ISBN-13: 978-0-13-413042-2 ISBN-10: 0-13-413042-1
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OPER ATIONS MANAGEMENT Sustainability and Supply Chain Management
TWELFTH EDITION
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TWELFTH EDITION
JAY HEIZER | BARRY RENDER | CHUCK MUNSON
HEIZER RENDER MUNSON
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O P E R A T I O N S MANAGEMENT Sustainability and Supply Chain Management
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T W E L F T H E D I T I O N
O P E R A T I O N S MANAGEMENT Sustainability and Supply Chain Management
HEIZER J A Y
RENDER B A R R Y
Jesse H. Jones Professor of Business Administration Texas Lutheran University
Charles Harwood Professor of Operations Management Graduate School of Business Rollins 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
C H U C K
MUNSON Professor of Operations Management Carson College of Business Washington State University
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Library of Congress Cataloging-in-Publication Data
Heizer, Jay. [Production and operations management] Operations management; sustainability and supply chain management / Jay Heizer, Jesse H. Jones Professor of Business Administration, Texas Lutheran University, Barry Render, Charles Harwood Professor of Operations Management, Crummer Graduate School of Business, Rollins College, Chuck Munson, Professor of Operations Management, Carson College of Business, Washington State University. -- Twelfth edition. pages cm Original edition published under the Title: Production and operations management. Includes bibliographical references and index. ISBN 978-0-13-413042-2 -- ISBN 0-13-413042-1 1. Production management. I. Render, Barry. II. Munson, Chuck. III. Title. TS155.H3725 2015 658.5--dc23 2015036857
10 9 8 7 6 5 4 3 2 1
ISBN 10: 0-13-413042-1
ISBN 13: 978-0-13-413042-2
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http://www.pearsoned.com/permissions/
To Karen Heizer Herrmann, all a sister could ever be
To Donna, Charlie, and Jesse
J.H.
B.R.
To Kim, Christopher, and Mark Munson for their unwavering support, and to Bentonville High School teachers Velma Reed and Cheryl Gregory,
who instilled in me the importance of detail and a love of learning C.M.
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ABOUT THE A U T H O R S
JAY HEIZER
BARRY RENDER
Professor Emeritus, the Jesse H. Jones Chair of Business Administration, Texas Lutheran University, Seguin, Texas. He received his B.B.A. and M.B.A. from the University of North Texas and his Ph.D. in Management and Statistics from Arizona State University. He was previously a member of the faculty at the University of Memphis, the University of Oklahoma, Virginia Commonwealth University, and the University of Richmond. He has also held visiting positions at Boston University, George Mason University, the Czech Management Center, and the Otto-Von-Guericke University, Magdeburg.
Dr. Heizer’s industrial experience is extensive. He learned the practical side of operations management as a machinist apprentice at Foringer and Company, as a production planner for Westinghouse Airbrake, and at General Dynamics, where he worked in engineering administration. In addition, he has been actively involved in consulting in the OM and MIS areas for a variety of organizations, includ- ing Philip Morris, Firestone, Dixie Container Corporation, Columbia Industries, and Tenneco. He holds the CPIM certification from APICS—the Association for Operations Management.
Professor Heizer has co-authored 5 books and has published more than 30 arti- cles on a variety of management topics. His papers have appeared in the Academy of Management Journal , Journal of Purchasing , Personnel Psychology , Production & Inventory Control Management , APICS—The Performance Advantage , Journal of Management History , IIE Solutions, and Engineering Management , among others. He has taught operations management courses in undergraduate, graduate, and executive programs.
Professor Emeritus, the Charles Harwood Professor of Operations Management, Crummer Graduate School of Business, Rollins College, Winter Park, Florida. He received his B.S. in Mathematics and Physics at Roosevelt University, and his M.S. in Operations Research and Ph.D. in Quantitative Analysis at the University of Cincinnati. He previously taught at George Washington University, University of New Orleans, Boston University, and George Mason University, where he held the Mason Foundation Professorship in Decision Sciences and was Chair of the Decision Sciences Department. Dr. Render has also worked in the aerospace indus- try for General Electric, McDonnell Douglas, and NASA.
Professor Render has co-authored 10 textbooks for Pearson, including Managerial Decision Modeling with Spreadsheets , Quantitative Analysis for Management , Service Management , Introduction to Management Science , and Cases and Readings in Management Science . Quantitative Analysis for Management, now in its 13th edition, is a leading text in that discipline in the United States and globally. Dr. Render’s more than 100 articles on a variety of management topics have appeared in Decision Sciences , Production and Operations Management , Interfaces , Information and Management , Journal of Management Information Systems , Socio-Economic Planning Sciences , IIE Solutions , and Operations Management Review , among others.
Dr. Render has been honored as an AACSB Fellow and was twice named a Senior Fulbright Scholar. He was Vice President of the Decision Science Institute Southeast Region and served as Software Review Editor for Decision Line for six years and as Editor of the New York Times Operations Management special issues for five years. For nine years, Dr. Render was President of Management Service Associates of Virginia, Inc., whose technology clients included the FBI, NASA, the U.S. Navy, Fairfax County, Virginia, and C&P Telephone. He is currently Consulting Editor to Pearson Press .
Dr. Render has received Rollins College’s Welsh Award as leading Professor and was selected by Roosevelt University as the recipient of the St. Claire Drake Award for Outstanding Scholarship. Dr. Render also received the Rollins College MBA Student Award for Best Overall Course, and was named Professor of the Year by full-time MBA students.
vi
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Professor of Operations Management, Carson College of Business, Washington State University, Pullman, Washington. He received his BSBA summa cum laude in finance, along with his MSBA and Ph.D. in operations management, from Washington University in St. Louis. For two years, he served as Associate Dean for Graduate Programs in Business at Washington State. He also worked for three years as a financial analyst for Contel Telephone Corporation.
Professor Munson serves as a senior editor for Production and Operations Management , and he serves on the editorial review board of four other journals . He has published more than 25 articles in such journals as Production and Operations Management , IIE Transactions, Decision Sciences , Naval Research Logistics , European Journal of Operational Research , Journal of the Operational Research Society , and Annals of Operations Research. He is editor of the book The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM , and he has co-authored the research monograph Quantity Discounts: An Overview and Practical Guide for Buyers and Sellers . He is also coauthor of Managerial Decision Modeling with Spreadsheets (4th edition), published by Pearson.
Dr. Munson has taught operations management core and elective courses at the undergraduate, MBA, and Ph.D. levels at Washington State University. He has also conducted several teaching workshops at international conferences and for Ph.D. students at Washington State University. His major awards include being a Founding Board Member of the Washington State University President’s Teaching Academy (2004); winning the WSU College of Business Outstanding Teaching Award (2001 and 2015), Research Award (2004), and Service Award (2009 and 2013); and being named the WSU MBA Professor of the Year (2000 and 2008).
