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ELEVENTHE D I T I O NGLOBAL EDITIONOPERATIONSMANAGEMENTi,Sustainability and Supply Chain ManagementJ AYHEIZERJesse H. Jones-Professor of Business AdministrationTexas Lutheran UniversityBARRYRENDERCharles Harwood Professor of Operations ManagementGraduate School of BusinessRollins CollegePEARSONBoston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal * TorontoDelhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

Table of ContentsAbout the AuthorsPrefacePART ONE621Introduction to Operations ManagementChapter 1 Operations and Productivity37GLOBAL COMPANY PROFILE: HARD ROCK CAFE 38What Is Operations Management? 40Organizing to Produce Goods and Services 40The Supply Chain 42Why Study OM? 42What Operations Managers Do 43The Heritage of Operations Management 44Operations for Goods and Services 47Growth of Services 47Service Pay 48The Productivity Challenge 49Productivity Measurement 50Productivity Variables 51Productivity and the Service Sector 53New Challenges in Operations Management 54Ethics, Social Responsibility, and Sustainability 55Summary 56Key Terms 56Ethical Dilemma 56Discussion Questions 56Solved Problems 57Problems 57CASE STUDIES 59Norwegian Salmon Processing Facility, Trondheim 59Frito-Lay: Operations Management in ManufacturingVideo Case 59Hard Rock Cafe: Operations Management in ServicesVideo Case 60Rapid Review 61Self Test 62Chapter 2GLOBAL COMPANY PROFILE: BOEING 64A Global View of Operations and Supply ChainsCultural and Ethical Issues 69Developing Missions and Strategies 70Mission 70Strategy 70Achieving Competitive Advantage ThroughOperations 71Competing on Differentiation 71Competing on Cost 72Competing on Response 73Issues in Operations Strategy 74Strategy Development and Implementation 75Key Success Factors and Core Competencies 76Integrating OM with Other Activities 77Building and Staffing the Organization 77Implementing the 10 Strategic OM Decisions 78Strategic Planning, Core Competencies, andOutsourcing 78The Theory of Comparative Advantage 80Risks of Outsourcing 80;Rating Outsource Providers 81Global Operations Strategy Options 83Summary 84Key Terms 84Ethical Dilemma 85Discussion Questions 85Using Software to Solve Outsourcing Problems 85Solved Problems 86"Problems 87CASE STUDIES 89ALDI 89Strategy at Regal Marine Video Case 89Hard Rock Cafe's Global Strategy Video Case 89Outsourcing Offshore at Darden Video Case 90Rapid Review 91Self Test 92Chapter 3The Global Environment and OperationsStrategy636637Managing Projects93GLOBAL COMPANY PROFILE: BECHTEL GROUP 94The Importance of Project Management 96Project Planning 96The Project Manager 97Work Breakdown Structure 98Project Scheduling 99Project Controlling 100

10TABLE OF CONTENTSHuman Resources 142Project Management Techniques:PERT and CPM 101Capacity 142The Framework of PERT and CPM 101Seven Steps in the Forecasting SystemNetwork Diagrams and ApproachesForecasting Approaches101Activity-on-Node Example 102143Overview of Quantitative MethodsDetermining the Project Schedule105Time-Series Forecasting144144Forward Pass 105Decomposition of a Time Series 144Backward Pass 107Naive ApproachCalculating Slack Time and Identifying the CriticalPath(s) 108Moving Averages 146Variability in Activity Times110115118119121122Ethical Dilemma122Correlation Coefficients for Regression Lines 165Using Software to Solve Project ManagementProblems 122123168170Forecasting in the Service SectorSouthwestern University: (A) ' 131SummaryProject Management at Arnold Palmer HospitalVideo Case 132Managing Hard Rock's RockfestChapter 4Monitoring and Controlling ForecastsFocus Forecasting 170CASE STUDIES 131Self TestMultiple-Regression Analysis 167Adaptive Smoothing126Rapid ReviewAssociative Forecasting Methods: Regression andCorrelation Analysis 162Standard Error of the Estimate 164Discussion QuestionsProblemsSeasonal Variations in Data 157Using Regression Analysis for Forecasting 162122Solved ProblemsVideo Case 133135172Ethical Dilemma172Discussion QuestionsProblems137What Is Forecasting?170172Solved ProblemsForecasting Demand172173174177CASE STUDIES 184Southwestern University: (B) 184Forecasting Ticket Revenue for Orlando MagicBasketball Games Video Case 185—140Forecasting Time Horizons 140Types of ForecastsKey TermsUsing Software in Forecasting136GLOBAL COMPANY PROFILE: WALT DISNEY PARKS &RESORTS 138Forecasting at Hard Rock Cafe141 'The Strategic Importance of Forecasting141Supply-Chain Management 141Rapid ReviewSelf TestVideo Case 186187188PART TWO Designing OperationsChapter 5152Cyclical Variations in Data 162Using Microsoft Project to Manage ProjectsKey Terms148Trend Projections 155Cost-Time Trade-Offs and Project CrashingSummaryExponential SmoothingExponential Smoothing with Trend AdjustmentProbability of Project Completion 112A Critique of PERT and CPM145Measuring Forecast Error 149Three Time Estimates in PERT 110,143Overview of Qualitative MethodsActivity-on-Arrow Example 104142Product DesignLife Cycle and Strategy 194189GLOBAL COMPANY PROFILE: REGAL MARINE 190Goods and Services Selection192Product Strategy Options Support CompetitiveAdvantage 193Product Life Cycles 194189Product-by-Value Analysis 195Generating New ProductsProduct Development195196Product Development System 196Quality Function Deployment (QFD)196

