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E1FTOC01.qxd 8/5/10 2:30 PM Page vi

Brief Contents

PART ONE: Operations Management 1

1. Introduction to Operations and Supply Chain Management 1
S1. Operational Decision-Making Tools: Decision Analysis 33
2. Quality Management 54
3. Statistical Process Control 108
S3. Operational Decision-Making Tools: Acceptance Sampling 148
4. Product Design 156
5. Service Design 189
6. Processes and Technology 226
7. Capacity and Facilities Design 257
S7. Operational Decision-Making Tools: Facility Location Models 297
8. Human Resources 315
S8. Operational Decision-Making Tools: Work Measurement 348
9. Project Management 366

PART TWO: Supply Chain Management 420

10. Supply Chain Management Strategy and Design 420
11. Global Supply Chain Procurement and Distribution 450
S11. Operational Decison-Making Tools: Transportation
and Transshipment Models 475
12. Forecasting 495
13. Inventory Management 553
S13. Operational Decision-Making Tools: Simulation 590
14. Sales and Operations Planning 607
S14. Operational Decision-Making Tools: Linear Programming 645
15. Resource Planning 678
16. Lean Systems 720
17. Scheduling 755

APPENDIX A—Normal Curve Areas 789

SOLUTIONS TO SELECTED ODD-NUMBERED PROBLEMS 790
INDEX 798
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Contents

PART ONE: Decision Making With Probabilities 38

Expected Value of Perfect Information 38
OPERATIONS MANAGEMENT 1 Sequential Decision Trees 39
Summary 41
Introduction to Operations and
1. Supply Chain Management 1
Summary of Key Formulas 42
Summary of Key Terms 42
■ Operations and Supply Chain Management Solved Problems 42
for Chocolate 1 Problems 42
■ What Do Operations and Supply Chain Case Problem S1.1–Whither an MBA at Strutledge? 51
Managers Do? 3 Case Problem S1.2–Transformer Replacement at
The Operations Function 2 Mountain States Electric Service 51
■ OM Dialogue: Mark Jackson, Marketing Manager 6 Case Problem S1.3–Evaluating Projects at Nexcom
The Evolution of Operations and Supply Chain Management 6 Systems 52
Globalization 9 References 53
The China Factor 10
■ The Balancing Act at New Balance 12
India, The World’s Service Provider 13
2. Quality Management 54
Productivity and Competitiveness 14
Strategy and Operations 17 ■ Quality Management at Mars 54
Primary Task 17 What Is Quality? 55
Core Competencies 18 Quality from the Customer’s Perspective 56
Order Winners and Order Qualifiers 18 Dimensions of Quality for Manufactured Products 56
Positioning the Firm 19 Dimensions of Quality for Services 56
Competing on Cost 19 Quality from the Producer’s Perspective 58
Competing on Speed 19 A Final Perspective on Quality 59
■ Trader Joe’s Unique Strategy 20 Quality Management System 59
Competing on Quality 21 The Evolution of Quality Management 59
Competing on Flexibility 21 ■ Applying Deming’s PDCA Cycle in Baldrige
Strategy Deployment 21 Award-Winning Schools and Hospitals 62
Policy Deployment 21 Quality Tools 62
Balanced Scorecard 23 Process Flowcharts 64
Operations Strategy 25 Cause-and-Effect Diagrams 64
Organization of this Text 25 Checksheets and Histograms 65
Learning Objectives of this Course 26 Pareto Analysis 65
Summary 26 Scatter Diagrams 66
Summary of Key Terms 27 Process Control Charts and Statistical Quality Control 67
Questions 27 TQM and QMS 67
Problems 28 The Focus of Quality Management—Customers 68
Case Problem 1.1–Visualize This 30 Quality Management in the Supply Chain 68
Case Problem 1.2–Whither an MBA at Strutledge? 30 Measuring Customer Satisfaction 69
Case Problem 1.3–Weighing Options at the Weight Club 31 ■ Measuring Customer Satisfaction with
References 31 “Voice of the Customer (VoC)” at Two
Baldrige Award Winners 70
SUPPLEMENT The Role of Employees in Quality Improvement 70
1. Operational Decision-Making Tools: Kaizen and Continuous Improvement 71
Decision Analysis 33 Quality Circles 72
Decision Analysis With and Without Probabilities 33 Process Improvement Teams 72
Decision Making Without Probabilities 34 ■ Customer Focus and Employee Empowerment
Decision Analysis With Excel 36 in a Baldrige Award-Winning City 73
Decision Analysis With OM Tools 37 Quality in Services 73
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viii Contents

