Operations Management

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2 Operations Management Processes and Supply Chains Eleventh Edition Global Edition Lee J. Krajewski Professor Emeritus at The Ohio State University and the University of Notre Dame Manoj K. Malhotra University of South Carolina Larry P. Ritzman Professor Emeritus at The Ohio State University and Boston College Boston Columbus Indianapolis New York San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

3 Operations Management: Processes and Supply Chains, Global Edition Table of Contents Cover IFC Title Page Copyright Page About the Authors Brief Contents Contents Preface Chapter 1 USING OPERATIONS TO CREATE VALUE Disney Role of Operations in an Organization Historical Evolution and Perspectives A Process View How Processes Work Nested Processes Service and Manufacturing Processes A Supply Chain View Core Processes Support Processes Supply Chain Processes Operations Strategy Corporate Strategy Market Analysis Competitive Priorities and Capabilities Order Winners and Qualifiers Using Competitive Priorities: An Airline Example Identifying Gaps between Competitive Priorities and Capabilities Addressing the Trends and Challenges in Operations Management Productivity Improvement Global Competition Managerial Practice 1.1 Japanese Earthquake and its Supply Chain Impact Ethical, Workforce Diversity, and Environmental Issues Designing and Operating Processes and Supply Chains Adding Value with Process Innovation Learning Goals in Review

4 Solved Active Model Exercise Video Case using Operations to Create Value at Crayola Case Theorganicgrocer.com Supplement A Decision Making Models Break-Even analysis Evaluating Services or Products Evaluating Processes Preference Matrix Decision theory Decision Making under Certainty Decision Making under Uncertainty Decision Making under Risk Decision trees Solved Part 1 Process Management Chapter 2 PROCESS STRATEGY AND ANALYSIS McDonalds Corporation Process Structure in Services Customer-Contact Matrix Service Process Structuring Process Structure in Manufacturing ProductProcess Matrix Manufacturing Process Structuring Production and Inventory Strategies Layout Process Strategy Decisions Customer Involvement Managerial Practice 2.1 customer involvement at ebay Resource Flexibility Capital Intensity Strategic Fit Decision Patterns for Service Processes

5 Decision Patterns for Manufacturing Processes Gaining Focus Strategies for Change Process Reengineering Process Improvement Process Analysis Documenting and Evaluating the Process Flowcharts Work Measurement Techniques Process Charts Data Analysis Tools Redesigning and Managing Process Improvements Questioning and Brainstorming Benchmarking Implementing Solved Active Model Exercise Video Case Process Analysis at Starwood Case Sims Metal Management Case Josés Authentic Mexican Restaurant Chapter 3 MANAGING QUALITY QVC Costs of Quality Prevention Costs Appraisal Costs Internal Failure Costs External Failure Costs Ethical Failure Costs Total Quality Management and Six Sigma Total Quality Management Managerial Practice 3.1 Quality at Verizon Wireless Six Sigma Acceptance Sampling Statistical Process Control Variation of outputs Control Charts Control Charts for Variables Control Charts for Attributes Process Capability Defining Process Capability

6 Using Continuous Improvement to Determine the Capability of a Process International Quality Documentation Standards and awards The ISo 9001:2008 Documentation Standards The ISo :2004 environmental Management System Benefits of ISo Certification Benefits of the Baldrige Performance excellence Program Solved Active Model Exercise Video Case Process Performance and Quality at Starwood Hotels & Resorts Experiential Learning Statistical Process Control with a Coin Catapult Chapter 4 PLANNING CAPACITY Tesla Motors Planning Long-term Capacity Measures of Capacity and utilization Economies of Scale Diseconomies of Scale Capacity timing and Sizing Strategies Sizing Capacity Cushions Timing and Sizing expansion Managerial Practice 4.1 Expansionist Capacity Strategy by Sharp Corporation Linking Capacity and other Decisions A Systematic Approach to Long-Term Capacity Decisions Step 1: Estimate Capacity Requirements Step 2: Identify Gaps Step 3: Develop Alternatives Step 4: Evaluate the Alternatives Tools for Capacity Planning Waiting-Line Models Simulation Decision Trees Solved Video Case Gate Turnaround at Southwest Airlines

7 Case Fitness Plus, Part A Supplement B Waiting Line Models Structure of Waiting-Line Customer Population The Service System Priority Rule Probability Distributions Arrival Distribution Service Time Distribution Using Waiting-Line Models to analyze Operations Single-Server Model Multiple-Server Model Littles Law Finite-Source Model Waiting Lines and Simulation SimQuick Decision Areas for Management Solved Problem Chapter 5 MANAGING PROCESS CONSTRAINTS British Petroleum Oil Spill in Gulf of Mexico The Theory of Constraints Key Principles of the TOC Managing Bottlenecks in Service Processes Managing Bottlenecks in Manufacturing Processes Identifying Bottlenecks Relieving Bottlenecks Drum-Buffer-Rope Systems Applying the Theory of Constraints to Product Mix Decisions Managing Constraints in Line Processes Line Balancing Rebalancing the Assembly Line Managerial Considerations Managerial Practice 5.1 Assembly Line Balancing at Chrysler Learning Goals in Review Solved

