d / ATI ANAGE <$M Mdition

Transcription

1 d / v ATI ANAGE 1 <$M Mdition

2 OS About the Authors vi Foreword xx Preface xxi Introduction to Operations Management 1 itj Operations and Productivity 1 Global Company Profile: Hard Rock Cafe 2 What Is Operations Management? 4 Organizing to Produce Goods and Services 4 Why Study OM? 4 What Operations Managers Do 7 How This Book Is Organized 7 The Heritage of Operations Management 8 Operations in the Service Sector 9 Differences between Goods and Services 10 Growth of Services 11 Service Pay 12 Exciting New Trends in Operations Management 12 The Productivity Challenge 14 Productivity Measurement 15 Productivity Variables 17 Productivity and the Service Sector 19 Ethics and Social Responsibility 20 Summary 20 Key Terms 21 Solved Problems 21 < Self-Test 22 Internet and Student CD-ROM/DVD Exercises 22 Discussion Questions 22 Ethical Dilemma 23 Problems 23 Case Study: Zychol Chemicals Corporation 24 Video Case Study: Hard Rock Cafe: Operations Management in Services 25 Additional Case Study 25 Bibliography 25 Internet Resources 26 2.] Operations Strategy in a Global Environment 27 Global Company Profile: Boeing 28 A Global View of Operations 31 Cultural and Ethical Issues 33 Developing Missions and Strategies 34 Mission 34 Strategy 35 Achieving Competitive Advantage Through Operations 36 Competing on Differentiation 36 Competing on Cost 37 Competing on Response 37 Ten Strategic OM Decisions 39 Issues in Operations Strategy 42 Research 42 Preconditions 43 Dynamics 43 Strategy Development and Implementation 43 Critical Success Factors and Core Competencies 44 Build and Staff the Organization 46 Integrate OMwith Other Activities 47 Global Operations Strategy Options 47 International Strategy 47 Multidomestic Strategy 47 Global Strategy 48 Transnational Strategy 49 Summary 49 Key Terms 50 Solved Problem 50 Discussion Questions 50 Self-Test 51 Internet and Student CD-ROM/DVD Exercises 51 Ethical Dilemma 51 Problems 52 Case Study: Minit- Lube 52 Video Case Studies: Strategy at Regal Marine 53; Hard Rock Cafe's Global Strategy 53 Additional Case Studies 54 Bibliography 54 Internet Resources 54 Project Management 55 Global Company Profile: Bechtel Group 56 The Importance of Project Management 58 Project Planning 59 The Project Manager 59 Work Breakdown Structure 60 Project Scheduling 61 Project Controlling 62 Project Management Techniques: PERT and CPM 63 The Framework of PERT and CPM 63 Network Diagrams and Approaches 63 XI

3 xii Contents Activity-on-Node Example 65 Activity-on-Arrow Example 68 Determining the Project Schedule 68 Forward Pass 69 Backward Pass 71 Calculating Slack Time and Identifying the Critical Path(s) 72 Variability in Activity Times 73 Three Time Estimates in PERT 74 Probability of Project Completion 76 Cost-Time Trade-Offs and Project Crashing 79 A Critique of PERT and CPM 81 Using Microsoft Project to Manage Projects 82 Creating a Project Schedule Using Microsoft Project 82 Tracking Progress and Managing Costs Using Microsoft Project 86 Summary 87 Key Terms 87 Using Software to Solve Project Management Problems 88 Solved Problems 88 Active Model Exercise 91 Self-Test 92 Internet and Student CD-ROM/DVD Exercises 93 Discussion Questions 93 Ethical Dilemma 93 Problems 93 Case Study: Southwestern University (A) 99 Video Case Studies: Project Management at Arnold Palmer Hospital 100; Managing Hard Rock's Rockfest 101 Additional Case Studies 102 Bibliography 102 Internet Resources Forecasting 103 Global Company Profile: Disney World 104 What Is Forecasting? 