Quality Attributes in Services 74 SPC Applied to Services 111

■ Ritz-Carlton Hotels: Two-Time Baldrige National Where to Use Control Charts 112
Quality Award Winner 75 Control Charts 112
Six Sigma 76 Control Charts for Attributes 113
The Six Sigma Goal—3.4 DPMO 76 p-Chart 114
■ Motorola’s Six Sigma Quality 77 ■ Using Control Charts for Improving
The Six Sigma Process 78 Health-Care Quality 116
■ Six Sigma Highlights 78 c-Chart 117
Improvement Projects 79 Control Charts for Variables 119
The Breakthrough Strategy: DMAIC 79 Mean (x–) Chart 119
■ North Shore University Hospital: A Six Sigma Range (R-) Chart 122
Project Example 79 Using x–- and R- Charts Together 123
Black Belts and Green Belts 80 Control Chart Patterns 124
Design for Six Sigma 80 Sample Size Determination 125
Lean Six Sigma 80 SPC with Excel and OM Tools 126
The Bottom Line—Profitability 82 Process Capability 127
The Cost of Quality 83 Process Capability Measures 130
The Cost of Achieving Good Quality 84 ■ Design Tolerances at Harley-Davidson
The Cost of Poor Quality 84 Company 131
Measuring and Reporting Quality Costs 85 Process Capability with Excel and OM Tools 132
The Quality–Cost Relationship 87 Summary 133
The Effect of Quality Management on Productivity 87 Summary of Key Formulas 133
Productivity 87 Summary of Key Terms 133
Measuring Product Yield and Productivity 88 Solved Problems 134
The Quality–Productivity Ratio 90 Questions 135
Quality Awards 91 Problems 135
The Malcolm Baldrige Award 91 Case Problem 3.1–Quality Control at Rainwater
Other Awards for Quality 93 Brewery 145
■ Baldrige National Quality Award Winners: Case Problem 3.2–Quality Control at Grass, Unlimited 146
What It Takes 93 Case Problem 3.3–Improving Service Time at Dave’s
ISO 9000 94 Burgers 147
Standards 94 References 147
Certification 95
Implications of ISO 9000 for U.S. Companies 95 SUPPLEMENT
■ ISO 9001 Certification at Monarcas Morelia 96 3. Operational Decision-Making Tools:
ISO Registrars 97
Acceptance Sampling 148
Summary 98
Single-Sample Attribute Plan 149
Summary of Key Formulas 98
Producer’s and Consumer’s Risks 149
Summary of Key Terms 98
The Operating Characteristic Curve 150
Solved Problems 99
Developing a Sampling Plan with OM Tools 151
Questions 99
Average Outgoing Quality 152
Problems 102
Double- and Multiple-Sampling Plans 153
Case Problem 2.1–Designing a Quality-Management
Summary 154
Program for the Internet at D4Q 104
Summary of Key Terms 154
Case Problem 2.2–Quality Management at State University 105
Solved Problem 154
Case Problem 2.3–Quality Problems at the Tech Bookstores 105
Questions 155
Case Problem 2.4–Product Yield at Continental Luggage
Problems 155
Company 107
References 107
4. Product Design 156
3. Statistical Process Control 108 ■ Product Design at Mars 156
■ Statistical Process Control at Mars and The Design Process 157
Hershey’s 108 Idea Generation 158
The Basics of Statistical Process Control 109 Feasibility Study 159
SPC in Quality Management 110 ■ Pixar’s Creativity 160
Quality Measures: Attributes and Variables 110 Rapid Prototyping and Concurrent Design 160
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Contents ix

