Operations Management

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1 \\ A \ \ ) / Operations Management An Integrated Approach ^ INTERNATIONAL STUDENT VERSION R. Dan Reid Nada R. Sanders ; m WILEY

2 C 0 N T E N T S CHAPTER 1 Basics of Operations Management l WHAT IS OPERATIONS MANAGEMENT? 2 Links to Practice: The E-tailers 4 DIFFERENCES BETWEEN MANUFACTURING AND SERVICE ORGANIZATIONS 5 Links to Practice: U.S. Postal Service 6 OPERATIONS MANAGEMENT DECISIONS 7 Links to Practice: Texas Instruments Incorporated 9 PLAN OF THIS BOOK 10 HISTORICAL DEVELOPMENT 11 WhyOM? 11 Historical Milestones 11 The Industrial Revolution 12 Scientific Management 13 The Human Relations Movement 14 Management Science 14 The Computer Age 15 Just-in-Time 15 Total Quality Management 15 Business Process Reengineering 16 Flexibility 16 Time-Based Competition 16 Supply Chain Management 16 Links to Practice: The Publishing Industry 17 Global Marketplace 18 Sustainability and Green Operations 18 Electronic Commerce 18 Outsourcing and Flattening of the World 19 TODAY'S OM ENVIRONMENT 2 0 OPERATIONS MANAGEMENT IN PRACTICE 21 WITHIN OM: HOW IT ALL FITS TOGETHER 21 OM ACROSS THE ORGANIZATION 22 THE SUPPLY CHAIN LINK 24 THE SUSTAINABILITY LINK 24 Chapter Highlights 25 Key Terms 25 Discussion Questions 25 Selected Bibliography 26 CHAPTER 2 Strategy and Productivity 27 THE ROLE OF OPERATIONS STRATEGY 29 The Importance of Operations Strategy 29 DEVELOPING A BUSINESS STRATEGY 30 Mission 30 Environmental Scanning 31 Core Competencies 33 Putting It Together 34 Links to Practice: Dell Computer Corporation 34 DEVELOPING AN OPERATIONS STRATEGY 35 Competitive Priorities 35 Links to Practice: Southwest Airlines Company 36 Links to Practice: FedEx Corporation 38 The Need for Trade-Offs 38 Order Winners and Qualifiers 39 Translating Competitive Priorities into Production Requirements 40 STRATEGIC ROLE OF TECHNOLOGY 4 1 Types of Technologies 41 Technology as a Tool for Competitive Advantage 42 PRODUCTIVITY 42 Measuring Productivity 42 Interpreting Productivity Measures 45 Productivity and Competitiveness 45 Productivity and the Service Sector 46 OPERATIONS STRATEGY WITHIN OM: HOW IT ALL FITS TOGETHER 46 OPERATIONS STRATEGY ACROSS THE ORGANIZATION 47 THE SUPPLY CHAIN LINK 47 THE SUSTAINABILITY LINK 4 8 Chapter Highlights 48 Key Terms 49 Formula Review 49 Solved Problems 49 Discussion Questions 50 Problems 50 Selected Bibliography 51 XV

3 xvi CONTENTS CHAPTER 3 Product and Process Design 53 PRODUCT DESIGN 55 Design of Services versus Goods 55 THE PRODUCT DESIGN PROCESS 56 Idea Development 56 Links to Practice: IBM Corporation 57 Product Screening 58 Preliminary Design and Testing 60 Final Design 60 FACTORS IMPACTING PRODUCT DESIGN 61 Design for Manufacture 61 Product Life Cycle 62 Concurrent Engineering 63 Remanufacturing 64 PROCESS SELECTION 64 Types of Processes 64 DESIGNING PROCESSES 68 PROCESS PERFORMANCE METRICS 70 LINKING PRODUCT DESIGN AND PROCESS SELECTION 73 Product Design Decisions 74 Links to Practice: The Babcock & Wilcox Company 74 Competitive Priorities 75 Facility Layout 75 Product and Service Strategy 77 Degree of Vertical Integration 77 TECHNOLOGY DECISIONS 7 8 Information Technology 78 Links to Practice: Using GPS Technology in Product Advertising 79 Automation 79 Links to Practice: Performing Robotic Surgery 81 e-manufacturing 82 DESIGNING SERVICES 83 How Are Services Different from Manufacturing? 