106 Forecasting Time Horizons 106 The Influence of Product Life Cycle 107 Types of Forecasts 107 The Strategic Importance of Forecasting 107 Human Resources 107 Capacity 107 Supply Chain Management 107 Seven Steps in the Forecasting System 108 Forecasting Approaches 108 Overview of Qualitative Methods 108 Overview of Quantitative Methods 109 Time-Series Forecasting 109 Decomposition of a Time Series 110 Naive Approach 110 Moving Averages 111 Exponential Smoothing 113 Measuring Forecast Error 115 Exponential Smoothing with Trend Adjustment 118 Trend Projections 121 Seasonal Variations in Data 123 Cyclical Variations in Data 128 Associative Forecasting Methods: Regression and Correlation Analysis 128 Using Regression Analysis for Forecasting 128 Standard Error of the Estimate 130 Correlation Coefficients for Regression Lines 131 Multiple-Regression Analysis 133 Monitoring and Controlling Forecasts 133 Adaptive Smoothing 135 Focus Forecasting 135 Forecasting in the Service Sector 136 Summary 137 Key Terms 139 Using Software in Forecasting 139 Solved Problems 140 Active Model Exercise 142 Self-Test 143 Internet and Student CD-ROM/DVD Exercises 143 ' Discussion Questions 143 Ethical Dilemma 144 Problems 144 Case Study: Southwestern ' University: (B) 151 Video Case Study: < Forecasting at Hard Rock Cafe 151 Additional Case Studies 152 Bibliography 152 Internet Resources 153 Designing Operations I Design of Goods and Services 155 Global Company Profile: Regal Marine 156 Goods and Services Selection 158 Product Strategy Options Support Competitive Advantage 158 Product Life Cycles 159 Life Cycle and Strategy 159 Product-by-Value Analysis 160 Generating New Products 160 New Product Opportunities 160 Importance of New Products 161 Product Development 162 Product Development System 162 Quality Function Deployment (QFD) 162 Organizing for Product Development 165 Manufacturability and Value Engineering 166 Issues for Product Design 167 Robust Design 167 Modular Design 167 Computer-Aided Design (CAD) 167 Computer-Aided Manufacturing (CAM) 168 Virtual Reality Technology 169 Value Analysis 169 Ethics and Environmentally Friendly Designs 169

4 Contents xiil Time-Based Competition 172 Purchasing Technology by Acquiring a Firm 174 Joint Ventures 174 Alliances 174 Defining a Product 174 Make-or-Buy Decisions 176 Group Technology 176 Documents for Production 176 Product Life-Cycle Management (PLM) 178 Service Design 178 Documents for Services 180 Application of Decision Trees to Product Design 182 Transition to Production 183 Summary 184 Key Terms 184 Solved Problem 184 Self-Test 185 Active Model Exercise 186 Internet and Student CD-ROM/DVD Exercises 186 Discussion Questions 187 Ethical Dilemma 187 Problems 187 Case Study: De Mar's Product Strategy 189' Video Case Study: Product Design at Regal Marine 189' Additional Case Studies 190' Bibliography 190 Internet Resources Managing Quality 191. J Global Company Profile: Arnold Palmer Hospital 192 Quality and Strategy 194 Defining Quality 194 Implications of Quality 195 Malcolm Baldrige National Quality Award 195 Cost of Quality (COQ) 196 Ethics and Quality Management 196 International Quality Standards 198 ISO ISO Total Quality Management 198 Continuous Improvement 198 Six Sigma 199 Employee Empowerment 200 Benchmarking 201 Just-in-Time (JIT) 202 Taguchi Concepts 203 Knowledge of TQM Tools 204 Tools of TQM 204 Check Sheets 204 Scatter Diagrams 205 Cause-and-Effect Diagrams 205 Pareto Charts 206 Flowcharts 207 Histograms 208 Statistical Process Control (SPC) 208 The Role of Inspection 208 When and Where to Inspect 208 Source Inspection 