Form Design 161 Service Improvement Analysis 207

■ Apple’s Design Process 162 Solution of the Single-Server Model with Excel 209
Functional Design 163 Advanced Single-Server Models 209
Reliability 163 Multiple-Server Model 210
Maintainability 164 The Basic Multiple-Server Model 210
Usability 165 Summary 214
Production Design 165 Summary of Key Terms 214
Final Design and Process Plans 167 Summary of Key Formulas 215
Technology in Design 167 Solved Problems 215
Collaborative Product Design Systems 168 Questions 216
Design Quality Reviews 169 Problems 217
■ Jugaad, Design for the Times 170 Case Problem 5.1–Streamlining the Refinancing Process 222
Design for Environment 170 Case Problem 5.2–Herding the Patient 223
Green Sourcing 172 Case Problem 5.3–The College of Business Copy
Green Manufacture 172 Center 223
Green Consumption 173 Case Problem 5.4–Northwoods Backpackers 224
Recycling and Re-Use 173 References 225
Quality Function Deployment 173
■ Nike’s Trash Talking Shoes 174
Design for Robustness 179
6. Processes and Technology 226
Summary 181 ■ Processes and Technology for Chocolate
Summary of Key Terms 181 Manufacturing 226
Summary of Key Formulas 182 Process Planning 228
Solved Problems 182 Outsourcing 228
Questions 183 Process Selection 229
Problems 183 Process Selection with Breakeven Analysis 230
Case Problem 4.1–Greening Product Design 186 Process Plans 235
Case Problem 4.2–Lean and Mean 187 Process Analysis 235
References 188 Process Flowcharts 236
■ Making Fast Food Faster 238
Process Innovation 241
5. Service Design 189 Steps in Process Innovation 241
■ Service Design at Hershey’s 189 ■ OM Dialogue: Anastasia Thatcher, Business
The Service Economy 190 Process Manager 244
Characteristics of Services 191 Technology Decisions 245
The Service Design Process 193 Financial Justification of Technology 245
■ Redbox Brings Self-Service to Movie Rentals 193 A Technology Primer 246
The Service-Process Matrix 195 Summary 249
Tools for Service Design 196 Summary of Key Terms 249
Service Blueprinting 198 Summary of Key Formulas 249
Front Office and Back-Office Activities 199 Solved Problems 249
Servicescapes 199 Questions 250
Quantitative Techniques 199 Problems 251
Waiting Line Analysis for Service Improvement 200 Case Problem 6.1–A Manager’s Woes 253
Elements of Waiting Line Analysis 200 Case Problem 6.2–Wrong Meds, Again! 254
Elements of a Waiting Line 200 Case Problem 6.3–The DPA Protocol 255
The Calling Population 200 References 255
The Arrival Rate 201
Service Times 202
Queue Discipline and Length 202
7. Capacity and Facilities Design 257
Basic Waiting Line Structures 202 ■ Capacity and Facilities Design at the
Operating Characteristics 204 New England Confectionery Company 257
Traditional Cost Relationships in Waiting Line Capacity Planning 258
Analysis 204 Facilities 261
The Psychology of Waiting 205 Objectives of Facility Layout 261
Waiting Line Models 206 ■ Bank of America’s Towering Achievement in
The Basic Single-Server Model 206 Green Design 261
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Basic Layouts 262

Process Layouts 262 8. Human Resources 315
Product Layouts 264 ■ Human Resources at Hershey’s 315
Fixed-Position Layouts 266 Human Resources and Quality Management 317
Designing Process Layouts 266 The Changing Nature of Human Resources Management 318
Block Diagramming 266 The Assembly Line 318
■ The Health Benefits of Good Layout 267 Limitations of Scientific Management 319
Relationship Diagramming 269 Employee Motivation 319
Computerized Layout Solutions 271 ■ Human Resources Management at Baldrige
■ Urban Outfitters’ New Distribution Facility 272 National Quality Award-Winning Companies 320
Designing Service Layouts 273
Contemporary Trends in Human Resources Management 321
Designing Product Layouts 274
Job Training 321
Line Balancing 274
Cross Training 321
Computerized Line Balancing 278
■ Employee Training at Kyphon, Inc., and Triage
Hybrid Layouts 278
Consulting Group 322
Cellular Layouts 278
Job Enrichment 322
Advantages of Cellular Layouts 280
Empowerment 323
Disadvantages of Cellular Layouts 281
Teams 323
Flexible Manufacturing Systems 282
■ Reducing Costs by Going Green in the
Mixed-Model Assembly Lines 282
Workplace 324
Summary 284
Flexible Work Schedules 324
Summary of Key Formulas 285
Alternative Workplaces and Telecommuting 324
Summary of Key Terms 285
Temporary and Part-Time Employees 325
Solved Problems 286
■ Telecommuting at Capital One 326
Questions 287
Problems 287 Employee Compensation 326
Case Problem 7.1–Workout Plus 293 ■ Part-Time Employees at UPS 327
Case Problem 7.2–Photo Op–Please Line Up 294 Types of Pay 327
Case Problem 7.3–The Grab ’n Go Café 294 Gainsharing and Profit Sharing 327
References 296 Managing Diversity in the Workplace 328
■ English in the Workplace 328
Affirmative Action and Equal Opportunity 329
SUPPLEMENT 7 Diversity Management Programs 329
7. Operational Decision-Making Tools: ■ A Commitment to Diversity at UPS and Kodak 330
Facility Location Models 297 Global Diversity Issues 331
Types of Facilities 297 ■ Developing a Skilled Workforce in China 331
Site Selection: Where to Locate 298 Job Design 332
Global Supply Chain Factors 299 The Elements of Job Design 333
Regional and Community Location Factors in Task Analysis 333
the United States 299 Worker Analysis 333
Location Incentives 300 Environmental Analysis 334
Geographic Information Systems 301 Ergonomics 334
Location Analysis Techniques 302 Technology and Automation 334
Location Factor Rating 302 Job Analysis 335
Location Factor Rating with Excel and OM Tools 303 Process Flowchart 335
Center-of-Gravity Technique 304 Worker-Machine Chart 336
Center-of-Gravity Technique with Excel and OM Tools 305 Motion Study 337
Load-Distance Technique 305 Learning Curves 338
Load-Distance Technique with Excel and OM Tools 307 Determining Learning Curves with Excel 341
Summary 308 Learning Curves with OM Tools 342
Summary of Key Formulas 308 Summary 342
Summary of Key Terms 308 Summary of Key Formulas 342
Solved Problems 309 Summary of Key Terms 343
Questions 309 Solved Problems 343
Problems 310 Questions 343
Case Problem S7.1–Selecting a European Distribution Center Problems 344
Site for American International Automotive Industries 314 Case Problem 8.1–Maury Mills 345
References 314 References 347
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Contents xi

