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									Contents
Chapter 1                                                  Service 34
                                                           The Next Sources of Competitive Advantage?      35
Introduction to Operations
Management 2                                           Developing an Operations Strategy from Competitive
                                                        Priorities 36
What Is Operations Management?     4                       Factory Focus and Trade-Offs 36
     An Organizational Perspective 4                       Questioning the Trade-Offs 37
     An Operational Perspective 6                      Order-Qualifiers and Order-Winners 39
Operations Management’s Contributions to               Distinctive (Core) Competencies 40
 Society 7                                             Operations Strategy Decisions 41
     Higher Standard of Living 8                           Strategic Decisions 41
     Better Quality Goods and Services   8                 Tactical Decisions 42
     Concern for the Environment 9                     Integration of Manufacturing and Services      43
     Improved Working Conditions 9
The Emergence of Operations Management       10        Chapter 3
     Application of OM to Service Operations     10
     An Expanded Definition of Quality 12
                                                       New Product and Service Development,
     Expansion of OM Concepts into Other
                                                       and Process Selection 48
      Functions 13                                     Why Emphasize New Goods and Services?       50
     A New Paradigm for OM 13                              Increased Competition 50
The Ever-Changing World of Operations                      Advances in Technology 50
 Management 14                                             Customer Demand 51
     Increased Global Competition 14                       Regulation Changes 51
     Advances in Technology 15                         The Benefits of Introducing New Products
     Linking OM to Customers and Suppliers 16           Faster 51
     Job Opportunities in Operations Management:           Greater Market Share 51
       Relating OM to Other Business Functions 19          Price Premiums 51
The Historical Development of Operations Management        Quick Reaction to Competition    52
 from an International and Canadian Perspective 20         Set Industry Standards 52
                                                       Categories of New Products 53
Chapter 2                                                  Incremental or Derivative Products 53
                                                           Next Generation or Platform Products 53
Operations Strategy           26
                                                           Breakthrough or Radical Products 53
Operations Strategy—An Overview     28                 The New Product Development Process       54
     What Is Operations Strategy? 28                       Idea Generation 54
     The Operations Management Strategy Development        Concept Development 55
      Process 28                                           Quality Function Deployment 56
Operations Strategy Means Adding Value for                 Design for Manufacturability 57
 the Customer 30                                       Unit Life Cycle Costing-Based Design 59
Trends Affecting Operations Strategy Decisions    32   Process Selection in Manufacturing 60
     Globalization 32                                      Types of Processes 60
     Technology 32                                         The Product-Process Matrix      62
Competitive Priorities   32                            Categories of New Services   64
     Cost 32                                               “Window Dressing” Services 64
     Quality 33                                            Breadth-of-Offering Services 65
     Delivery 33                                           Revolutionary Services 65
     Flexibility 33                                        Channel Development Services 65

vi
                                                                                                  Contents                       vii


