Answer 2 questions for supply chain class

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TENTH EDITION
Operations
Management
PROCESSES AND SUPPLY CHAINS
LEE J. KRAJEWSKI
Professor Emeritus at
The Ohio State University
and the University of Notre Dame
LARRY P. RITZMAN
Professor Emeritus at
The Ohio State University
and Boston College
MANOJ K. MALHOTRA
University of South Carolina
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Library of Congress Cataloging-in-Publication Data
Krajewski, Lee J.
Operations management : processes and supply chains / Lee J. Krajewski,
Larry P. Ritzman, Manoj K. Malhotra. — 10th ed.
p. cm.
Includes index.
ISBN 978-0-13-280739-5 (alk. paper)
1. Production management. I. Ritzman, Larry P. II. Malhotra, Manoj K. (Manoj Kumar), 1960- III. Title.
TS155.K785 2013
658.5—dc23
2011043411
10 9 8 7 6 5 4 3 2 1
www.pearsonhighered.com
PEARSON
ISBN 10:
0-13-280739-4
ISBN 13: 978-0-13-280739-5
Dedicated with love to our families.
?
Judie Krajewski
Gary and Christine; Gabrielle
Lori and Dan; Aubrey, Madeline, Amelia, and Marianna
Carrie and Jon; Jordanne, Alaina, and Bradley
Selena and Jeff; Alex
Virginia and Jerry
Virginia and Larry
?
Barbara Ritzman
Karen and Matt; Kristin and Alayna
Todd; Cody, Cole, Taylor, and Clayton
Kathryn and Paul
Mildred and Ray
?
Maya Malhotra
Vivek, Pooja, and Neha
Santosh and Ramesh Malhotra
Indra and Prem Malhotra; Neeti and Neil Ardeshna, and Deeksha
Sadhana Malhotra
Leela and Mukund Dabholkar
Aruna and Harsha Dabholkar; Aditee
Mangala and Pradeep Gandhi; Priya and Medha
About the Authors
Lee J. Krajewski
is Professor Emeritus at The Ohio State
University and Professor Emeritus at the University of Notre Dame.
While at The Ohio State University, he received the University Alumni
Distinguished Teaching Award and the College of Business Outstanding
Faculty Research Award. He initiated the Center for Excellence in Manufacturing Management and served as its director for 4 years. In addition, he received the National President’s Award and the National
Award of Merit of the American Production and Inventory Control Society. He served as president of the Decision Sciences Institute and was
elected a fellow of the institute in 1988. He received the Distinguished
Service Award in 2003.
Lee received his PhD from the University of Wisconsin. Over the
years, he has designed and taught courses at both graduate and undergraduate levels on topics such as operations strategy, introduction to operations management,
operations design, project management, and manufacturing planning and control systems.
Lee served as the editor of Decision Sciences, was the founding editor of the Journal of Operations
Management, and has served on several editorial boards. Widely published himself, Lee has contributed numerous articles to such journals as Decision Sciences, Journal of Operations Management,
Management Science, Production and Operations Management, International Journal of Production
Research, Harvard Business Review, and Interfaces, to name just a few. He has received five bestpaper awards. Lee’s areas of specialization include operations strategy, manufacturing planning
and control systems, supply chain management, and master production scheduling.
Larry P. Ritzman
is Professor Emeritus at The Ohio State University
and Professor Emeritus at Boston College. While at The Ohio State
University, he served as department chairman and received several
awards for both teaching and research, including the Pace Setters’ Club
Award for Outstanding Research. While at Boston College, he held the
Thomas J. Galligan, Jr. chair and received the Distinguished Service Award
from the School of Management. He received his doctorate at Michigan
State University, having had prior industrial experience at the Babcock
and Wilcox Company. Over the years, he has been privileged to teach and
learn more about operations management with numerous students at all
levels—undergraduate, MBA, executive MBA, and doctorate.
Particularly active in the Decision Sciences Institute, Larry has
served as council coordinator, publications committee chair, track
chair, vice president, board member, executive committee member, doctoral consortium coordinator, and president. He was elected a fellow of the institute in 1987 and earned the Distinguished
Service Award in 1996. He has received three best-paper awards. He has been a frequent reviewer,
discussant, and session chair for several other professional organizations.
