Operations Management: Processes and Supply Chains, Thirteenth Edition
By Lee J. Krajewski and Manoj K. Malhotra
Contents:
Preface 11
1 USING OPERATIONS TO CREATE VALUE 21
Apple Inc. 21
Role of Operations in an Organization 23
Historical Evolution and Perspectives 24
A Process View 24
How Processes Work 25
Nested Processes 25
Service and Manufacturing Processes 25
A Supply Chain View 27
Core Processes 27
Support Processes 27
Supply Chain Processes 28
Operations Strategy 28
Corporate Strategy 29
Market Analysis 31
Competitive Priorities and Capabilities 32
Managerial Practice 1.1 Zara 33
Order Winners and Qualifiers 34
Using Competitive Priorities: An Airline Example 35
Identifying Gaps Between Competitive Priorities and Capabilities 35
Trends and Challenges in Operations Management 37
Productivity Improvement 37
Global Competition 38
Ethical, Workforce Diversity, and Environmental Issues 40
Fourth Industrial Revolution (Industry 4.0) 41
The Internet of Things 42
Developing Skills for Your Career 46
Adding Value with Process Innovation 47
Learning Objectives in Review 48 Key Equations 49
Key Terms 49 Solved Problems 49 Discussion Questions 50
Problems 51
Case Chad’s Creative Concepts 53
Video Case Using Operations to Create Value at Crayola 54
SUPPLEMENT A Decision Making 55
Break-Even Analysis 55
Evaluating Services or Products 56
Evaluating Processes 58
Preference Matrix 59
Decision Theory 60
Decision Making Under Certainty 61
Decision Making Under Uncertainty 61
Decision Making Under Risk 63
Decision Trees 63
Learning Objectives in Review 65 Key Equations 66
Key Terms 66 Solved Problems 66 Problems 68
PART 1 Managing Processes 73
2 PROCESS STRATEGY AND ANALYSIS 73
CVS Pharmacy 73
Process Structure in Services 77
Customer-Contact Matrix 77
Service Process Structuring 78
Process Structure in Manufacturing 78
Product-Process Matrix 78
Manufacturing Process Structuring 79
Production and Inventory Strategies 80
Layout 81
Process Strategy Decisions 81
Customer Involvement 81
Resource Flexibility 82
Capital Intensity 83
Strategic Fit 84
Decision Patterns for Service Processes 85
Decision Patterns for Manufacturing
Processes 85
Gaining Focus 86
Managerial Practice 2.1 Plants-Within-a-Plant at Ford
Camacari 86
Strategies for Change 87
Process Reengineering 88
Process Improvement 88
Managerial Challenge Marketing 88
Process Analysis 89
Defining, Measuring, and Analyzing the Process 90
Flowcharts 91
Work Measurement Techniques 92
Process Charts 95
Data Analysis Tools 96
Redesigning and Managing Process
Improvements 101
Questioning and Brainstorming 101
Benchmarking 102
Implementing 102
Learning Objectives in Review 104 Key Terms 105
Solved Problems 105 Discussion Questions 108
Problems 109 Active Model Exercise 116
Case Custom Molds, Inc. 117
Case José’s Authentic Mexican Restaurant 119
Video Case Process Strategy and Analysis at Cleveland
Clinic 120
3 QUALITY AND PERFORMANCE 123
Lego 123
Costs of Quality 125
Prevention Costs 125
Appraisal Costs 126
Internal Failure Costs 126
External Failure Costs 126
Ethical Failure Costs 126
Total Quality Management and Six Sigma 127
Total Quality Management 127
Managerial Practice 3.1 Improving Quality Through
Employee Involvement
at Santa Cruz Guitar Company 129
Six Sigma 130
Acceptance Sampling 131
Managerial Challenge Accounting 132
Statistical Process Control 132
Variation of Outputs 133
Control Charts 135
Control Charts for Variables 136
Control Charts for Attributes 140
Process Capability 143
Defining Process Capability 143
Using Continuous Improvement to Determine the Capability of a Process 145
International Quality Documentation Standards and Awards 146