The New Service Development Process 65                                 Process Analysis Definitions 142
    The Customer Contact Approach to Designing                         Capacity versus Demand 145
     Service Processes 66                                              Value Stream Mapping 145
    Designing a New Service Organization 68                            Service Blueprinting 147
    Designing the Customer Service Encounter 69                        Fail-Safing 149
Process Selection in Services   69                                 Business Processes    149
    Types of Service Organizations 69                                  Business Process Analysis             149
    The Production Line Approach 70                                Benchmarking    152
    The Customer Involvement Approach 71                               What Should We Benchmark?               154
    The Personal Attention Approach 71                             Business Process Reengineering            155
                                                                       Reengineering Defined 155
                                                                       Characteristics of a Reengineered Process           156
Supplement 3
                                                                       Issues with Reengineering 157
The Role of Technology in Operations                    76
Technology in Manufacturing      77                                Supplement 5
    Automation 77                                                  Work Performance Measurement                          165
    Information Technology       79
Technology in Services    80                                       Work Methods       166
    Technology Trends in Services 80                                   Overall Operation 166
                                                                       Worker at a Fixed Workplace 167
    Integrating Technology into Services          83
                                                                       Worker Interacting with Equipment 169
E-Tailering 85
                                                                       Workers Interacting with Other Workers 170
Technology-Related Issues 86
                                                                   Work Measurement         172
    Overcoming Barriers to Entry       86
                                                                       Time Study 173
    Training and Support 86
                                                                       Elemental Standard-Time Data 175
                                                                       Predetermined Motion-Time Data 175
Chapter 4                                                              Work Sampling 175
Project Management              90
Definition of Project Management       93                          Chapter 6
    Work Breakdown Structure          94                           Quality Management                 186
Organizational Considerations in Project
                                                                   Defining Quality     188
 Management 96                                                         Quality in Goods 189
    Role of the Project Manager 97                                     Quality in Services 190
    High-Performance Project Teams          97                         Additional Views of Quality           191
Project Control 98                                                 The Quality Gurus        192
Critical Path Scheduling 100                                           Walter A. Shewhart 192
Time-Oriented Techniques 100                                           W. Edwards Deming 192
    CPM with a Single Time Estimate 101                                Joseph M. Juran 194
    PERT (CPM with Three Activity Time Estimates)            108       Shigeo Shingo 194
    Maintaining Ongoing Project Schedules 112                          Kaoru Ishikawa 194
Time–Cost Trade-Off Models       113                                   Armand Feigenbaum 194
    Minimum-Cost Scheduling (Time–Cost Trade-Off) 113                  Philip Crosby 195
CPM and PERT in Practice 116                                           Genichi Taguchi 195
Project Management Software 117                                    The Cost of Quality      195
                                                                       Cost of Prevention 196
                                                                       Cost of Detection/Appraisal           196
Chapter 5
                                                                       Cost of Failure 196
Process Measurement and Analysis                       134             Service Guarantees 197
Process Analysis 136                                               Organizationwide Quality Initiatives            197
Process Measurement 137                                                Total Quality Management              198
    Types of Performance Measures           137                        Six Sigma 202
viii                       Contents


Recognizing and Rewarding Quality           204                     Methods for Evaluating Potential Locations          271
       Canada Awards for Excellence 204                                  Factor-Rating Systems 271
       Malcolm Baldrige National Quality Award                           Cost-Based Analysis 272
         (MBNQA) 207                                                     A Spreadsheet Approach to Locating Facilities        275
       ISO Standards 208                                            Strategic Capacity Decisions     276
                                                                         Important Capacity Concepts        277
Supplement 6                                                             Capacity Strategies 279
Quality Control Tools for Improving                                      Capacity Planning 280
Processes 218                                                            Capacity Measures 282