SUPPLEMENT 8 Probabilistic Time Estimates 389

8. Operational Decision-Making Tools: ■ An Interstate Highway Construction Project
in Virginia 392
Work Measurement 348
CPM/PERT Analysis with OM Tools 393
Time Studies 348
Probabilistic Network Analysis 393
Stopwatch Time Study 349
Microsoft Project 396
Number of Cycles 353
PERT Analysis with Microsoft Project 398
Elemental Time Files 354
■ The Corps of Engineers Hurricane Katrina
Predetermined Motion Times 354
New Orleans Restoration Project 399
Work Sampling 356
Project Crashing and Time-Cost Tradeoff 400
Summary 358
Project Crashing 401
Summary of Key Formulas 358
The General Relationship of Time and Cost 403
Summary of Key Terms 358
Summary 404
Solved Problems 359
Summary of Key Formulas 405
Questions 359
Summary of Key Terms 405
Problems 360
Solved Problems 406
Case Problem S8.1–Measuring Faculty Work Activity
Questions 407
at State University 364
Problems 408
References 365
Case Problem 9.1–The Bloodless Coup Concert 417
Case Problem 9.2–Moore Housing Contractors 418
References 419
9. Project Management 366
■ Project Management at Mars 366
PART TWO:
Project Planning 367
Elements of a Project Plan 369 SUPPLY CHAIN MANAGEMENT 420
Project Return 369
The Project Team 370 Supply Chain Management Strategy
■ Cross-Cultural Project Teams 370
10. and Design 420
The Project Manager 371 ■ Supply Chain Management Strategy and
Scope Statement 371 Design at Mars 420
Work Breakdown Structure 371 Supply Chains 421
Responsibility Assignment Matrix 372 Supply Chains for Service Providers 423
■ Green Projects on the Increase Around the Value Chains 425
World 372 The Management of Supply Chains 425
Global and Diversity Issues in Project Management 373 Supply Chain Uncertainty and Inventory 425
■ Project Management Diversity in China 374 The Bullwhip Effect 426
Project Scheduling 375 Risk Pooling 427
The Gantt Chart 376 ■ Eliminating the Bullwhip Effect at Philips
Project Control 377 Electronics 427
Time Management 377 “Green” Supply Chains 428
Cost Management 377 ■ Going Green at Walmart 428
Quality Management 377 Sustainability and Quality Management 429
Performance Management 377 ■ Achieving Sustainability While Reducing
Communication 378 Costs and Increasing Profits 430
■ Reconstructing the Pentagon after 9/11 378 Information Technology: A Supply Chain Enabler 431
Enterprise Project Management 379 Electronic Business 431
CPM/PERT 379 Electronic Data Interchange 432
The Project Network 380 ■ Strategic Supply Chain Design at 7-Eleven
AOA Network 380 in Japan and the United States 432
AON Network 381 Bar Codes 433
■ British Airport Authority’s Terminal 5 Project Radio Frequency Identification 433
at Heathrow Airport 382 The Internet 435
The Critical Path 382 ■ Supply Chain Management at Gaylord Hotels 436
Activity Scheduling 383 Build-To-Order (BTO) 437
Activity Slack 386 Supply Chain Integration 437
■ A Couple of Iconic Building Renovation Projects 388 Collaborative Planning, Forecasting, and
Probabilistic Activity Times 389 Replenishment 437
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xii Contents

