book

Operations Management: Processes and Supply Chains, 12th Edition

Name: Operations Management: Processes and Supply Chains, 12th Edition
ISBN: 9780134741062

by Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman

January 2018

Intermediate to advanced

480 pages

236h 9m

English

Pearson

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Operations Management Processes and Supply Chains
Dedicated with love to our families.
About the Authors
Brief Contents
Contents
Preface
New to This EditionSolving Teaching and Learning ChallengesDeveloping Employability SkillsInstructor Teaching Resources
1 Using Operations to Create Value
Learning Goals
Role of Operations in an Organization
Historical Evolution and Perspectives
A Process View
How Processes WorkNested ProcessesService and Manufacturing ProcessesDifferencesSimilarities
A Supply Chain View
Core ProcessesSupport ProcessesSupply Chain Processes

Operations Strategy
Corporate StrategyEnvironmental ScanningDeveloping Core CompetenciesDeveloping Core ProcessesDeveloping Global StrategiesMarket AnalysisMarket SegmentationNeeds Assessment
Competitive Priorities and Capabilities
Order Winners and QualifiersUsing Competitive Priorities: An Airline ExampleIdentifying Gaps between Competitive Priorities and Capabilities
Addressing the Trends and Challenges in Operations Management
Productivity ImprovementMeasuring ProductivityThe Role of ManagementGlobal CompetitionComparative Cost AdvantagesDisadvantages of GlobalizationEthical, Workforce Diversity, and Environmental IssuesThe Internet of ThingsOperations Management ApplicationsConcerns and Barriers
Developing Skills for Your Career
Adding Value with Process Innovation
Supplement A Decision Making
Learning Goals
Break-Even Analysis
Evaluating Services or ProductsEvaluating Processes
Preference Matrix
Decision Theory
Decision Making under CertaintyDecision Making under UncertaintyDecision Making under Risk
Decision Trees
Key Equations
Break-Even Analysis
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Solved Problem 4
Solution
Problems
Break-Even AnalysisPreference MatrixDecision TheoryDecision Trees
Part 1 Managing Process
2 Process Strategy and AnalysisLearning Goals
Process Structure in Services
Customer-Contact MatrixCustomer Contact and CustomizationProcess Divergence and FlowService Process StructuringFront OfficeHybrid OfficeBack Office
Process Structure in Manufacturing
Product-Process MatrixManufacturing Process StructuringJob ProcessBatch ProcessLine ProcessContinuous-Flow ProcessProduction and Inventory StrategiesDesign-to-Order StrategyMake-to-Order StrategyAssemble-to-Order StrategyMake-to-Stock StrategyLayout
Process Strategy Decisions
Customer InvolvementPossible AdvantagesPossible DisadvantagesResource FlexibilityWorkforceEquipmentCapital IntensityAutomating Manufacturing ProcessesAutomating Service ProcessesEconomies of Scope
Strategic Fit
Decision Patterns for Service ProcessesDecision Patterns for Manufacturing ProcessesGaining FocusFocus by Process SegmentsFocused Service OperationsFocused Factories
Strategies for Change
Process ReengineeringProcess ImprovementProcess AnalysisSix Sigma Process Improvement Model
Defining, Measuring, and Analyzing the Process
FlowchartsSwim Lane FlowchartService BlueprintWork Measurement TechniquesTime Study MethodElemental Standard Data MethodPredetermined Data MethodWork Sampling MethodLearning Curve AnalysisProcess ChartsData Analysis ToolsChecklistsHistograms and Bar ChartsPareto ChartsScatter DiagramsCause-and-Effect DiagramsGraphs
Redesigning and Managing Process Improvements
Questioning and BrainstormingBenchmarkingImplementing
3 Quality and Performance
Learning Goals
Costs of Quality
Prevention CostsAppraisal CostsInternal Failure CostsExternal Failure CostsEthical Failure Costs
Total Quality Management and Six Sigma
Total Quality ManagementCustomer SatisfactionEmployee InvolvementContinuous ImprovementSix Sigma
Acceptance Sampling
