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Free ebooks ==> www.ebook777.com Confirming Pages Free ebooks ==> www.ebook777.com Operations Management eleventh edition William J. Stevenson Rochester Institute of Technology www.ebook777.com ste25251_fm_i-xxxv.indd i 12/24/10 4:30:09 PM Rev.Confirming Pages Free ebooks ==> www.ebook777.c...

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Operations Management eleventh edition

William J. Stevenson Rochester Institute of Technology

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This book is dedicated to you.

OPERATIONS MANAGEMENT Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2012, 2009, 2007, 2005, 2002, 1999, 1996, 1993, 1990, 1986, 1982 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. Proudly sourced and uploaded by [StormRG] Kickass Torrents | TPB | ET | h33t

This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-352525-9 MHID 0-07-352525-1 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Executive editor: Richard T. Hercher, Jr. Executive director of development: Ann Torbert Managing development editor: Gail Korosa Vice president and director of marketing: Robin J. Zwettler Marketing director: Brad Parkins Marketing manager: Katie White Vice president of editing, design, and production: Sesha Bolisetty Senior project manager: Bruce Gin Buyer II: Debra R. Sylvester Interior designer: Laurie J. Entringer Senior photo research coordinator: Keri Johnson Photo researcher: Bill Van Werden Lead media project manager: Kerry Bowler Media project manager: Ron Nelms Cover design: © Design Pics/Bilderbuch Typeface: 10/12 Times New Roman Compositor: Laserwords Private Limited Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Stevenson, William J. Operations management / William J. Stevenson.—11th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-07-352525-9 (alk. paper) ISBN-10: 0-07-352525-1 (alk. paper) 1. Production management. I. Title. TS155.S7824 2012 658.5—dc22

2010051901

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The McGraw-Hill/Irwin Series Operations and Decision Sciences Operations Management Beckman and Rosenfield, Operations Strategy: Competing in the 21st Century, First Edition Benton, Purchasing and Supply Chain Management, Second Edition Bowersox, Closs, and Cooper, Supply Chain Logistics Management, Third Edition Brown and Hyer, Managing Projects: A Team-Based Approach, First Edition Burt, Petcavage, and Pinkerton, Supply Management, Eighth Edition Cachon and Terwiesch, Matching Supply with Demand: An Introduction to Operations Management, Second Edition Finch, Interactive Models for Operations and Supply Chain Management, First Edition Fitzsimmons and Fitzsimmons, Service Management: Operations, Strategy, Information Technology, Seventh Edition Gehrlein, Operations Management Cases, First Edition Harrison and Samson, Technology Management, First Edition Hayen, SAP R/3 Enterprise Software: An Introduction, First Edition

Hopp, Supply Chain Science, First Edition

Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World, First Edition

Hopp and Spearman, Factory Physics, Third Edition

Stevenson, Operations Management, Eleventh Edition

Jacobs, Berry, Whybark, and Vollmann, Manufacturing Planning & Control for Supply Chain Management, Sixth Edition

Swink, Melnyk, Cooper, and Hartley, Managing Operations Across the Supply Chain, First Edition

Jacobs and Chase, Operations and Supply Management: The Core, Second Edition

Thomke, Managing Product and Service Development: Text and Cases, First Edition

Hill, Manufacturing Strategy: Text & Cases, Third Edition

Jacobs and Chase, Operations and Supply Chain Management, Thirteenth Edition Jacobs and Whybark, Why ERP? First Edition Johnson, Leenders, and Flynn, Purchasing and Supply Management, Fourteenth Edition Larson and Gray, Project Management: The Managerial Process, Fifth Edition Olson, Introduction to Information Systems Project Management, Second Edition Schroeder, Goldstein, and Rungtusanatham, Operations Management: Contemporary Concepts and Cases, Fifth Edition Simchi-Levi, Kaminsky, and Simchi-Levi, Designing and Managing the Supply Chain: Concepts, Strategies, Case Studies, Third Edition

Ulrich and Eppinger, Product Design and Development, Fourth Edition Zipkin, Foundations of Inventory Management, First Edition

Quantitative Methods and Management Science Hillier and Hillier, Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets, Fourth Edition Stevenson and Ozgur, Introduction to Management Science with Spreadsheets, First Edition

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Preface The material in this book is intended as an introduction to the field of operations management. The topics covered include both strategic issues and practical applications. Among the topics are forecasting, product and service design, capacity planning, management of quality and quality control, inventory management, scheduling, supply chain management, and project management. My purpose in revising this book continues to be to provide a clear presentation of the concepts, tools, and applications of the field of operations management. Operations management is evolving and growing, and I have found updating and integrating new material to be both rewarding and challenging, particularly due to the plethora of new developments in the field, while facing the practical limits on the length of the book.