CHUCK MUNSON
ABOUT THE AUTHORS vii
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PART ONE Introduction to Operations Management 1
Chapter 1 Operations and Productivity 1 Chapter 2 Operations Strategy in a Global Environment 29 Chapter 3 Project Management 59 Chapter 4 Forecasting 105
PART TWO Designing Operations 159
Chapter 5 Design of Goods and Services 159 ◆ Supplement 5 Sustainability in the Supply Chain 193
Chapter 6 Managing Quality 213 ◆ Supplement 6 Statistical Process Control 245
Chapter 7 Process Strategy 279 ◆ Supplement 7 Capacity and Constraint Management 307
Chapter 8 Location Strategies 337 Chapter 9 Layout Strategies 367 Chapter 10 Human Resources, Job Design, and Work Measurement 407
PART THREE Managing Operations 441
Chapter 11 Supply Chain Management 441 ◆ Supplement 11 Supply Chain Management Analytics 471
Chapter 12 Inventory Management 487 Chapter 13 Aggregate Planning and S&OP 529 Chapter 14 Material Requirements Planning (MRP) and ERP 563 Chapter 15 Short-Term Scheduling 599 Chapter 16 Lean Operations 635 Chapter 17 Maintenance and Reliability 659
PART FOUR Business Analytics Modules 677
Module A Decision-Making Tools 677 Module B Linear Programming 699 Module C Transportation Models 729 Module D Waiting-Line Models 747 Module E Learning Curves 775 Module F Simulation 791
ONLINE TUTORIALS
1. Statistical Tools for Managers T1-1 2. Acceptance Sampling T2-1 3. The Simplex Method of Linear Programming T3-1 4. The MODI and VAM Methods of Solving Transportation Problems T4-1 5. Vehicle Routing and Scheduling T5-1
Brief Table of Contents
ix
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Table of Contents
About the Authors vi Preface xxiii
Chapter 1 Operations and Productivity 1
GLOBAL COMPANY PROFILE: HARD ROCK CAFE 2 What Is Operations Management? 4 Organizing to Produce Goods and Services 4 The Supply Chain 6 Why Study OM? 6 What Operations Managers Do 7 The Heritage of Operations Management 8 Operations for Goods and Services 11
Growth of Services 11
Service Pay 12
The Productivity Challenge 13 Productivity Measurement 14
Productivity Variables 15
Productivity and the Service Sector 17
Current Challenges in Operations Management 18 Ethics, Social Responsibility, and Sustainability 19 Summary 20 Key Terms 20 Ethical Dilemma 20 Discussion Questions 20 Using Software for Productivity Analysis 21 Solved Problems 21 Problems 22 CASE STUDIES 24
Uber Technologies, Inc. 24
Frito-Lay: Operations Management in Manufacturing Video Case 25
Hard Rock Cafe: Operations Management in Services Video Case 25
Endnotes 26 Rapid Review 27 Self Test 28
Chapter 2 Operations Strategy in a Global Environment 29
GLOBAL COMPANY PROFILE: BOEING 30 A Global View of Operations and Supply
Chains 32 Cultural and Ethical Issues 35
Developing Missions and Strategies 35 Mission 36
Strategy 36
Achieving Competitive Advantage Through Operations 36 Competing on Diff erentiation 37
Competing on Cost 38
Competing on Response 39
Issues in Operations Strategy 40 Strategy Development and Implementation 41
Key Success Factors and Core Competencies 41
Integrating OM with Other Activities 43
Building and Staffi ng the Organization 43
Implementing the 10 Strategic OM Decisions 44
Strategic Planning, Core Competencies, and Outsourcing 44 The Theory of Comparative Advantage 46
Risks of Outsourcing 46
Rating Outsource Providers 47
Global Operations Strategy Options 49 Summary 50 Key Terms 50 Ethical Dilemma 51 Discussion Questions 51 Using Software to Solve Outsourcing
Problems 51 Solved Problems 52 Problems 53 CASE STUDIES 55
Rapid-Lube 55
Strategy at Regal Marine Video Case 55
Hard Rock Cafe’s Global Strategy Video Case 55
Outsourcing Off shore at Darden Video Case 56
Endnotes 56 Rapid Review 57 Self Test 58
Chapter 3 Project Management 59
GLOBAL COMPANY PROFILE: BECHTEL GROUP 60 The Importance of Project Management 62
PART ONE Introduction to Operations Management 1
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Project Planning 62 The Project Manager 63
Work Breakdown Structure 64
Project Scheduling 65 Project Controlling 66 Project Management Techniques: PERT and CPM 67
The Framework of PERT and CPM 67
Network Diagrams and Approaches 68
Activity-on-Node Example 69
Activity-on-Arrow Example 71
Determining the Project Schedule 71 Forward Pass 72
Backward Pass 74
Calculating Slack Time and Identifying the Critical Path(s) 75
Variability in Activity Times 77 Three Time Estimates in PERT 77
Probability of Project Completion 79
Cost-Time Trade-Off s and Project Crashing 82 A Critique of PERT and CPM 85 Using Microsoft Project to Manage Projects 86 Summary 88 Key Terms 88 Ethical Dilemma 89 Discussion Questions 89 Using Software to Solve Project Management
Problems 89 Solved Problems 90 Problems 93 CASE STUDIES 98
Southwestern University: (A) 98
Project Management at Arnold Palmer Hospital Video Case 99
Managing Hard Rock’s Rockfest Video Case 100
Endnotes 102 Rapid Review 103 Self Test 104
Chapter 4 Forecasting 105
GLOBAL COMPANY PROFILE: WALT DISNEY PARKS & RESORTS 106
What is Forecasting? 108 Forecasting Time Horizons 108
Types of Forecasts 109
The Strategic Importance of Forecasting 109 Supply-Chain Management 109
Human Resources 110
Capacity 110
Seven Steps in the Forecasting System 110 Forecasting Approaches 111
Overview of Qualitative Method 111
Overview of Quantitative Methods 112
Time-Series Forecasting 112 Decomposition of a Time Series 112
Naive Approach 113
Moving Averages 114
Exponential Smoothing 116
Measuring Forecast Error 117
Exponential Smoothing with Trend Adjustment 120
Trend Projections 124
Seasonal Variations in Data 126
Cyclical Variations in Data 131
Associative Forecasting Methods: Regression and Correlation Analysis 131 Using Regression Analysis for Forecasting 131
Standard Error of the Estimate 133
Correlation Coeffi cients for Regression Lines 134
Multiple-Regression Analysis 136
Monitoring and Controlling Forecasts 138 Adaptive Smoothing 139
Focus Forecasting 139
Forecasting in the Service Sector 140 Summary 141 Key Terms 141 Ethical Dilemma 141 Discussion Questions 142 Using Software in Forecasting 142 Solved Problems 144 Problems 146 CASE STUDIES 153
Southwestern University: (B) 153
Forecasting Ticket Revenue for Orlando Magic Basketball Games Video Case 154
Forecasting at Hard Rock Cafe Video Case 155
Endnotes 156 Rapid Review 157 Self Test 158
PART TWO Designing Operations 159
Chapter 5 Design of Goods and Services 159
GLOBAL COMPANY PROFILE: REGAL MARINE 160 Goods and Services Selection 162
Product Strategy Options Support Competitive Advantage 163
Product Life Cycles 164
Life Cycle and Strategy 164
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Product-by-Value Analysis 165
Generating New Products 165 Product Development 166
Product Development System 166
Quality Function Deployment (QFD) 166
Organizing for Product Development 169
Manufacturability and Value Engineering 170
Issues for Product Design 171 Robust Design 171
Modular Design 171
Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM) 171
Virtual Reality Technology 172
Value Analysis 173
Sustainability and Life Cycle Assessment (LCA) 173
Product Development Continuum 173 Purchasing Technology by Acquiring a Firm 174
Joint Ventures 174
Alliances 175
Defi ning a Product 175 Make-or-Buy Decisions 176
Group Technology 177
Documents for Production 178 Product Life-Cycle Management (PLM) 178
Service Design 179 Process–Chain–Network (PCN) Analysis 179
Adding Service Effi ciency 181
Documents for Services 181
Application of Decision Trees to Product Design 182
Transition to Production 184 Summary 184 Key Terms 185 Ethical Dilemma 185 Discussion Questions 185 Solved Problem 186 Problems 186 CASE STUDIES 189
De Mar’s Product Strategy 189
Product Design at Regal Marine Video Case 189
Endnotes 190 Rapid Review 191 Self Test 192
Supplement 5 Sustainability in the Supply Chain 193
Corporate Social Responsibility 194 Sustainability 195
Systems View 195
Commons 195
Triple Bottom Line 195
Design and Production for Sustainability 198 Product Design 198
Production Process 200
Logistics 200
End-of-Life Phase 203
