From the Authors v

Making Operations Management Personal vi

Changes to This Edition viii

Improved Learning Outcomes with WileyPLUS x

Acknowledgments xii

About the Authors xiv

1 Introduction to Operations Management 1

Chapter Overview 1

What is Operations Management? 2

Differences between Manufacturing and Service Organizations 4

Operations Management Decisions 6

Historical Development 9

Today's OM Environment 17

Operations Management in Practice 17

Within OM: How It All Fits Together 18

The Supply Chain Link 20

The Sustainability Link 20

Case: Hightone Electronics, Inc. 21

Case: Creature Care Animal Clinic (A) 21

Case: Analytics in Decision Making 22

Interactive Case: Virtual Company 22

Internet Challenge: Demonstrating Your Knowledge of OM 23

Chapter Highlights / Key Terms / Discussion Questions / Selected Bibliography

2 Operations Strategy and Competitiveness 25

Chapter Overview 25

The Role of Operations Strategy 26

The Importance of Operations Strategy 27

Developing a Business Strategy 27

Developing an Operations Strategy 31

Strategic Role of Technology 36

Productivity 37

Operations Strategy within OM: How It All Fits Together 40

The Supply Chain Link 41

The Sustainability Link 42

Solved Problems 42

Case: Prime Bank of Massachusetts 43

Case: Boseman Oil and Petroleum (BOP) 44

Case: Analytics in Decision Making 45

Interactive Case: Virtual Company 45

Internet Challenge: Understanding Strategic Differences 46

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

3 Product Design and Process Selection 49

Chapter Overview 49

Product Design 50

The Product Design Process 51

Factors Impacting Product Design 55

Process Selection 58

Designing Processes 61

Process Performance Metrics 64

Linking Product Design and Process Selection 65

Technology Decisions 70

Designing Services 74

Product Design and Process Selection within OM: How It All Fits Together 79

The Supply Chain Link 80

The SustainabilIty Link 80

Solved Problems 81

Case: Biddy's Bakery (BB) 83

Case: Creature Care Animal Clinic (B) 83

Case: Analytics in Decision Making 84

Interactive Case: Virtual Company 84

Internet Challenge: Country Comfort Furniture 85

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

4 Supply Chain Management 89

Chapter Overview 89

Basic Supply Chains 90

Issues Affecting Supply Chain Management 96

The Role of Purchasing 105

Sourcing Decisions 108

The Role of Warehouses 116

Implementing Supply Chain Management 121

Supply Chain Management within OM: How It All Fits Together 124

The Supply Chain Link 125

The Sustainability Link 125

Solved Problems 126

Case: Electronic Personal Heart Rate Monitors Supply Chain Management Game 127

Case: Supply Chain Management at Durham International Manufacturing Company (DIMCO) 129

