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1 Contents Preface 13 Case Theorganicgrocer.com 49 Selected References 50 PART 1 Competing with Operations 21 A Decision Making USING OPERATIONS. Break-Even Analysis 51 TO COMPETE 21 Evaluating Services or Products 52 Evaluating Processes 53 Scholastic and Harry Potter 21 Preference Matrix 55 Operations and Supply Chain Management across Decision Theory 56 the Organization 22 Decision Making under Certainty 56 Historical Evolution of Operations and Decision Making under Uncertainty 57 Supply Chain Management 23 Decision Making under Risk 58 A Process View 24 Decision Trees 59 How Processes Work 24 Learning Goals in Review 61 Nested Processes 25 MyOMLab Resources 61 Service and Manufacturing Processes 25 Key Equations 62 The Supply Chain View 26 Key Terms 62 Core Processes 27 Solved Problems 62 Support Processes 27 Problems 65 Operations Strategy 27 Selected References 68 Corporate Strategy 28 Market Analysis 30 Competitive Priorities and Capabilities 31 MANAGING EFFECTIVE Order Winners and Qualifiers 31 Using Competitive Priorities: An Airline Example Operations Strategy as a Pattern of Decisions 35 XBOX Trends in Operations Management 36. Productivity Improvement 36 Organization 71 Global Competition 37 Defining and Projects 71 Managerial Practice 1.1 Japanese Earthquake and Objectives of a Project 71 its Supply Chain Impact 39 Selecting the Project Manager and Team 72 Ethical, Workforce Diversity, and Recognizing Organizational Structure 72 Environmental Issues 39 Planning Operations Management as a Set of Decisions 40 Work Breakdown Structure 73 Computerized Decision-Making Tools 41 the 74 Addressing the Challenges in Operations the Schedule Management 41 Competing with Operations 41 8 Practice Part 2: Designing and Managing Processes 41. Part 3: Designing and Managing Supply Monitoring and Controlling Projects 89 Value with Process Innovation in Monitoring Project Status 89 Supply Chains 42 Monitoring Project Resources 90 Managerial Practice 1.2 Fashion" Controlling Projects Learning Goals Review 91 Operational Innovation 42 Learning Goals in Review 43 Resources 91 MyOMLab Resources Key Terms 92 Key Equation 43 Terms 44 Problems Solved Problems Solved Discussion Problems Questions Advanced Problems Questions Problems 46 Active Model Exercise 105 Advanced Problems 47.. Active Model Exercise 48 Video Case Project Management at the Phoenician 106 Video Case Operations as a Competitive Weapon Mustang at Starwood 49 Selected References 108

2 Designing and Managing Processes 10s Documenting the Process DEVELOPING A PROCESS Flowcharts 143 Swim Lane Flowcharts 145 b HA Y 109 Blueprints 146 Work Measurement Techniques 147 ebay Evaluating Performance 151 Process Strategy across the Supply Chains Have Processes 110 Redesigning the Process 155 Processes Are Just Operations 111 Questioning and Brainstorming Process Strategy Decisions Benchmarking 157 in Services 112 Managerial Practice 4.1 Baptist Memorial Hospital 157 of Service Processes: Customer Contact 112 Customer-Contact Matrix Learning Goals Review 160 Service Process Structuring 114 Process Structure in Manufacturing Product-Process Matrix 114 Manufacturing Process Structuring 115 Problems 161 Production and Inventory Strategies Layout Gather Information 117 Develop a Block Plan 118 Applying the Weighted-Distance Method Design a Detailed Layout 120 Customer Involvement 120 Possible Disadvantages 121 Possible Advantages 121 Resource Flexibility 122 Problems 165 Advanced Problems 171 Active Model Exercise 172 Case Jose's Authentic Mexican Restaurant 174 Selected References 175 MANAGING QUALITY 177 Workforce 122 Verizon Wireless 177 Equipment 122,. Capital Intensity 122 Quality and Performance across the Organization 178 Automating Manufacturing Processes 123 Costs of Quality 179 Prevention Costs 179 Automating Service Processes 123. Economies of Scope 124 Appraisal Costs 179 Strategic Fit 124 Managerial Practice 3.1 DP World Steps Up International External Failure Costs 179 Shipping 125 Ethics and Quality Decision Patterns for Service Processes 125 Management 180 Decision Patterns for Manufacturing Processes 126 Customer Satisfaction 180 Gaining Focus 127 