Principles of OPERATIONS MANAGEMENT - GBV

1 Principles ofOPERATIONSMANAGEMENTS eventh EditionJay HeizerJesse H. Jones Professor of Business AdministrationTexas Lutheran UniversityBarry RenderCharles Harwood Professor of OPERATIONS ManagementCrummer Graduate School of BusinessRollins CollegerPEARSONP renticeHallUpper Saddle River, New Jersey 07458 About the Authors viForeword xxPreface xxiPART ill 1,Introduction to OperationsManagement 1 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/DVDE xercises 22 Discussion Questions 22 EthicalDilemma 23 Problems 23 Case Studies:National Air Express 24.

2 Zychol ChemicalsCorporation 25 Video Case Study: Hard RockCafe: OPERATIONS MANAGEMENT in Services 25 Additional Case Study 26 Bibliography 26 Internet Resources 262.| OPERATIONS Strategy in aGlobal Environment 27 Global company profile : Boeing 28A Global View of OPERATIONS 31 Cultural and Ethical Issues 33 Developing Missions and Strategies 34 Mission 34 Strategy 35 Achieving Competitive AdvantageThrough 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 OM with 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

3 Questions 50 Self-Test 51 Internetand Student CD-ROM/DVD Exercises 51 EthicalDilemma 51 Problems 52 Case Study: Minit-Lube 52 Video Case Studies: Strategy at RegalMarine 53; Hard Rock Cafe's Global Strategy 53 Additional Case Studies 54 Bibliography 54 Internet Resources 543. project MANAGEMENT 55 JGlobal 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 Xli ContentsActivity-on-Node Example 65 Activity-on-Arrow Example 68 Determining the project Schedule 68 Forward Pass 69 Backward Pass 71 Calculating Slack Time and Identifyingthe Critical Path(s)

4 72 Variability in Activity Times 73 Three Time Estimates in PERT 74 Probability of project Completion 76 Cost-Time Trade-Offs and project Crashing 79A Critique of PERT and CPM 81 Using Microsoft project to Manage Projects 82 Creating a project Schedule UsingMicrosoft project 82 Tracking Progress and Managing Costs UsingMicrosoft project 86 Summary 87 Key Terms 87 Using Software toSolve project ManagemenfProblems 88 SolvedProblems 88 Active Model Exercise 91 Self-Test92 Internet and Student CD-ROM/DVD Exercises93 Discussion Questions 93 Ethical Dilemma 93 Problems 93 Case Study: Southwestern University(A) 99 Video Case Studies: project MANAGEMENT atArnold Palmer Hospital 100; Managing Hard Rock'sRockfest 101 'Additional Case Studies 102 Bibliography 102 Internet Resources Forecasting 103 Global company profile : Disney World 104 What Is Forecasting?

5 106 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: Regressionand 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 Softwarein Forecasting 139 Solved Problems 140 ActiveModel Exercise 142 Self-Test 143 Internet andStudent CD-ROM/DVD Exercises 143 DiscussionQuestions 143 Ethical Dilemma 144 Problems144 Case Studies: Southwestern University: (B)151; Digital Cell Phone, Inc.

6 151 Video CaseStudy: Forecasting at Hard Rock Cafe 152 Additional Case Studies 153 Bibliography 153 Internet Resources 153 Designing OPERATIONS 155@Design of Goods and Services 155 Global company profile : Regal Marine 156 Goods and Services Selection 158 Product Strategy Options SupportCompetitive 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)

7 168 Virtual Reality Technology 169 JContents xiiiValue Analysis 169 Ethics and Environmentally FriendlyDesigns 169 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 Problem184 * 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 ProductStrategy 189* Video Case Study: Product Designat Regal Marine 189 * Additional Case Studies 190*Bibliography 190 * Internet Resources 1906.

8 Managing Quality 191 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 9000198 ISO 14000198 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 ModelExercise 213 * Self-Test 214 Internet and StudentCD-ROM/DVD Exercises 214 * DiscussionQuestions 214 * Ethical Dilemma 215 * Problems215 * Case Study: Southwestern University (C)217* Video Case Studies: The Culture of Qualityat Arnold Palmer Hospital 218.

9 Quality at theRitz-Carlton Hotel company 218 * AdditionalCase Studies 219 Bibliography 219 * InternetResources 219 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 (Cp) 235 Process Capability Index (C k) 236 Acceptance Sampling 237 Operating Characteristic Curve 238 Average Outgoing Quality 239 Summary 240 * Key Terms 240 * Using Softwarefor SPC 240 * Solved Problems 241 * Active ModelExercise 242 * Self-Test 243 * Internet and StudentCD-ROM/DVD Exercises 244 DiscussionQuestions 244 Problems 244 * Case Studies:Bayfield Mud company 248; Alabama Airlines'On-Time Schedule 249 * Video Case Study: Farmto Fork: Quality at Darden Restaurants 250 *Additional Case Studies 251 * Bibliography 251 *Internet Resources Process Strategy 253 Global company profile : Dell Computer Corp.

10 254 Four Process Strategies 256 Process Focus 256 Repetitive Focus 258 Product Focus 259 XIVC ontentsMass 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 Service Process Design 270 Customer Interaction and Process Design 270 More Opportunities to Improve ServiceProcesses 271 Selection of Equipment and Technology 271 Production Technology 272 Machine Technology 272 Automatic Identification System (AISs) and RFID 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 Problem280 * Active Model Exercise 280 * Self-Test 281 Internet and Student CD-ROM/DVD Exercises281 * Discussion Questions 281 EthicalDilemma 282 * Problems 282 * Case Study:Rochester Manufacturing Corporation 283 Video Case Studies: Process Analysis at ArnoldPalmer Hospital 283.