•

Service Supply chain management Ethical conduct Sustainability Step-by-step problem solving •

• •

•

This Eleventh Edition Contains a Considerable Amount of Material . . . much more than one could hope to cover in a single semester. However, there is also considerable flexibility in terms of what material to cover. This allows instructors to select the chapters, or portions of chapters, that are most relevant for their purposes. That flexibility also extends to the choice of relative weighting of the qualitative or quantitative aspects of the material. As in previous editions, there are major pedagogical features designed to help students learn and understand the material. This section describes the key features of the book, the chapter elements, the supplements that are available for teaching the course, highlights of the eleventh edition, and suggested applications for classroom instruction. By providing this support, it is our hope that instructors and students will have the tools to make this learning experience a rewarding one.

What’s New in This Edition This edition has been revised to incorporate and integrate changes in the field of Operations Management, and the many suggestions for improvement received from instructors around the world who are using the text. The following are key among the revisions: • • •

The sequence of chapters has been changed to improve the flow. A tutorial has been added on working with the normal distribution. A list of key points has been added to every chapter.

New material and more emphasis have been devoted to these topics:

Linear programming is now a chapter rather than a chapter supplement, to allow more flexibility on when and where it is used. There is added emphasis on ethics in every chapter. Throughout the text, there are new, updated readings and photos to provide students with a motivating view of the critical importance of operations management today. Available for instructors, OM Video/DVD series Volumes 1–16 document the latest innovations in operations at companies such as Zappos.com, Xerox, Burton Snowboards, FedEx, Honda, and more.

Acknowledgments I want to thank the many contributors to this edition. Over the recent editions, reviewers and adopters of the text have provided a “continuously improving” wealth of ideas and suggestions. It is encouraging to me as an author. I hope all reviewers and readers will know their suggestions were valuable, were carefully considered, and are sincerely appreciated. The list includes post-publication reviewers, focus group participants, and manuscript reviewers: Vikas Agrawal, Fayetteville State University; Bahram Alidaee, University of Mississippi; Chen Chung, University of Kentucky; Robert Clark, Stony Brook University; Kathy Dhanda, DePaul University; Richard Ehrhardt, University of North Carolina at Greensboro; Warren Fisher, Stephen F. Austin State University; Seung-Lae Kim, Drexel University; Jooh Lee, Rowan University; Gita Mathur, San Jose State University; Kaushic Sengupta, Hofstra University; Kenneth Shaw, Oregon State University; Michael Shurden, Lander University; John Simon, Governors State University; Young Son, Bernard M. Baruch College; Timothy Vaughan, University of Wisconsin at Eau Claire; Pamela Zelbst, Sam Houston State University; Tekle Wanorie, Northwest Missouri State University. Other contributors included accuracy checkers: Michael Godfrey, University of Wisconsin at Oshkosh and Pamela Zelbst, Sam Houston State University; Test Bank: Alan Cannon, University of Texas at Arlington; Power Points: David Cook, Old Dominion University; Data Sets: Mehdi Kaighobadi, Florida Atlantic University; Excel Templates and

