Operations and supply management : the core

431 Pages·2008·8.924 MB·English

by  F Robert Jacobs, Richard B Chase

Jacobs
Operations and
Chase
Supply Management
The Core
SO
The authors of Operations Management for Competitive Advantage, u
p
F. Robert Jacobs and Richard B. Chase, bring this compact new text pe
Operations and Supply Management: The Core. Focused on the pr
important core concepts of the dynamic fi eld of operations this new la
y
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work is organized into four major sections: Strategy, Processes, Supply

Chains, and Inventory. Mio
n
a
The cover illustration might be considered representative of the ‘core’
ns
as well as the fl ow of goods and services through productive systems.
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The Student DVD includes an abundance of resources to enhance d
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the course including: full-length videos, video scenes, Excel
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templates, self-grading practice quizzes, ScreenCam software
e
tutorials, PowerPoint lecture slides, and Web links.
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03 Additional study materials can also be found on:
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1 The text Web site
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/1 www.mhhe.com/jacobs1e o
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6 C The authors’ text support site re
Y www.pom.edu
A
N
M The McGraw-Hill/Irwin dedicated Operations Management Web site
A www.mhhe.com/pom
G
Y
E
L
O
B
L ISBN 978-0-07-340330-4
A MHID 0-07-340330-X
C Part of
K
ISBN 978-0-07-329473-5
MHID 0-07-329473-X
90000
9 780073 294735
www.mhhe.com
DVD included
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O p e r a t i o n s a n d
S u p p l y M a n a g e m e n t :
T h e C o r e
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T M G - H / I S
H E C R AW I L L R W I N E R I E S
Operations and Decision Sciences
OPERATIONS MANAGEMENT
Benton Gray and Larson Pinto and Parente
Purchasing and Supply Management Project Management: SimProject: AProject Management
First Edition The Managerial Process Simulation for Classroom Instruction
Bowersox, Closs, and Cooper Fourth Edition First Edition
Supply Chain Logistics Management Harrison and Samson Schroeder
Second Edition Technology Management Operations Management: Contemporary
Burt, Dobler, and Starling First Edition Concepts and Cases
World Class Supply Management Hayen Third Edition
Seventh Edition SAPR/3 Enterprise Software: Seppanen, Kumar, and Chandra
Cachon and Terwiesch An Introduction Process Analysis and Improvement
Matching Supply with Demand: An First Edition First Edition
Introduction to Operations Management Hill Simchi-Levi, Kaminsky, and Simchi-Levi
First Edition Manufacturing Strategy: Text & Cases Designing and Managing the Supply Chain:
Chase, Jacobs, and Aquilano Third Edition Concepts, Strategies, Case Studies
Operations Management for Competitive Hopp and Spearman Third Edition
Advantage Factory Physics Sterman
Eleventh Edition Second Edition Business Dynamics: Systems Thinking and
Davis and Heineke Jacobs and Chase Modeling for a Complex World
Operations Management: Integrating Operations and Supply Management: First Edition
Manufacturing and Services The Core Stevenson
Fifth Edition First Edition Operations Management
Davis and Heineke Jacobs and Whybark Ninth Edition
Managing Services: Using Technology to Why ERP? Thomke
Create Value First Edition Managing Product and Service
First Edition Leenders, Johnson, Flynn, and Fearon Development: Text and Cases
Finch Purchasing and Supply Management First Edition
Operations Now: Supply Chain Profitability Thirteenth Edition Ulrich and Eppinger
and Performance Melnyk and Swink Product Design and Development
Third Edition Value-Driven Operations Management: Third Edition
Finch An Integrated Modular Approach Vollmann, Berry, Whybark, and Jacobs
Interactive Models for Operations and First Edition* Manufacturing Planning & Control for
Supply Chain Management Moses, Seshadri, and Yakir Supply Chain Management
First Edition HOM Operations Management Software Fifth Edition
Flaherty First Edition Webster
Global Operations Management Nahmias Principles and Tools for Supply
First Edition Production and Operations Analysis Chain Management
Fitzsimmons and Fitzsimmons Fifth Edition First Edition
Service Management: Operations, Strategy, Olson Zipkin
Information Technology Introduction to Information Systems Foundations of Inventory Management
Fifth Edition Project Management First Edition
Gehrlein Second Edition
Operations Management Cases
First Edition
QUANTITATIVE METHODS AND MANAGEMENTSCIENCE
Hillierand Hillier Stevenson and Ozgur Kros
Introduction to Management Science: Introduction to Management Science Spreadsheet Modeling for Business
AModeling and Case Studies Approach with Spreadsheets Decisions
with Spreadsheets First Edition First Edition
Third Edition
*Available only through McGraw-Hill’s PRIMIS Online Assets Library.
