10839i

Jacobs

Operations and Supply Management The Core

Chase

Operations and Supply Management The Core

The authors of Operations Management for Competitive Advantage, F. Robert Jacobs and Richard B. Chase, bring this compact new text Operations and Supply Management: The Core. Focused on the important core concepts of the dynamic field of operations this new work is organized into four major sections: Strategy, Processes, Supply Chains, and Inventory.

The cover illustration might be considered representative of the ‘core’ as well as the flow of goods and services through productive systems.

The Student DVD includes an abundance of resources to enhance the course including: full-length videos, video scenes, Excel templates, self-grading practice quizzes, ScreenCam software tutorials, PowerPoint lecture slides, and Web links.

MD DALIM 870331 9/10/06 CYAN MAG YELO BLACK

Additional study materials can also be found on:

The text Web site www.mhhe.com/jacobs1e The authors’ text support site www.pom.edu The McGraw-Hill/Irwin dedicated Operations Management Web site www.mhhe.com/pom

ISBN 978-0-07-340330-4 MHID 0-07-340330-X Part of ISBN 978-0-07-329473-5 MHID 0-07-329473-X

90000

9

780073 294735 www.mhhe.com

DVD included

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CONTENTS S

E C T I O N

O

IN

BRIEF

N E

S T R AT E GY

12 Inventory Control 308

1 Operations and Supply Strategy 4 2 Project Management 20

S

E C T I O N

T

W O

P RO C E S S E S 4 Manufacturing Processes 80 5 Service Processes 106 6 Six-Sigma Quality 136

E C T I O N

T

H R E E

S U P P LY C H A I N S 7 Strategic Sourcing 182 8 Logistics 202 9 Lean Manufacturing 223

S

E C T I O N

F

13 Material Requirements Planning 348

APPENDICES A Answers to Selected Problems 373

3 Strategic Capacity Management 51

S

11 Aggregate Sales and Operations Planning 283

O U R

B Learning Curve Tables 375 C Present Value Table 37 7 D Negative Exponential Distribution: Values of e −X 378 E Areas of the Cumulative Standard Normal Distribution 379 F Linear Programming Using the Excel Solver 380

P H OTO C R E D I T S 402 N A M E I N D E X 403

I N V E N TO RY 10 Demand Management and Forecasting 249

S U B J E C T I N D E X 405

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CONTENTS S

E C T I O N

O

N E

S

E C T I O N

T

S T R AT E GY

P RO C E S S E S

Twenty-First-Century Operations and Supply Management 2

Processes 50

1 O P E R AT I O N S

AND

S U P P LY S T R AT E GY 4

How IKEA Designs Its Sexy Prices 5 Operations and Supply Management: A Critical Responsibility of Every Manager 6 Case: Progressive Insurance 7 Efficiency, Effectiveness, and Value 8

What Is Operations and Supply Management? 9 What Is Operations and Supply Strategy? 10 Competitive Dimensions 11 The Notion of Trade-Offs 13 Order Winners and Order Qualifiers: The Marketing–Operations Link 14

Strategic Fit: Fitting Operational Activities to Strategy 14 A Framework for Operations and Supply Strategy 16 How Does Wall Street Evaluate Operations Performance? 17 Summary 18 Key Terms 18 Review and Discussion Questions 19 Internet Exercise: Harley-Davidson Motorcycles 19 Selected Bibliography 19

2 P RO J E C T M A N AG E M E N T 20 Apple’s iPod Has It’s Own Product Development Team 21 What Is Project Management? 22 Structuring Projects 23 Pure Project 23 Functional Project 24 Matrix Project 25

Work Breakdown Structure 26 Project Control Charts 28 Network-Planning Models 28 Critical Path Method (CPM) 30 Time–Cost Models 34

W O

3 S T R AT E G I C C A PAC I T Y M A N AG E M E N T 51 Shouldice Hospital: Hernia Surgery Innovation 52 Capacity Management In Operations 53 Capacity Planning Concepts 54 Economies and Diseconomies of Scale 55 Capacity Focus 55 Capacity Flexibility 56

The Learning Curve 56 Plotting Learning Curves 58 Logarithmic Analysis 60 Learning Curve Tables 60

Capacity Planning 61 Considerations in Adding Capacity 61 Determining Capacity Requirements 63 Using Decision Trees to Evaluate Capacity Alternatives 64