Supply Chain Management (SCM) Software 438 Questions 473

Measuring Supply Chain Performance 439 Case Problem 11.1–Somerset Furniture Company’s
Key Performance Indicators 439 Global Supply Chain–Continued 474
■ Apple’s Top-Ranked Supply Chain 441
Process Control 441
SUPPLEMENT 11
SCOR 442 11. Operational Decision-Making Tools:
Summary 444
Summary of Key Terms 444 Transportation and Transshipment
Summary of Key Formulas 444 Models 475
Solved Problems 444 The Transportation Model 475
Questions 445 Solution of the Transportation Model with Excel 477
Problems 447 The Transshipment Model 480
Case Problem 10.1–Somerset Furniture Company’s Solution of the Transshipment Problem with Excel 481
Global Supply Chain 448 Summary 482
References 449 Summary of Key Terms 482
Solved Problems 482
Global Supply Chain Procurement Problems 483
11. and Distribution 450 Case Problem S11.1–Stateline Shipping and Transport
■ Global Supply Chain Procurement and Company 492
Distribution at Hershey’s 450 Case Problem S11.2–Global Supply Chain Management
Procurement 451 at Cantrex Apparel International 493
Outsourcing 452 References 494
E-Procurement 453
E-Marketplaces 454
■ Virtual Manufacturing at Palm Inc. 454
12. Forecasting 495
Reverse Auctions 454 ■ Forecasting at Hershey’s 495
Distribution 455 The Strategic Role of Forecasting in Supply Chain
Speed and Quality 455 Management 496
Internet Companies: Amazon.com 455 Supply Chain Management 496
■ Achieving Warehouse Efficiency and ■ Sharing Forecasts at Boeing and Alcoa 498
Sustainability at Genzyme Corporation 456 Quality Management 498
Distribution Centers and Warehousing 457 Strategic Planning 499
Postponement 457 ■ Supply Chain Forecasting at Heineken USA 499
■ Supply Chain Management at Royal Caribbean 457 Components of Forecasting Demand 499
Warehouse Management Systems 458 Time Frame 499
Vendor-Managed Inventory 459 Demand Behavior 500
■ Vendor-Managed Inventory (VMI) at Dell 459 Forecasting Methods 501
Collaborative Logistics 459 Forecasting Process 502
Distribution Outsourcing 460 ■ Forecasting at Dell 503
Transportation 460 Time Series Methods 503
■ Supply Chain Operations at Food Distributor Moving Average 504
Sysco Corporation 462 Weighted Moving Average 506
Internet Transportation Exchanges 463 Exponential Smoothing 507
The Global Supply Chain 463 Adjusted Exponential Smoothing 510
Obstacles to Global Supply Chain Management 464 Linear Trend Line 512
Duties, Tariffs, and Global Trading Groups 464 Seasonal Adjustments 514
Landed Cost 465 ■ The CPFR Process at Bayer Consumer Care
Web-Based International Trade Logistics Systems 465 in the EU 516
■ Achieving Global Sustainability at HP in Forecast Accuracy 517
China 467 Mean Absolute Deviation 517
Recent Trends in Globalization for U.S. Companies 468 Cumulative Error 519
China’s Increasing Role in the Global Supply Chain 468 Forecast Control 520
■ Brazil as a Potential Near Shore Supplier for ■ Forecasting Market Demand at NBC 523
the United States 470 Time Series Forecasting Using Excel 524
Reverse Globalization 470 Forecasting with OM Tools 526
■ Reverse Globalization at K’NEX 472 Regression Methods 526
Effects of Terrorism on Global Supply Chains 472 Linear Regression 527
Summary of Key Terms 473 Correlation 529
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Contents xiii