Employee Involvement 181 Strategies for Change 128 Managerial Practice 5.1 Quality and Performance Process Reengineering 128 at Omega 182 Process Improvement 129. Continuous Improvement 183 Learning Goals in Review 129 MyOMLab Resources 129 Improvement Model 184 Key Equations 130 Acceptance Sampling 185 Key Terms 130 Statistical Process Control 186 Solved Problems 130 Variation of Outputs 186 Discussion Questions 131 Control Charts 189 Problems Statistical Process Control Methods 190 Active Model Exercise 134 Control Charts for Variables 190 Case Sims Metal Management 135 Control Charts for Attributes 194 Selected References 136 Process Capability 197 Defining Process Capability 198 Using Continuous Improvement to Determine ANALYZING PROCESSES the Capability of a Process 199 McDonald's Corporation 139 Quality Engineering 199 International Quality Documentation Standards 201 Process Analysis across the Organization 141 The ISO 9001:2008 Documentation Standards 201 A Systematic Approach 141 ISO Environmental Management Step 1: Identify Opportunities 141 System 201 Step 2: Define the Scope 142 ISO 26000:2010 Social Responsibility Guidelines 201 Step 3: Document the Process 142 Benefits of ISO Certification 202 Step 4: Evaluate Performance 142 Baldrige Performance Excellence Program 202

3 Learning Goals in Review 203 Multiple-Server Model 253 MyOMLab Resources 203 Little's Law 254 Key Equations 204 Finite-Source Model 255 Key Terms 205 Waiting Lines and Simulation 256 Solved Problems 205 Decision Areas for Management 257 Discussion Questions 208 Learning Goals in Review 258 Problems 209 MyOMLab Resources 258 Advanced Problems 214 Key Equations 259 Active Model Exercise 217 Key Terms 260 Video Case Process Performance and Quality at Starwood Solved Problem 260 Hotels & Resorts 217 Problems 260 Learning Statistical Process Control with a Coin Advanced Problems 262 Catapult 218 Selected References 262 Selected References PLANNING CAPACITY 221 Sharp Corporation MANAGING PROCESS Planning Capacity across the 223 Managing Constraints across the Organization 265 The Theory of Constraints 265 of and Utilization Economies of Scale Identification and Management of Bottlenecks 267 Diseconomies of Scale Managing Bottlenecks in Service Processes 267 Timing and 225 Managing Bottlenecks in Manufacturing Sizing Capacity Cushions 225 Processes 268 and Sizing 226 Managerial Practice 7.1 The Drum-Buffer-Rope System Managerial Practice 6.1 Expansionist Capacity Strategy the Ethanol Industry 227 Managing Constraints in a Line Process 274 Linking Capacity and Other Decisions 227 A Systematic to Long-Term Capacity Managerial Considerations Learning Goals in Review 279 Step Estimate Capacity Requirements 228 MyOMLab Resources 279 Step Identify 230 Step 3: Develop Alternatives 230 Key Terms 280 4: Alternatives 230 for Capacity 232 Discussion Questions 282 Models 232 Simulation Advanced Problems 285 Trees Learning Company 289 Constraint Management at Southwest Airlines 292 Resources 234 Key Equations 234 Key Terms 235 Solved Problems DESIGNING LEAN SYSTEMS 295 Discussion Questions 237 Problems 237 Panasonic Corporation 295 Advanced Problems 240 Video Case Gate Turnaround at Southwest Airlines 242 Lean Systems across the Organization 296 Continuous Improvement Using a Lean Systems Case Fitness Plus, Part A 243 Approach 297 Selected References 244 Supply Chain Considerations in Lean Systems 298 Close Supplier Ties 298 SUPPLEMENT B Waiting Line Models 245 Small Lot sizes 299 Why Waiting Lines Form 245 Process Considerations in Lean Systems 299 Uses of Waiting-Line Theory 246 Method of Work Flow 299 Structure of Waiting-Line Problems 246 Quality at the Source 300 Customer Population 246 Uniform Workstation Loads 301 The Service System 247 Standardized Components and Work Methods 302 Priority Rule 249 Flexible Workforce 302 Probability Distributions 249 Automation 302 Arrival Distribution 249 S Practices 302 Service Time Distribution 250 Preventive Maintenance (TPM) 303 Using Waiting-Line Models to Analyze Operations 250 Toyota Production System 304 Single-Server Model 251 House of Toyota 304