The Basic Quality Control Tools           218
       Process Flow Charts (or Diagrams) 218
                                                                    Chapter 8
       Checksheets 219                                              Facility Decisions: Layouts             296
       Bar Charts and Histograms 220
                                                                    Types of Manufacturing Layouts         298
       Pareto Charts 220
                                                                         Process Layout 301
       Scatterplots (or Diagrams) 222
                                                                         Product Layout 305
       Run (or Trend) Charts 222
                                                                         Current Thoughts on Assembly Lines 312
       Cause-and-Effect (or Fishbone) Diagrams          223
                                                                         Group Technology (Cellular) Layout 313
Advanced Quality Tools        223
                                                                    Facility Layouts for Services   314
       Affinity Diagram 223
                                                                         Types of Service Layouts 314
       Interrelationship Digraph      225
                                                                         Layout Considerations in Services        315
       Tree Diagram 225
                                                                    Computer Software for Facility Layout         316
       Matrix Diagram 225
Statistical Analysis of Processes     226
Attributes and Variables 227                                        Chapter 9
Sampling Errors 227                                                 Forecasting 328
Acceptance Sampling 228
                                                                    The Importance of Forecasting 330
       Designing a Sampling Plan for Attributes 228
                                                                    Types of Forecasting 331
       Operating Characteristic Curves 230
                                                                    Components of Demand 332
       Designing a Sampling Plan for Variables 231
                                                                    Time-Series Analysis 334
Statistical Process Control     233
                                                                         Simple Moving Average 335
       SPC Charts 235
                                                                         Weighted Moving Average 337
       SPC Using Attribute Measurements 236
                                    –                                    Exponential Smoothing 338
       Variable Measurements Using X and R Charts             238
                        –                                           Forecasting Errors in Time-Series Analysis      344
       How to Construct X and R Charts 239
A Framework for Applying the Tools              242                      Sources of Error 344
Process Capability 242                                                   Measurement of Error       345
       Six Sigma: Application    245                                Linear Regression Analysis 349
Taguchi Methods      246                                            Causal Relationship Forecasting 349
       Is an Out-of-Spec Product Really out of Spec?          247   Neural Networks 349
                                                                    The Application of Forecasting in Service
Chapter 7                                                            Operations 350
                                                                    Forecasting Software Programs 350
Strategic Facility Decisions: Location and
Capacity 260
                                                                    Chapter 10
Locating Manufacturing Operations           262                     Waiting Line Theory 364
       Qualitative Factors 263
       Quantitative Factors 264                                     Waiting Line Characteristics     366
Locating Service Operations         266                                  Population Source 366
       Location Strategies 266                                           Arrival Characteristics 367
       Computer Programs for Site Selection           266                Physical Features of Lines 369
       Types of Service Facilities 268                                   Customer Selection 369
                                                                                   Contents                       ix


    Processing Facility Structure   370                        Evolution of ERP Systems 440
    Exit 372                                                   Benefits of ERP Systems 441
Waiting Line Equations   373                                   Why ERP Systems Fail 442
    Capacity Utilization and Waiting Time   375                Issues in Selecting ERP Systems       442
The Trade-Off between Balking and Reneging 375             The Reverse Supply Chain 443
Two Typical Waiting Line Situations 376                    Requirements for a Successful Supply Chain       444
    Problem 1: Customers in Line 376                           Trust 444
    Problem 2: Equipment Selection 378                         Long-Term Relationships 444
Designing the Facility Using Waiting Line                      Information Sharing 444
 Characteristics 379                                           Individual Strengths of Organizations 444
                                                               The Right Type of Supply Chain 444
Chapter 11
Scheduling      386                                        Chapter 13
                                                           Just-in-Time Systems          450
The Importance of Scheduling 388
The Job Shop Defined 389                                   The JIT Concept 452
Scheduling in a Job Shop 389                               The Japanese Approach to Productivity      453
Elements of the Job Shop Scheduling Problem    390         Fundamentals of JIT 455
    Priority Rules for Sequencing Jobs at Machines   392       Just-in-Time Production 456
    Schedule Evaluation Criteria 393                           Focus on Quality 465
Priority Rules and Techniques   393                            Flexible Layout and Processes 466
    Scheduling n Jobs on One Machine 393                       Involvement of the Workforce 468
    Scheduling n Jobs on Two Machines 396                      Close Supplier Relationships 469
    Scheduling n Jobs on m Machines—Complex Job                Innovative Product and Process Design 471
     Shops 397                                                 Focus on Problem Solving and Continuous
Theory of Constraints Scheduling    398                          Improvement 472
Control in the Job Shop 400                                JIT in North America 473
    Tools of Shop-Floor Control     401                    Company Experiences and Challenges with JIT
Scheduling Workers in Service Operations 404                 Implementation 474
    Why Scheduling Is Important in Services 404            JIT in Services 475
    A Framework for Scheduling Service Workers 405             Application of JIT to Services   475
    The Use of Technology in Scheduling 408
    Examples of Scheduling in Services 409                 Chapter 14
                                                           Operations Planning: Overview and
Chapter 12                                                 Aggregate Plans 482
Supply Chain Management               420
                                                           Overview of Operations Planning Activities       484
Definition of Supply Chain Management 422                      Long-Range Planning 484
The Evolution of Supply Chain Management 424                   Intermediate-Range Planning      485
Designing a Supply Chain 426                                   Short-Range Planning 486
    Vertical Integration 426                               Aggregate Planning   487
    Facility Location 428                                      Planning Environment 488
    Procurement 428                                            Aggregate Planning Strategies        489
    Inventory Management 431                                   Relevant Costs 490
    Logistics 431                                          Aggregate Planning Techniques      491
    Performance Metrics 435                                    Full Costs versus Marginal Costs 491
    Use of Technology 435                                      A Simple Example of Aggregate Planning 492
Product Design to Facilitate Supply Chain                      A More In-Depth Example: The D&H
 Management 439                                                 Company 493
Enterprise Resource Planning (ERP) Systems 439                 Aggregate Planning Applied to Services:
    Defining ERP Systems    440                                 Victoria Parks and Recreation Department 498
x                        Contents