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O p e r a t i o n s a n d
S u p p l y M a n a g e m e n t :
T h e C o r e
F. R O B E R T J A C O B S
Indiana University
R I C H A R D B . C H A S E
University of Southern California
Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis
Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
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OPERATIONS AND SUPPLYMANAGEMENT: THE CORE
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the
Americas, New York, NY, 10020. Copyright ©2008 by The McGraw-Hill Companies, Inc. All rights reserved.
No part of this publication may be reproduced or distributed in any form or by any means, or stored in a
database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including,
but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 DOW/DOW0 9 8 7 6
ISBN: 978-0-07-340330-4 (student edition)
MHID: 0-07-340330-X (student edition)
ISBN: 978-0-07-327829-2 (instructor’s edition)
MHID: 0-07-327829-7 (instructor’s edition)
Editorial director:Stewart Mattson
Executive editor:Richard T. Hercher, Jr.
Developmental editor II:Christina A. Sanders
Marketing manager:Sankha Basu
Senior media producer:Victor Chiu
Project manager:Jim Labeots
Production supervisor:Gina Hangos
Senior designer:Artemio Ortiz Jr.
Photo research coordinator:Lori Kramer
Photo researcher: Emily Tietz
Supplement producer:Ira C. Roberts
Lead media project manager:Cathy L. Tepper
Cover design: Dave Seidler
Interior design: Artemio Ortiz Jr.
Typeface: 10/12 Times
Compositor:Interactive Composition Corporation
Printer:R. R. Donnelley
Library of Congress Cataloging-in-Publication Data
Jacobs, F. Robert.
Operations and supply management: the core/F. Robert Jacobs
Richard B. Chase.
p. cm. — (McGraw-Hill/Irwin series operations and decision sciences)
Based on Operations management for competitive advantage by Richard B. Chase.
Includes index.
ISBN-13: 978-0-07-340330-4 (SE: alk. paper)
ISBN-10: 0-07-340330-X (SE: alk. paper)
ISBN-13: 978-0-07-327829-2 (IE: alk. paper)
ISBN-10: 0-07-327829-7 (IE: alk. paper)
1. Production management. I Chase, Richard B. Operations management for
competitive advantage. II. Title.
TS155 .J27 2008
658'.5—dc21
2006046655
www.mhhe.com
jac0330x_fm.qxd 9/18/06 4:01 PM Page v
To our wives
Jeanne, Harriet
and to our children
Jennifer and Suzy
Laurie, Andy, Glenn, Rob, Christine, and Batsheva
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vi
P
R E F A C E
The goal of this book is to provide you with the essential information that every manager
needs to know about operations and supply–related activities in a firm. Times have
changed dramatically over the last few years. Organization structures are now much flatter,
and rather than being functionally organized, companies often are organized by customer
and product groups. Today’s manager cannot ignore how the real work of the organization
is done. This book is all about how to get the real work done effectively. It makes little
difference if you are officially in finance, marketing, accounting, or operations: The value-
added work, the process of creating and delivering products, needs to be completed in a
manner that is both high-quality and maximally efficient. Many of the things you do, or
will do, in your job are repetitive, even some of the most creative and high-profile activi-
ties. You should think of this course as preparing you to be your most productive and help-
ing you help your organization be its most productive.
We can consider the importance of the material in the book on many levels, but let’s
focus on three. First, consider your role as a business unit manager with people working
under your supervision. Or, in the longer term, you probably have aspirations to become a
senior executive with responsibility for multiple businesses or products. The concepts in
this text will be critical to your success in that role. Finally, you may decide to specialize in
operations and supply management as a long-term career.