Regulations and Industry Standards 203 International Environmental Policies and Standards 204
Summary 205 Key Terms 205 Discussion Questions 205 Solved Problems 206 Problems 207 CASE STUDIES 208
Building Sustainability at the Orlando Magic’s Amway Center Video Case 208
Green Manufacturing and Sustainability at Frito-Lay Video Case 209
Endnotes 210 Rapid Review 211 Self Test 212
Chapter 6 Managing Quality 213
GLOBAL COMPANY PROFILE: ARNOLD PALMER HOSPITAL 214
Quality and Strategy 216 Defi ning Quality 217
Implications of Quality 217
Malcolm Baldrige National Quality Award 218
ISO 9000 International Quality Standards 218
Cost of Quality (COQ) 218
Ethics and Quality Management 219
Total Quality Management 219 Continuous Improvement 220
Six Sigma 221
Employee Empowerment 222
Benchmarking 222
Just-in-Time (JIT) 224
Taguchi Concepts 224
Knowledge of TQM Tools 225
Tools of TQM 226 Check Sheets 226
Scatter Diagrams 227
Cause-and-Eff ect Diagrams 227
Pareto Charts 227
Flowcharts 228
Histograms 229
Statistical Process Control (SPC) 229
The Role of Inspection 230 When and Where to Inspect 230
Source Inspection 231
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Service Industry Inspection 232
Inspection of Attributes versus Variables 233
TQM in Services 233 Summary 235 Key Terms 235 Ethical Dilemma 235 Discussion Questions 236 Solved Problems 236 Problems 237 CASE STUDIES 239
Southwestern University: (C) 239
The Culture of Quality at Arnold Palmer Hospital Video Case 240
Quality Counts at Alaska Airlines Video Case 240
Quality at the Ritz-Carlton Hotel Company Video Case 242
Endnotes 242 Rapid Review 243 Self Test 244
Supplement 6 Statistical Process Control 245
Statistical Process Control (SPC) 246 Control Charts for Variables 248
The Central Limit Theorem 248
Setting Mean Chart Limits ( x -Charts) 250
Setting Range Chart Limits ( R-Charts) 253
Using Mean and Range Charts 254
Control Charts for Attributes 256
Managerial Issues and Control Charts 259
Process Capability 260 Process Capability Ratio ( C p ) 260
Process Capability Index ( C pk ) 261
Acceptance Sampling 262 Operating Characteristic Curve 263
Average Outgoing Quality 264
Summary 265 Key Terms 265 Discussion Questions 265 Using Software for SPC 266 Solved Problems 267 Problems 269 CASE STUDIES 274
Bayfi eld Mud Company 274
Frito-Lay’s Quality-Controlled Potato Chips Video Case 275
Farm to Fork: Quality at Darden Restaurants Video Case 276
Endnotes 276 Rapid Review 277 Self Test 278
Chapter 7 Process Strategy 279
GLOBAL COMPANY PROFILE: HARLEY-DAVIDSON 280 Four Process Strategies 282
Process Focus 282
Repetitive Focus 283
Product Focus 284
Mass Customization Focus 284
Process Comparison 286
Selection of Equipment 288 Process Analysis and Design 288
Flowchart 289
Time-Function Mapping 289
Process Charts 289
Value-Stream Mapping 290
Service Blueprinting 292
Special Considerations for Service Process Design 293
Production Technology 294 Machine Technology 294
Automatic Identifi cation Systems (AISs) and RFID 295
Process Control 295
Vision Systems 296
Robots 296
Automated Storage and Retrieval Systems (ASRSs) 296
Automated Guided Vehicles (AGVs) 296
Flexible Manufacturing Systems (FMSs) 297
Computer-Integrated Manufacturing (CIM) 297
Technology in Services 298 Process Redesign 298 Summary 299 Key Terms 299 Ethical Dilemma 300 Discussion Questions 300 Solved Problem 300 Problems 301 CASE STUDIES 302
Rochester Manufacturing’s Process Decision 302
Process Strategy at Wheeled Coach Video Case 302
Alaska Airlines: 20-Minute Baggage Process— Guaranteed! Video Case 303
Process Analysis at Arnold Palmer Hospital Video Case 304
Endnotes 304 Rapid Review 305 Self Test 306
Supplement 7 Capacity and Constraint Management 307
Capacity 308 Design and Eff ective Capacity 309
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TABLE OF CONTENTS xv
Capacity and Strategy 311
Capacity Considerations 311
Managing Demand 312
Service-Sector Demand and Capacity Management 313
Bottleneck Analysis and the Theory of Constraints 314 Theory of Constraints 317
Bottleneck Management 317
Break-Even Analysis 318 Single-Product Case 319
Multiproduct Case 320
Reducing Risk with Incremental Changes 322 Applying Expected Monetary Value (EMV)
to Capacity Decisions 323 Applying Investment Analysis to Strategy-Driven
Investments 324 Investment, Variable Cost, and Cash Flow 324
Net Present Value 324
Summary 326 Key Terms 327 Discussion Questions 327 Using Software for Break-Even Analysis 327 Solved Problems 328 Problems 330 CASE STUDY 333
Capacity Planning at Arnold Palmer Hospital Video Case 333
Endnote 334 Rapid Review 335 Self Test 336
Chapter 8 Location Strategies 337
GLOBAL COMPANY PROFILE: FEDEX 338 The Strategic Importance of Location 340 Factors That Aff ect Location Decisions 341
Labor Productivity 342
Exchange Rates and Currency Risk 342
Costs 342
Political Risk, Values, and Culture 343
Proximity to Markets 343
Proximity to Suppliers 344
Proximity to Competitors (Clustering) 344
Methods of Evaluating Location Alternatives 344 The Factor-Rating Method 345
Locational Cost–Volume Analysis 346
Center-of-Gravity Method 348
Transportation Model 349
Service Location Strategy 350 Geographic Information Systems 351 Summary 353
Key Terms 353 Ethical Dilemma 354 Discussion Questions 354 Using Software to Solve Location Problems 354 Solved Problems 355 Problems 357 CASE STUDIES 362
Southern Recreational Vehicle Company 362
Locating the Next Red Lobster Restaurant Video Case 362
Where to Place the Hard Rock Cafe Video Case 363
Endnote 364 Rapid Review 365 Self Test 366
Chapter 9 Layout Strategies 367
GLOBAL COMPANY PROFILE: McDONALD’S 368 The Strategic Importance of Layout Decisions 370 Types of Layout 370 Offi ce Layout 371 Retail Layout 372
Servicescapes 375
Warehouse and Storage Layouts 375 Cross-Docking 376
Random Stocking 377
Customizing 377
Fixed-Position Layout 377 Process-Oriented Layout 378
Computer Software for Process-Oriented Layouts 382
Work Cells 383 Requirements of Work Cells 383
Staffi ng and Balancing Work Cells 384
The Focused Work Center and the Focused Factory 386
Repetitive and Product-Oriented Layout 386 Assembly-Line Balancing 387
Summary 392 Key Terms 392 Ethical Dilemma 392 Discussion Questions 392 Using Software to Solve Layout Problems 393 Solved Problems 394 Problems 396 CASE STUDIES 402
State Automobile License Renewals 402
Laying Out Arnold Palmer Hospital’s New Facility Video Case 402
Facility Layout at Wheeled Coach Video Case 404
Endnotes 404 Rapid Review 405 Self Test 406
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Chapter 10 Human Resources, Job Design, and Work Measurement 407
GLOBAL COMPANY PROFILE: RUSTY WALLACE’S NASCAR RACING TEAM 408
Human Resource Strategy for Competitive Advantage 410 Constraints on Human Resource Strategy 410
Labor Planning 411 Employment-Stability Policies 411
Work Schedules 411
Job Classifi cations and Work Rules 412
Job Design 412 Labor Specialization 412
Job Expansion 413
Psychological Components of Job Design 413
Self-Directed Teams 414
Motivation and Incentive Systems 415
Ergonomics and the Work Environment 415 Methods Analysis 417 The Visual Workplace 420 Labor Standards 420
Historical Experience 421
Time Studies 421
Predetermined Time Standards 425
Work Sampling 427
Ethics 430 Summary 430 Key Terms 430 Ethical Dilemma 431 Discussion Questions 431 Solved Problems 432 Problems 434 CASE STUDIES 437
Jackson Manufacturing Company 437
The “People” Focus: Human Resources at Alaska Airlines Video Case 437
Hard Rock’s Human Resource Strategy Video Case 438
Endnotes 438 Rapid Review 439 Self Test 440
PART THREE Managing Operations 441
Chapter 11 Supply Chain Management 441
GLOBAL COMPANY PROFILE: DARDEN RESTAURANTS 442 The Supply Chain’s Strategic Importance 444 Sourcing Issues: Make-or-Buy and
Outsourcing 446 Make-or-Buy Decisions 447
Outsourcing 447
Six Sourcing Strategies 447 Many Suppliers 447
Few Suppliers 447
Vertical Integration 448
Joint Ventures 448
Keiretsu Networks 448
Virtual Companies 449
Supply Chain Risk 449 Risks and Mitigation Tactics 450
Security and JIT 451