Regression Analysis with Excel 529 Solved Problems 580

Multiple Regression with Excel 530 Questions 582
■ Forecasting Airport Security Gate Arrivals at Problems 582
the Transportation Security Administration 533 Case Problem 13.1–The Instant Paper Clip Office
Summary 534 Supply Company 587
Summary of Key Formulas 534 Case Problem 13.2–The Texas Gladiators Apparel
Summary of Key Terms 535 Store Case 587
Solved Problems 535 Problem 13.3–Pharr Foods Company 588
Questions 537 References 589
Problems 538
Case Problem 12.1–Forecasting at State University 549
SUPPLEMENT 13
Case Problem 12.2–The University Bookstore Student 13. Operational Decision-Making Tools:
Computer Purchase Program 549
Case Problem 12.3–Cascades Swim Club 550 Simulation 590
Case problem 12.4–Forecasting Passenger Arrivals at the Monte Carlo Simulation 590
Gotham International Airport 551 Computer Simulation with Excel 594
References 552 Decision Making with Simulation 596
Areas of Simulation Application 598
Waiting Lines/Service 599
13. Inventory Management 553 Inventory Management 599
Production and Manufacturing Systems 599
■ Inventory Management at Mars 553
Capital Investment and Budgeting 599
The Role of Inventory in Supply Chain Management 555
Logistics 599
The Effects of Information Technology on Inventory
Service Operations 599
Management 556
Environmental and Resource Analysis 599
Inventory and Quality Management in the Supply Chain 556
Summary 600
The Elements of Inventory Management 557
Summary of Key Terms 600
Demand 557
Solved Problems 600
Inventory Costs 557
Questions 602
Inventory Control Systems 559
Problems 602
Continuous Inventory Systems 559
References 606
Periodic Inventory Systems 560
The ABC Classification System 560
■ Inventory Management at Dell 561
14. Sales and Operations Planning 607
■ Determining Supply Chain Strategy
by Evaluating Inventory Costs at ■ Sales and Operations Planning at
Hewlett-Packard 563 Hershey’s 607
Economic Order Quantity Models 564 The Sales and Operations Planning Process 608
The Basic EOQ Model 564 ■ Disney’s Magic Numbers 611
The Production Quantity Model 567 Strategies for Adjusting Capacity 612
Solution of EOQ Models with Excel 569 Level Production 612
Solution of EOQ Models with OM Tools 570 Chase Demand 612
Quantity Discounts 570 Peak Demand 613
Quantity Discounts with Constant Carrying Cost 571 Overtime and Undertime 613
Quantity Discount Model Solution with Excel 573 Subcontracting 613
Reorder Point 573 Part-Time Workers 613
Safety Stocks 574 ■ Meeting Demand for Panettones 613
Service Level 574 Backlogs, Backordering, and Lost Sales 614
Reorder Point with Variable Demand 575 Strategies for Managing Demand 614
Determining the Reorder Point with Excel 576 ■ The Bullwhip Effect in a Slowdown 615
■ Establishing Inventory Safety Stocks at Quantitative Techniques for Aggregate Planning 616
Kellogg’s 577 Pure Strategies 616
Order Quantity for a Periodic Inventory System 577 General Linear Programming Model 618
Order Quantity with Variable Demand 578 Mixed Strategies 619
Determining the Order Quantity for the Fixed-Period The Transportation Method 623
Model with Excel 578 Other Quantitative Techniques 623
Summary 579 The Hierarchical Nature of Planning 626
Summary of Key Formulas 580 Collaborative Planning 628
Summary of Key Terms 580 Available-to-Promise 628
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xiv Contents

Aggregate Planning for Services 630 Item Master File 687

Revenue Management 631 ■ OM Dialogue: Vignesh Ramachandran,
Overbooking 631 Systems Auditor 687
Fare Classes 631 The MRP Process 688
■ Revenue Management at Harrah’s 631 Lot Sizing in MRP Systems 692
Single Order Quantities 632 Economic Order Quantity 692
Summary 634 Periodic Order Quantity 692
Summary of Key Terms 634 MRP Outputs 694
Solved Problems 635 Capacity Requirements Planning (CRP) 695
Questions 636 Calculating Capacity 696
Problems 637 Load Profiles 697
Case Problem 14.1–Seats for Sale 642 Overloads 698
Case Problem 14.2–Erin’s Energy Plan 643 Load Leveling 699
References 644 Relaxing MRP Assumptions 700
Enterprise Resource Planning (ERP) 700
■ OM Dialogue: John Snead, Financial
SUPPLEMENT 14
14. Operational Decision-Making Tools: Planning and Analysis 701
ERP Modules 702
Linear Programming 645 Finance/Accounting 702
Model Formulation 646
Sales/Marketing 703
Graphical Solution Method 648
Production/Materials Management 703
Linear Programming Model Solution 652
Human Resources 703
The Simplex Method 652
ERP Implementation 704
Slack and Surplus Variables 653
■ Under Armour at the Top of Their Game
Solving Linear Programming Problems with Excel 654
with ERP 704
Sensitivity Analysis 655
Analyze Business Processes 706
Sensitivity Ranges 656
Choose Modules to Implement 706
Summary 658
Align Level of Sophistication 706
Summary of Key Terms 658
Finalize Delivery and Access 707
Solved Problems 658
Link with External Partners 707
Questions 659
Customer Relationship Management (CRM) 707
Problems 659
Supply Chain Management (SCM) 707
Case Problem S14.1–Mosaic Tile Company 672
Product Lifecycle Management (PLM) 708
Case Problem S14.2–Summer Sports Camp at
Connectivity, Integration, and Services 708
State University 673
Summary 709
Case Problem S14.3–Spring Garden Tools 674
Summary of Key Terms 710
Case Problem S14.4–Walsh’s Juice Company 674
Questions 710
Case Problem S14.5–Julia’s Food Booth 675
Solved Problems 711
Case Problem S14.6–The Sea Village Amusement Park 676
Problems 712
References 677
Case Problem 15.1–Just ERP 717
Case Problem 15.2–Hosuki 717
References 718
15. Resource Planning 678
■ Resource Planning at Hershey’s 678
Material Requirements Planning (MRP) 679
16. Lean Systems 720
When to Use MRP 680 ■ Lean Production at Mars and Nestlé 720
Dependent Demand 680 The Basic Elements of Lean Production 722
Discrete Demand 681 Flexible Resources 723
Complex Products 681 Cellular Layouts 724
Erratic Orders 682 The Pull System 726
Assemble-to-Order 682 Kanbans 726
Master Production Schedule 682 Small Lots 730
Product Structure File 683 Quick Setups 730
Phantom Bills 685 Uniform Production Levels 732
K-Bills 685 ■ Production On-Demand at Conmed 735
Modular Bills 685 Quality at the Source 735
Time-Phased Bills 686 Visual Control 735
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Kaizen 735 Loading 757