The ISO 9001:2015 Documentation Standards 146
Malcolm Baldrige Performance Excellence Program 146
Systems Approach to Total Quality Management 147
Learning Objectives in Review 147 Key Equations 148
Key Terms 149 Solved Problems 149 Discussion Questions 152
Problems 152 Active Model Exercise 160
Experiential Learning 3.1 Statistical Process Control with a
Coin Catapult 160
Video Case Quality at Axon 162
4 LEAN SYSTEMS 163
Nike, Inc. 163
Continuous Improvement Using a Lean Systems
Approach 166
Managerial Challenge Finance 166
Strategic Characteristics of Lean Systems 168
Supply Chain Considerations in Lean Systems 168
Process Considerations in Lean Systems 169
Managerial Practice 4.1 Alcoa 171
Toyota Production System 174
Designing Lean System Layouts 175
One Worker, Multiple Machines 176
Group Technology 176
The Kanban System 177
General Operating Rules 178
Determining the Number of Containers 178
Other Kanban Signals 180
Value Stream Mapping 180
Current State Map 180
Future State Map 184
Operational Benefits and Implementation Issues 186
Organizational Considerations 186
Process Considerations 186
Inventory and Scheduling 187
Learning Objectives in Review 187 Key Equations 188
Key Terms 188 Solved Problems 188 Discussion Questions 191
Problems 191
Case Copper Kettle Catering 194
Video Case Lean Systems at Autoliv 195
5 CAPACITY PLANNING 197
3M 197
Planning Long-Term Capacity 199
Measures of Capacity and Utilization 200
Economies of Scale 200
Diseconomies of Scale 201
Capacity Timing and Sizing Strategies 201
Sizing Capacity Cushions 201
Timing and Sizing Expansion 202
Linking Capacity and Other Decisions 203
Managerial Challenge Operations 204
A Systematic Approach to Long-Term Capacity
Decisions 204
Step 1: Estimate Capacity Requirements 204
Step 2: Identify Gaps 206
Step 3: Develop Alternatives 206
Step 4: Evaluate the Alternatives 207
Tools for Capacity Planning 208
Managerial Practice 5.1 Capacity Planning at
PacifiCorp 208
Waiting-Line Models 209
Simulation 209
Decision Trees 210
Learning Objectives in Review 210 Key Equations 211
Key Terms 211 Solved Problems 211 Discussion Questions 213
Problems 213
Case Fitness Plus, Part A 219
Video Case Gate Turnaround at Southwest Airlines 219
SUPPLEMENT B Waiting Lines 221
Structure of Waiting-Line Problems 222
Customer Population 222
The Service System 223
Priority Rule 224
Probability Distributions 225
Arrival Distribution 225
Service Time Distribution 225
Using Waiting-Line Models to Analyze Operations 226
Single-Server Model 227
Multiple-Server Model 229
Little’s Law 230
Finite-Source Model 231
Waiting Lines and Simulation 232
SimQuick 232
Decision Areas for Management 233
Learning Objectives in Review 234 Key Equations 234
Key Terms 235 Solved Problem 235 Problems 236
6 CONSTRAINT MANAGEMENT 239
Microsoft Corporation 239
Managerial Challenge Marketing 241
The Theory of Constraints 242
Key Principles of the TOC 243
Managing Bottlenecks in Service Processes 244
Managing Bottlenecks in Manufacturing Processes 245
Identifying Bottlenecks 246
Relieving Bottlenecks 247
Managerial Practice 6.1 Theory of Constraints (TOC) and
Drum-Buffer-Rope (DBR) at Steelo Limited 248
Applying the Theory of Constraints to Product Mix
Decisions 249
Managing Constraints in Line Processes 251
Line Balancing 251
Rebalancing the Assembly Line 255
Managerial Considerations 256
Learning Objectives in Review 256 Key Equations 257
Key Terms 257 Solved Problems 257 Discussion Questions 259
Problems 259
Experiential Learning 6.1 Min-Yo Garment Company 266
Video Case Managing Constraints for Caregivers and Patients
at Cleveland Clinic During COVID-19 270