Managing the Integrated Supply Chain 451 Issues in Managing the Integrated Supply Chain 451
Opportunities in Managing the Integrated Supply Chain 452
Building the Supply Base 454 Supplier Evaluation 454
Supplier Development 454
Negotiations 455
Contracting 455
Centralized Purchasing 455
E-Procurement 456
Logistics Management 456 Shipping Systems 456
Warehousing 457
Third-Party Logistics (3PL) 458
Distribution Management 459 Ethics and Sustainable Supply Chain
Management 460 Supply Chain Management Ethics 460
Establishing Sustainability in Supply Chains 460
Measuring Supply Chain Performance 461 Assets Committed to Inventory 461
Benchmarking the Supply Chain 463
The SCOR Model 463
Summary 464 Key Terms 465 Ethical Dilemma 465 Discussion Questions 465 Solved Problems 465 Problems 466 CASE STUDIES 467
Darden’s Global Supply Chains Video Case 467
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Supply Chain Management at Regal Marine Video Case 467
Arnold Palmer Hospital’s Supply Chain Video Case 468
Endnote 468 Rapid Review 469 Self Test 470
Supplement 11 Supply Chain Management Analytics 471
Techniques for Evaluating Supply Chains 472 Evaluating Disaster Risk in the Supply Chain 472 Managing the Bullwhip Eff ect 474
A Bullwhip Eff ect Measure 475
Supplier Selection Analysis 476 Transportation Mode Analysis 477 Warehouse Storage 478 Summary 479 Discussion Questions 480 Solved Problems 480 Problems 482 Rapid Review 485 Self Test 486
Chapter 12 Inventory Management 487
GLOBAL COMPANY PROFILE: AMAZON.COM 488 The Importance of Inventory 490
Functions of Inventory 490
Types of Inventory 490
Managing Inventory 491 ABC Analysis 491
Record Accuracy 493
Cycle Counting 493
Control of Service Inventories 494
Inventory Models 495 Independent vs. Dependent Demand 495
Holding, Ordering, and Setup Costs 495
Inventory Models for Independent Demand 496 The Basic Economic Order Quantity (EOQ) Model 496
Minimizing Costs 497
Reorder Points 501
Production Order Quantity Model 502
Quantity Discount Models 505
Probabilistic Models and Safety Stock 508 Other Probabilistic Models 511
Single-Period Model 513 Fixed-Period (P) Systems 514 Summary 515 Key Terms 515 Ethical Dilemma 515
Discussion Questions 515 Using Software to Solve Inventory Problems 516 Solved Problems 517 Problems 520 CASE STUDIES 524
Zhou Bicycle Company 524
Parker Hi-Fi Systems 525
Managing Inventory at Frito-Lay Video Case 525
Inventory Control at Wheeled Coach Video Case 526
Endnotes 526 Rapid Review 527 Self Test 528
Chapter 13 Aggregate Planning and S&OP 529
GLOBAL COMPANY PROFILE: FRITO-LAY 530 The Planning Process 532 Sales and Operations Planning 533 The Nature of Aggregate Planning 534 Aggregate Planning Strategies 535
Capacity Options 535
Demand Options 536
Mixing Options to Develop a Plan 537
Methods for Aggregate Planning 538 Graphical Methods 538
Mathematical Approaches 543
Aggregate Planning in Services 545 Restaurants 546
Hospitals 546
National Chains of Small Service Firms 546
Miscellaneous Services 546
Airline Industry 547
Revenue Management 547 Summary 550 Key Terms 550 Ethical Dilemma 551 Discussion Questions 551 Using Software for Aggregate Planning 552 Solved Problems 554 Problems 555 CASE STUDIES 559
Andrew-Carter, Inc. 559
Using Revenue Management to Set Orlando Magic Ticket Prices Video Case 560
Endnote 560 Rapid Review 561 Self Test 562
Chapter 14 Material Requirements Planning (MRP) and ERP 563
GLOBAL COMPANY PROFILE: WHEELED COACH 564 Dependent Demand 566
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Dependent Inventory Model Requirements 566 Master Production Schedule 567
Bills of Material 568
Accurate Inventory Records 570
Purchase Orders Outstanding 570
Lead Times for Components 570
MRP Structure 571 MRP Management 575
MRP Dynamics 575
MRP Limitations 575
Lot-Sizing Techniques 576 Extensions of MRP 580
Material Requirements Planning II (MRP II) 580
Closed-Loop MRP 581
Capacity Planning 581
MRP in Services 583 Distribution Resource Planning (DRP) 584
Enterprise Resource Planning (ERP) 584 ERP in the Service Sector 587
Summary 587 Key Terms 587 Ethical Dilemma 587 Discussion Questions 588 Using Software to Solve MRP Problems 588 Solved Problems 589 Problems 592 CASE STUDIES 595
When 18,500 Orlando Magic Fans Come to Dinner Video Case 595
MRP at Wheeled Coach Video Case 596
Endnotes 596 Rapid Review 597 Self Test 598
Chapter 15 Short-Term Scheduling 599
GLOBAL COMPANY PROFILE: ALASKA AIRLINES 600 The Importance of Short-Term Scheduling 602 Scheduling Issues 602
Forward and Backward Scheduling 603
Finite and Infi nite Loading 604
Scheduling Criteria 604
Scheduling Process-Focused Facilities 605 Loading Jobs 605
Input–Output Control 606
Gantt Charts 607
Assignment Method 608
Sequencing Jobs 611 Priority Rules for Sequencing Jobs 611
Critical Ratio 614
Sequencing N Jobs on Two Machines: Johnson’s Rule 615
Limitations of Rule-Based Sequencing Systems 616
Finite Capacity Scheduling (FCS) 617 Scheduling Services 618
Scheduling Service Employees with Cyclical Scheduling 620
Summary 621 Key Terms 621 Ethical Dilemma 621 Discussion Questions 622 Using Software for Short-Term Scheduling 622 Solved Problems 624 Problems 627 CASE STUDIES 630
Old Oregon Wood Store 630
From the Eagles to the Magic: Converting the Amway Center Video Case 631
Scheduling at Hard Rock Cafe Video Case 632
Endnotes 632 Rapid Review 633 Self Test 634
Chapter 16 Lean Operations 635
GLOBAL COMPANY PROFILE: TOYOTA MOTOR CORPORATION 636
Lean Operations 638 Eliminate Waste 638
Remove Variability 639
Improve Throughput 640
Lean and Just-in-Time 640 Supplier Partnerships 640
Lean Layout 642
Lean Inventory 643
Lean Scheduling 646
Lean Quality 649
Lean and the Toyota Production System 649 Continuous Improvement 649
Respect for People 649
Processes and Standard Work Practice 650
Lean Organizations 650 Building a Lean Organization 650
Lean Sustainability 652
Lean in Services 652 Summary 653 Key Terms 653 Ethical Dilemma 653 Discussion Questions 653 Solved Problem 653 Problems 654
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CASE STUDIES 655 Lean Operations at Alaska Airlines Video Case 655
JIT at Arnold Palmer Hospital Video Case 656
Endnote 656 Rapid Review 657 Self Test 658
Chapter 17 Maintenance and Reliability 659
GLOBAL COMPANY PROFILE: ORLANDO UTILITIES COMMISSION 660
The Strategic Importance of Maintenance and Reliability 662
Reliability 663 System Reliability 663
Providing Redundancy 665
Maintenance 667
Implementing Preventive Maintenance 667
Increasing Repair Capabilities 670
Autonomous Maintenance 670
Total Productive Maintenance 671 Summary 671 Key Terms 671 Ethical Dilemma 671 Discussion Questions 671 Using Software to Solve Reliability Problems 672 Solved Problems 672 Problems 672 CASE STUDY 674
Maintenance Drives Profi ts at Frito-Lay Video Case 674
Rapid Review 675 Self Test 676
PART FOUR Business Analytics Modules 677
Module A Decision-Making Tools 677
The Decision Process in Operations 678 Fundamentals of Decision Making 679 Decision Tables 680 Types of Decision-Making Environments 681
Decision Making Under Uncertainty 681
Decision Making Under Risk 682
Decision Making Under Certainty 683
Expected Value of Perfect Information (EVPI) 683
Decision Trees 684 A More Complex Decision Tree 686
The Poker Decision Process 688
Summary 689 Key Terms 689 Discussion Questions 689 Using Software for Decision Models 689 Solved Problems 691 Problems 692 CASE STUDY 696
Warehouse Tenting at the Port of Miami 696
Endnote 696 Rapid Review 697 Self Test 698
Module B Linear Programming 699
Why Use Linear Programming? 700 Requirements of a Linear Programming
Problem 701 Formulating Linear Programming Problems 701
Glickman Electronics Example 701
Graphical Solution to a Linear Programming Problem 702
Graphical Representation of Constraints 702
Iso-Profi t Line Solution Method 703
Corner-Point Solution Method 705
Sensitivity Analysis 705 Sensitivity Report 706
Changes in the Resources or Right-Hand-Side Values 706
Changes in the Objective Function Coeffi cient 707
Solving Minimization Problems 708 Linear Programming Applications 710
Production-Mix Example 710
Diet Problem Example 711
Labor Scheduling Example 712
