Matching Supply with Demand

Transcription

1 Matching Supply with Demand An Introduction to Operations Management Third Edition Gerard Cachon The Wharton School, University of Pennsylvania Christian Terwiesch The Wharton School, University of Pennsylvania Me Gravu Hill McGraw-Hill Irwin

2 Table of Contents Chapter 1 Introduction Learning Objectives and Framework Road Map of the Book 6 Chapter 2 The Process View of the Organization Presbyterian Hospital in Philadelphia Three Measures of Process Performance Little's Law Inventory Turns and Inventory Costs Five Reasons to Hold Inventory 23 Pipeline Inventory 23 Seasonal Inventory 24 Cycle Inventory 25 Decoupling Inventory/Buffers 26 Safety Inventory The Product-Process Matrix Summary Further Reading Practice Problems 29 Chapter 3 Understanding the Supply Process: Evaluating Process Capacity How to Draw a Process Flow Diagram Bottleneck, Process Capacity, and Flow Rate (Throughput) How Long Does It Take to Produce a Certain Amount of Supply? Process Utilization and Capacity Utilization Workload and Implied Utilization Multiple Types of Flow Units Summary Practice Problems 50 Chapter 4 Estimating and Reducing Labor Costs xiv Analyzing an Assembly Operation 56 Time to Process a Quantity X Starting with an Empty Process 58 Labor Content and Idle Time 60 Increasing Capacity by Line Balancing Scale Up to Higher Volume 66 Increasing Capacity by Replicating the Line 67 Increasing Capacity by Selectively Adding Workers 67 Increasing Capacity by Further Specializing Tasks Summary Further Reading Practice Problems 74 Chapter 5 Project Management Motivating Example Critical Path Method Computing Project Completion Time Finding the Critical Path and Creating a Gantt Chart Computing Slack Time Dealing with Uncertainty 88 Random Activity Times 88 Potential Iteration/Rework Loops 91 Decision Tree/Milestones/Exit Option.91 Unknown Unknowns How to Accelerate Projects Literature/Further Reading Practice Problems 94 Chapter 6 The Link between Operations and Finance Paul Downs Cabinetmakers Building an ROIC Tree Valuing Operational Improvements Analyzing Operations Based on Financial Data Summary Further Reading Practice Problems 112 Chapter 7 Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model The Impact of Setups on Capacity 115

3 Table of Contents xv 7.2 Interaction between Batching and Inventory Choosing a Batch Size in the Presence of Setup Times Setup Times and Product Variety Setup Time Reduction Balancing Setup Costs with Inventory Costs: The EOQ Model Observations Related to the Economic Order Quantity Other Flow Interruptions: Buffer or Suffer Summary Further Reading Practice Problems 137 Chapter 8 Variability and Its Impact on Process Performance: Waiting Time Problems Motivating Example: A Somewhat Unrealistic Call Center Variability: Where It Comes From and How It Can Be Measured Analyzing an Arrival Process 149 Stationary Arrivals 151 Exponential Interarrival Times 153 Nonexponential Interarrival Times 154 Summary: Analyzing an Arrival Process Processing Time Variability Predicting the Average Waiting Time for the Case of One Resource Predicting the Average Waiting Time for the Case of Multiple Resources Service Levels in Waiting Time Problems Economic Implications: Generating a Staffing Plan Impact of Pooling: Economies of Scale Priority Rules in Waiting Lines 172 Processing-Time-Dependent Priority Rules 172 Processing-Time-Independent Priority Rules Reducing Variability 173 Ways to Reduce Arrival Variability 173 Ways to Reduce Processing Time Variability Summary Further Reading Practice Problems 177 Chapter 9 The Impact of Variability on Process Performance: Throughput Losses Motivating Examples: Why Averages Do Not Work Ambulance Diversion Throughput Loss for a Simple Process Customer Impatience and Throughput Loss Several Resources with Variability in Sequence 191 The Role of Buffers Summary Further Reading Practice Problems 195 Chapter 10 Quality Management, Statistical Process Control, and Six-Sigma Capability Controlling Variation: Practical Motivation The Two Types of Variation Constructing Control Charts Control Chart Example from a Service Setting Design Specifications and Process Capability Attribute Control Charts Robust Process Design Impact of Yields and Defects on Process Flow 214 Rework 215 Eliminating Flow Units from the Process 216 Cost Economics and Location of Test Points 217 Defects and Variability A Process for Improvement Further Reading Practice Problems 220 Chapter 11 Lean Operations and the Toyota Production System The, History of Toyota TPS Framework The Seven Sources of Waste JIT: Matching Supply with Demand 228 Achieve One-Unit-at-a-Time Flow 228 Produce at the Rate of Customer Demand 229 Implement Pull Systems 229