Statistical Process Control
Variation of OutputsPerformance MeasurementsSamplingSampling DistributionsCommon CausesAssignable CausesControl ChartsControl Charts for VariablesR-Chartx ¯ -ChartControl Charts for Attributesp-Chartsc-Charts
Process Capability
Defining Process CapabilityProcess Capability IndexProcess Capability RatioUsing Continuous Improvement to Determine the Capability of a Process
International Quality Documentation Standards and Awards
The ISO 9001:2008 Documentation StandardsMalcolm Baldrige Performance Excellence Program
Systems Approach to Total Quality Management
4 Capacity Planning
Learning Goals
Planning Long-Term Capacity
Measures of Capacity and UtilizationOutput Measures of CapacityInput Measures of CapacityUtilizationEconomies of ScaleSpreading Fixed CostsReducing Construction CostsCutting Costs of Purchased MaterialsFinding Process AdvantagesDiseconomies of Scale
Capacity Timing and Sizing Strategies
Sizing Capacity CushionsTiming and Sizing ExpansionExpansionist StrategyWait-and-See StrategyLinking Capacity and Other Decisions
A Systematic Approach to Long-Term Capacity Decisions
Step 1: Estimate Capacity RequirementsUsing Output MeasuresUsing Input MeasuresStep 2: Identify GapsStep 3: Develop AlternativesStep 4: Evaluate the AlternativesQualitative ConcernsQuantitative Concerns
Tools for Capacity Planning
Waiting-Line ModelsSimulationDecision Trees
Supplement B Waiting Lines
Learning Goals
Structure of Waiting-Line Problems
Customer PopulationThe Service SystemNumber of Lines Arrangement of Service Facilities Priority RuleProbability DistributionsArrival DistributionService Time Distribution
Using Waiting-Line Models to Analyze Operations
Single-Server ModelLittle’s LawFinite-Source Model
Waiting Lines and Simulation
SimQuick
Decision Areas for Management
Key Equations
Structure of Waiting-Line ProblemsUsing Waiting-Line Models to Analyze Operations
Key Terms
Solved Problem
Solution
Problems
Structure of Waiting-Line ProblemsUsing Waiting-Line Models to Analyze Operations
5 Constraint Management
Learning Goals
The Theory of Constraints
Key Principles of the TOC
Managing Bottlenecks in Service Processes
Managing Bottlenecks in Manufacturing Processes
Identifying BottlenecksRelieving BottlenecksDrum-Buffer-Rope Systems
Applying the Theory of Constraints to Product Mix Decisions
Managing Constraints in Line Processes
Line BalancingPrecedence Diagram Desired Output Rate Cycle Time Theoretical Minimum Idle Time, Efficiency, and Balance Delay Finding a Solution Rebalancing the Assembly LineManagerial ConsiderationsPacing Behavioral Factors Number of Models Produced Cycle Times
6 Lean Systems
Learning Goals
Continuous Improvement Using A Lean Systems Approach
Strategic Characteristics of Lean Systems
Supply Chain Considerations in Lean SystemsClose Supplier Ties Small Lot Sizes Process Considerations in Lean SystemsPull Method of Work Flow Quality at the Source Uniform Workstation Loads Standardized Components and Work Methods Flexible Workforce Automation Five S PracticesTotal Productive Maintenance Toyota Production SystemHouse of Toyota
Designing Lean System Layouts
One Worker, Multiple MachinesGroup Technology
The Kanban System
General Operating RulesDetermining the Number of ContainersOther Kanban SignalsContainer System Containerless System
Value Stream Mapping
Current State MapFuture State Map
Operational Benefits and Implementation Issues
Organizational ConsiderationsThe Human Costs of Lean Systems Cooperation and Trust Reward Systems and Labor Classifications Process ConsiderationsInventory and SchedulingSchedule Stability Setups Purchasing and Logistics
7 Project Management
Learning Goals
Defining and Organizing Projects
Defining the Scope and Objectives of a ProjectSelecting the Project Manager and TeamRecognizing Organizational Structure
Constructing Project Networks
Defining the Work Breakdown StructureDiagramming the NetworkEstablishing Precedence RelationshipsEstimating Activity Times