83 How Are Services Classified? 84 The Service Package 85 Differing Service Designs 86 PRODUCT DESIGN AND PROCESS SELECTION WITHIN OM: HOW IT ALL FITS TOGETHER 87 PRODUCT DESIGN AND PROCESS SELECTION ACROSS THE ORGANIZATION 88 THE SUPPLY CHAIN LINK 89 THE SUSTAINABILITY LINK 89 Chapter Highlights 90 Key Terms 91 Formula Review 91 Solved Problems 91 Discussion Questions 93 Problems 93 Selected Bibliography 95 CHAPTER 4 Global Supply Chain Management 97 WHAT IS A SUPPLY CHAIN? 98 COMPONENTS OF A SUPPLY CHAIN FOR A MANUFACTURER 100 External Suppliers 100 Internal Functions 102 External Distributors 102 THE BULLWHIP EFFECT 102 Causes ofthebullwhip Effect 103 Counteracting the Bullwhip Effect 104 SUPPLY CHAINS FOR SERVICE ORGANIZATIONS 104 Internal Operations 105 The External Distributors 106 MAJOR ISSUES AFFECTING SUPPLY CHAIN MANAGEMENT 106 Information Technology 106 E-Commerce 106 Business-to-Business (B2B) E-Commerce 107 The Evolution of B2B Commerce 107 The Benefits of B2B E-Commerce 108 Business-to-Consumer (B2C) E-Commerce 108 Consumer Expectations and Competition Resulting from E-Commerce 109 Links to Practice: Lands' End, Inc. 109 Globalization 110 Government Regulations and E-Commerce 112 Green Supply Chain Management 112 Infrastructure Issues 115 Product Proliferation 116 THE ROLE OF PURCHASING 116 The Traditional Purchasing Process 116 The E-purchasing Process 118 ~ SOURCING ISSUES 121 Insourcing versus Outsourcing Decisions 122 Developing Supplier Relationships 124 How Many Suppliers? 124 Developing Partnerships 125 Links to Practice: The Bama Companies 126 Critical Factors in Successful Partnering 127 Links to Practice: Sweetheart Cup Company/

4 CONTENTS XVii Georgia-Pacific Corporation 127 Benefits of Partnering 129 Ethics in Supply Management 130 SUPPLY CHAIN DISTRIBUTION The Role of Warehouses 131 Links to Practice: Fingerhut Direct Marketing, Inc. 132 Crossdocking 133 Links to Practice: FedEx Freight 133 Radio Frequency Identification Technology (RFID) 135 Third-Party Service Providers 136 IMPLEMENTING SUPPLY CHAIN MANAGEMENT 137 Strategies for Leveraging Supply Chain Management 138 SUPPLY CHAIN PERFORMANCE METRICS 139 TRENDS IN SUPPLY CHAIN MANAGEMENT 141 SUPPLY CHAIN MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 143 SCM ACROSS THE ORGANIZATION 143 THE SUPPLY CHAIN LINK 144 THE SUSTAINABILITY LINK 144 Chapter Highlights 145 Key Terms 146 Formula Review 146 Solved Problems 146 ^ Discussion Questions 148 Problems 148 Selected Bibliography 149 CHAPTER 5 Managing Quality 151 DEFINING QUALITY 152 Differences between Manufacturing and Service Organizations 153 Links to Practice: General Electric Company/Motorola, Inc. 154 COST OF QUALITY 155 THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM) 156 Quality Gurus 157 THE PHILOSOPHY OF TQM 161 Customer Focus 161 Continuous Improvement 161 Employee Empowerment 163 Links to Practice: The Walt Disney Company 164 Use of Quality Tools 164 Links to Practice: The Kroger Company/Meijer Stores Limited Partnership 167 / Product Design 167 Process Management 172 Managing Supplier Quality 172 QUALITY AWARDS AND STANDARDS 