8 Video Case Constraint Management at Southwest Airlines Experiential Learning Min-yo Garment Company Chapter 6 DESIGNING LEAN SYSTEMS Aldi Continuous Improvement Using a Lean Systems Approach Strategic Characteristics of Lean Systems Supply Chain Considerations in Lean Systems Process Considerations in Lean Systems Toyota Production System Designing Lean System Layouts One Worker, Multiple Machines Group Technology Managerial Practice 6.1 Panasonic corporation Value Stream Mapping The Kanban System General operating Rules Determining the Number of Containers Other Kanban Signals Operational Benefits and Implementation Issues Organizational Considerations Process Considerations Inventory and Scheduling Key Equation Solved Case duraweld Ltd. Video Case Lean Systems at Autoliv Chapter 7 MANAGING EFFECTIVE PROJECTS XBOX 360 Defining and Organizing Projects Defining the Scope and objectives of a Project Selecting the Project Manager and Team Recognizing Organizational Structure Constructing Project Networks Defining the Work Breakdown Structure Diagramming the Network Developing the Project Schedule Critical Path Project Schedule Activity Slack Analyzing CostTime Trade-Offs

9 Cost to Crash Minimizing Costs Assessing and Analyzing Risks Risk-Management Plans Managerial Plans 7.1 san FranciscoOakland Bay Bridge Statistical Analysis Analyzing Probabilities Near-Critical Paths Monitoring and Controlling Projects Monitoring Project Status Monitoring Project Resources Controlling Projects Solved Active Model Exercise Case The Pert Mustang Video Case Project Management at the Phoenician Part 2 Customer Demand Management Chapter 8 FORECASTING DEMAND Kimberly-Clark Managing Demand Demand Patterns Demand Management Options Key Decisions on Making Forecasts Deciding What to Forecast Choosing the Type of Forecasting Technique Forecast Error Cumulative Sum of Forecast Errors Dispersion of Forecast Errors Mean Absolute Percent Error Computer Support Judgment Methods Causal Methods: Linear Regression Time-Series Methods Naïve Forecast Horizontal Patterns: Estimating the Average Trend Patterns: Using Regression Seasonal Patterns: Using Seasonal Factors Criteria for Selecting Time-Series Methods Forecasting as a Process

10 A Typical Forecasting Process Using Multiple Forecasting Methods Managerial Practice 8.1 Combination Forecasts and the Forecasting Process Adding Collaboration to the Process Forecasting as a Nested Process Solved Video Case Forecasting and Supply Chain Management at Deckers Outdoor Corporation Case Yankee Fork and Hoe Company Experiential Learning 8.1 Forecasting a Vital Energy Statistic Chapter 9 MANAGING INVENTORIES Inventory Management at Netflix Inventory Trade-Offs Pressures for Small Inventories Pressures for Large Inventories Managerial Practice 9.1 inventory Management at Walmart Types of Inventory Accounting Inventories Operational Inventories Inventory reduction tactics Cycle Inventory Safety Stock Inventory Anticipation Inventory Pipeline Inventory ABC analysis Economic Order Quantity Calculating the EOQ Managerial Insights from the EOQ Continuous Review System Selecting the Reorder Point When Demand and Lead Time Are Constant Selecting the Reorder Point When Demand Is Variable and Lead Time Is Constant Selecting the Reorder Point When Both Demand and Lead Time Are Variable Systems Based on the Q System Calculating Total Q System Costs Advantages of the Q System Periodic review System Selecting the Time between Reviews Selecting the Target Inventory Level When Demand Is Variable and Lead Time Is Constant Selecting the Target Inventory Level When Demand and Lead Time Are Variable

11 Systems Based on the P System Calculating Total P System Costs Advantages of the P System Learning Goals in Review Solved Active Model Exercise Video Case inventory Management at crayola Experiential Learning swift electronic supply, inc. Case Parts emporium Supplement C Special Inventory Models Noninstantaneous Replenishment Quantity Discounts One-Period Decisions Key Term Solved Chapter 10 PLANNING AND SCHEDULING OPERATIONS Cooper Tire and Rubber Company Levels in Operations Planning and Scheduling Level 1: Sales and Operations Planning Level 2: Resource Planning Level 3: Scheduling S&OP Supply Options S&OP Strategies Chase Strategy Level Strategy Constraints and Costs Sales and Operations Planning as a Process Spreadsheets for Sales and Operations Planning Spreadsheets for a Manufacturer Spreadsheets for a Service Provider Scheduling Job and Facility Scheduling Workforce Scheduling Managerial Practice 10.1 Scheduling at Air New Zealand Sequencing Jobs at a Workstation Software Support

