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OperationsManagementTwelfth Global EditionWilliam J. StevensonSaunders College of BusinessRochester Institute of TechnologyMcGrawHillEducation

Preface vii1Introduction to OperationsManagementIntroductionReading:Al-Jomaih Automotive Excels in CustomerService 452Operations Strategy3Production of Goods Versus Providing ServicesWhy Learn About Operations Management?Process ManagementReading:Productivity Gains Curb Inflation79Career Opportunities and Professional SocietiesTransforming Strategy into Action: The BalancedScorecard 5414Reading:Manufacturing: The Chicken or The Egg?Productivity17Operations Management and Decision MakingProductivity Improvement 62Summary 62Key Points 62Key Terms 63Soived Problems 63Discussion and Review Questions 64Taking Stock 64Critical Thinking Exercises 65Problems 65Gases:An American Tragedy: Howa Good CompanyDied 66Reading:Revenue Management: Does It Work inManufacturing? 26Key Issues for Today's Business Operations2728Diet and the Environment: Vegetarian vs.Nonvegetarian 29Summary 36Key Points 36Key Terms 36Discussion and Review Questions 36Taking Stock 37Critical Thinking Exercises 37Gase:Hazel 37Selected Bibliography and Further Readings 38Problem-Solving Guide 38Home-Styie CookiesHazel RevisitedTapijt Express676969Operations Tour:Middle East Airlines 70Selected Bibliography and Furttier Readings 733ForecastingIntroduction27475Competitiveness, Strategy,and Productivity 40Elements of a Good ForecastIntroductionForecasting and the Supply Chain41Competitiveness42Mission And StrategiesxxviiiFeatures Common to All ForecastsForecast Accuracy 797778Steps in the Forecasting Process4459Dutch Tomate Growers' ProductivityAdvantage 6024Readings:Universities Embrace Sustainability56Readings:Productivity as a Double-Edged Sword17Reading:Analytics 20The Historical Evolution of OperationsManagement 21Operations Today53Implications of Organization Strategy for OperationsManagement 541112The Scope of Operations Management517879

ContentsReadings:Healthy Chicken from a HeaithyEnvironment 145Reading:Oil Price Fluctuations Mean Risky Oil PriceForecasts 80Approaches to ForecastingQualitative ForecastsKraft Foods' Recipe for Sustainability82Forecasts Based on Time-Series DataAssociative Forecasting TechniquesUsing Forecast Information84Recycle City: Maria's Market100Other Design Considerations106Choosing a Forecasting TechniqueReading:Lego A/S in the Pink110112Computer Software in Forecasting149151Designing for ProductionReading:Forecasting atABM 113Summary 114Key Points 115Key Terms 117Solved Problems 117Discussion and Review Questions 123Taking Stock 124Critical Thinking Exercises 124Problems 124Gases:M&L Manufacturing 132Service Design159160162Reading:The Challenges of Managing Services166Operations Strategy 167Summary 167Key Points 168Key Terms 168Discussion and Review Questions 168Taking Stock 169Critical Thinking Exercises 169Problems 169Operations Tour:Dubai Sewage Treatment Piants 170Selected Bibliography and Further Readings 170Highline Financial Services, Ltd. 133Selected Bibliography and Further Readings 133Introduction148Phases in Product Design and Development112Product and Service Design146Xerox Diverts 2 Billion Pounds of Waste fromLandfills through Green Initiatives 14782Monitoring Forecast ErrorxxixSUPPLEMENT TO CHAPTER 4: Reliability1341711365Readings:Middle Eastern Carriers Influence AircraftDesign 136and ServicesIntroductionProduct Redesign, Not Offshoring, Holds CostAdvantage for U.S. Manufacturers 137Dutch Boy Brushes Up Its PaintsIdea Generation138139Reading:Vlasic on a Roll with Huge Pickte SiicesLegal and Ethical ConsiderationsHuman Factors142Cultural Factors143Strategie Capacity Flanning for Products184185Reading:Capacity Expansion: Good News for AllCapacity Decisions Are Strategie187Defining and Measuring Capacity188Determinants of Effective Capacity140141Strategy Formulation189191Forecasting Capacity Requirements 192Additional Challenges of Flanning ServiceCapacity 194143Do it In-House or Outsource It?195Reading:Do You Want Pickled Beets with That?Developing Capacity Strategies196Global Product and Service DesignEnvironmental Factors: Sustainability144143Reading:A Littie Closer to Home196186