173 The Malcolm Baldrige National Quality Award (MBNQA) 173 The Deming Prize 174 ISO 9000 Standards 174 ISO Standards 175 WHY TQM EFFORTS FAIL 176 TOTAL QUALITY MANAGEMENT (TQM) WITHIN 0M: HOW IT ALL FITS TOGETHER 176 TOTAL QUALITY MANAGEMENT (TQM) ACROSS THE ORGANIZATION 177 THE SUPPLY CHAIN LINK 178 THE SUSTAINABILITY LINK 178 Chapter Highlights 179 Key Terms 179 Formula Review 180 Solved Problems 180 Discussion Questions 181 Problems 181 Selected Bibliography 182 CHAPTER 6 Quality Control and Six Sigma 183 WHAT IS STATISTICAL QUALITY CONTROL? 184 Links to Practice: Intel Corporation 185 SOURCES OF VARIATION: COMMON AND ASSIGNABLE CAUSES 186 DESCRIPTIVE STATISTICS 186 The Mean 186 The Range and Standard Deviation 187 Distribution of Data 187 STATISTICAL PROCESS CONTROL METHODS 187 Developing Control Charts 188 Types of Control Charts 189 CONTROL CHARTS FOR VARIABLE^ \ Mean (x-bar) Charts 190 Range (R) Charts 1 r Using Mean?~ CONTROL CHAf^ P-Charts 197 X C-Charts 200 PROCESS CAPABILIt Measuring ProcessN SIX SIGMA QUALITY 2fc

5 XVlii CONTENTS Links to Practice: Motorola, Inc. 208 ACCEPTANCE SAMPLING 209 Sampling Plans 209 Operating Characteristic (OC) Curves 210 Developing OC Curves 212 Average Outgoing Quality 213 IMPLICATIONS FOR MANAGERS 215 How Much and How Often to Inspect 215 Where to Inspect 215 Which Tools to Use 216 STATISTICAL QUALITY CONTROL IN SERVICES 216 Links to Practice: The Ritz-Carlton Hotel Company, L.L.C./ Nordstrom, Inc. 217 Links to Practice: Marriott International, Inc. 217 STATISTICAL QUALITY CONTROL (SQC) WITHIN OM: HOW IT ALL FITS TOGETHER 218 STATISTICAL QUALITY CONTROL (SQC) ACROSS THE ORGANIZATION 218 THE SUPPLY CHAIN LINK 219 THE SUSTAINABILITY LINK 219 Chapter Highlights 220 Key Terms 220 Formula Review 221 Solved Problems 221 Discussion Questions 226 Problems 226 Selected Bibliography 229 CHAPTER 7 Lean Systems 230 THE PHILOSOPHY OF JIT 232 Eliminate Waste 233 A Broad View of Operations 233 Simplicity 233 Continuous Improvement 234 Visibility 234 Flexibility 234 ELEMENTS OF JIT 235 Just-in-Time Manufacturing 235 Total Quality Management (TQM) 237 Respect for People 237 Links to Practice: Texas Instruments 238 JUST-IN-TIME MANUFACTURING 238 The Pull System 238 Kanban Production 239 Variations of Kanban Production 242 Small Lot Sizes and Quick Setups 242 Uniform Plant Loading 243 Flexible Resources 244 Facility Layout 245 Links to Practice: Ryder Integrated Logistics 245 TOTAL QUALITY MANAGEMENT 246 Product versus Process 247 Quality at the Source 247 Preventive Maintenance 248 Work Environment 248 RESPECT FOR PEOPLE 249 The Role of Production Employees 249 Lifetime Employment 250 The Role of Management 251 Supplier Relationships 252 BENEFITS OF JIT 253 Links to Practice: Alcoa, Inc. 253 IMPLEMENTING JIT 254 JIT IN SERVICES 255 Improved Quality 255 Uniform Facility Loading 255 Use of Multifunction Workers 256 Reductions in Cycle Time 256 Minimizing Setup Times and Parallel Processing 256 Workplace Organization 256 JIT AND LEAN SYSTEMS WITHIN 0M: HOW IT ALL FITS TOGETHER 256 JIT AND LEAN SYSTEMS ACROSS THE ORGANIZATION 256 THE SUPPLY CHAIN LINK 257 THE SUSTAINABILITY LINK 258 Chapter Highlights 258 Key Terms 259 Formula Review 259 Solved Problems 259 Discussion Questions 260 Problems 260 '. c-v ' Selected Bibliography 260 ^ CHAPTER 8 Forecasting and Demand Planning 262 PRINCIPLES OF FORECASTING 263 STEPS IN THE FORECASTING PROCESS 264 Links to Practice: Intel Corporation 265 TYPES OF FORECASTING METHODS 265 Links to Practice: Improving Sales Forecasting 266