7 PROJECT MANAGEMENT 273
Burj Khalifa 273
Defining and Organizing Projects 276
Defining the Scope and Objectives of a Project 276
Selecting the Project Manager and Team 277
Recognizing Organizational Structure 277
Managerial Challenge Marketing 278
Constructing Project Networks 278
Defining the Work Breakdown Structure 278
Diagramming the Network 280
Managerial Practice 7.1 Cleveland Clinic 282
Developing the Project Schedule 283
Critical Path 283
Project Schedule 283
Activity Slack 286
Analyzing Cost–Time Trade-Offs 286
Cost to Crash 287
Minimizing Costs 287
Assessing and Analyzing Risks 290
Risk-Management Plans 290
Statistical Analysis 291
Analyzing Probabilities 292
Near-Critical Paths 293
Risk Caused by Changing Requirements: Scrum 294
Monitoring and Controlling Projects 295
Monitoring Project Status 295
Monitoring Project Resources 295
Controlling Projects 296
Learning Objectives in Review 296 Key Equations 297
Key Terms 298 Solved Problems 298 Discussion Questions 302
Problems 302 Active Model Exercise 310
Case The Pert Mustang 310
Video Case Project Management at Choice Hotels
International 312
PART 2 Managing Customer Demand 313
8 FORECASTING 313
Starbucks 313
Managing Demand 315
Demand Patterns 315
Demand Management Options 316
Key Decisions on Making Forecasts 318
Deciding What to Forecast 318
Choosing the Type of Forecasting Technique 318
Managerial Challenge Information Technology 319
Forecast Error 319
Cumulative Sum of Forecast Errors 319
Dispersion of Forecast Errors 320
Mean Absolute Percent Error 321
Computer Support 322
Judgment Methods 322
Causal Methods: Linear Regression 323
Time-Series Methods 325
Naïve Forecast 325
Horizontal Patterns: Estimating the Average 325
Trend Patterns: Using Regression 328
Seasonal Patterns: Using Seasonal Factors 330
Criteria for Selecting Time-Series Methods 332
Big Data and the Forecasting Process 333
Big Data 334
Managerial Practice 8.1 Big Data and Health Care
Forecasting 335
A Typical Forecasting Process 336
Learning Objectives in Review 338 Key Equations 339
Key Terms 340 Solved Problems 340 Discussion Questions 344
Problems 345
Experiential Learning 8.1 Forecasting a Vital Energy Statistic 353
Case Yankee Fork and Hoe Company 354
Video Case Forecasting and Supply Chain Management at
Deckers Outdoor Corporation 355
9 INVENTORY MANAGEMENT 357
Ford’s Smart Inventory Management System (SIMS) 357
Inventory Trade-Offs 359
Pressures for Small Inventories 360
Pressures for Large Inventories 360
Managerial Challenge Finance 361
Types of Inventory 362
Accounting Inventories 362
Operational Inventories 363
Inventory Reduction Tactics 365
Cycle Inventory 365
Safety Stock Inventory 365
Anticipation Inventory 365
Pipeline Inventory 365
ABC Analysis 366
Economic Order Quantity 367
Calculating the EOQ 368
Managerial Insights from the EOQ 370
Continuous Review System 371
Selecting the Reorder Point When Demand and Lead
Time Are Constant 371
Selecting the Reorder Point When Demand Is
Variable and Lead Time Is Constant 372
Selecting the Reorder Point When Both Demand and
Lead Time Are Variable 376
Systems Based on the Q System 377
Calculating Total Q System Costs 377
Advantages of the Q System 378
Periodic Review System 378
Selecting the Time Between Reviews 379
Selecting the Target Inventory Level When Demand
Is Variable and Lead Time Is Constant 380
Selecting the Target Inventory Level When Demand
and Lead Time Are Variable 381
Calculating Total P System Costs 381
Advantages of the P System 381
Systems Based on the P System 382
Managerial Practice 9.1 Inventory Management at IKEA 382
Learning Objectives in Review 383 Key Equations 384
