[Roberta S. Russell, Bernard W. Taylor] Operations(Bookos.org) PDF

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7 TH EDITION

Operations Management Creating Value Along the Supply Chain

Roberta S. Russell Professor Virginia Polytechnic Institute and State University

Bernard W. Taylor III R. B. Pamplin Professor Virginia Polytechnic Institute and State University

JOHN WILEY & SONS, INC.

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To my mother, Margaret Snead, with appreciation for your love and support. To my mother, Jean V. Taylor, and in memory of my father, Bernard W. Taylor, Jr., with love and appreciation. Opener Photo Credits Repeat chocolate chip © Geoffrey Holman/iStockphoto, Chapter 1 © Yin Yang/iStockphoto, Chapter 2 © ECKEHARD SCHULZ/AP/Wide World Photos, Chapter 3 © H. Mark Weidman Photography/ Alamy, Chapter 4 © Ina Peters/iStockphoto, Chapter 5 © Patrik Urban/Alamy, Chapter 6 © Yaiza Fernandez Garcia/iStockphoto, Chapter 7 © Lyn Hughes/Corbis, Chapter 8 © “Andersen Ross/Getty Images, Inc.”, Chapter 9 © John O'Boyle/Star Ledger/Corbis, Chapter 10 © Norman Chan/iStockphoto, Chapter 11 © Jim West/ Alamy, Chapter 12 © “Spencer Platt/Getty Images, Inc.”, Chapter 13 © Julian Nieman/Alamy, Chapter 14 © Richard Levine/Alamy, Chapter 15 © H-Gall/iStockphoto, Chapter Opener 16 © mediablitzimages Limited/Alamy, Chapter 17 © Ei Katsumata/Alamy

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This book was set in Times by Thomson Digital and printed and bound by Courier/Kendallville. The cover was printed by Courier/Kendallville. This book is printed on acid free paper. Copyright © 2011 John Wiley and Sons, Inc. All rights reserved. No part of this publication, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, website www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201) 748-6011. Fax (201) 748-6008, website http://www.wiley.com/ go/permissions. “Evaluation copies are provided to qualified academics and professionals for review purposes only, for use in their courses during the next academic year. These copies are licensed and may not be sold or transferred to a third party. Upon completion of the review period, please return the evaluation copy to Wiley. Return instructions and a free of charge return shipping label are available at www.wiley.com/ go/returnlabel. Outside of the United States, please contact your local representative.” ISBN-13 9780470525906 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1

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About the Authors

Bernard W. Taylor III and Roberta S. Russell

Bernard W. Taylor III is the Pamplin Professor of Management Science and Head of the Department of Business Information Technology in the Pamplin College of Business at Virginia Polytechnic Institute and State University. He received a Ph.D. and an M.B.A. from the University of Georgia and a B.I.E. from the Georgia Institute of Technology. He is the author of the book Introduction to Management Science (10th ed.) and co-author of Management Science (4th ed.), both published by Prentice Hall. Dr. Taylor has published over 80 articles in such journals as Operations Research, Management Science, Decision Sciences, IIE Transactions, Journal of the Operational Research Society, Computers and Operations Research, Omega, and the International Journal of Production Research, among others. His paper in Decision Sciences (with P. Y. Huang and L. P. Rees) on the Japanese kanban production system received the Stanley T. Hardy Award for its contribution to the field of production and operations management. He has served as President of the Decision Sciences Institute (DSI) as well as Program Chair, Council Member, Vice President, Treasurer, and as the Editor of Decision Line, the newsletter of DSI. He is a Fellow of DSI and a recipient of their Distinguished Service Award. He is a former President, Vice-President, and Program Chair of the Southeast Decision Sciences Institute and a recipient of their Distinguished Service Award. He teaches management science and production and operations management courses at both the undergraduate and graduate level. He has received the University Certificate of Teaching Excellence on four occasions, the Pamplin College of Business Certificate of