Planning Service Capacity 68 Capacity Planning in Service versus Manufacturing 68 Capacity Utilization and Service Quality 69 Summary 70 Key Terms 70 Formula Review 70 Solved Problems 70 Review and Discussion Questions 73 Problems 73 Case: Shouldice Hospital—A Cut Above 7 7 Selected Bibliography 79

4 M A N U FAC T U R I N G P RO C E S S E S 80 Toshiba: Producer of the First Notebook Computer 81 How Production Processes Are Organized 82 Break-Even Analysis 83 Designing a Production System 85 Project Layout 85 Workcenters 85 Manufacturing Cel l 86 Assembly Line and Continuous Process Layouts 86

Managing Resources 39

Assembly-Line Design 88

Tracking Progress 40 Summary 40 Key Terms 40 Solved Problems 41 Review and Discussion Questions 43 Problems 43 Advanced Problem 47 Case: Cel l Phone Design Project 48 Selected Bibliography 49

Splitting Tasks 93 Flexible and U-Shaped Line Layouts 93 Mixed-Model Line Balancing 93 Summary 96 Key Terms 96 Solved Problems 96 Review and Discussion Questions 99 Problems 100 Advanced

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CONTENTS

Advanced Problem 17 7 Case: Hank Kolb, Director of Quality Assurance 17 7 Footnotes 179 Selected Bibliography 179

Problem 102 Case: Designing Toshiba’s Notebook Computer Line 103 Selected Bibliography 105

5 S E RV I C E P RO C E S S E S 106 Supply Chain Services at DHL 107 An Operational Classification of Services 108 Designing Service Organizations 109 Structuring the Service Encounter: Service-System Design Matrix 109 Economics of the Waiting Line Problem 111 The Practical View of Waiting Lines 111

The Queuing System 112 Customer Arrivals 112 Distribution of Arrivals 114 The Queuing System: Factors 117 Exiting the Queuing System 120

Waiting Line Models 120 Computer Simulation of Waiting Lines 127 Summary 127 Key Terms 127 Formula Review 128 Solved Problems 128 Review and Discussion Questions 129 Problems 130 Case: Community Hospital Evening Operating Room 134 Selected Bibliography 134

6 S I X -S I G M A Q U A L I T Y 136 GE Six-Sigma Supply Chain Processes 137 Total Quality Management 138 Quality Specification and Quality Costs 140 Developing Quality Specifications 140 Cost of Quality 142

ISO 9000 143 Six-Sigma Quality 145 Six-Sigma Methodology 146 Analytical Tools for Six Sigma 146

Statistical Quality Control 150 Variation Around Us 151 Process Capability 153

Process Control Procedures 158 Process Control with Attribute Measurements: Using p Charts 159 Process Control with Variable – and R Measurements: Using X Charts 161 – and R Charts 163 How to Construct X

Acceptance Sampling 166 Design of a Single Sampling Plan for Attributes 166 Operating Characteristic Curves 168 Summary 169 Key Terms 170 Formula Review 170 Solved Problems 17 1 Review and Discussion Questions 173 Problems 173

S

E C T I O N

T

H R E E

S U P P LY C H A I N S Why Having an Effective Supply Chain Matters 180

7 S T R AT E G I C S O U RC I N G 182 The World Is Flat 183 Flattener 5: Outsourcing 183 Flattener 6: Offshoring 183

Strategic Sourcing 184 Outsourcing 188 Measuring Sourcing Performance 192 Global Sourcing 194 Mass Customization 195 Summary 197 Key Terms 198 Formula Review 198 Review and Discussion Questions 198 Problems 199 Case: Pepe Jeans 200 Footnotes 201 Selected Bibliography 201

8 L O G I ST I C S 202 FedEx: A Leading Global Logistics Company 203 Logistics 204 Decisions Related to Logistics 204 Issues in Facility Location 206 Plant Location Methods 209 Factor-Rating Systems 209 Transportation Method of Linear Programming 210 Centroid Method 213

Locating Service Facilities 215 Summary 217 Key Terms 218 Formula Review 218 Solved Problem 218 Review and Discussion Questions 219 Problems 220 Case: Applichem—The Transportation Problem 221 Footnote 222 Selected Bibliography 222

9 L E A N M A N U FAC T U R I N G 223 Lean Six Sigma at Solectron 224 Lean Logic 225 The Toyota Production System 226 Elimination of Waste 226 Respect for People 233