Key Terms 385 Solved Problems 386 Discussion Questions 390
Problems 391 Active Model Exercise 396
Experiential Learning 9.1 Swift Electronic Supply, Inc. 397
Case Parts Emporium 398
Video Case Inventory Management at Crayola 400
SUPPLEMENT C Special Inventory Models 401
Noninstantaneous Replenishment 401
Quantity Discounts 404
One-Period Decisions 406
Learning Objectives in Review 409 Key Equations 409
Key Term 409 Solved Problems 410 Problems 412
10 OPERATIONS PLANNING AND
SCHEDULING 415
Cooper Tire and Rubber Company 415
Levels in Operations Planning and Scheduling 418
Level 1: Sales and Operations Planning 418
Level 2: Resource Planning 420
Level 3: Scheduling 420
S&OP Supply Options 421
Managerial Challenge Human Resources 422
S&OP Strategies 422
Chase Strategy 422
Level Strategy 422
Constraints and Costs 423
Sales and Operations Planning as a Process 423
Spreadsheets for Sales and Operations Planning 425
Spreadsheets for a Manufacturer 425
Spreadsheets for a Service Provider 426
Workforce and Workstation Scheduling 429
Workforce Scheduling 429
Managerial Practice 10.1 Scheduling Major League
Baseball Umpires 430
Job and Facility Scheduling 433
Sequencing Jobs at a Workstation 434
Software Support 436
Learning Objectives in Review 437 Key Terms 437
Solved Problems 438 Discussion Questions 441
Problems 441 Active Model Exercise 448
Case Memorial Hospital 448
Video Case Sales and Operations Planning at Starwood 450
SUPPLEMENT D Linear Programming 451
Characteristics of Linear Programming Models 451
Formulating a Linear Programming Model 452
Graphic Analysis 454
Plot the Constraints 454
Identify the Feasible Region 456
Plot the Objective Function Line 457
Find the Visual Solution 458
Find the Algebraic Solution 459
Slack and Surplus Variables 460
Sensitivity Analysis 460
Computer Analysis 461
Simplex Method 461
Computer Output 461
The Transportation Method 464
Transportation Method for Sales and Operations
Planning 464
Learning Objectives in Review 468 Key Terms 468
Solved Problems 468 Discussion Questions 471
Problems 471
11 RESOURCE PLANNING 479
Philips 479
Material Requirements Planning 481
Dependent Demand 481
Managerial Challenge Operations 483
Master Production Scheduling 483
Developing a Master Production Schedule 484
Available-to-Promise Quantities 486
Freezing the MPS 487
Reconciling the MPS with Sales and Operations
Plans 487
MRP Explosion 487
Bill of Materials 487
Inventory Record 489
Planning Factors 491
Outputs from MRP 494
MRP and the Environment 497
MRP, Core Processes, and Supply Chain
Linkages 498
Enterprise Resource Planning 499
How ERP Systems Are Designed 499
Managerial Practice 11.1 ERP Implementation at Valle
del Lili Foundation 500
Resource Planning for Service Providers 501
Dependent Demand for Services 501
Bill of Resources 502
Learning Objectives in Review 505 Key Terms 506
Solved Problems 506 Discussion Questions 511
Problems 512 Active Model Exercise 523
Case Wolverine, Inc. 524
Video Case Resource Planning at Cleveland Clinic 527
PART 3 Managing Supply Chains 529
12 SUPPLY CHAIN DESIGN 529
Amazon.com 529
Creating an Effective Supply Chain 531
Managerial Challenge Operations 533
Measuring Supply Chain Performance 534
Inventory Measures 534
Financial Measures 536
Strategic Options for Supply Chain Design 537
Efficient Supply Chains 537
Responsive Supply Chains 538
Designs for Efficient and Responsive Supply
Chains 539
Autonomous Supply Chains 540
Mass Customization 541
Competitive Advantages 542
Supply Chain Design for Mass Customization 542
Outsourcing Processes 543
Managerial Practice 12.1 Outsourcing in the Food
Delivery Business 543
Outsourcing and Globalization 544