Teaching Excellence Award, and the Pamplin College of Business Ph.D. Teaching Excellence Award at Virginia Tech. Roberta S. Russell is a Professor of Business Information Technology in the Pamplin College of Business at Virginia Polytechnic Institute and State University. She received a Ph.D. from Virginia Polytechnic Institute and State University, an M.B.A. from Old Dominion University, and a B.S. degree from Virginia Polytechnic Institute and State University. Dr. Russell’s primary research and teaching interests are in the areas of operations and supply chain management, service operations, scheduling, and quality. She has published in Decision Sciences, IIE Transactions, International Journal of Production Research, Journal of Operations Management, IEEE Transactions, Annals of Operations Research, Computers and Operations Research, and others. She is also coauthor of the Prentice Hall book Service Management and Operations. Dr. Russell is a member of DSI, ASQ, POMS, and IIE and a certified fellow of APICS. She is past Vice President of POMS, past President of the Southwest Virginia Chapter of APICS and has held numerous offices in Southeast DSI. She has received the Pamplin College of Business Certificate of Teaching Excellence, the University Certificate of Teaching Excellence, and the MBA Association’s Outstanding Professor Award. She serves on the Education and Research Foundation Board of APICS, and is a certified supply chain management professional (CSCMP). Her consulting experience with IBM, AT&T, Dupont, Courtaulds, Xaloy, Northrup Grumman Shipbuilding and others brings a practical perspective into the classroom.

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Brief Contents PART ONE:

1.

Operations Management

1

Introduction to Operations and Supply Chain Management

1

Operational Decision-Making Tools: Decision Analysis

33

S1. 2.

Quality Management

3.

Statistical Process Control S3.

54 108

Operational Decision-Making Tools: Acceptance Sampling

148

4.

Product Design

156

5.

Service Design

189

6.

Processes and Technology

226

7.

Capacity and Facilities Design

257

S7. 8.

Human Resources S8.

9. PART TWO:

Operational Decision-Making Tools: Facility Location Models

297 315

Operational Decision-Making Tools: Work Measurement

Project Management

348 366

Supply Chain Management

420

10.

Supply Chain Management Strategy and Design

420

11.

Global Supply Chain Procurement and Distribution

450

S11.

Operational Decison-Making Tools: Transportation and Transshipment Models

475

12.

Forecasting

495

13.

Inventory Management

553

S13. 14.

Operational Decision-Making Tools: Simulation

590

Sales and Operations Planning S14.

607

Operational Decision-Making Tools: Linear Programming

645

15.

Resource Planning

678

16.

Lean Systems

720

17.

Scheduling

755

APPENDIX A—Normal Curve Areas

789

SOLUTIONS TO SELECTED ODD-NUMBERED PROBLEMS INDEX

798

790

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Contents PART ONE:

OPERATIONS MANAGEMENT

1

Introduction to Operations and

1. Supply Chain Management

■ Operations and Supply Chain Management for Chocolate ■ What Do Operations and Supply Chain Managers Do? The Operations Function ■ OM Dialogue: Mark Jackson, Marketing Manager The Evolution of Operations and Supply Chain Management Globalization The China Factor ■ The Balancing Act at New Balance India, The World’s Service Provider Productivity and Competitiveness Strategy and Operations Primary Task Core Competencies Order Winners and Order Qualifiers Positioning the Firm Competing on Cost Competing on Speed ■ Trader Joe’s Unique Strategy Competing on Quality Competing on Flexibility Strategy Deployment Policy Deployment Balanced Scorecard Operations Strategy Organization of this Text Learning Objectives of this Course Summary Summary of Key Terms Questions Problems Case Problem 1.1–Visualize This Case Problem 1.2–Whither an MBA at Strutledge? Case Problem 1.3–Weighing Options at the Weight Club References

1 1 3 2 6 6 9 10 12 13 14 17 17 18 18 19 19 19 20 21 21 21 21 23 25 25 26 26 27 27 28 30 30 31 31

SUPPLEMENT

1. Operational Decision-Making Tools: Decision Analysis Decision Analysis With and Without Probabilities Decision Making Without Probabilities Decision Analysis With Excel Decision Analysis With OM Tools

33 33 34 36 37

Decision Making With Probabilities Expected Value of Perfect Information Sequential Decision Trees Summary Summary of Key Formulas Summary of Key Terms Solved Problems Problems Case Problem S1.1–Whither an MBA at Strutledge? Case Problem S1.2–Transformer Replacement at Mountain States Electric Service Case Problem S1.3–Evaluating Projects at Nexcom Systems References