The Simplex Method of LP 713 Integer and Binary Variables 713
Creating Integer and Binary Variables 713
Linear Programming Applications with Binary Variables 714
A Fixed-Charge Integer Programming Problem 715
Summary 716 Key Terms 716 Discussion Questions 716 Using Software to Solve LP Problems 716 Solved Problems 718 Problems 720 CASE STUDIES 725
Quain Lawn and Garden, Inc. 725
Scheduling Challenges at Alaska Airlines Video Case 726
Endnotes 726 Rapid Review 727 Self Test 728
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xx TABLE OF CONTENTS
Module C Transportation Models 729
Transportation Modeling 730 Developing an Initial Solution 732
The Northwest-Corner Rule 732
The Intuitive Lowest-Cost Method 733
The Stepping-Stone Method 734 Special Issues in Modeling 737
Demand Not Equal to Supply 737
Degeneracy 737
Summary 738 Key Terms 738 Discussion Questions 738 Using Software to Solve Transportation
Problems 738 Solved Problems 740 Problems 741 CASE STUDY 743
Custom Vans, Inc. 743
Rapid Review 745 Self Test 746
Module D Waiting-Line Models 747
Queuing Theory 748 Characteristics of a Waiting-Line System 749
Arrival Characteristics 749
Waiting-Line Characteristics 750
Service Characteristics 751
Measuring a Queue’s Performance 752
Queuing Costs 753 The Variety of Queuing Models 754
Model A (M/M/1): Single-Server Queuing Model with Poisson Arrivals and Exponential Service Times 754
Model B (M/M/S): Multiple-Server Queuing Model 757
Model C (M/D/1): Constant-Service-Time Model 762
Little’s Law 763
Model D (M/M/1 with Finite Source): Finite-Population Model 763
Other Queuing Approaches 765 Summary 765 Key Terms 765 Discussion Questions 765 Using Software to Solve Queuing Problems 766 Solved Problems 766 Problems 768 CASE STUDIES 771
New England Foundry 771
The Winter Park Hotel 772
Endnotes 772 Rapid Review 773 Self Test 774
Module E Learning Curves 775
What Is a Learning Curve? 776 Learning Curves in Services and
Manufacturing 777 Applying the Learning Curve 778
Doubling Approach 778
Formula Approach 779
Learning-Curve Table Approach 779
Strategic Implications of Learning Curves 782 Limitations of Learning Curves 783 Summary 783 Key Term 783 Discussion Questions 783 Using Software for Learning Curves 784 Solved Problems 784 Problems 785 CASE STUDY 787
SMT’s Negotiation with IBM 787
Endnote 788 Rapid Review 789 Self Test 790
Module F Simulation 791
What Is Simulation? 792 Advantages and Disadvantages of Simulation 793 Monte Carlo Simulation 794 Simulation with Two Decision Variables:
An Inventory Example 797 Summary 799 Key Terms 799 Discussion Questions 799 Using Software in Simulation 800 Solved Problems 801 Problems 802 CASE STUDY 805
Alabama Airlines’ Call Center 805
Endnote 806 Rapid Review 807 Self Test 808
Appendix A1 Bibliography B1 Name Index I1 General Index I7
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ONLINE TUTORIALS
1. Statistical Tools for Managers T1-1
Discrete Probability Distributions T1-2 Expected Value of a Discrete Probability Distribution T1-3
Variance of a Discrete Probability Distribution T1-3
Continuous Probability Distributions T1-4 The Normal Distribution T1-4
Summary T1-7 Key Terms T1-7 Discussion Questions T1-7 Problems T1-7 Bibliography T1-7
2. Acceptance Sampling T2-1
Sampling Plans T2-2 Single Sampling T2-2
Double Sampling T2-2
Sequential Sampling T2-2
Operating Characteristic (OC) Curves T2-2 Producer’s and Consumer’s Risk T2-3 Average Outgoing Quality T2-5 Summary T2-6 Key Terms T2-6 Solved Problem T2-7 Discussion Questions T2-7 Problems T2-7
3. The Simplex Method of Linear Programming T3-1
Converting the Constraints to Equations T3-2 Setting Up the First Simplex Tableau T3-2 Simplex Solution Procedures T3-4 Summary of Simplex Steps for Maximization
Problems T3-6 Artifi cial and Surplus Variables T3-7 Solving Minimization Problems T3-7 Summary T3-8 Key Terms T3-8 Solved Problem T3-8
Discussion Questions T3-8 Problems T3-9
4. The MODI and VAM Methods of Solving Transportation Problems T4-1
MODI Method T4-2 How to Use the MODI Method T4-2 Solving the Arizona Plumbing Problem with MODI T4-2
Vogel’s Approximation Method: Another Way to Find an Initial Solution T4-4
Discussion Questions T4-8 Problems T4-8
5. Vehicle Routing and Scheduling T5-1
Introduction T5-2 Service Delivery Example: Meals-for-ME T5-2
Objectives of Routing and Scheduling Problems T5-2
Characteristics of Routing and Scheduling Problems T5-3 Classifying Routing and Scheduling Problems T5-3 Solving Routing and Scheduling Problems T5-4
Routing Service Vehicles T5-5 The Traveling Salesman Problem T5-5 Multiple Traveling Salesman Problem T5-8 The Vehicle Routing Problem T5-9 Cluster First, Route Second Approach T5-10
Scheduling Service Vehicles T5-11 The Concurrent Scheduler Approach T5-13
Other Routing and Scheduling Problems T5-13 Summary T5-14 Key Terms T5-15 Discussion Questions T5-15 Problems T5-15 Case Study: Routing and Scheduling of
Phlebotomists T5-17 Bibliography T5-17
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Welcome to your operations management (OM) course. In this book, we present a state-of-the- art view of the operations function. Operations is an exciting area of management that has a profound effect on productivity. Indeed, few other activities have as much impact on the quality of our lives. The goal of this text is to present a broad introduction to the field of operations in a realistic, practical manner. Even if you are not planning on a career in the operations area, you will likely be working with people in operations. Therefore, having a solid understanding of the role of operations in an organization will be of substantial benefit to you. This book will also help you understand how OM affects society and your life. Certainly, you will better understand what goes on behind the scenes when you attend a concert or major sports event; purchase a bag of Frito-Lay potato chips; buy a meal at an Olive Garden or a Hard Rock Cafe; place an order through Amazon.com; board a flight on Alaska Airlines; or enter a hospital for medical care. More than one and a half million readers of our earlier editions seem to have endorsed this premise.
We welcome comments by email from our North American readers and from students using the International edition, the Indian edition, the Arabic edition, and our editions in Portuguese, Spanish, Turkish, Indonesian, and Chinese. Hopefully, you will find this material useful, interest- ing, and even exciting.
New to This Edition We’ve made significant revisions to this edition, and want to share some of the changes with you.
Five New Video Case Studies Featuring Alaska Airlines In this edition, we take you behind the scenes of Alaska Airlines, consistently rated as one of the top carriers in the country. This fascinating organization opened its doors—and planes— so we could examine leading edge OM in the airlines industry. We observe: the quality pro- gram at Alaska Air (Chapter 6); the process analysis behind the airline’s 20-minute baggage retrieval guarantee (Chapter 7); how Alaska empowers its employees (Chapter 10); the air- line’s use of Lean, 5s, kaizen, and Gemba walks (Chapter 16); and the complexities of sched- uling (Module B).
Our prior editions focused on integrated Video Case Studies for the Orlando Magic basketball team, Frito-Lay, Darden Restaurants, Hard Rock Cafe, Arnold Palmer Hospital, Wheeled Coach Ambulances, and Regal Marine. These Video Case Studies appear in this edition as well, along with the five new ones for Alaska Airlines. All of our videos are created by the authors, with the outstanding coauthorship of Beverly Amer at Northern Arizona University, to explicitly match with text content and terminology.
Preface
xxiii
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xxiv PREFACE
Creating Your Own Excel Spreadsheets We continue to provide two free decision support software programs, Excel OM for Windows and Mac and POM for Windows, to help you and your students solve homework problems and case studies. These excellent packages are found in MyOMLab and at our text’s Student Download Page.