209 Service Industry Inspection 210 Inspection of Attributes versus Variables 210 TQM in Services 210 Summary 213 Key Terms 213 Active Model Exercise 213 Self-Test 214 Internet and Student CD-ROM/DVD Exercises 214' Discussion Questions 214 Ethical Dilemma 215 Problems 215 ' Case Study: Southwestern University (C) 217 Video Case Studies: The Culture of Quality at Arnold Palmer Hospital 218; Quality at the Ritz-Carlton Hotel Company 218 Additional Case Studies 219 Bibliography 219 Internet Resources 219 Supplement 6: Statistical Process Control 221 Statistical Process Control (SPC) 222 Control Charts for Variables 224 The Central Limit Theorem 224 Setting Mean Chart Limits (x-charts) 225 Setting Range Chart Limits (R-Charts) 228 Using Mean and Range Charts 229 Control Charts for Attributes 230 Managerial Issues and Control Charts 233 Process Capability 235 Process Capability Ratio (C ) 235 Process Capability Index (C' k) 236 Acceptance Sampling 237 Operating Characteristic Curve 238 Average Outgoing Quality 239 Summary 240 Key Terms 240 ' Using Software for SPC 240 Solved Problems 241 Active Model Exercise 242 ' Self-Test 243 Internet and Student CD-ROM/DVD Exercises 244 Discussion Questions 244 Problems 244 Case Studies: BayfieldMud Company 248; Alabama Airlines' On-Time Schedule 249 Video Case Study: Farm to Fork: Quality at Darden Restaurants 250 Additional Case Studies 251 Bibliography 251 Internet Resources ) Process Strategy 253 Global Company Profile: Dell Computer Corp. 254 Four Process Strategies 256 Process Focus 256 Repetitive Focus 258 Product Focus 259 Mass Customization Focus 260 Comparison of Process Choices 263 Process Analysis and Design 266 Flow Diagrams 266 Time-Function Mapping 266 Value-Stream Mapping 267 Process Charts 268 Service Blueprinting 269

5 XIV Contents Service Process Design 270 Customer Interaction and Process Design 270 More Opportunities to Improve Service Processes 271 Selection of Equipment and Technology 271 Production Technology 272 Machine Technology 272 Automatic Identification System (AISs) andrfid 273 Process Control 273 Vision Systems 274 Robots 274 Automated Storage and Retrieval System (ASRSs) 274 Automated Guided Vehicles (AGVs) 275 Flexible Manufacturing Systems (FMSs) 275 Computer-Integrated Manufacturing (CIM) 275 Technology in Services 275 Process Redesign 277 Ethics and Environmentally Friendly Processes 279 Summary 279 Key Terms 280 Solved Problem 280 ' Active Model Exercise 280 Self-Test 281 Internet and Student CD-ROM/DVD Exercises 281 Discussion Questions 281 Ethical Dilemma 282 Problems 282 Case Study: Rochester Manufacturing Corporation 283 Video Case Studies: Process Analysis at Arnold Palmer Hospital 283; Process Strategy at Wheeled Coach 284 Additional Case Studies 285 Bibliography 285 Internet Resources 285 Supplement 7: Capacity Planning 287 Capacity 288 Design and Effective Capacity 289 Capacity and Strategy 290 Capacity Considerations 290 Managing Demand 291 Demand and Capacity Management in the Service Sector 293 Capacity Planning 295 Break-Even Analysis 296 Single-Product Case 298 Multiproduct Case 298 Applying Decision Trees to Capacity Decisions 300 Applying Investment Analysis to Strategy-Driven Investments 301 Investment, Variable Cost, and Cash Flow 302 Net Present Value 302 Summary 305 Key Terms 305 Using Software for Break-Even Analysis 305 Solved Problems 306 Self-Test 308 Internet and Student CD-ROM/ DVD Exercises 308 Discussion Questions 308 Problems 309 Video Case Study: Capacity Planning at Arnold Palmer Hospital 312 Additional Case Studies 312 Bibliography 313 