I had

accounting, finance, engineering, MIS, medi­ cine, law, and most other professions, will find

taught production and operations management for

that a large part of their jobs will be devoted to

12 years to over a thousand students, 98% of whom

operational issues.

were not operations management majors but rather

•

were majoring in accounting, marketing, finance, MIS, and several other fields. Few students had any

Opening each chapter is an On the Job box,

which briefly describes the featured per­

idea what operations management was, and their

son's operations management activities. Many of the people profiled work outside

quantitative skills were quite varied, with many of them exhibiting severe math anxiety. These factors

the operations function of their companies; they include accounting managers, financial

presented several special challenges in teaching

officers, customer service and sales person­

this course; how to demonstrate the relevance of

nel, purchasing managers, engineers, and

operations management to this wide variety of nonmajors: how to teach the thought processes and an­

entrepreneurs. Few had extensive formal

training in operations management, but most have found that their forma! exposure

alytical reasoning required in operations manage­

ment in a mathematically accessible and interesting

to operations management, though limited, • has been invaluable.

way that reduces math anxiety; how to eliminate ar­

tificial separations between quantitative and quali•

tative/behavioral material; and how to make the dis­

cussion

and examples realistic, and

familiarize

used to illustrate the applicability and importance of opera­

Over 200 companies are

tions management to a wide variety of or­ ganizations, as well as a variety of jobs.

students with the richness and importance of opera­

tions, without overwhelming them.

•

Over the years, I prepared in-class notes, trans­

Each chapter contains an In Good Com­ box, which describes how the pro­

parencies, and exercises that addressed these issues

pany

in the course, but I found no textbook that adequately

filed organization has addressed the oper­

assisted the students (and me) in doing so. Many stu­

ations management issues in that chapter

dents encouraged me to turn my notes into a book be­

to improve its performance.

cause they found them more readable and interesting

2.

To familiarize students witfi real production sys­

than the text. Little did 1 know that this "conversion" of

tems.

notes would take five years of my life, but I believe the

or full-time jobs, most of them are familiar with

Although many of my students hold part-

result has been a book that will help instructors teach,

very' few production systems and frequently with

and students learn, about the extent, substance, and

only a small part of their own companies, such

excitement of operations management.

as the accounts receivable department. Accoun­

tants, sales representatives, and computer sys­ tems analysts who understand the general na­

ture and activities of production systems are

GOALS AND CORRESPONDING FEATURES

better able to work with and communicate with customers, suppliers, and co-workers and be more effective in their jobs. •

In writing this book 1 had the following goals: 1.

Chapter 3, therefore, provides tours of four

production

systems.

These tours,

To demonstrate t/te importance of operations

which include both manufacturing and

management to non-mafors. Anyone seeking a

service operations, describe the main ac­

supervisory or managerial career in marketing,

tivities involved in producing the compa­

Preface

VT

titative and qualitative aspects of P/OM

nies' products, whether it be a roll of liner­

•

board or a title insurance policy. More im­

must be integrated to solve real problems

portantly, the chapter identifies opera­

and bring together the topics of the chap­

tional problems and issues important to

ter and related chapters. With two excep­

the success of the company. These discus­

tions (Walt Disney World and Southwest

sions preview and motivate the topics to

Airlines), the companies used are ficti­

be covered in the remainder of the book.

tious, but the problems underlying most of the cases are a synthesis of actual situa­

The end-of-chapter Cases and some in-

tions from my experiences and those of

text examples have also been designed to

colleagues or from written reports. The

provide descriptions of real production

cases are quite different from those in

systems or parts of systems. 3.

To made tfie topics realistic and applicable.

other books in that they tell a story of the

Be­

problem and how it was solved. They

cause of their work experiences, students want

demonstrate the problems that occur in

to see how the topic applies to their jobs. They

implementation; the unexpected events

have also encountered the ambiguities, "messi­

that can occur; and how behavioral and

ness," and unanticipated consequences of real

quantitative tools can be combined to ob­

situations, so they will not accept tools that

tain better solutions than either one alone

work only in idealized worlds. •

can achieve. Although the cases are not

I have used real examples extensively to

designed for "solution," discussion ques­

show how companies and workers are

tions are provided with each one.

confronting P/OM issues and problems. Over 100 photos make the people, compa­ nies, and situations more tangible.