Yield Management in Aggregate Planning      502              Master Production Schedule    566
    Market Segmentation 503                                      Time Fences       566
    High Fixed and Low Variable Costs     503                Materials Requirements Planning (MRP) Systems            567
    Product Perishability 503                                    Purposes, Objectives, and Philosophy of MRP           567
    Presold Capacity 504                                         Benefits of an MRP System 568
Aggregate Planning in Practice   504                             Where MRP Can Be Used 569
                                                             MRP System Structure 570
Chapter 15                                                       Demand for Products 570
                                                                 Bill of Materials File 571
Inventory Systems for Independent
                                                                 Inventory Records File 573
Demand 518
                                                                 MRP Computer Program 575
Definition of Inventory 520                                      Output Reports 575
Reasons for Maintaining Inventory 520                        Lot Sizing in MRP Systems 576
Inventory Costs 521                                          A Simple MRP Example 576
Independent versus Dependent Demand 522                          Bill of Materials (Product Structure Tree) File      577
Types of Inventory Systems 523                                   Inventory Records File 577
    Fixed-Order-Quantity and Fixed-Time-Period                   Lot Sizes 577
      Systems 523                                                Running the MRP Program 577
Basic Inventory Models   525                                 Capacity Requirements Planning (CRP)        580
    Basic Fixed-Order-Quantity Model 525                         Computing Work Centre Load       580
    Fixed-Order-Quantity Model with Usage 528                Manufacturing Resource Planning (MRP II)          582
    Incorporating Demand Uncertainty in Fixed-Order-             MRP II 582
      Quantity Models 529                                        Sales and Operations Planning     583
    Fixed-Time-Period Model 530                              Distribution Requirements Planning (DRP)          583
    Quantity-Discount Model 531                              MRP in Services 584
    In-Transit Inventory Model 533
Inventories and Service Levels 535                           Appendix A: Areas of the Standard Normal
Economic Order Quantity Models in Relation to                Distribution A-1
  the Real World 536
    Effect of Reduced Setup Costs on Lot Sizes        537    Appendix B: Areas of the Cumulative Standard
Perishable Inventory 537                                     Normal Distribution A-2
Single-Period Inventory Model    538                         Appendix C: Answers to Selected Problems                A-4
    Safety Stock in the Single-Period Inventory
     Model 540                                               Photo Credits     PC-1
Inventory Management in Services    540                      Bibliography     B-1
    Yield Management or Revenue Management             541
Additional Issues in Inventory Management       545          Glossary   G-1
    Determining Realistic Costs 545                          Name Index      I-1
    ABC Inventory Planning 546
    Inventory Accuracy 549                                   Subject Index     I-5
Current Trends in Inventory Management      550

                                                             Bonus Chapters available in PDF format on
Chapter 16                                                   our Web site at www.mcgrawhill.ca/olc/davis
Materials Planning for Dependent
Demand 562                                                   WS10 Waiting Line Management
                                                             WS17 Human Resource Issues in Operations
Independent versus Dependent Demand MRP                           Management
  Systems 564

								
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