Developing the Project Schedule
Critical PathProject ScheduleActivity SlackGantt Chart
Analyzing Cost–Time Trade-Offs
Cost to CrashMinimizing Costs
Assessing and Analyzing Risks
Risk-Management PlansSimulationStatistical AnalysisAnalyzing ProbabilitiesNear-Critical Paths
Monitoring and Controlling Projects
Monitoring Project StatusOpen Issues and RisksSchedule StatusMonitoring Project ResourcesControlling Projects
Key Equations
Developing the Project ScheduleAnalyzing Cost–Time Trade-offsAssessing and Analyzing Risks
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Discussion Questions
Problems
Developing the Project ScheduleAnalyzing Cost–Time Trade-offsAssessing and Analyzing Risks
Active Model Exercise
Questions
Part 2 Managing Customer Demand
8 ForecastingLearning Goals
Managing Demand
Demand PatternsDemand Management OptionsComplementary ProductsPromotional PricingPrescheduled AppointmentsReservationsRevenue ManagementBacklogsBackorders and Stockouts
Key Decisions on Making Forecasts
Deciding What to ForecastLevel of AggregationUnits of MeasurementChoosing the Type of Forecasting Technique
Forecast Error
Cumulative Sum of Forecast ErrorsDispersion of Forecast ErrorsMean Absolute Percent ErrorComputer Support
Judgment Methods
Causal Methods: Linear Regression
Time-Series Methods
Naïve ForecastHorizontal Patterns: Estimating the AverageSimple Moving AveragesWeighted Moving AveragesExponential SmoothingTrend Patterns: Using RegressionSeasonal Patterns: Using Seasonal FactorsCriteria for Selecting Time-Series MethodsUsing Statistical CriteriaUsing a Holdout SampleUsing a Tracking Signal
Insights into Effective Demand Forecasting
Big DataVolumeVarietyVelocityA Typical Forecasting ProcessUsing Multiple Forecasting MethodsAdding Collaboration to the ProcessForecasting as a Nested Process
Key Equations
Forecast ErrorCausal Methods: Linear RegressionTime-Series Methods
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Solved Problem 4
Solution
Discussion Questions
Problems
Causal Methods: Linear RegressionTime-Series Methods
Forecasting a Vital Energy Statistic
In-Class Exercise—Part 1In-Class Exercise—Part 2In-Class Exercise—Parts 3 and Beyond
9 Inventory Management
Learning Goals
Inventory Trade-offs
Pressures for Small InventoriesCost of CapitalStorage and Handling CostsTaxes, Insurance, and ShrinkagePressures for Large InventoriesCustomer ServiceOrdering CostSetup CostLabor and Equipment UtilizationTransportation CostPayments to Suppliers
Types of Inventory
Accounting InventoriesOperational InventoriesCycle InventorySafety Stock InventoryAnticipation InventoryPipeline Inventory
Inventory Reduction Tactics
Cycle InventorySafety Stock InventoryAnticipation InventoryPipeline Inventory
ABC Analysis
Economic Order Quantity
Calculating the EOQManagerial Insights from the EOQ
Continuous Review System
Selecting the Reorder Point when Demand and Lead Time are ConstantSelecting the Reorder Point when Demand Is Variable and Lead Time Is ConstantStep 1: Service Level PolicyStep 2: Distribution of Demand during Lead TimeStep 3: Safety Stock and Reorder PointSelecting the Reorder Point when Both Demand and Lead Time are VariableSystems Based on the Q SystemTwo-Bin SystemBase-Stock SystemCalculating Total Q System CostsAdvantages of the Q System
Periodic Review System
Selecting the Time Between ReviewsSelecting the Target Inventory Level when Demand is Variable and Lead Time is ConstantSelecting the Target Inventory Level when Demand and Lead Time are VariableSystems Based on the P SystemSingle-Bin SystemOptional Replenishment SystemCalculating Total P System CostsAdvantages of the P System
Key Equations
Types of InventoryEconomic Order QuantityContinuous Review SystemPeriodic Review System
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Solved Problem 4
Solution
Solved Problem 5
Solution
Solved Problem 6
Solution
Discussion Questions
Problems