Many instructors also encourage students to develop their own Excel spreadsheet models to tackle OM issues. With this edition, we provide numerous examples at chapter end on how to do so. “Creating Your Own Excel Spreadsheets” examples now appear in Chapters 1, 2, 4, 8, 12, and 13, Supplement 6, Supplement 7, and Modules A, B, and F. We hope these eleven samples will help expand students’ spreadsheet capabilities.
Video Case Alaska Airlines: 20-Minute Baggage Process—Guaranteed! Alaska Airlines is unique among the nine major U.S. carriers not only for its extensive flight coverage of remote towns throughout Alaska (it also covers the U.S., Hawaii, and Mexico from its pri- mary hub in Seattle). It is also one of the smallest independent airlines, with 10,300 employees, including 3,000 flight attendants and 1,500 pilots. What makes it really unique, though, is its abil- ity to build state-of-the-art processes, using the latest technology, that yield high customer satisfaction. Indeed, J. D. Power and Associates has ranked Alaska Airlines highest in North America for seven years in a row for customer satisfaction.
Alaska Airlines was the first to sell tickets via the Internet, first to offer Web check-in and print boarding passes online, and first with kiosk check-in. As Wayne Newton, Director of System Operation Control, states, “We are passionate about our pro- cesses. If it’s not measured, it’s not managed.”
One of the processes Alaska is most proud of is its baggage han- dling system. Passengers can check in at kiosks, tag their own bags with bar code stickers, and deliver them to a customer service agent at the carousel, which carries the bags through the vast under- ground system that eventually delivers the bags to a baggage han- dler. En route, each bag passes through TSA automated screening and is manually opened or inspected if it appears suspicious. With the help of bar code readers, conveyer belts automatically sort and transfer bags to their location (called a “pier”) at the tarmac level. A baggage handler then loads the bags onto a cart and takes it to Al
as ka
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in es
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Using Software for Productivity Analysis
This section presents three ways to solve productivity problems with computer software. First, you can create your own Excel spreadsheets to conduct productivity analysis. Second, you can use the Excel OM software that comes with this text. Third, POM for Windows is another program that is available with this text .
Program 1.1
Actions Copy C7 to B7, Copy B14 to C14, Copy C15 to B15, and Copy D14 to D15
Create a row for each of the inputs used for the productivity measure. Put the output in the last row.
=C5*C6
=B10/B7
Enter the values for the old system in column B and the new system in Column C.
Productivity = Output/Input
=(C14-B14)/B14=C10/(C8+C9)
X USING EXCEL OM Excel OM is an Excel “add-in” with 24 Operations Management decision support “Templates.” To access the templates, double- click on the Excel OM tab at the top of the page, then in the menu bar choose the appropriate chapter (in this case Chapter 1 ), from either the “Chapter” or “Alphabetic” tab on the left. Each of Excel OM’s 24 modules includes instructions for that particular module. The instructions can be turned on or off via the “instruction” tab in the menu bar.
P USING POM FOR WINDOWS POM for Windows is decision support software that includes 24 Operations Management modules. The modules are accessed by double-clicking on Module in the menu bar, and then double-clicking on the appropriate (in this case Productivity ) item. Instructions are provided for each module just below the menu bar.
CREATING YOUR OWN EXCEL SPREADSHEETS Program 1.1 illustrates how to build an Excel spreadsheet for the data in Example 2.
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PREFACE xxv
Expanding and Reordering Our Set of Homework Problems We believe that a vast selection of quality homework problems, ranging from easy to challeng- ing (denoted by one to four dots), is critical for both instructors and students. Instructors need a broad selection of problems to choose from for homework, quizzes, and exams—without reus- ing the same set from semester to semester. We take pride in having more problems—by far, with 807—than any other OM text. We added dozens of new problems this edition. The following table illustrates the selection by chapter.
Further, with the majority of our adopters now using the MyOMLab learning system in their classes, we have reorganized all the homework problems—both those appearing in the printed text, as well as the Additional Homework Problems that are available in MyOMLab—by topic heading. We are identifying all problems by topic (see the following example).
The list of all problems by topic also appears at the end of each boxed example, as well as in the Rapid Review that closes each chapter. These handy references should make it easier to assign problems for homework, quizzes, and exams. A rich set of assignable problems and cases makes the learning experience more complete and pedagogically sound.
CHAPTER 5 | DESIGN OF GOODS AND SERVICES 187
Problems 5.4–5.8 relate to Product Development
• • 5.4 Construct a house of quality matrix for a wrist- watch. Be sure to indicate specific customer wants that you think the general public desires. Then complete the matrix to show how an operations manager might identify specific attributes that can be measured and controlled to meet those customer desires.
• • 5.5 Using the house of quality, pick a real product (a good or service) and analyze how an existing organization satis- fies customer requirements.
• • 5.6 Prepare a house of quality for a mousetrap.
• • 5.7 Conduct an interview with a prospective purchaser of a new bicycle and translate the customer’s wants into the specific hows of the firm.
• • • • 5.8 Using the house of quality sequence, as described in Figure 5.4 on page 169, determine how you might deploy resources to achieve the desired quality for a product or service whose production process you understand.
Problems 5.9–5.17 relate to Defining a Product
• • 5.9 Prepare a bill of material for (a) a pair of eyeglasses and its case or (b) a fast-food sandwich (visit a local sandwich
Problems 5.21–5.28 relate to the Application of Decision Trees to Product Design
• • 5.21 The product design group of Iyengar Electric Supplies, Inc., has determined that it needs to design a new series of switches. It must decide on one of three design strategies. The market forecast is for 200,000 units. The better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, Dr. W. L. Berry, has decided that the following costs are a good estimate of the initial and variable costs connected with each of the three strategies: a) Low-tech: A low-technology, low-cost process consisting of
hiring several new junior engineers. This option has a fixed cost of $45,000 and variable-cost probabilities of .3 for $.55 each, .4 for $.50, and .3 for $.45.
b) Subcontract: A medium-cost approach using a good outside design staff. This approach would have a fixed cost of $65,000 and variable-cost probabilities of .7 of $.45, .2 of $.40, and .1 of $.35.
c) High-tech: A high-technology approach using the very best of the inside staff and the latest computer-aided design technol- ogy. This approach has a fixed cost of $75,000 and variable- cost probabilities of .9 of $.40 and .1 of $.35.
What is the best decision based on an expected monetary value (EMV) criterion? ( Note: We want the lowest EMV, as we are dealing with costs in this problem.) PX
• • 5.22 MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of
Problem 5.3 is available in MyOMLab.
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Chapter Number of Problems
15 27
16 12
17 24
Module A 32
Module B 42
Module C 18
Module D 39
Module E 33
Module F 25
Chapter Number of Problems
Supplement 7 45
8 34
9 27
10 46
11 8
Supplement 11 20
12 53
13 26
14 32
Chapter Number of Problems
1 18
2 12
3 33
4 59
5 28
Supplement 5 19
6 21
Supplement 6 55
7 17
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Jay, Barry, and Chuck’s OM Blog As a complement to this text, we have created a companion blog, with coordinated features to help teach the OM course. There are teaching tips, highlights of OM items in the news (along with class discussion questions and links), video tips, guest posts by instructors using our text, sample OM syllabi from dozens of colleges, and much more—all arranged by chapter. To learn more about any chapter topics, visit www.heizerrenderOM.wordpress.com . As you prepare your lectures and syllabus, scan our blog for discussion ideas, teaching tips, and classroom exercises.
Lean Operations In previous editions, we sought to explicitly differentiate the concepts of just-in-time, Lean, and Toyota Production System in Chapter 16. However, there is significant overlap and interchangea- bility among those three concepts, so we have revised Chapter 16 to incorporate the three concepts into an overall concept of “Lean.” The chapter suggests that students view Lean as a comprehen- sive integrated operations strategy that sustains competitive advantage and results in increased returns to all stakeholders.
Chapter-by-Chapter Changes To highlight the extent of the revisions in this edition, here are a few of the changes, on a chapter- by-chapter basis.
Chapter 1 : Operations and Productivity We updated Table 1.4 to reflect employment in various sectors and expanded our discussion of Lean operations. Our new case, Uber Technologies, introduces productivity by discussing the dis- ruptive nature of the Uber business model. In addition, there is a new “Creating Your Own Excel Spreadsheets” example for both labor productivity and multifactor productivity.