6 CONTENTS XIX Qualitative Methods 266 Quantitative Methods 268 TIME SERIES MODELS 270 Forecasting Level or Horizontal Pattern 271 Forecasting Trend 279 Forecasting Seasonality 282 Links to Practice: The Ski Industry Forecast 285 CAUSAL MODELS 285 Linear Regression 285 Correlation Coefficient 288 Multiple Regression 289 MEASURING FORECAST ACCURACY 289 Forecast Accuracy Measures 289 Tracking Signal 291 SELECTING THE RIGHT FORECASTING MODEL 292 FORECASTING SOFTWARE 293 Spreadsheets 293 Statistical Packages 293 Specialty Forecasting Packages 294 Guidelines for Selecting Forecasting Software 294 FOCUS FORECASTING 295 COMBINING FORECASTS 295 Links to Practice: Combining Methods in Weather Forecasting 296 COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR) 296 FORECASTING WITHIN OM: HOW IT ALL FITS TOGETHER 297 FORECASTING ACROSS THE ORGANIZATION 297 THE SUPPLY CHAIN LINK 298 THE SUSTAINABILITY LINK 298 Chapter Highlights 299 Key Terms 299 Formula Review 300 Solved Problems 301 Discussion Questions 305 Problems 305 Selected Bibliography 309 CHAPTER 9 Capacity and Location Decisions 311 CAPACITY PLANNING 313 Why Is Capacity Planning Important? 313 Links to Practice: Capacity Planning in the ER 313 Measuring Capacity 314 Capacity Considerations 316 Links to Practice: Focus in the Retail Industry 319 MAKING CAPACITY PLANNING DECISIONS 319 Identify Capacity Requirements 320 Develop Capacity Alternatives 321 Evaluate Capacity Alternatives 321 DECISION TREES 321 LOCATION ANALYSIS 324 What Is Facility Location? 325 Factors Affecting Location Decisions 325 Links to Practice: Locating in Silicon Valley 326 Globalization 327 MAKING LOCATION DECISIONS 329 Procedure for Making Location Decisions 329 Procedures for Evaluating Location Alternatives 329 CAPACITY PLANNING AND FACILITY LOCATION WITHIN OM: HOW IT ALL FITS TOGETHER 340 CAPACITY PLANNING AND FACILITY LOCATION ACROSS THE ORGANIZATION 340 THE SUPPLY CHAIN LINK 341 THE SUSTAINABILITY LINK 341 Chapter Highlights 341 Key Terms 342 Formula Review 342 Solved Problems 342 Discussion Questions 345 Problems 346 Selected Bibliography 348 CHAPTER 10 Layout Planning 350 WHAT IS LAYOUT PLANNING? 351 TYPES OF LAYOUTS 352 Process Layouts 352 Links to Practice: Wal-Mart Stores, Inc. 354 Product Layouts 354 Links to Practice: Toyota Motor Corporation 356 Hybrid Layouts 356 Fixed-Position Layouts 357 DESIGNING PROCESS LAYOUTS 357 Step 1: Gather Information 357 Step 2: Develop a Block Plan 360 Step 3: Develop a Detailed Layout 363 SPECIAL CASES OF PROCESS LAYOUT 363 Warehouse Layouts 363 Office Layouts 366 DESIGNING PRODUCT LAYOUTS 367