Types of InventoryInventory Reduction TacticsABC AnalysisEconomic Order QuantityContinuous Review SystemPeriodic Review System
Active Model Exercise
Questions
Swift Electronic Supply, Inc.
Industry and Company PreviewDRAMSimulation
Supplement C Special Inventory Models
Learning Goals
Noninstantaneous Replenishment
Quantity Discounts
One-Period Decisions
Key Equations
Noninstantaneous ReplenishmentQuantity DiscountsOne-Period Decisions
Key Term
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Problems
Noninstantaneous ReplenishmentQuantity DiscountsOne-Period Decisions
10 Operations Planning and Scheduling
Learning Goals
Levels in Operations Planning and Scheduling
Level 1: Sales and Operations PlanningAggregationInformation InputsRelated PlansLevel 2: Resource PlanningLevel 3: Scheduling
S&OP Supply Options
S&OP Strategies
Chase StrategyLevel StrategyConstraints and CostsSales and Operations Planning as a Process
Spreadsheets for Sales and Operations Planning
Spreadsheets for a ManufacturerSpreadsheeets for a Service Provider
Scheduling
Job and Facility SchedulingGantt Progress ChartGantt Workstation ChartWorkforce SchedulingConstraintsDeveloping a Workforce ScheduleSequencing Jobs at a WorkstationPriority Sequencing RulesPerformance MeasuresSoftware Support
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Discussion Questions
Problems
S&OP StrategiesSpreadsheets for Sales and Operations PlanningScheduling
Active Model Exercise
Questions
Supplement D Linear Programming
Learning Goals
Characteristics of Linear Programming Models
Objective FunctionDecision VariablesConstraintsFeasible RegionParametersLinearityNonnegativity
Formulating a Linear Programming Model
Graphic Analysis
Plot the ConstraintsIdentify the Feasible RegionPlot the Objective Function LineFind the Visual SolutionFind the Algebraic SolutionSlack and Surplus VariablesSensitivity Analysis
Computer Analysis
Simplex MethodComputer Output
The Transportation Method
Transportation Method for Sales and Operations Planning
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Discussion Questions
Problems
Formulating a Linear Programming ModelGraphic AnalysisComputer AnalysisThe Transportation Method
11 Resource Planning
Learning Goals
Material Requirements Planning
Dependent Demand
Master Production Scheduling
Developing a Master Production ScheduleAvailable-to-Promise QuantitiesFreezing the MPSReconciling the MPS with Sales and Operations Plans
MRP Explosion
Bill of MaterialsInventory RecordGross RequirementsScheduled ReceiptsProjected On-Hand InventoryPlanned ReceiptsPlanned Order ReleasesPlanning FactorsPlanning Lead TimeLot-Sizing RulesFixed Order QuantityPeriodic Order QuantityLot for LotComparing Lot-Sizing RulesSafety StockOutputs from MRPMaterial RequirementsAction NoticesResource Requirements ReportsPerformance ReportsMRP and the EnvironmentMRP, Core Processes, and Supply Chain Linkages
Enterprise Resource Planning
How ERP Systems Are Designed
Resource Planning for Service Providers
Dependent Demand for ServicesRestaurantsAirlinesHospitalsHotelsBill of Resources
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Solved Problem 4
Solution
Discussion Questions
Problems
Master Production SchedulingMRP Explosion Resource Planning for Service Providers
Active Model Exercise
Questions
Part 3 Managing Supply Chains
12 Supply Chain DesignLearning Goals
Creating an Effective Supply Chain
Supply Chains for Services and ManufacturingServicesManufacturing
Measuring Supply Chain Performance
Inventory MeasuresFinancial MeasuresTotal RevenueCost of Goods SoldOperating ExpensesCash FlowWorking CapitalReturn on Assets
Strategic Options for Supply Chain Design
Efficient Supply ChainsCommon DesignsResponsive Supply ChainsCommon DesignsDesigns for Efficient and Responsive Supply Chains
Mass Customization
Competitive AdvantagesSupply Chain Design for Mass CustomizationAssemble-to-Order StrategyModular DesignPostponement
Outsourcing Processes
Vertical IntegrationMake-or-Buy Decisions