•

Many of the illustrative examples are a bit longer and "messier" than the "toy" problems commonly used in texts. Typically, a single example will grow in complexity and realism

as the discussion progresses and additional factors are introduced. For example. Chapter

7

first presents the

rationale,

thought­

process, and mechanics of a standard heuris­ tic for designing a single repetitive flow

process (assembly line). Unlike many P/OM

texts, however, this chapter then discusses

4.

To provide a state-of-tfie art treatment of topics.

In the past 20 years, businesses have radically changed the way they design and produce

goods and services; they have redesigned jobs and work systems, quality management sys­ tems. and material management and inventory

systems, and they have changed the technolo­

gies they use at a dizzying pace. Terms such as

lean production, just-in-time production, electronic data interchange, total quality management, concur­

rent engineering, and cellular production have en­ tered the vernacular of the business press.

•

methods for improving the design, including

switching

heuristics and

not simply tacked onto this book as a sepa­

nonquantitative

considerations involving staffing, technol­

rate "new methods” section resembling a glossary. They are discussed extensively

ogy, and task synergies. More advanced top­

throughout the book in an integrated fash­

ics, such as the use of parallel work-stations,

ion. For example, not only is Chapter 11 de­

parallel production lines, and the effects of

voted entirely to quality management, total

randomness and variation on the production

quality management principles and tech­

system, are presented for instructors who wish to cover the topic in greater depth.

niques are woven into the chapters on op­

erations strategy, product design, process design, job design, and lean production,

Without being smothered in mathematical calculations, students can see the complex­

•

Entire chapters or substantial sections,

ity of operational problems and possible ap­

not just brief abstracts, are devoted to top­

proaches to resolving them and become fa­

ics such as lean and just-in-time production, cel­ lular production, and vendor relations.

miliar with available tools, •

These approaches and methodologies are

The end-of-chapter Cases

provide de­

tailed and realistic examples of how quan­

•

Attention to the ecological implications of opera­

tions decisions has been increasing, and not

Preface

simply because of environmental regula­

•

When presenting quantitative material 1

tions. Several chapters contain sections that

have tried to focus on the thought-process

point out, and illustrate with real examples, the opportunities that exist for companies to

of how to approach various types of prob­

increase profits by designing products and

sented is appropriate in practice.

production processes and managing opera­

lems, and

•

tions in an environmentally sound manner. 5.

VII

and iv/iy the approach pre­

To a large extent, 1 have avoided present­

ing quantitative material in a fashion assumptions

formulas

To emphasize the strategic role of operations in or­

where

The maior changes occurring in business have involved fundamental changes in

stated, followed by a "toy" numerical ex­

ample where the student simply substi­

strategy. Companies such as Hewlett-Packard, Southwest Airlines, Walt Disney, Wal-Mart, Toy­

tutes numbers for variables. Because my illustrative examples explain the rationale of

ota, and Chrysler have become successful not

the approach and the reasons for each step, the

simply because they have marketed their prod­

mathematical steps are more intuitive,

ucts well, but because they have developed pro­

less magical, and more likely to be com­

ganizations.

are

prehended and retained by students,

duction systems that allow them to excel in vari­

ous ways: introducing new products more quickly, producing products of higher quality or

and

•

Solved Problems are

provided at the end

of all chapters that contain quantitative

at lower cost than competitors, or being more

material. The solutions for these problems

responsive and flexible in the timeliness of de­ livery and variety of products produced.

are explained in detail, providing further

•

reinforcement and practice for students.

Chapter 2, therefore, provides an extensive discussion of the role of operations in the devel­

opment and execution of an organization’s strategy.

The need for compatibility between the

ORGANIZATION OF THE BOOK

marketing strategy, such as one based on

•

6.

providing customized products, and the

The general organization of the book is consistent

operations strategy and production system

with most P/OM courses. It begins with general back­

is emphasized. Numerous real-world exam­

ground information on operations management, strat­

ples and numerical illustrations are used to

egy, and production processes. It then discusses is­

shov/ how companies can, and have, ex­

sues related to the design of production systems.. The

ploited operational strengths.

final part focuses on shorter-term operations plan­

Subsequent chapters dealing with system de­

ning and control decisions. Three features of the orga­

sign issues reinforce and expand the discus­

nization of the book should also assist instruction.

sion of operations strategy, such as how ca­

Topics are integrated and reinforced.

pacity and facility location decisions can be

as quality management and lean production per­

used to enhance competitive position. To make the quantitative models and tools ac­

meate so many aspects of operations that it is ar­ tificial to segment totally their coverage from

The proliferation of computers and

other operations management topics. For exam­

model-based software has made the use of

ple, mistake-proofing of iobs [poka yoke] is a com­

quantitative models and methods in opera­

mon tool used in quality management, but not to

cessible.