7 XX CONTENTS Step 1: Identify Tasks and Their Immediate Predecessors 367 Step 2: Determine Output Rate 369 Step 3: Determine Cycle Time 369 Step 4: Compute the Theoretical Minimum Number of Stations 371 Step 5: Assign Tasks to Workstations (Balance the Line) 371 Step 6: Compute Efficiency, Idle Time, and Balance Delay 372 Other Considerations 373 GROUP TECHNOLOGY (CELL) LAYOUTS 374 FACILITY LAYOUT WITHIN OM: HOW IT ALL FITS TOGETHER 375 FACILITY LAYOUT ACROSS THE ORGANIZATION THE SUPPLY CHAIN LINK 376 THE SUSTAINABILITY LINK 376 Chapter Highlights 377 Key Terms 377 Formula Review 377 Solved Problems 378 Discussion Questions 380 Problems 380 Selected Bibliography 384 CHAPTER 11 Job Design and Work Measurement 385 DESIGNING A WORK SYSTEM 386 JOB DESIGN 387 Designing a Job 387 Links to Practice: Google 387 Machines or People? 388 Level of Labor Specialization 389 Eliminating Employee Boredom 390 Team Approaches to Job Design 390 Links to Practice: The SCO Group 391 The Alternative Workplace 391 Links to Practice: AT&T 392 METHODS ANALYSIS 393 THE WORK ENVIRONMENT 395 WORK MEASUREMENT 396 Costing 396 Performance 397 Planning 397 SETTING STANDARD TIMES 397 How to Do a Time Study 397 Elemental Time Data 403 Predetermined Time Data 403 Work Sampling 405 Links to Practice: Pace Productivity 407 COMPENSATION 407 Time-Based Systems 407 Output-Based Systems 407 Group Incentive Plans 408 Links to Practice: Accountable Care Organizations (ACO) 408 Incentive Plan Trends 409 LEARNING CURVES 409 WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS TOGETHER 412 WORK SYSTEM DESIGN ACROSS THE ORGANIZATION THE SUPPLY CHAIN LINK THE SUSTAINABILITY LINK 413 Chapter Highlights 414 Key Terms 414 Formula Review 415 Solved Problems 415 Discussion Questions 418 Problems 418 Selected Bibliography 421 CHAPTER 12 Inventory Management Policies 423 TYPES OF INVENTORY 424 HOW COMPANIES USE THEIR INVENTORY 425 OBJECTIVES OF INVENTORY MANAGEMENT 427 Customer Service 427 Cost-Efficient Operations 428 Minimum Inventory Investment 429 RELEVANT INVENTORY COSTS Item Costs 431 Holding Costs 431 Ordering Costs 433 Shortage Costs 433 ABC INVENTORY CLASSIFICATION 433 Procedure for an ABC Inventory Analysis 435 Inventory Control Using ABC Classification 435 INVENTORY RECORD ACCURACY Links to Practice: Cisco Systems^ Inc. 436 INVENTORY IN SERVICE ORGANIZATIONS 438 DETERMINING ORDER QUANTITIES 439 MATHEMATICAL MODELS FOR DETERMINING ORDER QUANTITY 440 Economic Order Quantity (EOQ) 440 Calculating the EOQ 443

8 CONTENTS XXI Economic Production Quantity (EPQ) 445 Quantity Discount Model 449 WHY COMPANIES DON'T ALWAYS USE THE OPTIMAL ORDER QUANTITY 453 JUSTIFYING SMALLER ORDER QUANTITIES 453 Links to Practice: Kenworth Trucks 453 Understanding the EPQ Factors 454 DETERMINING SAFETY STOCK LEVELS How Much Safety Stock? 455 PERIODIC REVIEW SYSTEM 457 Comparison of Continuous Review Systems and Periodic Review Systems 459 THE SINGLE-PERIOD INVENTORY MODEL 460 INVENTORY MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 462 INVENTORY MANAGEMENT ACROSS THE ORGANIZATION 463 THE SUPPLY CHAIN LINK 463 THE SUSTAINABILITY LINK 464 Chapter Highlights 464 Key Terms 465 Formula Review 465 Solved Problems 466 Discussion Questions 469 Problems 470 Selected Bibliography 472' ~~ f CHAPTER 13 Sales and Operations Planning 473 THE ROLE OF AGGREGATE PLANNING 475 Marketing Plan 475 Aggregate or Production Plan 475 Financial and Engineering Plans 476 Master Production Schedule 476 Links to Practice: Coca-Cola Midi (CCM) 477 TYPES OF AGGREGATE PLANS 477 Level Aggregate Plan 477 Chase Aggregate Plan 478 Hybrid Aggregate Plan 479 AGGREGATE PLANNING OPTIONS Demand-Based Options 480 