Larry’s areas of particular expertise are service processes, operations strategy, production and inventory systems, forecasting, multistage manufacturing, and layout. An active
researcher, Larry’s publications have appeared in such journals as Decision Sciences, Journal of
Operations Management, Production and Operations Management, Harvard Business Review, and
Management Science. He has served in various editorial capacities for several journals.
iv
ABOUT THE AUTHORS
Manoj K. Malhotra
is the Jeff B. Bates Professor in the Moore
School of Business, and has served as the chairman of the Management
Science Department at the University of South Carolina (USC), Columbia,
since 2000. He is the founding director of the Center for Global Supply
Chain and Process Management (GSCPM), which has been in operation since 2005. He earned an engineering undergraduate degree from
the Indian Institute of Technology (IIT), Kanpur, India, in 1983, and
a PhD in operations management from The Ohio State University in
1990. He is a fellow of the Decision Sciences Institute and is certified as
a fellow of the American Production and Inventory Management Society
(CFPIM). Manoj has conducted seminars and consulted with firms such as
Cummins Turbo Technologies, John Deere, Metso Paper, Palmetto Health
Richland, Phelps Dodge, Sonoco, UCB Chemicals, Verizon, Walmart
Global Logistics, and Westinghouse Nuclear Fuels Division, among others.
Apart from teaching operations management, supply chain management, and global business issues at USC, Manoj has also taught at the Terry School of Business, University of Georgia;
Wirtschaftsuniversität Wien in Austria; and the Graduate School of Management at Macquarie
University, Australia. His research has thematically focused on the deployment of flexible resources in manufacturing and service firms, and on the interface between operations and supply chain
management and other functional areas of business. His work on these and related issues has
been published in refereed journals such as Decision Sciences, European Journal of Operational
Research, IIE Transactions, International Journal of Production Research, Journal of Operations
Management, OMEGA, and Production and Operations Management Journal. He is a recipient of
the Decision Sciences Institute’s Outstanding Achievement Award for the best application paper
in 1990, and the Stan Hardy Award in 2002 and 2006 for the best paper published in the field of
operations management. In 2007, his co-authored study on the evolution of manufacturing planning systems was a finalist for the best paper award in the Journal of Operations Management. In
2007, Manoj won the University of South Carolina Educational Foundation Award for Professional
Schools, which is the university’s most prestigious annual prize for innovative research, scholarship, and creative achievement. More recently, he received the Decision Sciences journal best
paper award for the year 2011.
Manoj has won several teaching awards, including the Michael J. Mungo Outstanding Graduate
Teaching Award in 2006 from the University of South Carolina and the Alfred G. Smith Jr. Excellence
in Teaching Award in 1995 from the Moore School of Business. He was voted by the students as an
outstanding professor in the international MBA program by the classes of 1997, 1998, 1999, 2000,
2005, and 2008; and as the outstanding professor in the IMBA-Vienna program by the classes of
1998 and 2004. He was designated as one of the first “Master Teachers” in the Moore School of
Business in 1998, and has been listed in “Who’s Who among America’s Teachers” in 1996 and 2000.
Manoj is an associate editor of Decision Sciences and senior editor for the POMS journal. He
has served as the past area editor for POMS journal (2000–2003) and an associate editor for the
Journal of Operations Management (2001–2010). He is an active referee for several other journals
in the field, and has served as the co-editor for special focus issues of Decision Sciences (1999) and
Journal of Operations Management (2002). He was the program chair for the 36th International
Meeting of the Decision Sciences Institute (DSI) in San Francisco in 2005, and has also served
as an associate program chair for the POMS national meeting. He has been involved in the MidCarolina chapter of APICS as its past president, executive board member, and as an instructor of
professional level CPIM certification courses. He is a founding board member of Shingo Prize for
Lean Excellence in South Carolina.