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Preface

ScreenCam tutorials: Lee Tangedahl, University of Montana; Instructors Manual: Michael Godfrey and Pamela Zelbst. Special thanks goes out to those subject matter experts who helped design and develop content in Connect™ Operations Management for this edition: Ronny Richardson of Southern Polytechnic State University who created Guided Examples and Shyam Jha, University of Arizona, Nancy Lambe, University of South Alabama, and Andrew Manikas, University of Wisconsin at Oshkosh, who designed the new assignable interactive applications. Finally I would like to thank all the people at McGraw-Hill/ Irwin for their efforts and support. It is always a pleasure to work with such a professional and competent group of people. Special thanks go to Dick Hercher, Executive Editor; Gail Korosa, Managing Developmental Editor; Bruce Gin, Project Manager; Debra Sylvester, Buyer II; Katie White, Marketing Manager; Laurie Entringer, Designer; Kerry Bowler and Ron Nelms, Media Project Managers; Keri Johnson, Photo Research and many others who worked “behind the scenes.” I would also like to thank the many reviewers of previous editions for their contributions. Ardavan Asef-Faziri, California State University at Northridge; Prabir Bagchi, George Washington State University; Gordon F. Bagot, California State University at Los Angeles; Ravi Behara, Florida Atlantic University; Michael Bendixen, Nova Southeastern; Ednilson Bernardes, Georgia Southern University; Prashanth N. Bharadwaj, Indiana University of Pennsylvania; Greg Bier, University of Missouri at Columbia; Joseph Biggs, Cal Poly State University; Kimball Bullington, Middle Tennessee State University; Alan Cannon, University of Texas at Arlington; Injazz Chen, Cleveland State University; Alan Chow, University of Southern Alabama at Mobile; Chrwan-Jyh, Oklahoma State University; Loretta Cochran, Arkansas Tech University; Lewis Coopersmith, Rider University; Richard Crandall, Appalachian State University; Dinesh Dave, Appalachian State University; Scott Dellana, East Carolina University; Xin Ding, University of Utah; Ellen Dumond, California State University at Fullerton; Kurt Engemann, Iona College; Diane Ervin, DeVry University; Farzaneh Fazel, Illinois State University; Wanda Fennell, University of Mississippi at Hattiesburg; Joy Field, Boston College; Lillian Fok, University of New Orleans; Charles Foley, Columbus State Community College; Matthew W. Ford, Northern Kentucky University; Phillip C. Fry, Boise State University; Charles A. Gates Jr., Aurora University; Tom Gattiker, Boise State University; Damodar Golhar, Western Michigan University; Robert Graham, Jacksonville State University; Angappa Gunasekaran, University of Massachusetts at Dartmouth; Haresh Gurnani, University of Miami; Terry Harrison, Penn State University; Vishwanath Hegde, California State University at East Bay; Craig Hill, Georgia State University; Jim Ho, University of Illinois at Chicago; Jonatan Jelen, Mercy College; Prafulla Joglekar, LaSalle University; Vijay Kannan, Utah State University; Sunder Kekre, Carnegie-Mellon

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University; Jim Keyes, University of Wisconsin at Stout; Beate Klingenberg, Marist College; John Kros, East Carolina University; Vinod Lall, Minnesota State University at Moorhead; Kenneth Lawrence, New Jersey Institute of Technology; Anita Lee-Post, University of Kentucky; Karen Lewis, University of Mississippi; Bingguang Li, Albany State University; Cheng Li, California State University at Los Angeles; Maureen P. Lojo, California State University at Sacramento; F. Victor Lu, St. John’s University; Janet Lyons, Utah State University; James Maddox, Friends University; Mark McComb, Mississippi College; George Mechling, Western Carolina University; Scott Metlen, University of Idaho; Douglas Micklich, Illinois State University; Ajay Mishra, SUNY at Binghamton; Scott S. Morris, Southern Nazarene University; Philip F. Musa, University of Alabama at Birmingham; Seong Hyun Nam, University of North Dakota; Roy Nersesian, Monmouth University; John Olson, University of St. Thomas; Jeffrey Ohlmann, University of Iowa at Iowa City; Ozgur Ozluk, San Francisco State University; Kenneth Paetsch, Cleveland State University; Taeho Park, San Jose State University; Allison Pearson, Mississippi State University; Patrick Penfield, Syracuse University; Steve Peng, California State University at Hayward; Richard Peschke, Minnesota State University at Moorhead; Andru Peters, San Jose State University; Charles Phillips, Mississippi State University; Frank Pianki, Anderson University; Sharma Pillutla, Towson University; Zinovy Radovilsky, California State University at Hayward; Stephen A. Raper, University of Missouri at Rolla; Pedro Reyes, Baylor University; Buddhadev Roychoudhury, Minnesota State University at Mankato; Narendra Rustagi, Howard University; Herb Schiller, Stony Brook University; Dean T. Scott, DeVry University; Scott J. Seipel, Middle Tennessee State University; Raj Selladurai, Indiana University; Dooyoung Shin, Minnesota State University at Mankato; Raymond E. Simko, Myers University; Jake Simons, Georgia Southern University; Charles Smith, Virginia Commonwealth University; Kenneth Solheim, DeVry University; Victor Sower, Sam Houston State University; Jeremy Stafford, University of North Alabama; Donna Stewart, University of Wisconsin at Stout; Dothang Truong, Fayetteville State University; Mike Umble, Baylor University; Javad Varzandeh, California State University at San Bernardino; Emre Veral, Baruch College; Mark Vroblefski, University of Arizona; Gustavo Vulcano, New York University; Walter Wallace, Georgia State University; James Walters, Ball State University; John Wang, Montclair State University; Jerry Wei, University of Notre Dame; Michael Whittenberg, University of Texas; Geoff Willis, University of Central Oklahoma; Jiawei Zhang, NYU; Zhenying Zhao, University of Maryland; Yong-Pin Zhou, University of Washington.