Topics such

tions management more wide-spread and im­

include it in the job design chapter would be to

portant rather than less so. However, the form

omit an innportant iob design principle. For this

and level of knowledge students need regard­

reason, many popular topics are covered in more

ing quantitative methods has changed. Every

than one place in the book. Typically, one chapter

student needs to develop the ability to analyze

will provide detailed discussion of the topic, but it

a situation or problem, identify what informa­

will be discussed within other relevant chapters as

tion is known, structure the problem, identify

well. This approach allows instructors to omit

what is to be determined, and select a method

chapters from the course and still be able to cover

for finding the solution.

desired topics.

VIII

Preface

Quantitative and qualitative topics are integrated.

OTHER FEATURES

To perform good operational planning and to solve operational problems, a manager must utilize a wide

set of skills and knowledge. A theme of this book is that quantitative methods are tools to be used as part

of the decision-making process, not an end in them­ selves. Too often operations management topics and problems are divided into mutually exclusive cate­ gories—quantitative or qualitative—where one and

In addition to the features mentioned earlier—On the

Job and In Good Company profiles, End-of-

Chapter

Plant

Cases,

Tours,

Problems—the book contains

and

Solved

several other fea­

tures that support the learning process; •

Chapter

Summaries.

The most impor­

only one approach is presented. 1 have organized the

tant issues discussed in the chapter are

book by general topics or problems and have in­

presented in one- or two-sentence state­ ments at the end of each chapter. These

cluded whatever knowledge or skills are helpful or

appropriate. For example. Chapter 9 not only pre­

reinforce key ideas and provide a quick ref­

sents mathematical models of queueing systems, it

erence for the main ideas.

also considers "qualitative" issues, such as the rela­

•

Hiyfiligfited Formulas and Key Formulas Sec­

The most important and frequently

tive advantages of single waiting lines and express

tion.

servers, the psychology of waiting, and selection of

needed formulas and equations are high­

appropriate performance measures.

lighted with color in the body of the chapter. They are then printed together at the end of

Tfie Hoof: is flexible And usable by a wide audience.

the chapter for easy reference when stu­

Material in this book has been used at four universi­

ties in both undergraduate and graduate business

dents are solving numerical problems. •

Hiyfiligbted Key Terms and Key Terms Sec-

courses and in a senior level engineering manage­

tion.

ment course with success. The topics covered in in­ troductory P/OM courses vary considerably from

where they are first defined and then are

school to school and instructor to instructor. There­

page number cited where their definition

listed at the end of each chapter with the

fore, this book contains all the standard P/OM top­ ics, from which an instructor can customize his or

Key terms are highlighted in bold

was given. •

her course. Further, almost all chapters are suffi­

End-of-C/iapter Problems.

The book con­

ciently self-contained so any set of chapters can be

tains approximately 250 end-of-chapter problems. I have intentionally tried to pro­

combined for a course.

vide a set of problems with a wide range of

instructors should find this text very flexible

difficulty from the very direct and simple to

with respect to the degree of mathematical content

relatively complex mini-cases requiring con­

desired in the course. By choosing to include or

siderable analysis and possibly the use of

omit individual chapter sections. Chapter Supple­

computer software. (The most difficult ones

ments, or Tutorials, instructors can use this book

are designated by an asterisk *.) To a large

for courses ranging from those with quite modest to

extent, the problems have been constructed

very substantia! mathematical emphasis. The core

in pairs; problems 1 and 2 address the same

of the book only assumes students have prerequi­

topic, and so on. In general, even-numbered

site knowledge of college algebra and basic proba­

problems will only use data from other

bility and statistics. For those schools that wish to

introduce management science tools, such as linear

even-numbered problems and similarly for odd-numbered problems. The answers to al­

programming or simulation, as part of the P/OM course, three Tutorials provide in-depth introduc­

at the end of the book.

tions with special focus on how these tools can be used for operations management. At those schools

where students have more advanced mathematical

preparation, such as a prerequisite management

most all odd-numbered problems are given •

Discussion and Review Questions.

