Operations Management: Contemporary Concepts and Cases Fifth Edition [PDF]

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Operations Management Contemporary Concepts and Cases



Fifth Edition



Roger G. Schroeder Susan Meyer Goldstein 6VI Johnny Rungtusanatham Carlson School of Management University of Minnesota



Me Graw Hill Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto



About the Authors vi Preface viii



2.3 2.4



PART ONE INTRODUCTION 1 Chapter 1



The Operations Function 2 1.1 1.2 1.3 1.4 1.5 1.6 1.7



1.8



Why Study Operations Management? 3 Definition of Operations Management and Supply Chains 4 Decisions at Pizza U.S.A. 7 Operations Decisions— A Framework 9 Cross-Functional Decision Making 11 Operations as a Process 13 Contemporary Operations Themes 14 Services and Manufacturing 14 Customer-Directed Operations 15 Lean 15 Integration of Operations with Other Functions 15 Environmental Concerns and Sustainability 15 Supply Chain Management 16 Globalization of Operations 16 Key Points a n d Terms 17 You Decide 18 Student Internet Exercises 18 Discussion Questions 18 Selected Bibliography 19



Chapter 2



Operations and Supply Chain Strategy 20 2.1 2.2 xiv



McDonald's Operations Strategy 21 Global Scope of Operations and Supply Chains 23



2.5 2.6 2.7 2.8



Supply Chain Strategy 25 Operations Strategy Model 27 Corporate and Business Strategy 27 Operations Mission 28 Operations Objectives 29 Strategic Decisions 30 Distinctive Competence 31 Emphasis on Operations Objectives 31 Linking Strategies 33 Environment and Sustainable Operations 35 Key Points and Terms 36 You Decide 37 Student Internet Exercises 37 Discussion Questions 37 Selected Bibliography 38



Chapter 3



Product Design 40 3.1 3.2



3.3 3.4 3.5



3.6 3.7 3.8



Strategies for New-Product Introduction , 41 New-Product Development Process 42 Concept Development 43 Product Design 43 Pilot Production/Testing 44 Cross-Functional Product Design 45 Supply Chain Collaboration 46 Quality Function Deployment 48 Customer Attributes 48 Engineering Characteristics 49 Value Analysis 52 Modular Design 53 Key Points and Terms 55 You Decide 56 Student Internet Exercises 56 Discussion Questions 57 Selected Bibliography 57



Contents



PART TWO PROCESS DESIGN 59



6.7 6.8



You Decide 125 Student Internet Exercises 125 Solved Problems 126 Discussion Questions 127 Problems 127 Selected Bibliography 129



Chapter 4 Process Selection 60 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9



Product-Flow Characteristics 61 Approaches to Order Fulfillment 66 Process Selection Decisions 70 Product-Process Strategy 72 Focused Operations 74 Mass Customization 75 Environmental Concerns 77 Cross-Functional Decision Making 78 Key Points and Terms 79 You Decide 81 Student Internet Exercises 81 Discussion Questions 81 Selected Bibliography 82



Chapter 7



Lean Thinking and Lean Systems 131 7-1 7.2 7.3 7.4 7.5 7.6 7.7



Chapter 5



Service Process Design 84 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8



Defining Service 85 Service-Product Bundle 86 Service Matrix 88 Customer Contact 91 Service Recovery and Guarantees 94 Globalization of Services 96 Employees and Service 99 Key Points and Terms 102 You Decide 103 Student Internet Exercises 103 ' Discussion Questions 103 Selected Bibliography 104



Business Process Reengineering 120 Key Points and Terms 124



7.8 7.9 7.10 7.11 7.12



Evolution of Lean 131 Lean Tenets 134 The Lean System 138 Stabilizing the Master Schedule 139 Controlling Flow with the Kanban System 141 Reducing Setup Time and Lot Sizes 144 Changing Layout and Maintaining Equipment 145 Cross-Training, Rewarding, and Engaging Workers 146 Guaranteeing Quality 147 Changing Relationships with Suppliers 147 Implementation of Lean 149 Key Points and Terms 151 You Decide 152 Student Internet Exercises 152 Solved Problems 153 Discussion Questions 154 Problems 154 Selected Bibliography 155



PART THREE QUALITY 157



Chapter 6



Chapter 8



Process-Flow Analysis 106



Managing Quality 158



6.1 6.2 6.3 6.4 6.5 6.6



Process Thinking 107 The Process View of Business 108 Measuring Process Flows 109 Measuring Process Flows at Pizza U.S.A. Ill Process Flowcharting 112 Process-Flow Analysis as Asking Questions 118



8.1 8.2 8.3 8.4



Quality Definitions 159 Service Quality 162 Quality Planning, Control, and Improvement 163 Quality Pioneers 167



8.5



W. Edwards Deming 167 Joseph Juran 168 ISO 9000 Standards 169



xv



xvi Contents



8.6 8.7 8.8 8.9 8.10



Malcolm Baldrige Award 170 Supply Chain Quality 172 Quality and Financial Performance 174 Why Some Quality Improvement Efforts Fail 177 Key Points and Terms 178



10.6 10.7 10.8 10.9



You Decide 179 Student Internet Exercises 179 Discussion Questions 179 Selected Bibliography 180



Supply Chain Structural Improvements 227 Supply Chain Infrastructural Improvements 231 Technology and Supply Chain Management 233 Key Points and Terms 236 You Decide 238 Student Internet Exercises 238 Discussion Questions 239 Selected Bibliography 239



Chapter 9



Quality Control and Improvement 182 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11