In your role as a manager with people working under your supervision, one of your
major duties will be to organize the way work is done. There needs to be some structure to
the work process, including how information is captured and analyzed, as well as how de-
cisions and changes and improvements are made. Without a logical or structured approach,
even a small group may be subject to errors, ineffiencies, and even chaos.
Designing efficient process flows is an important element of getting a group to work to-
gether. If your group is involved in creative activities such as designing cars, buildings, or
even stock portfolios, there still needs to be structure to how the work is done, who is re-
sponsible for what, and how progress is reported. The concepts of project management,
manufacturing and service process design, capacity analysis, and quality in this text are all
directly related to the knowledge you will need to be a great supervisor in your organiza-
tion, and getting your group to work productively and efficiently will lead to success and
more responsibility for you.
Next, think about becoming a senior executive. Making acquisitions, planning mergers,
and buying and selling divisions will get your name and picture in business magazines.
Deals are easily explained to boards, shareholders, and the media. They are newsworthy
and offer the prospect of nearly immediate gratification, and being a deal maker is consis-
tent with the image of the modern executive as someone who focuses on grand strategy and
leaves operations details to others. Unfortunately, the majority of deals are unsuccessful.
The critical element of success, even with the grandest deals, can still be found most often
in the operational details.
Realsuccesshappenswhenoperationalprocessescanbeimproved.Productivityimprove-
mentsfromthingssuchassharingcustomerserviceprocesses,purchasingsystems,distribu-
tionandmanufacturingsystems,andotherprocessescanleadtogreatsynergiesandsuccess.
Operationsaccountsfor60to80percentofthedirectexpensesthatlimittheprofitofmost
firms.Withouttheseoperationssynergies,designedandimplementedbyexecutiveswitha
keenunderstandingoftheconceptsinthisbook,companiesareoftenleftwithexpensivedebt,
disappointedcustomersandshareholders,andpressureonthebottomline—onearnings.
Finally,youmaybeinterestedinacareerinoperations.Well,youarenotalone.Profes-
sional organizations such as theAssociation for Operations Management, the Institute for
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PREFACE vii
SupplyManagement,andtheCouncilofSupplyChainManagementProfessionalshavewell
over200,000membersparticipatinginregularmonthlymeetings,annualconferences,and
certificationprograms.Entry-leveljobsmightbeasaforecaststrategist,projectmanager,in-
ventorycontrolmanager,productionsupervisor,purchasingmanager,logisticsmanager,or
warehousespecialist.Inaddition,topoperationsstudentsmayobtaintheirinitialjobswith
consultingfirms,workingasbusinessprocessanalystsandsystemdesignspecialists.
Arecent study on career patterns in logistics conducted by researchers at The Ohio State
University found that 40 percent of the executives in operations and supply management
positions had majored in business. The median salary for managers was $97,000; for di-
rectors, $141,000; and for vice presidents, $231,000. Our experience with students has
been that operations majors usually have the highest-paying initial offers, surpassing those
in accounting, finance, and marketing. There are great opportunities for students who
major in the field.
We encourage you to talk to your instructor about what you want to get out of the course.
What are your career aspirations, and how do they relate to the material in this course? Write
your instructor a short e-mail describing what you want to do in the future—this is invaluable
information for tailoring the material in the course to your needs. As you work through the
text and the DVD, share your experiences and insights with the class. Being an active stu-
dent is guaranteed to make your experience more valuable and interesting.
A
C K N O W L E D G M E N T S
Special thanks to Rex Cutshall, Indiana University, for countless contributions to creating
this text as well as authoring the PowerPoint lecture slides and ScreenCam tutorials;
Marilyn Helms, Dalton State University, for preparing the Study Guide; William Berry,
QueensCollege,forpreparingtheTestBank;andJeffreyRummel,UniversityofConnecticut,
for checking the page proof for accuracy and preparing the Solutions Manual.