Capacity-Based Options 480 EVALUATING THE CURRENT SITUATION Links to Practice: UPS Hires Seasonal Workers 483 DEVELOPING THE AGGREGATE PLAN 483 AGGREGATE PLANS FOR COMPANIES WITH TANGIBLE PRODUCTS 485 c x AGGREGATE PLANS FOR SERVICE COMPANIES WITH NONTANGIBLE PRODUCTS 488 AGGREGATE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 492 AGGREGATE PLANNING ACROSS THE ORGANIZATION 493 THE SUPPLY CHAIN LINK 493 THE SUSTAINABILITY LINK 494 Chapter Highlights 494 Key Terms 494 Solved Problems 495 Discussion Questions 501 Problems 502 Selected Bibliography 504 CHAPTER 14 Materials Planning 505 ENTERPRISE RESOURCE PLANNING 507 ERP Modules 508 THE EVOLUTION OF ERP 508 First-Generation ERP 508 Second-Generation ERP 509 Links to Practice: Arapahoe County Government 510 THE BENEFITS OF ERP 511 Links to Practice: i2 Technologies 511 Links to Practice: SAP AG 512 THE COST OF ERP SYSTEMS 512 MATERIAL PLANNING SYSTEMS 513 AN OVERVIEW OF MRP 513 TYPES OF DEMAND 514 OBJECTIVES OF MRP 516 MRP INPUTS 516 Authorized MPS 516 Inventory Records 516 Bills of Material 518 THE MRP EXPLOSION PROCESS 521 ACTION NOTICES 525 COMPARISON OF LOT SIZE RULES 525 THE ROLE OF CAPACITY REQUIREMENTS PLANNING (CRP) 526 RESOURCE PLANNING WITHIN OM: HOW IT ALL FITS TOGETHER 528 RESOURCE PLANNING ACROSS THE ORGANIZATION THE SUPPLY CHAIN LINK THE SUSTAINABILITY LINK 530 Chapter Highlights 531 Key Terms 531 Formula Review 532

9 XXii CONTENTS Solved Problems 532 Discussion Questions 535 Problems 535 * Selected Bibliography 537 CHAPTER 15 Operations Scheduling 538 SCHEDULING OPERATIONS 540 HIGH-VOLUME OPERATIONS 540 Characteristics of Flow Operations 540 LOW-VOLUME OPERATIONS 541 Gantt Chart 541 SCHEDULING WORK 542 Infinite Loading 542 Finite Loading 543 Forward Scheduling 543 Backward Scheduling 544 Monitoring Workflow 544 HOW TO SEQUENCE JOBS 546 Priority Rules 546 How to Use Priority Rules 547 MEASURING PERFORMANCE 548 Links to Practice: Airline Scheduling 548 Job Flow Time 548 Average Number of Jobs in the System 549 Makespan 549 Job Lateness and Tardiness 549 / COMPARING PRIORITY RULES 550 Comparing SPT and S/RO 55,3 SEQUENCING JOBS THROUGH TWO WORK CENTERS 553 SCHEDULING BOTTLENECKS 555 Links to Practice: l-800-fl0wers.com 557 THEORY OF CONSTRAINTS 558 SCHEDULING FOR SERVICE ORGANIZATIONS 558 Scheduling Services Demanded 558 Scheduling Employees 560 DEVELOPING A WORKFORCE SCHEDULE SCHEDULING WITHIN OM: PUTTING IT ALL TOGETHER 562 SCHEDULING ACROSS THE ORGANIZATION THE SUPPLY CHAIN LINK 564 THE SUSTAINABILITY LINK 564 Chapter Highlights 564 Key Terms 565 Formula Review 565 Solved Problems 565 Discussion Questions 569 Problems 569 Selected Bibliography 572 CHAPTER 16 PERT, CPM and Critical Chain 573 PROJECT LIFE CYCLE 575 Conception 575 Feasibility Analysis or Study 575 Planning 576 Execution 576 Termination 576 NETWORK PLANNING TECHNIQUES 576 Links to Practice: PERT and the Polaris Missile 576 Step 1: Describe the Project 577 Step 2: Diagram the Network 578 Step 3: Estimate the Project's Completion Time 579 Step 3 (a): Deterministic Time Estimates 580 Step 3 (b): Probabilistic Time Estimates 582 Step 4: Monitor the Project's Progression 588 Links to Practice: Managing the Olympic Games 588 ESTIMATING THE PROBABILITY OF COMPLETION DATES 589 REDUCING PROJECT COMPLETION TIME 591 Crashing Projects 591 THE CRITICAL CHAIN APPROACH Adding Safety Time 594 Wasting Safety Time 594 PROJECT MANAGEMENT WITHIN OM: HOW IT ALL FITS TOGETHER 596 PROJECT MANAGEMENT OM ACROSS THE ORGANIZATION 596 THE SUPPLY CHAIN LINK 597 THE SUSTAINABILITY LINK 597 Chapter Highlights 597 Key Terms 598 Formula Review 598 Solved Problems 598 Discussion Questions 602 t Problems 602 Selected Bibliography 605 APPENDIX A Solutions to Odd-Numbered Problems 607 APPENDIX B ^