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Walkthrough MAJOR STUDY AND LEARNING FEATURES A number of key features in this text have been specifically designed to help introductory students learn, understand, and apply Operations concepts and problem-solving techniques.

Examples with Solutions Throughout the text, wherever a quantitative or analytic technique is introduced, an example is included to illustrate the application of that technique. These are designed to be easy to follow.

A furniture manufacturer wants to predict quarterly demand for a certain loveseat for periods 15 and 16, which happen to be the second and third quarters of a particular year. The series consists of both trend and seasonality. The trend portion of demand is projected using the equation Ft ⫽ 124 ⫹ 7.5t. Quarter relatives are SR1 ⫽ 1.20, SR2 ⫽ 1.10, SR3 ⫽ 0.75, and SR4 ⫽ 0.95. a.

Use this information to deseasonalize sales for quarters 1 through 8.

b.

Use this information to predict demand for periods 15 and 16.

a. Period 1 2 3 4 5 6 7 8

b.

Quarter 1 2 3 4 1 2 3 4

Sales 132 140 146 153 160 168 176 185

⫼ ⫼ ⫼ ⫼ ⫼ ⫼ ⫼ ⫼ ⫼

Quarter Relative 1.20 1.10 0.75 0.95 1.20 1.10 0.75 0.95

⫽ ⫽ ⫽ ⫽ ⫽ ⫽ ⫽ ⫽ ⫽

Deseasonalized Sales 110.00 127.27 194.67 161.05 133.33 152.73 234.67 194.74

EXAMPLE 7

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SOLUTION

The trend values at t ⫽ 15 and t ⫽ 16 are: F15 ⫽ 124 ⫹ 7.5(15) ⫽ 236.5 F16 ⫽ 124 ⫹ 7.5(16) ⫽ 244.0 Multiplying the trend value by the appropriate quarter relative yields a forecast that includes both trend and seasonality. Given that t ⫽ 15 is a third quarter and t ⫽ 16 is a fourth quarter, the forecasts are Period 15: 236.5(0.75) ⫽ 177.38 Period 16: 244.0(0.95) ⫽ 231.80

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Solved Problems At the end of chapters and chapter supplements, “solved problems” are provided to illustrate problem solving and the core concepts in the chapter. These have been carefully prepared to enhance student understanding as well as to provide additional examples of problem solving. The Excel logo indicates that a spreadsheet is available on the text’s Web site, to help solve the problem.

Excel solution:

SOLVED PROBLEMS

Problem 1 e cel

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A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows:

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Annual fixed cost Variable cost/unit Annual volume (units)

Make

Buy

$150,000 $60 12,000

None $80 12,000

a. Given these numbers, should the firm buy or make this item? b. There is a possibility that volume could change in the future. At what volume would the manager be indifferent between making and buying?

Solution

a. Determine the annual cost of each alternative: Total cost ⫽ Fixed cost ⫹ Volume ⫻ Variable cost Make: Buy:

$150, 000 ⫹ 12, 000($60) ⫽ $870, 000 0 ⫹ 12, 000($80) ⫽ $960, 000

Because the annual cost of making the item is less than the annual cost of buying it, the manager would reasonably choose to make the item. Note: If...