12 Solved Active Model Exercise Video Case Sales and Operations Planning at Starwood Case Memorial Hospital Supplement D Linear Programming Models Characteristics of Linear Programming Models Formulating a Linear Programming Model Graphic Analysis Plot the Constraints Identify the Feasible Region Plot the Objective Function Line Find the Visual Solution Find the Algebraic Solution Slack and Surplus Variables Sensitivity Analysis Computer Analysis Simplex Method Computer Output The Transportation Method Transportation Method for Sales and Operations Planning Learning Goals in Review Solved Chapter 11 EFFICIENT RESOURCE PLANNING Philips Material Requirements Planning Dependent Demand Master Production Scheduling Developing a Master Production Schedule Available-to-Promise Quantities Freezing the MPS Reconciling the MPS with Sales and Operations Plans MRP Explosion Bill of Materials Inventory Record Planning Factors Outputs from MRP

13 MRP and the Environment MRP, Core Processes, and Supply Chain Linkages Enterprise Resource Planning How ERP Systems Are Designed Managerial Practice 11.1 ERP Implementation by SAP at DOW Corning Resource Planning for Service Providers Dependent Demand for Services Bill of Resources Learning Goals in Review Solved Active Model Exercise Case Flashy Flashers, Inc. Part 3 Supply chain Management Chapter 12 DESIGNING EFFECTIVE SUPPLY CHAINS Amazon.com Creating an Effective Supply Chain Supply Chains for Services and Manufacturing Services Manufacturing Measuring Supply Chain Performance Inventory Measures Financial Measures Strategic Options for Supply Chain Design Efficient Supply Chains Responsive Supply Chains Designs for efficient and Responsive Supply Chains Mass Customization Competitive Advantages Supply Chain Design for Mass Customization Outsourcing Processes Managerial Practice 12.1 Building a Supply Chain for the Dreamliner Vertical Integration Make-or-Buy Decisions Learning Goals in Review Solved Problem Video Case Supply Chain Design at Crayola

14 Experiential Learning Sonic Distributors Case Brunswick Distribution, inc. Chapter 13 SUPPLY CHAINS AND LOGISTICS Bavarian Motor Works (BMW) Factors Affecting Location Decisions Dominant Factors in Manufacturing Dominant Factors in Services LoadDistance Method Distance Measures Calculating a LoadDistance Score Center of Gravity Break-Even Analysis Transportation Method Setting Up the Initial Tableau Dummy Plants or Warehouses Finding a Solution Geographical Information Systems Using GIS Managerial Practice 13.1 How Fast-Food Chains Use Gis to Select Their Sites The GIS Method for Locating Multiple Facilities Inventory Placement A Systematic Location Selection Process Solved Active Model Exercise Video Case continental Tire: Pursuing a Winning Plant Decision Case R.U. Reddie for Location Chapter 14 INTEGRATING THE SUPPLY CHAIN Coral Princess Supply Chain Disruptions Causes of Supply Chain Disruptions Supply Chain Dynamics Integrated Supply Chains New Services or Product Development Process Design Analysis Development Full Launch Supply Relationship Process Sourcing

15 Design Collaboration Negotiation Managerial Practice 14.1 The Consequences of Power in an Automotive Supply Chain Buying Information exchange Order Fulfillment Process Customer Demand Planning Supply Planning Production Logistics Customer Relationship Process Marketing Order Placement Customer Service Supply Chain Risk Management Operational Risks Financial Risks Security Risks Performance Measures Solved Video Case Sourcing Strategy at Starwood Case HassiaWaters International Chapter 15 MANAGING SUPPLY CHAIN SUSTAINABILITY FedEx The Three Elements of Supply Chain Sustainability Reverse Logistics Supply Chain Design for Reverse Logistics Managerial Practice 15.1 Recycling at Walmart Financial Implications Energy Efficiency Transportation Distance Freight Density Transportation Mode Disaster relief Supply Chains Organizing for Disaster Relief Managing Disaster Relief Operations Supply Chain Ethics BuyerSupplier Relationships Facility Location

16 Inventory Management Managing Sustainable Supply Chains Key Equation Solved Video Case Supply Chain Sustainability at Clif Bar & Company Appendix Normal Distribution References Glossary Name Index Subject Index IBC