ContentsConstraint ManagementEvaluating AlternativesMethods Analysis 299201Motion Study201303Work MeasurementOperations Strategy 207Summary 207Key Points 208Key Terms 208Solved Problems 208Discussion and Review Questions 211Taking Stock 211Critical Thinking Exercises 211Problems 212Gase:Outsourcing of Hospital Services 215Selected Bibliography and Further Readings 215SUPPLEMENT TO CHAPTER 5: Decision Theory305Operations Strategy 316Summary 317Key Points 317Key Terms 318Solved Problems 319Discussion and Review Questions 319Taking Stock 320Critical Thinking Exercise 320Problems 320Gase:Emaar Enterprises Garment Assembly 323Selected Bibliography and Further Readings 324216SUPPLEMENT TO CHAPTER 7: Learning CurvesProcess Selection and Facility LayoutIntroductionTechnology236237Process Selection8238244Reading:ATM Machines Serve Customers and BanksProcess Strategy262338340Service and Retail Locations351Reading:Careful Site Selection for FranchisesDesigning Process Layouts 271Summary 275Key Points 276Key Terms 276Solved Problems 276Discussion and Review Questions 280Taking Stock 280Critical Thinking Exercises 280Problems 281Selected Bibliography and Further Readings 287Job DesignThe Nature of Location DecisionsReading:Selecting the New Facility: Operations and MarketConsiderations 344Reading:BMW's Strategy: Fiexibility 270Introduction337Identifying a Country, Region, Community,and Site 343260Work Design and MeasurementThe Need for Location Decisions336General Procedure for Making LocationDecisions 342Strategie Resource Organization: FacilitiesLayout 250Designing Product Layouts: Line BalancingLocation Flanning and AnalysisGlobal Locations246249Reading:Everything Under One Roof352Evaluating Location Alternatives 353Summary 358Key Points 358Key Terms 359Solved Problems 359Discussion and Review Questions 360Taking Stock 360Critical Thinking Exercises 361Problems 361Gase:Bonjour, Costco! 364Selected Bibliography and Further Readings 364288289289Quality of Work Life9294Reading:Incentives for Good IdeasManagement of QualityIntroduction298325366367The Evolution of Quality Management368

ContentsProcess CapabilityReading:Whatever Happened to Quality?368Insights on Quality ManagementReadings:The Name of Quality372374Hyundai: Kissing Ciunkers GoodbyeQuality Awards378380Reading:HACCP Sets AI RifaiAbove the RestQuality Certification380Total Quality Management38411 Aggregate Flanning and MasterReading:Improving Quality and Reducing Risk inOffshoring 384SchedulingIntroduction388Reading:WhatKeeps Six Sigma Practitioners Up at Night? 391Quality ToolsReading:Quality Control Starts at the Source 441Summary 441Key Points 441Key Terms 441Solved Problems 443Discussion and Review Questions 447Taking Stock 448Critical Thinking Exercises 448Problems 448Gases:Kaufkraft 454Selected Bibliography and Further Readings 455383Problem Solving and Process Improvement456458Reading:Decreasing Workforce Capacity Can BeProblematic 462Basic Strategies for Meeting Uneven Demand392Reading:Benchmarking Corporate Web Sites of Fortune 500Companies 400Operations Strategy 400Summary 400Key Points 401Key Terms 401Solved Problem 401Discussion and Review Questions 402Taking Stock 403Critical Thinking Exercises 403Problems 403Gases:Chick-n-Gravy Dinner Line 405Aegean Markets 406Selected Bibliography and Further Readings 408Techniques for Aggregate FlanningAggregate Flanning in ServicesMaster SchedulingIntroductionInspection410Dino Powdered Milk 492Selected Bibliography and Further Readings 492MRP InputsReading:Mother Nature as a Quality Controller 415Statistical Process Control477494495An Overview of MRP412417477The Master Scheduling Process 478Summary 483Key Points 483Key Terms 484Solved Problems 484Discussion and Review Questions 487Taking Stock 487Critical Thinking Exercise 487Problems 487Gase:Introduction411468475Disaggregating the Aggregate Plan12 MRP and ERP10 Quality Control440Toys, Inc. 454381Quality and the Supply Chain435Operations StrategyThe Foundations of Modern Quality Management:The Gurus 369xxxi496MRP ProcessingMRP Outputs495500507Other Considerations508465