Over

270 questions are provided at the end of the chapters. These not only help students

science course, the tutorials can either be omitted

review the important topics, but many require students to relate the topics to their

or sections of them can be used to illustrate the ap­ plication of these tools to P/OM topics.

own experiences and to draw upon several topics together to answer the questions.

Preface

SUPPLEMENTARY MATERIALS

IX

sion of various companies and industries, and for their reinforcement of key concepts in the text. Each segment is approximately 3-5 minutes long and can be used to introduce topics to students and provide a real-world context for related concepts. Addition­

ally, a selection of plant tour videos are available, related to companies and industries in the text. Software Animated Simulations. Instructor's Guide.

This selection of

The Instructor's Guide was writ­ ten by the author to make sure it was compatible

software simulations of key concepts from the text

with the themes and style of the text. For each chap­

simulations, including queuing and |IT scheduling,

ter, the Guide contains: (1) a list of learning objec­

allow instructors to demonstrate the effects of key

tives, (2) possible in-class exercises to motivate or il­ lustrate the chapter topic, (3) suggested examples or

parameters.

additional comments instructors can use to illus­

Supplement CD-ROM.

trate topics, (4) solutions to all end-of-chapter prob­ lems, (5) answers to review and discussion ques­

tions where there is a dominant answer (for many

questions, especially those requiring students to use their own experiences no single answer exists), and

Presentation.

This CD-ROM contains all

of the supplements for this text (excluding video) in

computerized form, allowing instructors to print,

edit, and project the material as needed. Instructors may print out any of the material for their own use

or for distribution to students. Also included on the CD-ROM are the Software Animated Simulations, the PowerPoint Presentations, and the text illustra­

(6) possible answers to the case questions. PoH’erPoiHt

are designed for use in classroom presentation. The

These PowerPoint lec­

tions. Available for IMB or IBM compatibles.

ture slides contain a combination of key concepts,

images, and examples from the text. Developed by Lance Matheson of Virginia Tech, the slides are di­

ACKNOWLEDGMENTS

vided into a thorough presentation file for each

chapter, and consist of over 600 instructional im­ ages. Designed according to the organization of the

material in the text, this series of electronic trans­ parencies can be used for classroom presentation to reinforce P/OM concepts visually and graphically.

This book is the result of hard work by many people. First, I would like to thank the hundreds of students

who used parts of this book in class and provided helpful feedback. I would especially like to thank

Carolyne Weigel Schriefer, my research assistant for

by Y.

this book. I am also grateful to Professor L. S.

Chang (developer of QSOM^” Prentice Hall) is avail­

Hiraoka's P/OM students at Kean College of New

able with the book. However, the book is designed

Jersey, who told us what pedagogical elements were

so it can be used with any of the standard operations

most useful to them as they studied and who evalu­

management or management science packages.

ated the proposed design of the text. Second. I

Computer

Test

Software.

Bfljift.

Software

Including

developed

objective

questions and

problems, as well as short-answer and essay ques­ tions, the Test Bank has been designed to meet the

varying testing needs of instructors. Computerized Test Band.

The entire Test Bank is

also available in a computerized form, allowing in­

structors to create and modify exams. It is available in a Windows format for IBM and IBM compatibles. Video Tapes. The Wiley/Nightly Business Report Video contains segments from the highly respected

would like to thank the following faculty reviewers who reviewed various drafts very conscientiously and provided superb comments to improve the style and content of the text.

John Buzacott

York University

Barbara Flynn Frank Forst

Iowa State University Loyola University of Chicago

Gregory Frazier

University of Oregon

Manton Gibbs

Indiana University of Pennsyl­

S. K. Goyal

vania Concordia

Jeff Heyl

DePaul University

treal

Nightly Business Report that have been selected for

their applicability to P/OM concepts, their discus­

University,

Mon­

X

Preface

Tim Ireland

Oklahoma State University

Third, I would like to thank those people at Wiley

Thomas lohnson

University of Southern Florida

who believed in this project and helped to produce

V. Kannan

Michigan State University

a book of which I can be proud; Beth Lang Golub,

Gary Kern

University of Notre Dame Florida International

Nancy Perry, Leslie Hines, Francine Banner, David

Jerzy Kyparisis

University

Kear,

Charlotte

Hyland,

Anna

Melhorn,

Laura

Nicholls, and Hilary Newman. Many thanks also go

Hon-Shiang Lau Phillip Lederer

Oklahoma State University

to Suzanne Ingrao for her work in producing the

University of Rochester

book. I would like to give special thanks to Elisa

Lewis Litteral

University of Richmond

Adams, my development editor. Throughout the

Timothy Lowe

University of Iowa

lames Luxhoj Lance Matheson

Rutgers University Virginia Polytechnic Institute

process she gave me direct and constructive com­ ments and helped me to keep up my spirits and to