4 Designing Lean System Layouts 305 SUPPLEMENT C Special Inventory One Worker, Multiple Machines 305 Group Technology 306 Models 365 Value Stream Mapping 307 Non.nstantaneous 365 Quantity Discounts 368 The Kanban System 310 General Operating Rules 311 One-Period Decisions 370 Determining the Number of Containers Other Kanban Signals 313 Resources 373 Operational Benefits and Implementation Issues 313 Organizational Considerations 313 Managerial Practice 8.1 Lean Systems the University of Pittsburgh Medical Shadyside 314 Process Considerations 315 Inventory and Scheduling 315 Learning Goals in Review MyOMLab Resources 316 Solved Problems 374 Problems 376 Selected References 377 DESIGNING EFFECTIVE KeyEquation 316 SUPPLY CHAINS 379 Key Terms 316 Nikon 379 Solved Problems 317 Discussion Questions 319 Organization 381 Problems 319 Supply Chains for Services and Manufacturing 382 Advanced Problems 321 Services 382 Video Case Lean Systems Autoliv 323 Manufacturing 382 Case weld Ltd. 324 Measures of Supply Chain Performance 383 Selected References 325 Inventory Measures 384 Financial Measures 385 PART 3 Designing and Managing Inventory Placement Mass Customization 387 Supply Chains Competitive Advantages 387 MANAGING INVENTORIES Supply Chain Design for Mass Customization 388 Inventory Management at 327 Outsourcing Managerial Practice 10.1 Building a Supply Chain the Inventory Management across the Organization 328 n r Inventory and Supply Chains 329. Pressures for Small Inventories 329 Strategic 392 Pressures for Large Inventories 330 Types of Inventory 331 Supply Chains Inventory Reduction Tactics 333 Design of Efficient and Responsive Supply Chains 394 ABC Analysis 334 Review 395 Economic Order Quantity 335 MyOMLab Resources 396 Calculating the EOQ 335 Equations 396 Managerial Insights from the EOQ 339 Key Terms 396 Inventory Control Systems 339 Continuous Review System 340 Discussion Questions 397 Periodic Review System 345 Problems 398 Managerial Practice 9.1 The Supply Chain Implications of Advanced Problems 398 Periodic Review Inventory Systems at Celanese 346 Comparative Advantages of the P Systems 348 Exper.ential Learning Sonic Distributors 400 Distribution, Inc. 401 Hybrid Systems 349 Selected References 403 Learning Goals in Review 349 MyOMLab Resources Key Equations 351 LOCATING FACILITIES Key Terms 352 Bavarian Motor Works (BMW) 405 Solved Problems 352 Location Decisions across the Organization 407 Factors Affecting Location Decisions 407 Problems 360 Active Model Exercise 361 Dominant Factors Services Geographical Information Systems and Location Experiential Learning Swift Electronic Supply, 361 Case Parts Emporium 363,,, n.c Selected References 364 Practice 11.1 How Fast-Food Cha.ns Use to Select Their Sites 411 Locating a Single Facility 411 Comparing Several Sites 412

5 Applying the Load-Distance Method 413 i Using Break-Even Analysis 415 MANAGING Locating a Facility Within a Supply Chain Network 416 S U P L Y C H N S 461 Managerial Practice 11.2 General Electric's Expansion in India 417 FedEx 461 The Method for Locating Multiple Facilities 417 Sustainability across the Organization 463 The Transportation Method 417 Supply Chains and Environmental Responsibility 463 Learning Goals in Review 420 Reverse Logistics 464 MyOMLab Resources 420 Managerial Practice 13.1 Recycling at Hewlett-Packard and Key Equations Key Terms 421 Energy Efficiency 467 Solved Problems 421 Supply Chains, Social Responsibility, and Humanitarian Discussion Questions 424 Logistics 472 Problems 425 Disaster Relief Supply Chains 473 Advanced Problems 428 Supply Chain Ethics 475 Active Model Exercise 430 Managing Sustainable Supply Chains 477 Selected References 430 Learning Goals in Review 477 MyOMLab Resources INTEGRATING THE SUPPLY Key Equations 478 Key Terms 478 CHAIN 431 Solved Problems 478 Eastman Kodak 431 Discussion Questions 479 Problems 480 Supply Chain Integration across the Organization 432 video Case Supply Chain Sustainability at Bar & Supply Chain Dynamics 433 Company 481 External Causes 434 Selected References 482 Internal Causes 434 Implications for Supply Chain Design 434 Integrated Supply Chains 435 New Service or Product Development Process 436 Design FORECASTING DEMAND Motorola Mobility 483 Analysis 437 Forecasting across the Organization 485 Development 