Lean Implementation Requirements 234 Lean Layouts and Design Flows 235 Lean Applications for Line Flows 235 Lean Applications for Workcenter Shops 236 Six-Sigma Quality 237

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CONTENTS

Aggregate Planning Techniques 292

A Stable Schedule 237 Work with Suppliers 238

A Cut-and-Try Example: The JC Company 292 Level Scheduling 296

Lean Services 239 Summary 241 Key Terms 241 Formula Review 242 Solved Problem 242 Review and Discussion Questions 242 Problems 243 Case: Quality Parts Company 243 Case: Value Chain Mapping Approach 245 Footnotes 246 Selected Bibliography 247

S

E C T I O N

F

O U R

12 I N V E N TO RY C O N T RO L 308

I N V E N TO RY In Running a Business, Computers Can Do More Than Just Word Processing and E-Mail 248

10 D E M A N D M A N AG E M E N T F O R E C A ST I N G 249

AND

Wal-Mart’s Data Warehouse 250 Demand Management 251 Types of Forecasting 252 Components of Demand 252 Qualitative Techniques in Forecasting 254 Market Research 254 Panel Consensus 255 Historical Analogy 255 Delphi Method 255 Simple Moving Average 257 Weighted Moving Average 258 Exponential Smoothing 259 Forecast Errors 263 Sources of Error 263 Measurement of Error 264 Linear Regression Analysis 265

Web-Based Forecasting: Collaborative Planning, Forecasting, and Replenishment (CPFR) 270 Summary 272 Key Terms 273 Formula Review 273 Solved Problems 274 Review and Discussion Questions 276 Problems 276 Case: Altavox Electronics 281 Footnotes 282 Selected Bibliography 282 AND

Hospitals Hope to Save by Supply Management 309 Definition of Inventory 312 Purposes of Inventory 312 Inventory Costs 313 Independent versus Dependent Demand 314 Inventory Systems 315 A Single-Period Inventory Model 315 Multiperiod Inventory Systems 318

Fixed–Order Quantity Models 320 Establishing Safety Stock Levels 323 Fixed–Order Quantity Model with Safety Stock 324

Fixed–Time Period Models 327 Fixed–Time Period Model with Safety Stock 328

Time Series Analysis 256

11 A G G R E G AT E S A L E S P L A N N I N G 283

Yield Management 298 Summary 299 Key Terms 300 Solved Problem 300 Review and Discussion Questions 303 Problems 303 Case: Bradford Manufacturing—Planning Plant Production 306 Footnotes 307 Selected Bibliography 307

O P E R AT I O N S

What Is Sales and Operations Planning? 285 Overview of Sales and Operations Planning Activities 285 The Aggregate Operations Plan 287 Production Planning Environment 288 Relevant Costs 290

Inventory Control and Supply Chain Management 329 ABC Inventory Planning 331 Inventory Accuracy and Cycle Counting 333 Summary 335 Key Terms 335 Formula Review 336 Solved Problems 337 Review and Discussion Questions 339 Problems 339 Case: Hewlett-Packard—Supplying the DeskJet Printer in Europe 345 Footnotes 347 Selected Bibliography 347

13 M AT E R I A L R E Q U I R E M E N T S P L A N N I N G 348 From Push to Pull 349 Where MRP Can Be Used 350 Material Requirements Planning System Structure 351 Demand for Products 352 Bil l of Materials 352 Inventory Records 354 MRP Computer Program 356

An Example Using MRP 356 Forecasting Demand 357 Developing a Master Production Schedule 357 Bil l of Materials (Product Structure) 358 Inventory Records 358 Performing the MRP Calculations 359

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CONTENTS

Lot Sizing in MRP Systems 361 Lot-for-Lot 361 Economic Order Quantity 362 Least Total Cost 363 Least Unit Cost 364 Choosing the Best Lot Size 365 Summary 365 Key Terms 365 Solved Problems 366 Review and Discussion Questions 367 Problems 367 Case: Brunswick Motors, Inc.—An Introductory Case for MRP 37 1 Selected Bibliography 372

C Present Value Table 37 7 D Negative Exponential Distribution: Values of e −X 378 E Areas of the Cumulative Standard Normal Distribution 379 F Linear Programming Using the Excel Solver 380 P H OTO C R E D I T S 402

APPENDICES A Answers to Selected Problems 373 B Learning Curve Tables 375

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N A M E I N D E X 403 S U B J E C T I N D E X 405