■ Universal Studios Holds “Treasure Hunt” The Assignment Method of Loading 758
Kaizen Event 737 Sequencing 761
Jidoka 737 Sequencing Jobs Through One Process 762
Total Productive Maintenance 738 Sequencing Jobs Through Two Serial Processes 764
Supplier Networks 739 Guidelines for Selecting a Sequencing Rule 766
The Benefits of Lean Production 740 ■ Patient Scheduling 767
Implementing Lean Production 741 Monitoring 768
Drawbacks of Lean Production 742 Gantt Charts 768
■ OM Dialogue: Nicole Sanders, Commodity Input/Output Control 769
Manager 742 ■ OM Dialogue: Margie Deck, Plant
■ Toyota’s Quality Problems 743 Manager 772
Lean Services 744 Advanced Planning and Scheduling Systems 772
Lean Retailing 745 ■ When Good Genes Make Good Schedules 774
Lean Banking 745 Theory of Constraints 774
Lean Health Care 745 Drum-Buffer-Rope 775
Leaning the Supply Chain 745 Process vs. Transfer Batch Sizes 775
Lean Six Sigma 746 Employee Scheduling 777
Lean and the Environment 746 Automated Scheduling Systems 779
Value Stream Mapping (VSM) 746 Summary 779
Summary 748 Summary of Key Formulas 780
Summary of Key Formulas 748 Summary of Key Terms 780
Summary of Key Terms 749 Solved Problems 780
Questions 749 Questions 781
Problems 750 Problems 782
Case Problem 16.1–The Blitz is On 751 Case Problem 17.1–America Reads, America Counts 786
Case Problem 16.2–Where’s My Cart? 751 Case Problem 17.2–From a Different Perspective 787
References 753 References 788

17. Scheduling 755 Appendix A Normal Curve Areas 789

■ Scheduling at Ghirardelli’s 755 Solutions to Selected Odd-Numbered Problems 790
Objectives in Scheduling 757 Index 798
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Preface

CHANGES IN THE SEVENTH EDITION

This new seventh edition is organized around the increasingly important and prevalent topic of operations
as the creation of value along the supply chain. We describe how every chapter topic fits within a supply
chain framework in a company or organization in a global operating environment. To this end two
chapters deal directly with supply chain management: Chapter 10, Supply Chain Management Strategy
and Design, and Chapter 11, Global Supply Chain Procurement and Distribution. However, every chapter
includes material relating the chapter topic(s) to supply chain management. In addition, Chapter 5,
Service Design, reflects the expanding presence and importance of service companies in operations
management. We have also added new material in almost every chapter on an increasingly important
global topic: sustainability.
To help us show how the OM topics in this new edition all fit together within a supply chain
framework, we open each chapter with a specific example about one product: chocolate. Chocolate is
an ideal product to use as an example to introduce the various OM topics in this text because its supply
chain is global, and its production process is straightforward and interesting.
In addition to opening each chapter with a chocolate example, this new edition also includes
numerous new “Along the Supply Chain” boxes within each chapter that describe real-world business
applications of OM topics. This edition includes discussion questions that accompany many of these
boxes for in-class or online discussion.
Chapter 1 focuses on examples of excellence in operations management and on the strategic design
of operations and supply chain management. Chapter 2, Quality Management, emphasizes quality
management systems and has expanded coverage of Six Sigma, including the Six Sigma process, Six
Sigma tools, Six Sigma and profitability, and lean Six Sigma.
Chapter 4, has new sections on Design for the Environment. Chapter 5, Service Design, includes
discussions of the service economy, characteristics of services, the service design process, and tools for
service design. A streamlined waiting line analysis section is included in this chapter. Chapter 6 emphasizes
process analysis skills, and Chapter 7 contains examples of various service layouts.
Both Chapter 8, Human Resources, and Chapter 9, Project Management, emphasize diversity in the
workplace and global diversity issues. Chapter 10, Supply Chain Management Strategy and Design, and
Chapter 11, Supply Chain Procurement and Distribution, both focus on creating value along the supply
chain and include new material on sustainability. Chapter 11 includes a section on China’s increasing role
in the global supply chain. Chapter 12, Forecasting, and Chapter 13, Inventory Management, both
emphasize the important role of these topics in operations and supply chain management.
Chapter 14 introduces Sales and Operations Planning into the aggregate planning process. Chapter 15,
updates resource planning with discussions of SOA (service oriented architecture) and PLM (product
lifecycle management). Chapter 16, has sections on leaning the supply chain, lean services, value
stream mapping, and lean and the environment.