2. Quality Management ■ Quality Management at Mars What Is Quality? Quality from the Customer’s Perspective Dimensions of Quality for Manufactured Products Dimensions of Quality for Services Quality from the Producer’s Perspective A Final Perspective on Quality Quality Management System The Evolution of Quality Management ■ Applying Deming’s PDCA Cycle in Baldrige Award-Winning Schools and Hospitals Quality Tools Process Flowcharts Cause-and-Effect Diagrams Checksheets and Histograms Pareto Analysis Scatter Diagrams Process Control Charts and Statistical Quality Control TQM and QMS The Focus of Quality Management—Customers Quality Management in the Supply Chain Measuring Customer Satisfaction ■ Measuring Customer Satisfaction with “Voice of the Customer (VoC)” at Two Baldrige Award Winners The Role of Employees in Quality Improvement Kaizen and Continuous Improvement Quality Circles Process Improvement Teams ■ Customer Focus and Employee Empowerment in a Baldrige Award-Winning City Quality in Services

38 38 39 41 42 42 42 42 51 51 52 53

54 54 55 56 56 56 58 59 59 59 62 62 64 64 65 65 66 67 67 68 68 69

70 70 71 72 72 73 73

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Quality Attributes in Services ■ Ritz-Carlton Hotels: Two-Time Baldrige National Quality Award Winner Six Sigma The Six Sigma Goal—3.4 DPMO ■ Motorola’s Six Sigma Quality The Six Sigma Process ■ Six Sigma Highlights Improvement Projects The Breakthrough Strategy: DMAIC ■ North Shore University Hospital: A Six Sigma Project Example Black Belts and Green Belts Design for Six Sigma Lean Six Sigma The Bottom Line—Profitability The Cost of Quality The Cost of Achieving Good Quality The Cost of Poor Quality Measuring and Reporting Quality Costs The Quality–Cost Relationship The Effect of Quality Management on Productivity Productivity Measuring Product Yield and Productivity The Quality–Productivity Ratio Quality Awards The Malcolm Baldrige Award Other Awards for Quality ■ Baldrige National Quality Award Winners: What It Takes ISO 9000 Standards Certification Implications of ISO 9000 for U.S. Companies ■ ISO 9001 Certification at Monarcas Morelia ISO Registrars Summary Summary of Key Formulas Summary of Key Terms Solved Problems Questions Problems Case Problem 2.1–Designing a Quality-Management Program for the Internet at D4Q Case Problem 2.2–Quality Management at State University Case Problem 2.3–Quality Problems at the Tech Bookstores Case Problem 2.4–Product Yield at Continental Luggage Company References

3. Statistical Process Control ■ Statistical Process Control at Mars and Hershey’s The Basics of Statistical Process Control SPC in Quality Management Quality Measures: Attributes and Variables

74 75 76 76 77 78 78 79 79 79 80 80 80 82 83 84 84 85 87 87 87 88 90 91 91 93 93 94 94 95 95 96 97 98 98 98 99 99 102 104 105 105 107 107

SPC Applied to Services Where to Use Control Charts Control Charts Control Charts for Attributes p-Chart ■ Using Control Charts for Improving Health-Care Quality c-Chart Control Charts for Variables Mean (x–) Chart Range (R-) Chart Using x–- and R- Charts Together Control Chart Patterns Sample Size Determination SPC with Excel and OM Tools Process Capability Process Capability Measures ■ Design Tolerances at Harley-Davidson Company Process Capability with Excel and OM Tools Summary Summary of Key Formulas Summary of Key Terms Solved Problems Questions Problems Case Problem 3.1–Quality Control at Rainwater Brewery Case Problem 3.2–Quality Control at Grass, Unlimited Case Problem 3.3–Improving Service Time at Dave’s Burgers References

108 109 110 110

116 117 119 119 122 123 124 125 126 127 130 131 132 133 133 133 134 135 135 145 146 147 147

SUPPLEMENT

3. Operational Decision-Making Tools: Acceptance Sampling Single-Sample Attribute Plan Producer’s and Consumer’s Risks The Operating Characteristic Curve Developing a Sampling Plan with OM Tools Average Outgoing Quality Double- and Multiple-Sampling Plans Summary Summary of Key Terms Solved Problem Questions Problems