Key Equations
Measuring Supply Chain PerformanceOutsourcing Processes
Key Terms
Solved Problem
Solution
Discussion Questions
Problems
Measuring Supply Chain PerformanceOutsourcing Processes
Scenario
Materials (available from instructor)SetupTasksCosts and ConditionsDelaysOrdering Delay.Delivery Delay.Run the Exercise
13 Supply Chain Logistic Networks
Learning Goals
Factors Affecting Location Decisions
Dominant Factors in ManufacturingFavorable Labor ClimateProximity to MarketsImpact on EnvironmentQuality of LifeProximity to Suppliers and ResourcesProximity to the Parent Company’s FacilitiesUtilities, Taxes, and Real Estate CostsOther FactorsDominant Factors in ServicesProximity to CustomersTransportation Costs and Proximity to MarketsLocation of CompetitorsSite-Specific Factors
Load–Distance Method
Distance MeasuresCalculating a Load–Distance ScoreCenter of Gravity
Break-Even Analysis
Transportation Method
Setting Up the Initial TableauDummy Plants or WarehousesFinding a Solution
Geographical Information Systems
Using GISThe GIS Method for Locating Multiple Facilities
Inventory Placement
A Systematic Location Selection Process
Key Equations
Load–Distance Method
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Solved Problem 4
Solution
Discussion Questions
Problems
Load–Distance MethodBreak-Even AnalysisTransportation MethodA Systematic Location Selection Process
Active Model Exercise
Questions
14 Supply Chain Integration
Learning Goals
Supply Chain Disruptions
Causes of Supply Chain DisruptionsExternal CausesInternal CausesSupply Chain DynamicsIntegrated Supply Chains
Additive Manufacturing
Supply Chain Implications of AMEnablers of Adopting AM
New Service or Product Development Process
DesignAnalysisDevelopmentFull Launch
Supplier Relationship Process
SourcingSupplier SelectionSupplier Certification and EvaluationDesign CollaborationNegotiationCompetitive OrientationCooperative OrientationBuyingElectronic Data InterchangeCatalog HubsExchangesAuctionsLocus of ControlInformation ExchangeRadio Frequency IdentificationVendor-Managed Inventories
Order Fulfillment Process
Customer Demand PlanningSupply PlanningProductionLogistics
Customer Relationship Process
MarketingBusiness-to-Consumer SystemsBusiness-to-Business SystemsOrder PlacementCustomer Service
Supply Chain Risk Management
Operational RisksFinancial RisksSecurity RisksPerformance Measures
Key Equations
Supplier Relationship ProcessOrder Fulfillment Process
Key Terms
Solved Problem 1
SolutionKramerSunrise
Solved Problem 2
Solution
Solved Problem 3
SolutionOne Team In-HouseExpected Value
Discussion Questions
Problems
Supplier Relationship ProcessOrder Fulfillment ProcessSupply Chain Risk Management
15 Supply Chain Sustainability
Learning Goals
The Three Elements of Supply Chain Sustainability
Reverse Logistics
Supply Chain Design for Reverse LogisticsFinancial Implications
Energy Efficiency
Transportation DistanceFreight DensityTransportation Mode
Disaster Relief Supply Chains
Organizing for Disaster ReliefManaging Disaster Relief Operations
Supply Chain Ethics
Buyer–Supplier RelationshipsFacility LocationInventory Management
Managing Sustainable Supply Chains
Key Equation
Energy Efficiency
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Discussion Questions
Problems
Energy Efficiency
Appendix Normal Distribution
Selected References
Glossary
Name Index
Subject Index
SupplementE Simulation
Learning Goals
Reasons for Using Simulation Models
The Monte Carlo Simulation Process
Data CollectionRandom-Number AssignmentModel FormulationAnalysis
Simulation with Excel Spreadsheets
Generating Random NumbersRandom-Number AssignmentSimulation with Two Uncontrollable Variables
Simulation with SimQuick Software
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Problems
The Monte Carlo Simulation ProcessSimulation with Excel SpreadsheetsTable of Random Numbers
Selected References
Supplement F Financial Analysis
Learning Goals
Time Value of Money