Internet Resources J Location Strategies 315 Global Company Profile: FedEx 316 The Strategic Importance of Location 318 Factors That Affect Location Decisions 319 Labor Productivity 320 Exchange Rates and Currency Risk 320 Costs 321 Political Risk, Values, and Culture 322 Proximity to Markets 322 Proximity to Suppliers 322 Proximity to Competitors (Clustering) 322 Methods of Evaluating Location Alternatives 323 The Factor-Rating Method 323 ; Locational Break-Even Analysis 324 Center-of-Gravity Method 326 Transportation Model 328 Service Location Strategy 328 How Hotel Chains Select Sites 329 The Call Center Industry 330 Geographic Information Systems 331 Summary 332 Key Terms 332 Using Software to Solve Location Problems 333 Solved Problems 333 Self-Test 335 Active Model Exercise 335 Internet and Student CD-ROM/DVD Exercises 336 Discussion Questions 336 Ethical Dilemma 336 Problems 337 Video Case Studies: Locating the Next Red Lobster Restaurant 341; Where to Place the Hard Rock Cafe 342 Additional Case Studies 343 Bibliography 343 Internet Resources ] Layout Strategies 345 Global Company Profile: McDonald's 346 The Strategic Importance of Layout Decisions 348 Types of Layout 348 Office Layout 350 Retail Layout 351 Servicescapes 352 Warehousing and Storage Layouts 353 Cross-Docking 354 Random Stocking 354 Customizing 354 Fixed-Position Layout 355 Process-Oriented Layout 356 Computer Software for Process-Oriented Layouts 360 Work Cells 360 Requirements of Work Cells 361 Staffing and Balancing Work Cells 361 The Focused Work Center and the Focused Factory 364

6 Contents XV Repetitive and Product-Oriented Layout 364 Assembly-Line Balancing 366 Summary 370 Key Terms 371 Using Software to Solve Layout Problems 371 Solved Problems 372 Self-Test 375 Active Model Exercise 375 Internet and Student CD-ROM/DVD Exercises 376 Discussion Questions 376 Ethical Dilemma 377 Problems 377 Case Study: State Automobile License Renewals 382 Video Case Studies: Laying Out Arnold Palmer Hospital's New Facility 383; Facility Layout at Wheeled Coach 384 Additional Case Studies 384 Bibliography 385 Internet Resources 385 jlo.j Human Resources and Job Design 387 Global Company Profile: Rusty Wallace's NASCAR Racing Team 388 Human Resource Strategy for Competitive Advantage 390 Constraints on Human Resource Strategy 390 Labor Planning 391 Employment-Stability Policies 391 Work Schedules 391 Job Classifications and Work Rules 392 Job Design 392 Labor Specialization 392 Job Expansion 393 Psychological Components of Job Design 394 Self-Directed Teams 394 Motivation and Incentive Systems 395 Ergonomics and the Work Environment 397 Methods Analysis 399 The Visual Workplace 402 Ethics and the Work Environment 403 Labor Standards 403 Summary 404 Key Terms 404 Solved Problem 404 Self-Test 405 Internet and Student CD-ROM/ DVD Exercises 405 Discussion Questions 405 Ethical Dilemma 406 Problems 406 Case Study: The Fleet That Wanders 407 Video Case Study: Hard Rock's Human Resource Strategy 407 Additional Case Studies 408 Bibliography 408 Internet Resources 409 Supplement 10:; Work Measurement 411 Labor Standards and Work Measurement 412 Historical Experience 413 Time Studies 413 Predetermined Time Standards 418 Work Sampling 420 Summary 423 Key Terms 423 Solved Problems 423 Active Model Exercise 425 Self-Test 425 Internet and Student CD-ROM/DVD Exercises 426 Discussion Questions 426 Problems 426 Case Study: Jackson Manufacturing Company 429 Additional Case Studies 430 Bibliography 430 Internet Resources 430 Managing Operations 431 ] Supply Chain Management 431 Global Company