v
Brief Contents
PART 1
Creating Value through Operations Management
1
USING OPERATIONS TO COMPETE
SUPPLEMENT A DECISION MAKING
2
PART 2
PROJECT MANAGEMENT
Managing Processes
3
PROCESS STRATEGY
4
PROCESS ANALYSIS
5
QUALITY AND PERFORMANCE
6
CAPACITY PLANNING
SUPPLEMENT B
PART 3
WAITING LINES
7
CONSTRAINT MANAGEMENT
8
LEAN SYSTEMS
1
1
31
49
89
89
119
157
201
225
243
275
Managing Supply Chains
307
9
307
345
359
385
411
SUPPLY CHAIN INVENTORY MANAGEMENT
SUPPLEMENT C
SPECIAL INVENTORY MODELS
10 SUPPLY CHAIN DESIGN
11 SUPPLY CHAIN LOCATION DECISIONS
12 SUPPLY CHAIN INTEGRATION
13 SUPPLY CHAIN SUSTAINABILITY AND
HUMANITARIAN LOGISTICS
SUPPLEMENT D LINEAR PROGRAMMING
441
463
507
543
587
Appendix 1 NORMAL DISTRIBUTION
617
Appendix 2 TABLE OF RANDOM NUMBERS
618
Glossary
619
Name Index
633
Subject Index
637
14 FORECASTING
15 OPERATIONS PLANNING AND SCHEDULING
16 RESOURCE PLANNING
MYOMLAB SUPPLEMENTS
vi
SUPPLEMENT E
SIMULATION
E-1
SUPPLEMENT F
FINANCIAL ANALYSIS
F-1
SUPPLEMENT G ACCEPTANCE SAMPLING PLANS
G-1
SUPPLEMENT H MEASURING OUTPUT RATES
H-1
SUPPLEMENT I
LEARNING CURVE ANALYSIS
I-1
SUPPLEMENT J
OPERATIONS SCHEDULING
J-1
Contents
Preface xiii
PART 1
1
Creating Value through
Operations Management
1
USING OPERATIONS
TO COMPETE 1
Scholastic and Harry Potter 1
Operations and Supply Chain Management across
the Organization 2
Historical Evolution of Operations and
Supply Chain Management 3
A Process View 4
How Processes Work 4
Nested Processes 5
Service and Manufacturing Processes 5
The Supply Chain View 6
Core Processes 7
Support Processes 7
Operations Strategy 7
Corporate Strategy 8
Market Analysis 10
Competitive Priorities and Capabilities 11
Order Winners and Qualifiers 11
Using Competitive Priorities: An Airline Example 13
Operations Strategy as a Pattern of Decisions 15
Trends in Operations Management 16
Productivity Improvement 16
Global Competition 17
Managerial Practice 1.1 Japanese Earthquake and
its Supply Chain Impact 19
Ethical, Workforce Diversity, and
Environmental Issues 19
Operations Management as a Set of Decisions 20
Computerized Decision-Making Tools 21
Addressing the Challenges in Operations
Management 21
Part 1: Creating Value through Operations
Management 21
Part 2: Managing Processes 21
Part 3: Managing Supply Chains 22
Adding Value with Process Innovation in
Supply Chains 22
Managerial Practice 1.2 Operational Innovation
Is a Competitive Weapon at Progressive Insurance 22
Learning Goals in Review 23
MyOMLab Resources 23
Key Equation 23
Key Terms 24
Solved Problems 24
Discussion Questions 25
Problems 26
Advanced Problems 27
Active Model Exercise 28
Video Case Operations as a Competitive Weapon
at Starwood 29
Case Chad’s Creative Concepts 29
Selected References 30
SUPPLEMENT A Decision Making
31
Break-Even Analysis 31
Evaluating Services or Products 32
Evaluating Processes 33
Preference Matrix 35
Decision Theory 36
Decision Making under Certainty 36
Decision Making under Uncertainty 37
Decision Making under Risk 38
Decision Trees 39
Learning Goals in Review 41
MyOMLab Resources 41
Key Equations 42
Key Terms 42
Solved Problems 42
Problems 45
Selected References 48
2
PROJECT MANAGEMENT
49
XBOX 360 49
Project Management across the Organization 51
Defining and Organizing Projects 51
Defining the Scope and Objectives of a Project 51
Selecting the Project Manager and Team 52
Recognizing Organizational Structure 52
Planning Projects 53
Defining the Work Breakdown Structure 53
Diagramming the Network 54
Developing the Schedule 57
Analyzing Cost–Time Trade-Offs 60
Assessing Risks 64
Managerial Practice 2.1 Boston’s Big Dig Project
Poses Many Challenges 65
Analysis 66
Monitoring and Controlling Projects 69
Monitoring Project Status 69
Monitoring Project Resources 70
Controlling Projects 70
Learning Goals in Review 71
MyOMLab Resources 71
Key Equations 72
Key Terms 72
Solved Problems 72
Discussion Questions 77
Problems 77
Advanced Problems 82
Active Model Exercise 85
Video Case Project Management at the Phoenician 86
Case The Pert Mustang 87
Selected References 88
vii
viii
CONTENTS
PART 2
3
Managing Processes
PROCESS STRATEGY
89
89
eBay 89