Chapter 2 : Operations Strategy in a Global Environment We have updated Figure 2.1 to better reflect changes in the growth of world trade and Figure 2.5 to reflect product life cycle changes. The Minute Lube case has been revised as Rapid Lube. Example 1 (National Architects) has been expanded to clarify factor rating calculations and is also demonstrated with a “Creating Your Own Excel Spreadsheets” presentation.
Chapter 3 : Project Management We rewrote and updated the Bechtel Global Company Profile and added a new section on well- defined projects with the “agile” and “waterfall” approaches. There are two new OM in Action boxes: “Agile Project Management at Mastek,” and “Behind the Tour de France.”
Chapter 4 : Forecasting We created a new table comparing the MAD, MSE, and MAPE forecasting error measures. There is also a new OM in Action box called “NYC’s Potholes and Regression Analysis.”
Chapter 5 : Design of Goods and Services We expanded our treatment of concurrent engineering and added two new discussion questions. Solved Problem 5.1 has been revised.
Supplement 5: Sustainability in the Supply Chain We wrote a new introductory section on Corporate Social Responsibility. There is also a new OM in Action box called “Blue Jeans and Sustainability” and 10 new homework problems.
Chapter 6 : Managing Quality We added new material to expand our discussion of Taguchi’s quality loss function. There is a new sec- tion on SERVQUAL, and a new video case study, “Quality Counts at Alaska Airlines,” appears here.
xxvi PREFACE
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Supplement 6: Statistical Process Control We added a figure on the relationship between sample size and sampling distribution. We also added raw data to Examples S2 and S3 to illustrate how ranges are computed. There is a new Excel spreadsheet to show students how to make their own c -chart, and we have added three new homework problems.
Chapter 7 : Process Strategy We wrote a new section on machine technology and additive manufacturing. There are two new discussion questions and three new homework problems. Our second new video case study is called “Alaska Airlines: 20-Minute Baggage Process—Guaranteed!”
Supplement 7: Capacity and Constraint Management We added a new Table S7.1, which compares and clarifies three capacity measurements, with an example of each. There is a new treatment of expected output and actual output in Example S2. The discussion of bottleneck time versus throughput time has also been expanded. Example S3, capacity analysis with parallel processes, has been revised. We have also added a new “Creating Your Own Excel Spreadsheets” example for a break-even model. Finally, we updated the Arnold Palmer Hospital capacity planning case with recent data.
Chapter 8 : Location Strategies We added two new OM in Action boxes: “Iowa—Home of Corn and Facebook” and “Denmark’s Meat Cluster.” We changed the notation for the center-of-gravity model to simplify the equa- tion and provided a new “Creating Your Own Excel Spreadsheets” presentation for the center-of- gravity example.
Chapter 9 : Layout Strategies We created a new Muther grid for office relationship charting and added a spread of five layouts showing how offices have evolved over time. There is a new OM in Action box called “Amazon Lets Loose the Robots,” and there is a new graphic example of Proplanner’s Flow Path Calculator. We have included a formula for idle time as a second measure of balance assignment efficiency and added new technology issues to the Arnold Palmer Hospital video case.
Chapter 10 : Human Resources, Job Design, and Work Measurement We added a new OM in Action box, “The Missing Perfect Chair,” and revised the Operations Chart as a service example. Our third new video case study is “The ‘People’ Focus: Human Resources at Alaska Airlines.”
Chapter 11 : Supply Chain Management We added “outsourcing” as a supply chain risk in Table 11.3.
Supplement 11: Supply Chain Management Analytics We added a major section on the topic of Warehouse Storage, with a new model for allocating inven- tory to storage locations. There is a new discussion question and three new homework problems.
Chapter 12 : Inventory Management New Programs 12.1 and 12.2 illustrate “Creating Your Own Excel Spreadsheets” for both the production run model and the single-period inventory model. The Excel function NORMSINV is introduced throughout the chapter. The Quantity Discount Model section is totally rewritten to illustrate the feasible solution shortcut. Solved Problem 12.5 is likewise redone with the new approach.
Chapter 13 : Aggregate Planning and S&OP We added a new OM in Action box, “Revenue Management Makes Disney the ‘King’ of the Broadway Jungle.” We also provided a new “Creating Your Own Excel Spreadsheets” example for the transportation method for aggregate planning, using the Solver approach.
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Chapter 14 : Material Requirements Planning (MRP) and ERP The MRP II example now includes greenhouse gasses.
Chapter 15 : Short-Term Scheduling We begin this chapter with a new Global Company Profile featuring Alaska Airlines and the scheduling issues it faces in its northern climate. We have added two new graphics to help illus- trate Forward and Backward Scheduling. There is also a new section called Performance Criteria, detailing how the choice of priority rule depends on four quantifiable criteria. We now explicitly define the performance criteria for sequencing jobs as separate numbered equations. Also, we provide an explicit formula for job lateness. There is a new OM in Action box called “Starbucks’ Controversial Scheduling Software.”
Chapter 16 : Lean Operations This chapter saw a major reorganization and rewrite with an enhanced focus on Lean operations. There is more material on supplier partnerships and building lean organizations. A new OM in Action box describes the use of kaizen at San Francisco General Hospital, and we have added a new video case study called “Lean Operations at Alaska Airlines.”
Chapter 17 : Maintenance and Reliability There are no major changes in this chapter.
Module A: Decision-Making Tools We added a discussion of “big data” and a new “Creating Your Own Excel Spreadsheets” example on how to evaluate a decision table.
Module B: Linear Programming There is a new section on integer and binary programming, two new homework problems, and a new video case study called “Using LP to Meet Scheduling Challenges at Alaska Airlines.” The corner point method is now covered before the iso-profit line approach.
Module C: Transportation Models There are no major changes to Module C.
Module D: Waiting-Line Models The limited population model (Model D) has been replaced by the finite population model, M/M/1 with finite source. This standardizes the queuing notation to match the M/M/1, M/M/s, and M/D/1. We have also expanded the coverage of Little’s Law and added six new homework problems.
Module E: Learning Curves There are no major changes to Module E.
Module F: Simulation We added a new “Creating Your Own Excel Spreadsheets” example for a simulation problem.
Student Resources To liven up the course and help students learn the content material, we have made available the following resources:
◆ Forty-one exciting Video Case Studies (videos located at MyOMLab ): These Video Case Studies feature real companies (Alaska Airlines, The Orlando Magic, Frito-Lay, Darden Restaurants, Regal Marine, Hard Rock Cafe, Ritz-Carlton, Wheeled Coach, and Arnold Palmer Hospital) and
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allow students to watch short videos, read about the key topics, and answer questions. These case studies can also be assigned without using class time to show the videos. Each of them was developed and written by the text authors to specifi cally supplement the book’s content. Instruc- tors who wish to use these in class, and who don’t have access to MyOMLab, should contact their Pearson Publishing Representative for access to the MyOMLab materials.
◆ POM for Windows software (located at MyOMLab and at the Student Download Page, www .pearsonhighered.com/heizer): POM for Windows is a powerful tool for easily solving OM problems. Its 24 modules can be used to solve most of the homework problems in the text.
◆ Excel OM problem-solving software (located at MyOMLab and at the Student Download Page, www.pearsonhighered.com/heizer): Excel OM is our exclusive user-friendly Excel add-in. Excel OM automatically creates worksheets to model and solve problems. Users select a topic from the pull-down menu and fi ll in the data, and then Excel will display and graph (where appropri- ate) the results. This software is great for student homework, what-if analysis, and classroom demonstrations. This edition includes a new version of Excel OM that is compatible with Microsoft Excel 2013 for Windows, Excel 2011 and 2016 for Mac, and earlier versions of Excel. Professor Howard Weiss, Temple University, developed both Excel OM for Windows and Mac, and POM for Windows to accompany our text and its problem set.
◆ Excel OM data fi les (located at MyOMLab and at the Student Download Page, www .pearsonhighered.com/heizer): These data fi les are prepared for specifi c examples and allow users to solve all the marked text examples without reentering any data.
◆ Active Models (located at MyOMLab and at the Student Download Page, www.pearsonhighered .com/heizer): These 28 Active Models are Excel-based OM simulations, designed to help students understand the quantitative methods shown in the textbook examples. Students may change the data in order to see how the changes aff ect the answers.
◆ Virtual tours (located at MyOMLab): These company tours provide direct links to companies— ranging from a hospital to an auto manufacturer—that practice key OM concepts. After touring each Web site, students are asked questions directly related to the concepts discussed in the chapter.