ContentsxxxivProject Management SoftwareCritical Thinking Exercises 815Problems 816Case:Trans-Siberian Bank 819762Risk Management 763Summary 764Key Points 765Key Terms 765Solved Problems 765Discussion and Review Questions 772Taking Stock 772Critical Thinking Exercises 772Problems 772Gases:The Case of the Mexican Crazy QuiltReadings:Stopped at a Light? Why Not Read This, You MayHave Time 819Selected Bibliography and Further Readings 82177919 Linear ProgrammingIntroductionBoro and Sons Engineering 781Selected Bibliography and Further Readings 781822823Linear Programming Models824Graphical Linear Programming18 Management ofWaiting LinesWhy is There Waiting?782Computer Solutions784Managerial Implications of Waiting LinesGoal of Waiting-Line ManagementReading:Hotels Avoid QueuingCharacteristics of Waiting Lines785786Measures of Waiting-Line PerformanceQueuing Models: Infinite-SourceConstraint ManagementThe Psychology of Waiting785785Queuing Model: Finite-SourceThe Simplex Method790790805838Sensitivity Analysis 841Summary 844Key Points 844Key Terms 844Solved Problems 844Discussion and Review QuestionsProblems 847Gases:Al-Hejri Ltd. 851847Selected Bibliography and Further Readings811811Managing Waiting Lines at Disney WorldOperations Strategy 812Summary 812Key Points 813Key Terms 813Solved Problems 813Discussion and Review Questions 815Taking Stock 815838Custom Cabinets, Inc. 852810Readings:Your Time Perception or Mine?826812853Appendix AAnswers to Selected ProblemsAppendix BTablesAppendix CWorking with the Normal DistributionPhoto Credits 877Company Index 878Subject Index 880854867872

ContentsxxxiiMRP in Services510Cases;Benefits and Requirements of MRPMRP IIUPD Manufacturing511596Tai Din Fung and Sons Pte LtdCapacity Requirements FlanningERP510513Grill Rite516598Cafe Kibbe599Operations Tours:Readings:Implementing ERP Systems—Cases from theGCCDairy Khoury 600AI Rifai 601Selected Bibliography and Further Readings 603Challenges in ERP Implementation 522Operations Strategy 524Summary 524Key Points 524Key Terms 525SO/yedßroA/ems 525Discussion and Review Questions 534Taking Stock 534Critical Thinking Exercises 535Problems 535Cases:Promotional Novelties 540The Coffee Club of Constantinople59614 JIT and Lean OperationsIntroduction604606Reading:JIT Can Be Hard to ImplementSupporting GoalsBuilding Blocks608609610Readings:GlaxoSmithKline and McLaren Team Up for FasterChangeovers 612541Operations Tour:"People" Firms Boost Profits, Study ShowsLean ToolsSelected Bibliography and Further Readings 544627Transitioning to a Lean System ventory Managementintroduction547The Nature and Importance of InventoriesLean Services548Requirements for Effective Inveritory Management551Reading:Radio Frequency Identification (RFID) FacilitatesB2B Transactions 553Inventory Ordering Policies557How Much to Order: Economic Order QuantityModels 557Reorder Point Ordering569How Much to Order: Fixed-Order-Interval ModelThe Single-Period Model576Operations Strategy 581Summary 581Key Points 581Key Terms 582Solved Problems 583Discussion and Review Questions 588Taking Stock 588Critical Thinking Exercises 588Problems 589629Reading:Nearby Suppliers Match Ford's Mix546573617629630Reading:To Build a Better Hospital, Virginia Mason TakesLessons from Toyota Plants 632JIT II633Operations Strategy 633Summary 634Key Points 635Key Terms 635Solved Problems 635Discussion and Review Questions 636Taking Stock 636Critical Thinking Exercises 636Problems 636Gase:Sun Operations 637Operations Tour:Vitale Barberis Canonico 638Selected Bibliography and Further Readings 639SUPPLEMENT TO CHAPTER 14: Maintenance640