Process Strategy across the Organization 90
Supply Chains Have Processes 90
Processes Are Not Just in Operations 91
Process Strategy Decisions 91
Process Structure in Services 92
Nature of Service Processes: Customer Contact 92
Customer-Contact Matrix 93
Service Process Structuring 94
Process Structure in Manufacturing 94
Product-Process Matrix 94
Manufacturing Process Structuring 95
Production and Inventory Strategies 96
Layout 97
Gather Information 97
Develop a Block Plan 98
Applying the Weighted-Distance Method 98
Design a Detailed Layout 100
Customer Involvement 100
Possible Disadvantages 101
Possible Advantages 101
Resource Flexibility 102
Workforce 102
Equipment 102
Capital Intensity 102
Automating Manufacturing Processes 103
Automating Service Processes 103
Economies of Scope 104
Strategic Fit 104
Managerial Practice 3.1 Flexible Automation
at R.R. Donnelley 105
Decision Patterns for Service Processes 105
Decision Patterns for Manufacturing Processes 106
Gaining Focus 107
Strategies for Change 108
Process Reengineering 108
Process Improvement 109
Learning Goals in Review 109
MyOMLab Resources 109
Key Equations 110
Key Terms 110
Solved Problems 110
Discussion Questions 111
Problems 112
Active Model Exercise 114
Case Custom Molds, Inc. 115
Selected References 116
4
PROCESS ANALYSIS
119
McDonald’s Corporation 119
Process Analysis across the Organization 121
A Systematic Approach 121
Step 1: Identify Opportunities 121
Step 2: Define the Scope 122
Step 3: Document the Process 122
Step 4: Evaluate Performance 122
Step 5: Redesign the Process 123
Step 6: Implement Changes 123
Documenting the Process 123
Flowcharts 123
Swim Lane Flowcharts 125
Service Blueprints 126
Work Measurement Techniques 127
Evaluating Performance 131
Data Analysis Tools 132
Redesigning the Process 135
Generating Ideas: Questioning and Brainstorming 135
Benchmarking 137
Managerial Practice 4.1 Baptist Memorial Hospital 137
Managing and Implementing Processes 138
Learning Goals in Review 140
MyOMLab Resources 140
Key Terms 141
Solved Problems 141
Discussion Questions 145
Problems 145
Advanced Problems 151
Active Model Exercise 152
Video Case Process Analysis at Starwood 152
Case José’s Authentic Mexican Restaurant 154
Selected References 155
5
QUALITY AND PERFORMANCE
157
Verizon Wireless 157
Quality and Performance across the Organization 158
Costs of Quality 159
Prevention Costs 159
Appraisal Costs 159
Internal Failure Costs 159
External Failure Costs 159
Ethics and Quality 159
Total Quality Management 160
Customer Satisfaction 160
Employee Involvement 161
Managerial Practice 5.1 Quality and Performance
at Steinway & Sons 162
Continuous Improvement 163
Six Sigma 164
Six Sigma Improvement Model 164
Acceptance Sampling 165
Statistical Process Control 166
Variation of Outputs 166
Control Charts 169
Statistical Process Control Methods 170
Control Charts for Variables 170
Control Charts for Attributes 174
Process Capability 177
Defining Process Capability 178
Using Continuous Improvement to Determine
the Capability of a Process 179
Quality Engineering 179
International Quality Documentation Standards 181
The ISO 9001:2008 Documentation Standards 181
ISO 14000:2004 Environmental Management
System 181
ISO 26000:2010 Social Responsibility Guidelines 181
Benefits of ISO Certification 182
Baldrige Performance Excellence Program 182
Learning Goals in Review 183
MyOMLab Resources 183
ix
CONTENTS
Key Equations 184
Key Terms 185
Solved Problems 185
Discussion Questions 188
Problems 189
Advanced Problems 194
Active Model Exercise 197
Video Case Process Performance and Quality at Starwood
Hotels & Resorts 197
Experiential Learning Statistical Process Control with a Coin
Catapult 198
Selected References 199
Little’s Law 234
Finite-Source Model 235
Waiting Lines and Simulation 236
Decision Areas for Management 237
Learning Goals in Review 238
MyOMLab Resources 238
Key Equations 239
Key Terms 240
Solved Problem 240
Problems 240
Advanced Problems 242
Selected References 242
6
7
CAPACITY PLANNING
201
Sharp Corporation 201
Planning Capacity across the Organization 203
Pl …
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