Vertical Integration 545
Make-or-Buy Decisions 546
Learning Objectives in Review 547 Key Equations 547
Key Terms 548 Solved Problem 548 Discussion Questions 549
Problems 549
Experiential Learning 12.1 Sonic Distributors 552
Case Brunswick Distribution, Inc. 553
Video Case Supply Chain Design at Crayola 555
13 SUPPLY CHAIN LOGISTICS
NETWORKS 557
Airbus SAS 557
Factors Affecting Location Decisions 560
Dominant Factors in Manufacturing 560
Dominant Factors in Services 562
Managerial Challenge Human Resources 563
Load–Distance Method 563
Distance Measures 564
Calculating a Load–Distance Score 564
Center of Gravity 565
Break-Even Analysis 567
Transportation Method 569
Setting Up the Initial Tableau 569
Dummy Plants or Warehouses 569
Finding a Solution 570
Geographical Information Systems 571
Using a GIS 571
Managerial Practice 13.1 Fast-Food Site Selection
Using GIS 572
The GIS Method for Locating Multiple
Facilities 573
Warehouse Strategy in Logistics Networks 573
Inventory Placement 573
Autonomous Warehouse Operations 574
A Systematic Location Selection Process 575
Learning Objectives in Review 576 Key Equations 577
Key Terms 577 Solved Problems 577 Discussion Questions 580
Problems 580 Active Model Exercise 586
Case R.U. Reddie for Location 586
Video Case Continental Tire: Pursuing a Winning Plant
Decision 588
14 SUPPLY CHAIN INTEGRATION 589
Oasis of the Seas 589
Supply Chain Disruptions 592
Causes of Supply Chain Disruptions 592
Supply Chain Dynamics 593
Integrated Supply Chains 594
Managerial Challenge Information Technology 595
Supply Chain Risk Management 596
Operational Risks 596
Managerial Practice 14.1 Coronavirus and the Supply
Chain: Where Is the Toilet Paper? 597
Financial Risks 597
Security Risks 598
Cloud Computing and Blockchains 600
Cloud Computing 600
Blockchains 601
New Service or Product Development Process 604
Design 604
Analysis 605
Development 605
Full Launch 605
Supplier Relationship Process 606
Sourcing 606
Design Collaboration 609
Negotiation 609
Buying 611
Vendor-Managed Inventories 611
Key Performance Measures for the Supplier
Relationship Process 612
Order Fulfillment Process 612
Customer Demand Planning 612
Supply Planning 612
Production 612
Logistics 613
Key Performance Measures for the Order
Fulfillment Process 615
Customer Relationship Process 615
Marketing 615
Order Placement 616
Customer Service 616
Key Performance Measures for the Customer
Relationship Process 617
Learning Objectives in Review 617 Key Equations 618
Key Terms 618 Solved Problems 618 Discussion Questions 620
Problems 620
Case Wolf Motors 625
Video Case Integrating the Supply Chain at Cleveland Clinic 626
15 SUPPLY CHAIN SUSTAINABILITY 629
Coca-Cola 629
The Three Elements of Supply Chain
Sustainability 631
Reverse Logistics 633
Supply Chain Design for Reverse Logistics 633
Managerial Challenge Operations and Logistics 635
Energy Efficiency 635
Transportation Distance 635
Freight Density 638
Transportation Mode 640
Disaster Relief Supply Chains 641
Organizing for Disaster Relief 641
Managing Disaster Relief Operations 642
Managerial Practice 15.1 Using Drones in Disaster Relief 643
Supply Chain Ethics 644
Buyer–Supplier Relationships 644
Facility Location 645
Inventory Management 646
Managing Sustainable Supply Chains 646
Learning Objectives in Review 647 Key Equation 647
Key Terms 647 Solved Problems 648 Discussion Questions 649
Problems 649
Video Case Supply Chain Sustainability at Clif Bar &
Company 651
Appendix NORMAL DISTRIBUTION 653
Selected References 654
Glossary 661
Name Index 671
Subject Index 675
Online Supplements
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
Supplement K LAYOUT K-1