10 CONTENTS XXlii The Standard Normal Distribution 629 APPENDIX P-Chartf 630 C NAME INDEX 633 SUBJECT INDEX 636 SUPPLEMENT A Spreadsheet Modeling; An Introduction Ai WHAT ARE MODELS? A2 THE SPREADSHEET MODELING PROCESS A4 EVALUATING SPREADSHEET MODELS A5 Planning the Model A 7 Implementing the Model in Excel A8 Assessing the Model A9 Using the Model for Analysis All Adding Data Tables A14 Graphing the Model Results A17 Planning the Model A18 Constructing the Model in Excel A19 Reviewing Relative and Absolute Cell Referencing A20 Entering Formulas in the Model A21 USEFUL SPREADSHEET TIPS A26 IMPORTANT EXCEL FORMULAS A27 SPREADSHEET MODELING WITHIN OM: HOW IT ALL FITS TOGETHER A28 Supplement Highlights A29 Key Terms A29 Discussion Questions A29 Problems A30 Case: Diet Planning A3 2 Online Resources A3 2 Selected Bibliography A3 2 SUPPLEMENT B Introduction to Optimization Bi INTRODUCTION B2 ALGEBRAIC FORMULATION B4 Examining the Formulation B6 SPREADSHEET MODEL DEVELOPMENT B7 Testing the Model B8 SOLVER BASICS B9 SETTING UP AND RUNNING SOLVER B9 Solving the Problem B12 INTERPRETING THE SOLUTION B13 SOLVER SOLUTION REPORTS B14 RECAP B16 OUTCOMES OF LINEAR PROGRAMMING PROBLEMS B16 OPTIMIZATION WITHIN OM: HOW IT ALL FITS TOGETHER B 1 8 Supplement Highlights B18 Key Terms B19 Solved Problems B19 Discussion Questions B23 Problems B24 Case: Exeter Enterprises B 2 5 Online Resources B26 Selected Bibliography B26 SUPPLEMENT Waiting Line Models ci ELEMENTS OF WAITING LINES C2 C Links to Practice: Waiting for Fast Food C3 The Customer Population C3 The Service System C4 Arrival and Service Patterns C6 Waiting Line Priority Rules C6 WAITING LINE PERFORMANCE MEASURES C7 SINGLE-SERVER WAITING LINE MODEL C7 MULTISERVER WAITING LINE MODEL CIO CHANGING OPERATIONAL CHARACTERISTICS C13 LARGER-SCALE WAITING LINE SYSTEMS C14 WAITING LINE MODELS WITHIN OM: HOW IT ALL FITS TOGETHER C15 Supplement Highlights C15 Key Terms C16 Formula Review C16 Solved Problems C16 Discussion Questions C18 Problems C19 Case: The Copy Center Holdup C19 Online Resources C20 Selected Bibliography C20 SUPPLEMENT D Master Scheduling and Rough-Cut Capacity Planning Di MASTER PRODUCTION SCHEDULING D2 MPS AS A BASIS OF COMMUNICATION D3 OBJECTIVES OF MASTER SCHEDULING D4 DEVELOPING AN MPS D4

11 XXiv CONTENTS ROUGH-CUT CAPACITY PLANNING D6 Formula Review D16 EVALUATING AND ACCEPTING THE MPS D9 Solved Problems D17 USING THE MPS D10 Discussion Questions D22 USING THE ATP RECORDS Dll Problems D22 STABILIZING THE MPS D14 Case: Newmarket International Manufacturing MASTER PRODUCTION SCHEDULING AND ROUGH-CUT Company (c) D23 CAPACITY PLANNING WITHIN OM: HOW IT ALL FITS Online Resources D24 TOGETHER D15 Selected Bibliography D24 Supplement Highlights D16 Key Terms D16

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