Profile: Darden Restaurants 432 The Supply Chain's Strategic Importance 434 Global Supply Chain Issues 435 Supply Chain Economics 436 Make-or-Buy Decisions 437 Outsourcing 438 Ethics in the Supply Chain 438 Supply Chain Strategies 438 Many Suppliers 439 Few Suppliers 439 Vertical Integration 439 Keiretsu Networks 440 Virtual Companies 440 Managing the Supply Chain 441 Issues in an Integrated Supply Chain 441 Opportunities in an Integrated Supply Chain 442 E-Procurement 445 Online Catalogs 445 Auctions 446 RFQs 446 Real-Time Inventory Tracking 446 Vendor Selection 447 Vendor Evaluation 447 Vendor Development 448 Negotiations 448 Logistics Management 448 Distribution Systems 449 Third-Party Logistics 450 Cost of Shipping Alternatives 451 Logistics, Security, and JIT 452 Measuring Supply Chain Performance 452 Summary 455 Key Terms 455 Solved Problem 455 Self-Test 456 Internet and Student CD-ROM/ DVD Exercises 456 Discussion Questions 456 Ethical Dilemma 457 Problems 457 Case Study: Dell's Value Chain 458 Video Case Studies: Darden's Global Supply Chains; Arnold Palmer Hospital's Supply Chain; Supply Chain Management at Regal Marine 459 Additional Case Studies 461 Bibliography 461 Internet Resources 461

7 XVI Contents Supplement 11: Outsourcing as a Supply Chain Strategy 463 What Is Outsourcing? 464 Types of Outsourcing 465 Strategic Planning and Core Competencies 466 The Theory of Comparative Advantage 467 Outsourcing Trends and Political Repercussions 467 Risks in Outsourcing 468 Methodologies for Outsourcing 470 Evaluating Multiple Criteria with Factor Rating 470 Break-even Analysis 472 Advantages and Disadvantages of Outsourcing 473 Advantages of Outsourcing 473 Disadvantages of Outsourcing 474 Audits and Metrics to Evaluate Outsourcing Performance 475 Ethical Issues in Outsourcing 475 Summary 476 Key Terms 476 Using Software to Solve Outsourcing Problems 476 Solved Problem 476 Self-Test 477 Internet and Student CD-ROM/ DVD Exercises 477 Discussion Questions 477 Problems 478 Case Study: Outsourcing to Tata 479 Video Case Study: Outsourcing Offshore at Darden 479 Bibliography 480 Internet Resources Inventory Management 481 Global Company Profile: Amazon.com 482 Functions of Inventory 484 Types of Inventory 484 Inventory Management 485 ABC Analysis 485 Record Accuracy 486 Cycle Counting 487 Control of Service Inventories 488 Inventory Models 489 Independent vs. Dependent Demand 489 Holding, Ordering, and Setup Costs 490 Inventory Models for Independent Demand 490 The Basic Economic Order Quantity (EOQ) Model 490 Minimizing Costs 491 Reorder Points 495 Production Order Quantity Model 497 Quantity Discount Models 500 Probabilistic Models and Safety Stock 502 Other Probabilistic Models 505 Fixed-Period (P) Systems 507 Summary 509 Key Terms 510 Using Software to Solve Inventory Problems 510 Solved Problems 511 Self-Test 515 Active Model Exercise 515 Internet and Student CD-ROM/DVD Exercises 516 Discussion Questions 516 Ethical Dilemma 516 Problems 517 Case Studies: Zhou Bicycle Company; Sturdivant Sound Systems 521 Video Case Study: Inventory Control at Wheeled Coach 522 Additional Case Studies 522 Bibliography 523 Internet Resources 523 Aggregate Planning 525 Global Company Profile: Anheuser-Busch 526 The Planning Process 528 The Nature of Aggregate Planning 528 Aggregate Planning Strategies 530 Capacity Options 531 Demand Options 532 Mixing Options to Develop a Plan 532 Methods for Aggregate Planning 533 Graphical Methods 534 Mathematical Approaches 538 Comparison of Aggregate Planning Methods 540 Aggregate Planning in Services 541 