We also wish to thank the following reviewers, focus group, and survey participants for
their many thoughtful suggestions for this text:
R
E V I E W E R S
Stephan Vachon, Clarkson University
Seong Jong Joo, Central Washington University
Ednilson Bernardes, Georgia Southern University
Terry Harrison, Penn State University
Alan Cannon, University of Texas at Arlington
Anita Lee-Post, University of Kentucky
Eric Svaan, University of Michigan, Ann Arbor
Jayanta Bandyopadhyay, Central Michigan University
Ajay Das, Baruch College
Uttarayan Bagchi, University of Texas, Austin
Eng Gee, Ngee Am Poly—Singapore
F G
O C U S R O U P
Alan Cannon, University of Texas—Arlington
Renato De Matta, University of Iowa—Iowa City
Barbara Downey, University of Missouri
Karen Eboch, Bowling Green State University
Rick Franza, Kennesaw State University
Marijane Hancock, University of Nebraska
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viii PREFACE
Lori Koste, Grand Valley State University
Tomislav Mandakovic, Florida International University—Miami
Ann Marucheck, University of North Carolina—Chapel Hill
Timothy McClurg, University of Wisconsin
Cesar Rego, University of Mississippi
Kimberlee Snyder, Winona State University
Fathi Sokkar, Eastern Michigan University
Robert Szymanski, University of Central Florida
Kevin Watson, University of New Orleans
Theresa Wells, University of Wisconsin—Eau Claire
Mustafa Yilmaz, Northeastern University
Rhonda Lummus, Iowa State University
S P
U R V E Y A RT I C I PA N T S
Terry Harrison, Penn State University
Ajay Das, Baruch College
Jonatan Jelen, Baruch College
Mark Barrat, Arizona State University—Tempe
Johnny Rungtusanatham, University of Minnesota
William Verdini, Arizona State University—Tempe
Antonio Arrela-Risa, Texas A&M University
Matt Keblis, Texas A&M University
Drew Stapleton, University of Wisconsin—Lacrosse
David Lewis, Brigham Young University
Kathy Dhanda, DePaul University
Daniel R. Heiser, DePaul University
Ann Marucheck, University of North Carolina—Chapel Hill
Eric Svaan, University of Michigan—Ann Arbor
Amer Qureshi, Columbus State University
Mark Ippolito, Indiana University, Purdue University—Indianapolis
Jayanta Bandyopadhyay, Central Michigan University
Rohit Verma, Cornell University
Thanks to the McGraw-Hill/Irwin marketing and production team who make this
possible—Sankha Basu, marketing manager; Stewart Mattson, editorial director; James
Labeots, project manager; Gina Hangos, production supervisor; Artemio Ortiz, designer;
Lori Kramer, photo research coordinator; Cathy Tepper, media project manger; Victor
Chiu, media producer; and Ira Roberts, supplement producer.
Aspecial thanks to our outstanding editorial team. Christina Sanders, our amazing de-
velopmental editor, has become our passionate partner in the development of this book.
Thanks for your enthusiasm, organizational skills, and patience. We love working with you.
We appreciate our executive editor, Dick Hercher. His brilliant guidance and unwaver-
ing dedication to working with us is a constant motivator. His leadership has provided the
solid foundation on which the entire team associated with this book is built. It is an honor
to publish another book with Dick Hercher.
Last, but certainly not least, we thank our families. We have stolen countless hours, time
that would otherwise be spent with them. We sincerely appreciate your support.
F. Robert Jacobs
Richard B. Chase
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ix
C B
O N T E N T S I N R I E F
S E C T I O N O N E 11 Aggregate Sales and Operations
Planning 283
STRATEGY 12 Inventory Control 308
1 Operations and Supply Strategy 4
13 Material Requirements
2 Project Management 20 Planning 348
S T
E C T I O N W O
APPENDICES
PROCESSES A Answers to Selected Problems 373
3 Strategic Capacity Management 51
B Learning Curve Tables 375
4 Manufacturing Processes 80
C Present Value Table 377
5 Service Processes 106
D Negative Exponential Distribution:
6 Six-Sigma Quality 136
Values of e−X 378
S T
E C T I O N H R E E
E Areas of the Cumulative Standard
Normal Distribution 379
SUPPLY CHAINS
7 Strategic Sourcing 182 F Linear Programming Using the Excel
Solver 380
8 Logistics 202
9 Lean Manufacturing 223
PHOTO CREDITS 402
S F
E C T I O N O U R
NAME INDEX 403
INVENTORY
SUBJECT INDEX 405
10 Demand Management and
Forecasting 249