George Monahan

University of Illinois-Urbana-

maintain at least a modicum of sanity. Fourth, I

would like to thank those people featured in the "On

Champaign

the lob" profiles, those who helped with the plant

C. Carl Pegels

SUNY-Buffalo

tours, and those people and companies who pro­

Fred Raafat Farhad Raiszadeh

San Diego State University University of Tennessee-Chat­

vided photos and reviewed narratives used in the

tanooga

book. Finally, this is a "first edition" book, so I hope

instructors will be patient with any deficiencies they

Boston College

find. Many difficult trade-offs and decisions had to

Rudolph Russell

Louisiana State University University of South Carolina

be made about what topics to include and how to

loseph Sarkis

University of Texas-Arlington

dom of my P/OM colleagues is far beyond my own

Todd Schultz

Augusta College

knowledge. So I seek your suggestions, advice, and

Ramesh Soni

Indiana University of

even critical comments that will help me to make fu­

Pennsylvania

ture editions better. 1 want to practice continuous

Ashok Srinivasan

Purdue University

improvement and make the second edition even

John Steelquist

Chaminade University

better than the first. Please feel free to e-mail me at

Jeffrey Ringuest Dan Rinks

present them. The collective experiences and wis­

[email protected] .

CONTEXTS

L

PART 1

Chapter i

•

N INTRODUCTION TO OPERATIONS AND STRATEGY

Production Systems

7,6

AND Operations

OPERATIONS MANAGEMENT

Management

5

Chapter 2 7.7

P/OM'S VALUE TO YOU

6

0nl/ie^o6: Carol R. Caruthers,

Price Waterhouse LLP

1.2

2.1

6

PRODUCTION SYSTEMS AND

2.2

Production of Goods and Services

9

10

MANAGEMENT? Reaching the Goals 11 ^oo(fCompany: Quali^ Drives the

2.3

Winning Dimensions

37

Philosophy and Policies

38

2.-7

OPERATIONS AS A COMPETITIVE

Skills and Knowledge Needed to Be

2. J

16

DEVELOPING AN OPERATIONS 40

Measuring Productivity

18

MANAGEMENT

OPERATIONALIZING GOALS AND 41

METKSURING PERFORMANCE

THE HISTORY OF OPERATIONS

42

Cost Measures and Accounting

Practices 44 Goal-Based Measures of Performance

18

Scientific Management 20 The Human Relations Movement

23

2.6

Operations Research/Management Science

45

GUIDING OPERATIONS DECISIONS; OPERATIONS SUBSTRATEGIES

24

Technology Strategy; Capabilities

Computers In Operations

and Expertise

Management 24 The lapanese Production System

Capacity' Strategy

25

47 49

Facility Location Strategy

27

Process Strategy OPERATIONS MANAGEMENT,

28

51

53

Quality Strategy 56 Human Resources Strategy

PRODUCTIVITY, AND

COMPETITIVENESS

38

STRATEGY

13

a Successful Operations Manager

38

WEAPON

Gap 12 Responsibilities and Challenges

Operations Management Today

36

The Business Unit Strategy

Operations as a Strategic Weapon:

(OR/MS)

36

Market and Competitive Analysis 37 Selecting Products, Markets, and Order-

WHAT IS OPERATIONS

The Industrial Revolution

35

THE ORGANIZATION'S

Goals

7

Functional Units of the Organization

1.4

35

STEERING THE SHIP On i£e ^oS: Bob Anastasi, CTI-

STRATEGY 7

OF ORGANIZATIONS

Facing Operations Managers

34

Operations Strategy

Cryogenics

THE FUNCTIONAL UNITS

1.3

23

IS FOR EVERYONE

56

Information in Operations Strategy

57

XI

XII 2.7

Contents 3.3

PRODUCTION COST STRUCTURE AND

PRODUCTION OF BUSINESS FORMS

THE OPERATIONS AND MARKETING

Scheduling

58

of Scale Strategically 60 SoodCompany: Hewlett-Packard s

2.3

Major Operational Issues

63

3.4 63

OPERATIONS STRATEGY

UNITED PARCEL SERVICE (UPS): LOCAL.