Design of Quality Control Systems 183 Process Quality Control 186 Attribute Control 188 Variables Control 188 Using Control Charts 190 Process Capability 191 Continuous Improvement 193 Six Sigma 197 Lean and Six Sigma 200 Quality Control and Improvement in Industry 201 Key Points and Terms 203 You Decide 204 Student Internet Exercises 204 Solved Problems 204 Discussion Questions 207 Problems 207 Selected Bibliography 211



PART FOUR CAPACITY AND SCHEDULING



10.4 10.5



11.8 11.9 11.10



A Forecasting Framework 243 Qualitative Forecasting Methods 245 Time-Series Forecasting 247 Moving Average 248 Exponential Smoothing 250 Forecasting Errors 253 Advanced Time-Series Forecasting 255 Causal Forecasting Methods 257 Selecting a Forecasting Method 259 Collaborative Planning, Forecasting, and Replenishment 261 Key Points and Terms 262 You Decide 263 Student Internet Exercises 263 Solved Problems 264 Discussion Questions 265 Problems 267 Selected Bibliography 269 Supplement: Advanced Methods 270



213



Supply Chain Management 214 10.2 10.3



11.1 11.2 11.3 11.4 11.5 11.6 11.7



11.11



Chapter 10 10.1



Chapter 11 Forecasting 241



Supply Chain and Supply Chain Management 215 Purchasing and Logistics 219 Measuring Supply Chain Performance 222 Supply Chain Dynamics—the Bullwhip Effect 224 Improving Supply Chain Performance 227



Chapter 12



Capacity Planning 275 12.1 12.2



Facilities Decisions 278 Facilities Strategy 278 Amount of Capacity 279 Size of Facilities 280 Timing of Facilities Decisions 281 Facility Location 282 Types of Facilities 282



12.3 12.4



Sales and Operations Planning Definition 283 Cross-Functional Nature ofS&OP 285



Contents xvii



12.5 12.6 12.7 12.8 12.9



Planning Options 287 Basic Aggregate Planning Strategies 289 Aggregate Planning Costs 290 Aggregate Planning Example 291 Key Points and Terms 296 You Decide 297 Student Internet Exercises 297 Solved Problems 298 Discussion Questions 302 Problems 303 Selected Bibliography 307 Supplement: Mathematical Models 309



Chapter 13



Scheduling Operations 313 13.1 13.2 13.3 13.4 13.5 13.6 13.7



Batch Scheduling 314 Gantt Charting 315 Finite Capacity Scheduling 318 Theory of Constraints 320 Priority Dispatching Rules 322 Planning and Control Systems 324 Key Points and Terms 325 You Decide 327 Student Internet Exercises 327 Solved Problems 327 Discussion Questions 329 Problems 330 Selected Bibliography 331



Chapter 14



Project Planning and Scheduling 333 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8



Objectives and Trade-Offs 335 Planning and Control in Projects 335 Scheduling Methods 338 Constant-Time Networks 339 PERT Method 344 CPM Method 348 Use of Project Management Concepts 350 Key Points and Terms 351 You Decide 353 Student Internet Exercises 353 Solved Problems 353 Discussion Questions 357 Problems 357 Selected Bibliography 359



PART FIVE INVENTORY



361



Chapter 15



Independent Demand Inventory 362 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9



Purpose of Inventories 364 Costs of Inventories 366 Independent versus Dependent Demand 368 Economic Order Quantity 369 Continuous Review System 372 Periodic Review System 377 Using P and Q Systems in Practice 379 ABC Inventory Management 382 Key Points and Terms 383 You Decide 385 Student Internet Exercises 385 Solved Problems 385 Discussion Questions 388 Problems ' 388 Selected Bibliography 391 Supplement: Advanced Models 392



Chapter 16



Materials Requirements Planning and ERP 395 16.1 16.2



Definitions of MRP Systems 397 MRP versus Order Point • Systems 400 16.3 MRP Example 401 16.4 MRP Elements 405 Master Scheduling 405 Bill of Materials (BOM) 405 Inventory Records 406 Capacity Planning 407 Purchasing 407 Shop-Floor Control 407 16.5 Operating an MRP System 408 16.6 The Successful MRP System 409 16.7 Enterprise Resource Planning Systems 412 16.8 Key Points and Terms 414 You Decide 415 Student Internet Exercises 415 Solved Problem 416 Discussion Questions 417 Problems 419 Selected Bibliography 421



xviii Contents



PART SIX



Capacity and Scheduling



CASE STUDIES Introduction 423



Crocs: Revolutionizing an Industry's Supply Chain Model for Competitive Advantage 492 Unifine Richardson 504 eBags: Managing Growth 507 Merriwell Bag Company 516 Lawn King, Inc. 518 World Industrial Abrasives 522 Inventory



Shipper Manufacturing Company 424 FHE, Inc. 427 Early Supplier Integration in the Design of the Skid-Steer Ladder 432 Process Design



Eastern Gear, Inc. 434 Southwest Airlines: Singin' the (Jet) Blues 437 The Field Service Division of DMI 448 Pharmacy Service Improvement at CVS (A) 451



Consolidated Electric 524 Southern Toro Distributor, Inc. 528 Toy Plus, Inc. 535



APPENDIXES A



Quality



Customer-Driven Learning at Radisson Hotels Worldwide 465 Quality at Gillette Argentina 474 Bayfield Mud Company 482 Six Sigma at 3M, Inc. 484



B



Areas Under the Standard Normal Probability Distribution 539 Random Number Table 540



PHOTO CREDITS INDEX



543



541