4 xvi Table of Contents 11.5 Quality Management Exposing Problems through Inventory Reduction Flexibility Standardization of Work and Reduction of Variability Human Resource Practices Lean Transformation Further Reading Practice Problems 239 Chapter 12 Betting on Uncertain Demand: The Newsvendor Model O'Neill Inc An Introduction to the Newsvendor Model Constructing a Demand Forecast The Expected Profit-Maximizing Order Quantity Performance Measures 254 Expected Lost Sales 255 Expected Sales 256 Expected Leftover Inventory 25 7 Expected Profit 257 In-Stock Probability and Stockout Probability 258 ' 12.6 Choosing an Order Quantity to Meet a Service Objective Managerial Lessons Summary Further Reading Practice Problems 263 Chapter 13 Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost When Is the Mismatch Cost High? Reducing Mismatch Costs with Make-to- Order Quick Response with Reactive Capacity Summary Further Reading Practice Problems 282 Chapter 14 Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model Medtronic's Supply Chain The Order-up-to Model Design and Implementation The End-of-Period Inventory Level Choosing Demand Distributions Performance Measures 299 In-Stock and Stockout Probability 299 Expected Back Order 301 Expected On-Hand Inventory 302 Pipeline Inventory/Expected On-Order Inventory Choosing an Order-up-to Level to Meet a Service Target Choosing an Appropriate Service Level Controlling Ordering Costs Managerial Insights Summary Further Reading Practice Problems 314 Chapter 15 Risk-Pooling Strategies to Reduce and Hedge Uncertainty Location Pooling 319 Pooling Medtronic s Field Inventory 320 Medtronic s Distribution Center(s) 324 Electronic Commerce Product Pooling Lead Time Pooling: Consolidated Distribution and Delayed Differentiation 333 Consolidated Distribution 333 Delayed Differentiation Capacity Pooling with Flexible Manufacturing Summary Further Reading Practice Problems 348 Chapter 16 Revenue Management with Capacity Controls Revenue Management and Margin Arithmetic Protection Levels and Booking Limits 355

5 Table of Contents xvii 16.3 Overbooking Implementation of Revenue Management 363 Demand Forecasting 363 Dynamic Decisions 364 Variability in Available Capacity 364 Reservations Coming in Groups 364 Effective Segmenting of Customers 364 Multiple Fare Classes 364 Software Implementation 365 Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacity Summary Further Reading Practice Problems 368 Chapter 17 Supply Chain Coordination The Bullwhip Effect: Causes and Consequences 373 Order Synchronization 3 76 Order Batching 377 Trade Promotions and Forward Buying 3 78 Reactive and Overreactive Ordering 382 Shortage Gaming Bullwhip Effect: Mitigating Strategies 384 Sharing Information 384 Smoothing the Flow of Product 385 Eliminating Pathological Incentives 385 Using Vendor-Managed Inventory 386 The Countereffect to the Bullwhip Effect: Production Smoothing Incentive Conflicts in a Sunglasses Supply Chain Buy-Back Contracts More Supply Chain Contracts 395 Quantity Discounts 395 Options Contracts 395 Revenue Sharing 396 Quantity Flexibility Contracts 396 Price Protection Summary Further Reading Practice Problems 398 Chapter 18 Sustainable Operations Sustainability: Background 401 Energy 401 Water 404 Material 404 Agriculture, Fishing, and Forestry 404 People Sustainability: The Business Case Sustainability and Operations Management 406 y 18.4 Summary Further Reading Practice Problems 409 Chapter 19 Business Model Innovation Zipcar and Netflix Innovation and Value Creation The Customer Value Curve: ^ The Demand Side of Business Model Innovation Solutions: The Supply Side of Business Model Innovation 417 Process Timing 418 Process Location 419 Process Standardization Unsuccessful Business Model Innovation 422 / 19.6 Summary Further Reading 423 Appendix A Statistics Tutorial 424 Appendix B Tables 433 Appendix C Evaluation of the Loss Function 445 Appendix D Equations and Approximations 448 Appendix E Solutions to Selected Practice Problems 456 Glossary 482 References 492 Index of Key "How to" Exhibits 495 Summary of Key Notation and Equations 496 Index 500