4. Product Design 108

111 112 112 113 114

■ Product Design at Mars The Design Process Idea Generation Feasibility Study ■ Pixar’s Creativity Rapid Prototyping and Concurrent Design

148 149 149 150 151 152 153 154 154 154 155 155

156 156 157 158 159 160 160

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Contents Form Design ■ Apple’s Design Process Functional Design Reliability Maintainability Usability Production Design Final Design and Process Plans Technology in Design Collaborative Product Design Systems Design Quality Reviews ■ Jugaad, Design for the Times Design for Environment Green Sourcing Green Manufacture Green Consumption Recycling and Re-Use Quality Function Deployment ■ Nike’s Trash Talking Shoes Design for Robustness Summary Summary of Key Terms Summary of Key Formulas Solved Problems Questions Problems Case Problem 4.1–Greening Product Design Case Problem 4.2–Lean and Mean References

5. Service Design ■ Service Design at Hershey’s The Service Economy Characteristics of Services The Service Design Process ■ Redbox Brings Self-Service to Movie Rentals The Service-Process Matrix Tools for Service Design Service Blueprinting Front Office and Back-Office Activities Servicescapes Quantitative Techniques Waiting Line Analysis for Service Improvement Elements of Waiting Line Analysis Elements of a Waiting Line The Calling Population The Arrival Rate Service Times Queue Discipline and Length Basic Waiting Line Structures Operating Characteristics Traditional Cost Relationships in Waiting Line Analysis The Psychology of Waiting Waiting Line Models The Basic Single-Server Model

161 162 163 163 164 165 165 167 167 168 169 170 170 172 172 173 173 173 174 179 181 181 182 182 183 183 186 187 188

189 189 190 191 193 193 195 196 198 199 199 199 200 200 200 200 201 202 202 202 204 204 205 206 206

Service Improvement Analysis Solution of the Single-Server Model with Excel Advanced Single-Server Models Multiple-Server Model The Basic Multiple-Server Model Summary Summary of Key Terms Summary of Key Formulas Solved Problems Questions Problems Case Problem 5.1–Streamlining the Refinancing Process Case Problem 5.2–Herding the Patient Case Problem 5.3–The College of Business Copy Center Case Problem 5.4–Northwoods Backpackers References

6. Processes and Technology ■ Processes and Technology for Chocolate Manufacturing Process Planning Outsourcing Process Selection Process Selection with Breakeven Analysis Process Plans Process Analysis Process Flowcharts ■ Making Fast Food Faster Process Innovation Steps in Process Innovation ■ OM Dialogue: Anastasia Thatcher, Business Process Manager Technology Decisions Financial Justification of Technology A Technology Primer Summary Summary of Key Terms Summary of Key Formulas Solved Problems Questions Problems Case Problem 6.1–A Manager’s Woes Case Problem 6.2–Wrong Meds, Again! Case Problem 6.3–The DPA Protocol References

7. Capacity and Facilities Design ■ Capacity and Facilities Design at the New England Confectionery Company Capacity Planning Facilities Objectives of Facility Layout ■ Bank of America’s Towering Achievement in Green Design

ix 207 209 209 210 210 214 214 215 215 216 217 222 223 223 224 225

226 226 228 228 229 230 235 235 236 238 241 241 244 245 245 246 249 249 249 249 250 251 253 254 255 255

257 257 258 261 261 261

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Contents

Basic Layouts Process Layouts Product Layouts Fixed-Position Layouts Designing Process Layouts Block Diagramming ■ The Health Benefits of Good Layout Relationship Diagramming Computerized Layout Solutions ■ Urban Outfitters’ New Distribution Facility Designing Service Layouts Designing Product Layouts Line Balancing Computerized Line Balancing Hybrid Layouts Cellular Layouts Advantages of Cellular Layouts Disadvantages of Cellular Layouts Flexible Manufacturing Systems Mixed-Model Assembly Lines Summary Summary of Key Formulas Summary of Key Terms Solved Problems Questions Problems Case Problem 7.1–Workout Plus Case Problem 7.2–Photo Op–Please Line Up Case Problem 7.3–The Grab ’n Go Café References

262 262 264 266 266 266 267 269...