Restaurants 542 Hospitals 542 National Chains of Small Service Firms 542 Miscellaneous Services 542 Airline Industry 543 Yield Management 543 Summary 546 Key Terms 547 Using Software for Aggregate Planning 547 Solved Problems 548 Self-Test 550 Active Model Exercise 550 Internet and Student CD-ROM/DVD Exercises 551 Discussion Questions 551 Ethical Dilemma 552 Problems 552 Case Studies: Southwestern University: (G); Andrew-Carter, Inc. 556 Additional Case Studies 558 Bibliography 558 Internet Resources 558 Material Requirements Planning (MRP) and ERP 559 Global Company Profile: Wheeled Coach 560 Dependent Demand 562 Dependent Inventory Model Requirements 562 Master Production Schedule 562 Bills of Material 565 Accurate Inventory Records 567 Purchase Orders Outstanding 567 Lead Times for Components 567 MRP Structure 568 MRP Management 572 MRP Dynamics 572 MRP and JIT 572 Lot-Sizing Techniques 574

8 Contents XVii Extensions of MRP 578 Material Requirements Planning II (MRP II) 578 Closed-Loop MRP 579 Capacity Planning 579 MRP in Services 580 Distribution Resource Planning (DRP) 581 Enterprise Resource Planning (ERP) 582 Advantages and Disadvantages of ERP Systems 585 ERP in the Service Sector 585 Summary 586 Key Terms 586 Using Software to Solve MRP Problems 586 Solved Problems 587 Self-Test 590 Active Model Exercise 590 Internet and Student CD-ROM/DVD Exercises 591 Discussion Questions 591 Ethical Dilemma 592 Problems 592 Case Study: Ikon's Attempt at ERP 595 Video Case Study: MRP at Wheeled Coach 596 Additional Case Studies 597 Bibliography 597 Internet Resources 597 Short-Term Scheduling 599 Global Company Profile: Delta Air Lines 600 The Strategic Importance of Short-Term Scheduling 602 Scheduling Issues 602 Forward and Backward Scheduling 603 Scheduling Criteria 605 Scheduling Process-Focused Facilities 605 Loading Jobs 606 Input-Output Control 606 Gantt Charts 607 Assignment Method 609 Sequencing Jobs 612 Priority Rules for Dispatching Jobs 612 Critical Ratio 615 Sequencing N Jobs on Two Machines: Johnson's Rule 616 Limitations of Rule-Based Dispatching Systems 618 Finite Capacity Scheduling (FCS) 618 Theory of Constraints 619 Bottlenecks 620 Drum, Buffer, Rope 620 Scheduling Repetitive Facilities 621 Scheduling Services 621 Scheduling Service Employees with Cyclical Scheduling 623 Summary 625 Key Terms 625 Using Software for Short-Term Scheduling 625 Solved Problems 627 Active Model Exercise 630 Self-Test 631 Internet and Student CD-ROM/DVD Exercises 631 Discussion Questions 631 Ethical Dilemma 632 Problems 632 Case Study: Old Oregon Wood Store 635 Video Case Study: Scheduling at Hard Rock Cafe 636 Additional Case Studies 637 Bibliography 637 Internet Resources 637 [16.] JIT and Lean Operations 639 Global Company Profile: Toyota Motor Corporation 640 Just-in-Time, the Toyota Production System, and Lean Operations 642 Eliminate Waste 642 Remove Variability 643 Improve Throughout 644 Just-in-Time (JIT) 644 JIT Partnerships 645 Concerns of Suppliers 646 JIT Layout 647 Distance Reduction 647 Increased Flexibility 647 Impact on Employees 647 Reduced Space and Inventory 647 JIT Inventory 648 Reduce Variability 648 Reduce Inventory 649 Reduce Lot Sizes 649 Reduce Setup Costs 650 JIT Scheduling 651 Level Schedules 652 Kanban 652 JIT Quality 655 Toyota Production System 656 Continuous Improvement 656 Respect for People 656 Standard Work Practice 656 Lean Operations 657 Building a Lean Organization 657 Lean Operations in Services 658 Summary 659 Key Terms 659 Solved Problem 659 Self-Test 660 Internet and Student CD-ROM/ DVD Exercises 660 Discussion