◆ Online Tutorial Chapters (located at MyOMLab and at the Student Download Page, www .pearsonhighered.com/heizer ): “Statistical Tools for Managers,” “Acceptance Sampling,” “The Simplex Method of Linear Programming,” “The MODI and VAM Methods of Solving Trans- portation Problems,” and “Vehicle Routing and Scheduling” are provided as additional material.
◆ Additional practice problems (located at MyOMLab): These problems provide problem-solving experience. They supplement the examples and solved problems found in each chapter.
◆ Additional case studies (located at MyOMLab and at the Student Download Page, www .pearsonhighered.com/heizer ): Over two dozen additional case studies supplement the ones in the text. Detailed solutions appear in the Solutions Manual.
◆ Virtual offi ce hours (located at MyOMLab): Professors Heizer, Render, and Munson walk stu- dents through all 89 Solved Problems in a series of 5- to 20-minute explanations. These have been updated with this new edition.
Instructor Resources At the Instructor Resource Center, www.pearsonhighered.com/irc , instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media sup- plements that accompany this text. Visit http://247.pearsoned.com for answers to frequently asked questions and toll-free user support phone numbers.
The following supplements are available with this text:
Instructor’s Resource Manual The Instructor’s Resource Manual, updated by co-author Chuck Munson, contains many useful resources for instructors—PowerPoint presentations with annotated notes, course outlines, video notes, blog highlights, learning techniques, Internet exercises and sample answers, case analysis ideas, additional teaching resources, and faculty notes.
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http://www.pearsonhighered.com/heizer
http://www.pearsonhighered.com/irc
http://247.pearsoned.com
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
www.pearsonhighered.com/heizer
Instructor’s Solutions Manual The Instructor’s Solutions Manual, written by the authors, contains the answers to all of the dis- cussion questions, Ethical Dilemmas , Active Models, and cases in the text, as well as worked-out solutions to all the end-of-chapter problems, additional homework problems, and additional case studies.
PowerPoint Presentations An extensive set of PowerPoint presentations, created by Professor Jeff Heyl of Lincoln University, is available for each chapter. With well over 2,000 slides, this set has excellent color and clarity.
Test Bank / TestGen® Computerized Test Bank The test bank, updated by James Roh, contains a variety of true/false, multiple-choice, short-answer, and essay questions, along with a selection of written problems, for each chapter. Test questions are annotated with the following information:
◆ Diffi culty level ◆ Type: multiple-choice, true/false, short-answer, essay, problem ◆ Learning objective ◆ AACSB (see the description that follows)
TestGen®, Pearson Education’s test-generating software, is PC/MAC compatible and preloaded with all the test bank questions. The test program permits instructors to edit, add, and delete ques- tions from the test bank to create customized tests.
The Association to Advance Collegiate Schools of Business (AACSB)
The test bank has connected select questions to the general knowledge and skill guidelines found in the AACSB Assurance of Learning standards.
AACSB is a not-for-profit corporation of educational institutions, corporations, and other organizations devoted to the promotion and improvement of higher education in business admin- istration and accounting. A collegiate institution offering degrees in business administration or accounting may volunteer for AACSB accreditation review. The AACSB makes initial accredi- tation decisions and conducts periodic reviews to promote continuous quality improvement in management education. Pearson Education is a proud member of the AACSB and is pleased to provide advice to help you apply AACSB assurance of learning standards.
What are AACSB assurance of learning standards? One of the criteria for AACSB accredita- tion is quality of the curricula. Although no specific courses are required, the AACSB expects a curriculum to include learning experiences in the following areas:
◆ Written and oral communication ◆ Ethical understanding and reasoning ◆ Analytical thinking ◆ Information technology ◆ Interpersonal relations and teamwork ◆ Diverse and multicultural work environments ◆ Refl ective thinking ◆ Application of knowledge
Questions that test skills relevant to these guidelines are appropriately tagged. For example, a question regarding clothing manufactured for U.S. firms by 10-year olds in Asia would receive the Ethical understanding and reasoning tag.
Tagged questions help you measure whether students are grasping the course content that aligns with the AACSB guidelines noted. In addition, the tagged questions may help instructors identify potential applications of these skills. This in turn may suggest enrichment activities or other educational experiences to help students achieve these skills.
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Video Package Designed and created by the authors specifically for their Heizer/Render/Munson texts, the video package contains the following 41 videos:
◆ Frito-Lay: Operations Management in Manufacturing ( Chapter 1 ) ◆ Hard Rock Cafe: Operations Management in Services ( Chapter 1 ) ◆ Strategy at Regal Marine ( Chapter 2 ) ◆ Hard Rock Cafe’s Global Strategy ( Chapter 2 ) ◆ Outsourcing Off shore at Darden ( Chapter 2 ) ◆ Project Management at Arnold Palmer Hospital ( Chapter 3 ) ◆ Managing Hard Rock’s Rockfest ( Chapter 3 ) ◆ Forecasting Ticket Revenue for Orlando Magic Basketball Games ( Chapter 4 ) ◆ Forecasting at Hard Rock Cafe ( Chapter 4 ) ◆ Product Design at Regal Marine ( Chapter 5 ) ◆ Building Sustainability at the Orlando Magic’s Amway Center ( Supplement 5 ) ◆ Green Manufacturing and Sustainability at Frito-Lay ( Supplement 5 ) ◆ Quality Counts at Alaska Airlines ( Chapter 6 ) ◆ The Culture of Quality at Arnold Palmer Hospital ( Chapter 6 ) ◆ Quality at the Ritz-Carlton Hotel Company ( Chapter 6 ) ◆ Frito-Lay’s Quality-Controlled Potato Chips ( Supplement 6 ) ◆ Farm to Fork: Quality at Darden Restaurants ( Supplement 6 ) ◆ Alaska Airlines: 20-Minute Baggage Process—Guaranteed! ( Chapter 7 ) ◆ Process Strategy at Wheeled Coach ( Chapter 7 ) ◆ Process Analysis at Arnold Palmer Hospital ( Chapter 7 ) ◆ Capacity Planning at Arnold Palmer Hospital ( Supplement 7 ) ◆ Locating the Next Red Lobster Restaurant ( Chapter 8 ) ◆ Where to Place the Hard Rock Cafe ( Chapter 8 ) ◆ Facility Layout at Wheeled Coach ( Chapter 9 ) ◆ Laying Out Arnold Palmer Hospital’s New Facility ( Chapter 9 ) ◆ The “People” Focus: Human Resources at Alaska Airlines ( Chapter 10 ) ◆ Hard Rock’s Human Resource Strategy ( Chapter 10 ) ◆ Darden’s Global Supply Chains ( Chapter 11 ) ◆ Supply Chain Management at Regal Marine ( Chapter 11 ) ◆ Arnold Palmer Hospital’s Supply Chain ( Chapter 11 ) ◆ Managing Inventory at Frito-Lay ( Chapter 12 ) ◆ Inventory Control at Wheeled Coach ( Chapter 12 ) ◆ Using Revenue Management to Set Orlando Magic Ticket Prices ( Chapter 13 ) ◆ When 18,500 Orlando Magic Fans Come to Dinner ( Chapter 14 ) ◆ MRP at Wheeled Coach ( Chapter 14 ) ◆ From the Eagles to the Magic: Converting the Amway Center ( Chapter 15 ) ◆ Scheduling at Hard Rock Cafe ( Chapter 15 ) ◆ Lean Operations at Alaska Airlines ( Chapter 16 ) ◆ JIT at Arnold Palmer Hospital ( Chapter 16 ) ◆ Maintenance Drives Profi ts at Frito-Lay ( Chapter 17 ) ◆ Scheduling Challenges at Alaska Airlines (Module B)
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ALABAMA John Mittenthal University of Alabama Philip F. Musa University of Alabama at Birmingham William Petty University of Alabama Doug Turner Auburn University
ALASKA Paul Jordan University of Alaska
ARIZONA Susan K. Norman Northern Arizona University Scott Roberts Northern Arizona University Vicki L. Smith-Daniels Arizona State University Susan K. Williams Northern Arizona University
CALIFORNIA Jean-Pierre Amor University of San Diego Moshen Attaran California State University–Bakersfi eld Ali Behnezhad California State University–Northridge Joe Biggs California Polytechnic State University Lesley Buehler Ohlone College Rick Hesse Pepperdine Ravi Kathuria Chapman University Richard Martin California State University–Long Beach Ozgur Ozluk San Francisco State University Zinovy Radovilsky California State University–Hayward Robert J. Schlesinger San Diego State University