of

Operations

3.1

ONE SIZE DOES NOT FIT ALL

3.2

lEFFERSON SMURFIT CORPORATION: PAPERBOARD MANUFACTURING

Products

The Facility

71 72

72

Sorting

89

Loading

90

87

89

Major Operational Issues

3. .5

90

APPROVED STATEWIDE TITLE AGENCY: PROCESSING TITLE

73

Pulp Preparation

INSURANCE

74

The Fourdrinier Machine

Major Operational Issues

PART 2-.5

91

Customers and Products

75

Winding. Cutting, and Shipping

Chapter 4

87

DELIVERY The Deliveiy Network and a Typical

68

Delivery C_ycle

Tours

84

NATIONAL. AND WORLDWIDE

7s)a71 'Disney Islorfd, Orlando, Sforida:

Chapter 3.

83

84

Packing and Shipping

REVISING AND UPDATING THE

An Operations Strategy Case

81

Printing 82 Collating and Finishing

Using Experience Effects and Economies

Strategy Takes Aim at Its Competitors

79

Order Receipt and Production

58

STRATEGIES Leverage and Capacity Utilization

STANDARD REGISTER COMPANY:

76

93 Major Operational Issues 94

76

ESIGNING PRODUCTION SYSTEMS

Forecasting

92

The Production Process

98

When to Use Qualitative Methods

lOI

107

How to Improve Qualitative 4.1

GOOD DECISIONS BEGIN WITH GOOD FORECASTS Onl/ie^oS: )a_yne Rosselli, Garden

Vall^' Ranch

Forecasting

4.4

102

What Is Forecasting?

IIO

Background and Strategy of Quantitative

102

Forecasts—and Wins Big

Forecasting

110

Steps in Modeling

III

Time Series and Causal Models

104

FORECASTING METHODS

The Role of Time

QUANTITATIVE FORECASTING

METHODS

Importance of Demand Forecasting 103 Sn SoodCompany: CompaQ.BetS On

4.2

107

102

105

4.3

105

113

CONSTANT PROCESSES AND THE

CUMULATIVE AVERAGE

115

QUASI-CONSTANT PROCESSES

117

Quantitative versus Qualitative Methods

4.6

106

Simple Moving Average

4.3

QUALITATIVE FORECASTING

METHODS

Weighted Moving Average 106

118

119

Simple Exponential Smoothing

120

Contents

4.7

MODELS

4.S

Feed Mix or Diet Problem

122

Verifying Model Assumptions

122

Evaluating Forecast Accuracy

123

Multiperiod Planning

LINEAR TREND PROCESSES

126

Moving Linear Regression 129 Double Exponential Smoothing

127

THE GEOMETRY OF LINEAR 179

Graphical Solution 130

and Unbounded Problems

132

Preparing the Problem for Solution Algorithm

CAUSAL MODELS

141

185

The Simplex Pivot and the Second

Estimating the Relationship and

Tableau

142

186

The Third Tableau

Practical Hints for Using Causal

The Fourth Tableau

144

187

187

General Comments About the

ADVANCED MODELS

4.12

IMPLEMENTATION AND USE OF

T/.j 145

FORECASTING SYSTEMS

Model Evaluation and Testing

Algorithm

144

4.7/

USING ARTIFICIAL VARIABLES 189

The Two-Phase Method T/.i,

146

190

INFEASIBLE PROBLEMS. MULTIPLE OPTIMA. UNBOUNDEDNESS.

148

9Reyno[Js and9fiffCoffe^e: K Forecasting Case

191

AND DEGENERACY 162

T1.10 COMPUTER SOLUTION OF

191

LINEAR PROGRAMS

Tutorial

i

Optimization Models. Linear

Problem Input

Programming.