Case: Analytics in Decision Making 130

Interactive Case: Virtual Company 130

Internet Challenge: Global Shopping 131

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

5 Total Quality Management 135

Chapter Overview 135

Defining Quality 136

Cost of Quality 138

The Evolution of Total Quality Management (TQM) 139

The Philosophy of TQM 143

Quality Awards and Standards 154

Why TQM Efforts Fail 156

Total Quality Management (TQM) within OM: How It All Fits Together 157

The Supply Chain Link 158

The Sustainability Link 159

Solved Problems 159

Case: Gold Coast Advertising (GCA) 160

Case: Delta Plastics, Inc. (A) 160

Case: Analytics in Decision Making 162

Interactive Case: Virtual Company 162

Internet Challenge: Snyder Bakeries 163

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

6 Statistical Quality Control 167

Chapter Overview 167

What is Statistical Quality Control? 168

Sources of Variation: Common and Assignable Causes 169

Descriptive Statistics 169

Statistical Process Control Methods 171

Control Charts for Variables 173

Control Charts for Attributes 179

Process Capability 185

Six Sigma Quality 189

Acceptance Sampling 190

Implications for Managers 196

Statistical Quality Control in Services 198

Statistical Quality Control (SQC) within OM: How It All Fits Together 199

The Supply Chain Link 200

The SustainabilIty Link 200

Solved Problems 201

Case: Scharadin Hotels 206

Case: Delta Plastics, Inc. (B) 207

Case: Analytics in Decision Making 207

Interactive Case: Virtual Company 208

Internet Challenge: Safe-Air 208

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

7 Just-in-Time and Lean Systems 214

Chapter Overview 214

The Philosophy of JIT 215

Elements of JIT 217

Just-in-Time Manufacturing 220

Total Quality Management 227

Respect for People 230

Benefits of JIT 233

Implementing JIT 234

JIT in Services 236

JIT and Lean Systems within OM: How It All Fits Together 237

The Supply Chain Link 238

The Sustainability Link 238

Solved Problems 239

Case: Katz Carpeting 239

Case: Dixon Audio Systems 240

Case: Analytics in Decision Making 241

Interactive Case: Virtual Company 241

Internet Challenge: Truck-Fleet, Inc. 242

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

8 Forecasting 245

Chapter Overview 245

Principles of Forecasting 246

Steps in the Forecasting Process 246

Types of Forecasting Methods 247

Time Series Models 251

Causal Models 266

Measuring Forecast Accuracy 270

Selecting the Right Forecasting Model 273

Collaborative Planning, Forecasting, and Replenishment (CPFR) 276

Forecasting within OM: How It All Fits Together 277

The Supply Chain Link 278

The Sustainability Link 278

Solved Problems 279

Case: Bram-Wear 284

Case: The Emergency Room (ER) at Northwest General (A) 285

Case: Analytics in Decision Making 286

Interactive Case: Virtual Company 286

Internet Challenge: Online Data Access 286

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

9 Capacity Planning and Facility Location 293

Chapter Overview 293

Capacity Planning 294

Making Capacity Planning Decisions 299

Decision Trees 301

Location Analysis 304

Making Location Decisions 308

Capacity Planning and Facility Location within OM: How It All Fits Together 318

Capacity Planning and Facility Location across the Organization 318

The Supply Chain Link 318

The Sustainability Link 319

Solved Problems 319

Case: Data Tech, Inc. 322

Case: The Emergency Room (ER) at Northwest General (B) 323

Case: Analytics in Decision Making 323

Interactive Case: Virtual Company 323

Internet Challenge: EDS Office Supplies, Inc. 324

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

10 Facility Layout 329

Chapter Overview 329

What is Layout Planning? 330

Types of Layouts 330

Designing Process Layouts 333

Special Cases of Process Layout 339

Designing Product Layouts 343

Group Technology (Cell) Layouts 349

Facility Layout within OM: How It All Fits Together 350

The Supply Chain Link 351

The Sustainability Link 351

Solved Problems 352

Case: Sawhill Athletic Club (A) 354

Case: Sawhill Athletic Club (B) 355

Case: Analytics in Decision Making 356

Interactive Case: Virtual Company 356

Internet Challenge: D J and Associates, Inc. 356

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

11 Work System Design 363

Chapter Overview 363

Work System Design 364

Job Design 364

Work Measurement 372

Compensation 385

Work System Design within OM: How It All Fits Together 386

The Supply Chain Link 387

The Sustainability Link 388

Solved Problems 388

Case: The Navigator III 391

Case: Northeast State University 391

Case: Analytics in Decision Making 392

Interactive Case: Virtual Company 392

Internet Challenge: E -commerce Job Design 393

Chapter Highlights / Key Terms / Formula Review / Discussion Questions / Problems / Selected Bibliography

12 Inventory Management 399

Chapter Overview 399

Basic Inventory Principles 400

Inventory Management Objectives 402

Minimum Inventory Investment 404

Relevant Inventory Costs 406

ABC Inventory Classification 408

Inventory Record Accuracy 411

Determining Order Quantities 413

Determining Safety Stock Levels 428

The Periodic Review System 430

Inventory Management within OM: How It All Fits...