Future Value of an InvestmentPresent Value of an InvestmentPresent Value FactorsAnnuities
Methods of Financial Analysis
Depreciation and TaxesStraight-Line Depreciation Accelerated Depreciation Taxes Analysis of Cash FlowsNet Present Value MethodInternal Rate of Return MethodPayback MethodComputer Support
Using Judgment with Financial Analysis
Key Equations
Time Value of MoneyMethods of Financial Analysis
Key Terms
Selected References
Supplement G Acceptance Sampling Plans
Learning Goals
Acceptance Sampling Quality and Risk Decisions
Sampling Plans
Single-Sampling PlanDouble-Sampling PlanSequential-Sampling Plan
Operating Characteristic Curves
Drawing the OC Curve
Selecting a Single-Sampling Plan
Sample Size EffectAcceptance Level Effect
Average Outgoing Quality
Key Equation
Average Outgoing Quality
Key Terms
Solved Problem
Solution
Problems
Operating Characteristic CurvesSelecting a Single-Sampling PlanAverage Outgoing Quality
Selected References
Supplement H Measuring Output Rates
Learning Goals
Work Standards
Developing a Work StandardMethods for Measuring Output Rates
Time Study Method
Step 1: Selecting Work ElementsStep 2: Timing the ElementsStep 3: Determining Sample SizeStep 4: Setting the StandardOverall Assessment of Time StudyElemental Standard Data Method
Predetermined Data Method
Work Sampling Method
Work Sampling ProcedureSample SizeSampling ScheduleOverall Assessment of Work SamplingManagerial Considerations in Work Measurement
Key Equations
Time Study MethodWork Sampling Method
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Problems
Time Study MethodWork Sampling Method
Selected References
Supplement I Learning Curve Analysis
Learning Goals
The Learning Curve Concept
BackgroundLearning Curves and Competitive Strategy
Developing Learning Curves
Using Learning Curves
Bid PreparationFinancial PlanningLabor Requirement Estimation
Managerial Considerations in the Use of Learning Curves
Key Equation
Developing Learning Curves
Key Term
Solved Problem
Solution
Problems
Developing Learning CurvesUsing Learning Curves
Selected References
Supplement J Operations Scheduling
Learning Goals
Performance Measures for Scheduling Processes
Job Shop Scheduling
Priority Sequencing RulesScheduling Jobs for One WorkstationSingle-Dimension Rules Multiple-Dimension Rules Scheduling Jobs for Multiple Workstations
Flow Shop Scheduling
Labor-Limited Environments
Key Equations
Performance Measures for Scheduling ProcessesJob Shop Scheduling
Key Terms
Solved Problem 1
Solution
Solved Problem 2
Solution
Solved Problem 3
Solution
Discussion Question
Problems
Job Shop SchedulingFlow Shop Scheduling
Active Model Exercise
Questions
Selected References
Supplement K Layout
Learning Goals
Step 1: Gather Information
Space RequirementsCloseness FactorsConstraints
Step 2: Develop a Block Plan
Weighted-Distance MethodEvaluating Block Plans
Step 3: Design a Detailed Layout
Key Equation
Step 2: Develop a Block Plan
Key Terms
Solved Problem
Solution
Problems
Step 2: Develop a Block Plan
Active Model Exercise
Questions
Selected References

Content preview from Operations Management: Processes and Supply Chains, 12th Edition

Process Strategy Decisions

Having covered process structure decisions in both service and manufacturing organizations, we turn our attention now to the other three major process strategy decisions shown in Figure 2.1—customer involvement, resource flexibility, and capital intensity.

Customer Involvement

Customer involvement reflects the ways in which customers become part of the process and the extent of their participation. It is especially important for many service processes, particularly if customer contact is (or should be) high.

Possible Advantages

The advantages of a more customer-focused process might increase the net value to the customer. Some customers seek active participation in and control over the service process, particularly if ...

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