Computer Output 191 Sensitivity Anafysis 191

And Heuristics

T//

166

MATHEMATICAL MODELS AND

167

CONSTRAINED OPTIMIZATION 167

I170

Solar Oil Company' Revisited; Updating

Production Decisions

195

PROGRAMMING MODELS

195

Tl. IJ HEURISTIC METHODS IN 172

FORMULATING LINEAR

PROGRAMS

Tl. 12 INTEGER AND MIXED-INTEGER PROGRAMS

CHARACTERISTICS AND

ASSUMPTIONS OF LINEAR

T/.j

193

193

ADVANTAGES AND PITFALLS OF USING OPTIMIZATION MODELS

T/.4

MODELS FOR DECISION MAKING

Health_y Pet Food Revisited

MODELS

T/.J

191

T/. 11 USING LINEAR PROGRAMMING

OPERATIONS DECISION MAKING

T/.2

188

145

Monitoring Forecasts: Tracking Signals and

Buildup and Breakdown Models

188

The Big-M Method

145

Combining Forecasting Methods Adaptive Models

183

184

The Initial Simplex Tableau

141

Selecting an Independent Variable

Models

182

The Algebraic Foundations of the

137

Forecasting

182

T/.7 THE SIMPLEX ALGORITHM

133

Linear Trend Processes with

4.10

180

Multiple Optima, Infeasible Problems.

Constant or Quasi-Constant Processes

Seasonalify

177

PROGRAMS

SEASONAL PROCESSES with Seasonality

T/6

173

175

Blending Problem

Linear Regression for Trend Processes

4.9

173

Steps in Problem Formulation

COMPARING ALTERNATIVE

XIII

Characteristics 173

197

OPERATIONS 197

Advantages of Heuristics

197

XIII

XIV

Contents

Chapter 5

Product Design

Js.2

and

REDUNDANT (BACKUP)

211

Operations

INCREASING RELIABILITY USING 247

COMPONENTS

J./

THE PRODUCT DESIGN 212

REVOLUTION Onl£e^o£: DeeAmbrosia, Standard

Register Company

Capacity Planning

and

250

Facility Location 213

PRODUCT DEVELOPMENT

J, J

THE PRODUCT DESIGN PROCESS

6./

THE IMPORTANCE OF CAPACITY 251

AND LOCATION DECISIONS

Designing for Production

2(4

Roma 215

6.2

217

Team Design

0nl£e^o5: Sand)' Bo_yd, Espresso

215

Concurrent Design and Engineering

Working with Customers and Suppliers

6.3

BASIC PRINCIPLES OF DESIGNING

Minimize the Number of Paris Used Use Common Components

221

Use Standard Components

221

Simplify the Assembly Process

219

255

6.4

CAPACITY PLANNING AND

Break-Even Anafysis

227

Quality Function Deployment

Decision Anafysis

228

228

231

The Taguchi Method

262

Reouiremenls

226

PRODUCT DESIGN TOOLS

263 265

6.J

FACILITY LOCATION

6.6

LOCATION DECISION STAGES

266

AND FACTORS AFFECTING

232

Computer-Aided Design

FACILITY LOCATION

234

Design for Manufacturability and Design for

The Regional Decision

Assembly 235 3n Sood Company: Bocings Design

The Local Decision

Prototyping

262

EVALUATION METHODS Forecasting Demand and Capacity

Design for Robustness

Takes Off

257

260

Demand Strategies

Make Product Specifications and Tolerances

Value Anafysis

2SS

Capacitj' Expansion Strategies

222

253

CAPACITY STRATEGY

Facility Focus

220

225

Reasonable

252

MEASURING CAPACITY

The Organization of Production and

Use Modularify to Obtain Producl

Variety

251

Factors That Determine Capacity

217

PRODUCTS FOR PRODUCTION

3.5

g

212

J. 2

S.4

Chapter

The Site Decision

268

270

Public Service Facilities

236

266 267

270

Retail/Competilive Service Facilities

237

5.6

PRODUCT DESIGN FOR SERVICES

22,7

5.7

PRODUCTION DOCUMENTS

22,8

5.S

ENVIRONMENTALLY SENSITIVE

6.7

271

A SCORING RULE FOR LOCATION DECISION MAKING

DESIGN

272

Company: McrCCdcS Bcnz

Finds a Home in Alabama 240

27i£re-5Pac7: A Producl Design Case

5Jn

6. J

274

MATHEMATICAL MODELS FOR

FACILITY LOCATION PLANNING

244

275

Adding Capacify at an Existing or NewFacilify

Chapter 5

supplement

Product Reliability

278

Locating Several Facilities Simultaneousfy: 247

Fixed-Charge Problem

278

Public Service Facility Location Models 5s./

COMPUTING PRODUCT

RELIABILITY

Planar Location; Median and Center of

247

Gravity Models

282

280

XV

Contents 6.9

LOCATING FACILITIES GLOBALLY

Why Have Foreign Operations?

326

Foods, Inc.

285

A Checklist for Evaluating Foreign Sites C£enan