437 Demand Patterns 485 Full Launch 437 Key Decisions on Making Forecasts 486 Supplier Relationship Process 437 Deciding What to Forecast 486 Sourcing 438 Choosing the Type of Forecasting Technique 486 Design Collaboration 441 Forecast Error 487 Negotiation 441 Computer Support 490 Buying 442 Judgment Methods 490 Information Exchange 444 Causal Methods: Linear Regression 490 The Order Fulfillment Process 445 Time-Series Methods 492 Customer Demand Planning 445 Forecast 493 Supply Planning 445 Estimating the Average 493 Production 445 Trend Projection with Regression 496 Logistics 445 Seasonal Patterns 499 Managerial Practice Order Fulfillment aboard the Coral Choosing a Quantitative Forecasting Method 501 Princess 448 Criteria for Selecting Time-Series Methods 501 The Customer Relationship Process 448 Tracking Signals 501 Marketing 448 Using Multiple Techniques 502 Order Placement 449 Managerial Practice 14.1 Combination Forecasts and the Customer Service 449 Forecasting Process 503 Levers for Improved Supply Chain Performance 450 Putting It All Together: Forecasting as a Process 503 The Levers 450 Typical Forecasting Process 504 Performance Measures 451 Adding Collaboration to the System 505 Learning Goals in Review 451 Forecasting as a Nested Process 505 MyOMLab Resources 451 Learning Goals in Review 506 Key Equations 452 MyOMLab Resources 506 Key Terms 452 Key Equations 507 Solved Problems 452 Key Terms 508 Discussion Questions 454 Problems 508 Problems 454 Discussion Questions 512 Advanced Problems 456 Problems 513 Video Case Sourcing Strategy at Starwood 458 Advanced Problems 516 Case Hassia Waters 459 Video Case Forecasting and Supply Chain Management Selected References 460 Deckers Outdoor Corporation 520

6 Case Yankee Fork and Hoe Company 522 Resource Planning for Service Providers 585 Experiential Learning Forecasting with Holdout Dependent Demand for Services 585 Sample 523 Bill of Resources 586 Experiential Learning Forecasting a Vital Energy Learning Goals in Review 587 Statistic 524 MyOMLab Resources 587 Selected References 525 Key Terms 588 Solved Problems 588 Discussion Questions 592 PLANNING AND SCHEDULING 592 Advanced Problems 597 U t New Zealand 527 Flashy Flashers, Inc. 602 Operations Planning and Scheduling across the Selected References 605 Organization 528 Stages in Operations Planning and Scheduling 529 SUPPLEMENT D Linear Programming Aggregation 529 Models 607 The Relationship of Operations Plans and Schedules.. Concepts 607 to Other P ans Formulating a Problem 608 Managing Demand Graphic Analysis 610 Demand Options Plot the Constraints 610 Managerial Practice 15.1 Singapore Airlines Group , Identify the Feasible Region 612 Sales and Operations Plans 533,,, Plot an Objective Function 613 Inputs 534 Supply Options Find the Algebraic Solution 614 Planning Constraints and Costs Sensitivity Analysis 616 Sales and Operations Planning as a Process Computer Solution 616 Using Spreadsheets ,.. Simplex Method 616,... _ The Computer Transportation Output Method 6,7 619 Scheduling Employees 542..,,. - Transportation Method for Production Planning 620 Sequencing Jobs at a Workstation Software Support 548 Applications Learning Goals in Review 548 MyOMLab Resources 549 MyOMLab Resources 624 Key Terms 549 Key Terms 624 Solved Problems 550 Discussion Questions 553 Discussion 627 Problems 553 Problems 627 Case Reddie for Location 634 Selected References 636 Active Model Exercise 558 Video Case Sales and Operations Planning at Starwood 559 Case Memorial Hospital 560 Selected References Normal Distribution PLANNING SUFFICIENT RESOURCES Dow Corning Appendix 2 Table of Random Numbers 638 Glossary Name Index Resource Planning across the Organization 564 Subject 657 Enterprise Resource Planning 564 SUPPLEMENTS SUPPLEMENT E Master Production Scheduling 569 SUPPLEMENT F Analysis Inventory Record 573 Planning Factors 576 SUPPLEMENT G Acceptance Sampling Outputs from MRP 579 Plans Managerial Practice 16.1 Material Requirements Planning at Winnebago Industries 583 Rates MRP, Core Processes, and Supply Chain Linkages 583 Learning Curve Analysis MRP and the Environment 584 SUPPLEMENT J Operations Scheduling

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