TABLE OF CONTENTSOrganizing for Product Development199Manufacturability and Value EngineeringIssues for Product DesignRegulations and Industry Standards200201Summary235Key Terms235Modular Design 201Discussion QuestionsComputer-Aided Design (CAD) and Computer-AidedManufacturing (CAM) 201Solved ProblemsVirtual Reality Technology 202CASE STUDIESValue Analysis 203Problems237237Green Manufacturing and Sustainability at Frito-LayVideo Case 238203Purchasing Technology by Acquiring a Firm 204Rapid ReviewJoint Ventures 204Self TestChapter 6205Make-or-Buy Decisions206Documents for Production208Product Life-Cycle Management (PLM)Service Design209Adding Service EfficiencyImplications of Quality 245211Documents for Services 211246246Total Quality Management214Continuous Improvement215Ethical Dilemma215Discussion QuestionsSolved Problem216.Product Design at Regal MarineRapid Review248pEmployee Empowerment250250Just-in-Time (JIT)252Taguchi Concepts252Knowledge of TQM Tools 253219Temsa Global's Product Strategy247248Six Sigma 249Benchmarking215216CASE STUDIES246ISO 9000 International Quality StandardsEthics and Quality Management214Key TermsMalcolm Baldrige National Quality AwardCost of Quality (COQ)Application of Decision Trees to ProductDesign 212,Transition to ProductionQuality Management and InternationalStandards241Quality and Strategy 244Defining Quality 245208Process-Chain-Network (PCN) Analysis 209Self Test240GLOBAL COMPANY PROFILE: ARNOLD PALMERHOSPITAL 242Group Technology 207Problems239205Defining a ProductSummary235235Building Sustainability at the Orlando Magic's AmwayCenter Video Case Study 237Sustainability and Life Cycle Assessment(LCA) 203Alliances233International Environmental Policies and Standards 234Robust Design 201Product Development ContinuumTools of TQM219Video Case 219254Check Sheets254Scatter Diagrams 255221Cause-and-Effect Diagrams 255222Pareto Charts 255Supplement 5SustainabilityCorporate Social ResponsibilitySustainability 225223224256Histograms257The Role of InspectionCommons 225257258When and Where to Inspect' 258Triple Bottom Line 225Product Design 228FlowchartsStatistical Process Control (SPC)Systems View 225Design and Production for Sustainability11Source Inspection227259Service Industry Inspection260Inspection of Attributes versus Variables 260Production Process 230TQM in ServicesLogistics 230SummaryEnd-of-Life Phase 232Key Terms263263261

12TABLE OF CONTENTSEthical DilemmaSelection of Equipment263Discussion QuestionsSolved ProblemProblems263264Flowchart264CASE STUDIES315Value-Stream Mapping316Process Charts 317Service BlueprintingThe Culture of Quality at Arnold Palmer HospitalVideo Case 267318Special Considerations for Service ProcessDesign 318Quality at the Ritz-Carlton Hotel CompanyVideo Case 268Rapid Review315315Time-Function Mapping266Southwestern University: (C) 266Self Test314Process Analysis and DesignProduction Technology269321Machine Technology 321270Automatic Identification Systems (AISs) and RFID 321Supplement 6Statistical Process ControlStatistical Process Control (SPC)271Process ControlVision Systems272321322Control Charts for Variables 274RobotsThe Central Limit Theorem 274Automated Storage and Retrieval Systems (ASRSs) 322Setting Mean Chart Limits (x-Charts)Automated Guided Vehicles (AGVs) 323275Flexible Manufacturing Systems (FMSs) 323Setting Range Chart Limits (R-Charts) 278Computer-Integrated Manufacturing (CIM) 323Using Mean and Range Charts 279Control Charts for AttributesTechnology in Services280Process RedesignManagerial Issues and Control Charts 284Process CapabilitySummary285Process Capability Ratio (Cp)Acceptance SamplingOperating Characteristic Curve 288Solved Problem'ProblemsAverage Outgoing Quality ,290Summary291Solved Problems291Process Strategy at Wheeled Coach293Rapid Review295Self Test299Cecil Rice Export, Alexandria, Egypt299Chapter 7Four Process Strategies308Bottleneck Analysis and the Theory ofConstraints 340342Bottleneck ManagementRepetitive Focus 309Break-Even Analysis310Mass Customization FocusProcess Comparison306Theory of ConstraintsProcess Focus 308312310337337Service-Sector Demand and CapacityManagement 338305GLOBAL COMPANY PROFILE: HARLEY-DAVIDSON335,336Capacity ConsiderationsManaging Demand333—Capacity and Strategy304Product FocusCapacity PlanningDesign and Effective Capacity303Process DesignVideo Case 330331Capacity 334Farm to Fork: Quality at Darden RestaurantsVideo Case 301Self Test329332Supplement 7Frito-Lay's Quality-Controlled Potato ChipsVideo Case 301Rapid Review329Process Analysis at Arnold Palmer HospitalVideo Case 329291Using Software for SPCCASE STUDIES327Rochester Manufacturing's Process DesignDiscussion QuestionsProblems327328CASE STUDIES291Key Terms327Discussion Questions287'326Ethical Dilemma286324326326Key Terms285Process Capability Index (Cpk)322342343Single-Product Case 343Multiproduct Case 344