Questions 660 Ethical Dilemma 661 Problems 661 Case Studies: Mutual Insurance Company of Iowa; JIT After the Fire 662 Video Case Study: JIT at Arnold Palmer Hospital 664 Additional Case Studies 664 Bibliography 665 Internet Resources 665 ;17.: Maintenance and Reliability 667 Global Company Profile: Orlando Utilities Commission 668 The Strategic Importance of Maintenance and Reliability 670 Reliability 671 Improving Individual Components 671 Providing Redundancy 673 Maintenance 674 Implementing Preventive Maintenance 674 Increasing Repair Capabilities 678

9 xvni Contents Total Productive Maintenance 679 Techniques for Enhancing Maintenance 679 Summary 679 Key Terms 680 Using Software to Solve Reliability Problems 680 Solved Problems 680 Internet and Student CD-ROM/DVD Exercises 680 Self-Test 681 Discussion Questions 681 Ethical Dilemma 681 Problems 682 Case Study: Worldwide Chemical Company 683 Additional Case Studies 684 Bibliography 684 Internet Resources 684 Quantitative Modules 685 A. Decision-Making Tools 685 The Decision Process in Operations 686 Fundamentals of Decision Making 687 Decision Tables 688 Types of Decision-Making Environments 688 Decision Making Under Uncertainty 688 Decision Making Under Risk 689 Decision Making Under Certainty 690 Expected Value of Perfect Information (EVPI) 691 Decision Trees 691 A More Complex Decision Tree 693 Using Decision Trees in Ethical Decision Making 695 Summary 696 Key Terms 696 Using Software for Decision Models 696 Self-Test 697 Solved Problems 698 Internet and Student CD-ROM/DVD Exercises 699 Discussion Questions 699 Problems 699 Case Studies: Tom Tucker's Liver Transplant; Ski Right Corp. 703 Additional Case Study 704 Bibliography 704 B. Linear Programming 705 Requirements of a Linear Programming Problem 706 Formulating Linear Programming Problems 707 Shader Electronics Example 707 Graphical Solution to a Linear Programming Problem 708 Graphical Representation of Constraints 708 Iso-Profit Line Solution Method 709 Corner-Point Solution Method 711 Sensitivity Analysis 712 Sensitivity Report 713 Changes in the Resources or Right-Hand-Side Values 713 Changes in the Objective Function Coefficient 714 Solving Minimization Problems 715 Linear Programming Applications 716 Production-Mix Example 717 Diet Problem Example 718 Labor Scheduling Example 719 The Simplex Method of LP 720 Summary 721 Key Terms 721 Using Software to Solve LP Problems 721 Solved Problems 722 Active Model Exercise 724 Self-Test 725 Internet and Student CD-ROM/DVD Exercises 726 Discussion Questions 726 Problems 726 Case Study: Golding Landscaping and Plants, Inc. 731 Additional Case Study 732 Bibliography 732 C. Transportation Models 733 Transportation Modeling 734 Developing an Initial Solution 736 The Northwest-Corner Rule 736 The Intuitive Lowest-Cost Method 737 The Stepping-Stone Method 738 Special Issues in Modeling 741 Demand Not Equal to Supply 741 Degeneracy 742 Summary 743 Key Terms 743 Using Software to Solve Transportation Problems 743 Solved Problems 745 Self-Test 747 Internet and Student CD-ROM/DVD Exercises 747 Discussion Questions 747 Problems 748 Case Study: Custom Vans, Inc. 751 Additional Case Study 752 Bibliography 752 D. Waiting-Line Models 753 Characteristics of a Waiting-Line System 754 Arrival Characteristics 755 Waiting-Line Characteristics 756 Service Characteristics 756 Measuring a Queue's Performance 758 Queuing Costs 758 The Variety of Queuing Models 759 Model A (M/M/l): Single-Channel Queuing Model with Poisson Arrivals and Exponential Service Times 760 Model B (M/M/S): Multiple-Channel Queuing Model 763 Model C (M/D/l): Constant-Service-Time Model 766 Model D: Limited-Population Model 767 Other Queuing Approaches 770 Summary 771 Key Terms 771 Using Software to Solve Queuing Problems 771 Solved Problems 772 Self-Test 774 Active Model Exercise 774 Internet and Student CD-ROM/DVD Exercises 775 Discussion Questions 775 Problems 776 Case Studies: New England Foundry; The Winter Park Hotel 779 Additional Case Study 780 Bibliography 780

10 Contents XIX E. Learning Curves 781 Learning Curves in Services and Manufacturing 783 Applying the Learning Curve 784 Arithmetic Approach 784 Logarithmic Approach 784 Learning-Curve Coefficient Approach 785 Strategic Implications of Learning Curves 787 Limitations of Learning Curves 788 Summary 788 Key Term 788 Using Software for Learning Curves 788 Solved Problems 789 Active Model Exercise 790 Self-Test 790 Internet and Student CD-ROM/DVD Exercises 791 Discussion Questions 791 Problems 791 Case Study: SMT's Negotiation with IBM 793 Bibliography 794 F. Simulation 795 What Is Simulation? 796 Advantages and Disadvantages of Simulation 797 Monte Carlo Simulation 797 Simulation of a Queuing Problem 801 Simulation and Inventory Analysis 803 Summary 806 Key Terms 806 Using Software in Simulation 806 Solved Problems 808 Self-Test 809 Internet and Student CD-ROM/DVD Exercises 809 Discussion Questions 810 Problems 810 Case Study: Alabama Airlines' Call Center 814 Additional Case Studies 815 Bibliography 815 Appendices Al Indices II Photo Credits Cl CD-ROM Tutorials 1. Statistical Tools for Managers Tl-1 Discrete Probability Distributions Tl-2 Expected Value of a Discrete Probability Distribution Tl-3 Variance of a Discrete Probability Distribution Tl-3 Continuous Probability Distributions Tl-4 The Normal Distribution Tl-4 Summary Tl-7 Key Terms Tl-7 Discussion Questions Tl-7' Problems Tl-7'Bibliography Tl-8 2. Acceptance Sampling Sampling Plans T2-2 Single Sampling T2-2 Double Sampling T2-2 Sequential Sampling T2-2 T2-1 Operating Characteristic (OC) Curves T2-2 Producer's and Consumer's Risk T2-3 Average Outgoing Quality T2-5 Summary T2-6' Key Terms T2-6 Solved Problem T2-7 ' Discussion Questions T2-7 ' Problems T The Simplex Method of Linear Programming T3-1 Converting the Constraints to Equations T3-2 Setting Up the First Simplex Tableau T3-2 Simplex Solution Procedures T3-4 Summary of Simplex Steps for Maximization Problems T3-6 Artificial and Surplus Variables T3-7 Solving Minimization Problems T3-7 Summary T3-8 Key Terms T3-8 Solved Problem T3-8' Discussion Questions T3-8 Problems T The MODI and VAM Methods of Solving Transportation Problems T4-1 MODI Method T4-2 How to Use the MODI Method T4-2 Solving the Arizona Plumbing Problem with MODI T4-2 Vogel's Approximation Method: Another Way to Find an Initial Solution T4-4 Discussion Questions T4-8' Problems T Vehicle Routing and Scheduling T5-1 Introduction T5-2 Service Delivery Example: Meals-for-ME T5-2 Objectives of Routing and Scheduling Problems T5-2 Characteristics of Routing and Scheduling Problems T5-3 Classifying Routing and Scheduling Problems T5-3 Solving Routing and Scheduling Problems T5-4 Routing Service Vehicles T5-5 The Traveling Salesman Problem T5-5 Multiple Traveling Salesman Problem T5-8 The Vehicle Routing Problem T5-9 Cluster First, Route Second Approach T5-10 Scheduling Service Vehicles T5-11 The Concurrent Scheduler Approach T5-13 Other Routing and Scheduling Problems T5-13 Summary T5-14 ' Key Terms T5-15 Discussion Questions T5-15 Problems T5-15 Case Study: Routing and Scheduling of Phlebotomists T5-17' Bibliography T5-17