MAJOR TEXT THEMES

OPERATIONS STRATEGY: CREATING VALUE ALONG

THE SUPPLY CHAIN
A company’s plan for being competitive is its strategy. The success of a strategic plan is largely
determined by how well a company coordinates all of its internal processes, including operations, with
its suppliers and customers to produce products and services that provide value. Throughout this book,
we try to show how the functions and processes described in each chapter fit into a company’s strategic
E1FPREF01.qxd 8/5/10 12:02 PM Page xvii

Preface xvii

design for the creation of value. In each chapter, we emphasize the need for considering the overall
strategic implications of particular operating decisions.
One way in which companies can gain a competitive edge is by deploying the basic functions of
operations management in a more effective manner than their rivals, e.g., build a better supply chain.
Therefore, we give literally dozens of examples that explain how companies deploy specific operations
functions along their supply chain to provide value and make them successful. Throughout the book,
“Along the Supply Chain” boxes describe how successful companies have gained a competitive edge
through operations.

GLOBAL OPERATIONS
Companies and organizations today must increasingly compete in a global marketplace. The
establishment of new trade agreements between countries, innovations in information technology, and
improvements in transport and shipping are just a few of the factors that have enabled companies to
develop global supply chains. The opening of the global marketplace has only served to introduce more
competitors and make competition tougher, thus making strategic supply chain design even more
important for achieving success. In this edition, we have sought to introduce this global aspect of
operations into our discussion at every opportunity. In each chapter, we include examples that touch on
the impact of global operations relative to the topic under discussion, and we discuss how globalization
affects supply chain management.

SUSTAINABILITY
Environmental concerns are changing every aspect of operations and supply chain management from
product and service design, to supplier sourcing, to manufacture and delivery. In virtually every chapter of
this text we address the impact of “sustainability” (i.e., meeting present needs without sacrificing future
resources) and give examples of “green practices”. For example, in Chapter 4 on product design, we
discuss the design for environment lifecycle, eco-labeling, recycling and reuse, and sustainable operations.
In Chapter 6 on processes we discuss green manufacturing; in Chapter 7 on facilities we discuss LEED
certified green buildings; in Chapter 10 on supply chain management we discuss green sourcing; and in
Chapter 16 on lean systems we discuss lean and the environment.

SERVICES AND MANUFACTURING

We have attempted to strike a balance between manufacturing and service operations in this book.
Traditionally, operations management was thought of almost exclusively in a manufacturing context.
However, in the United States and other industrialized nations, there has been a dramatic shift toward
service industries. Thus, managing service operations is an important area of study. In many cases,
operations management processes and techniques are indistinguishable between service and
manufacturing. However, in many other instances, service operations present unique situations and
problems that require focused attention and unique solutions. We have tried to reflect the uniqueness
of service operations by providing focused discussions on service operations throughout the text. For
example, in Chapter 2 on quality management we specifically address the importance of quality
management in service companies, in Chapter 5 on Service Design we emphasize the differences in
design considerations between manufacturing and services, and in Chapter 14 we discuss aggregate
planning in services. One type of service examined in virtually every chapter in the book is health
care.

QUALITATIVE AND QUANTITATIVE PROCESSES

We have also attempted to strike a balance between the qualitative (or managerial) aspects of operations
management and the quantitative aspects. In the contemporary world of operations management, the
quantitative and technological aspects are probably more important than ever. The ability to manage
people and resources effectively, to motivate, organize, control, evaluate, and adapt to change, have
become critical to competing in today’s global markets. Thus, throughout this book we seek to explain
and clearly demonstrate how the successful operations manager manages and how to use quantitative
techniques and technology when they are applicable.
However, we attempt to present these quantitative topics in a way that’s not overly complex or
mathematically intimidating. Above all, we want to show how the quantitative topics fit in with, and
E1FPREF01.qxd 8/5/10 12:02 PM Page xviii

xviii Preface

complement, the qualitative aspects of operations management. We want you to be able to see both “the
forest and the trees.”

TEACHING AND LEARNING SUPPORT FEATURES

This text is accompanied by many features and supplements both in the text and online for students and
instructors.

PEDAGOGY IN THE TEXTBOOK

“Along the Supply Chain” Boxes
These boxes are located in every chapter in the text. They describe the application of operations in a
real world company, organization or agency related to specific topics in each chapter. They emphasize
how companies effectively compete with operations management in the global marketplace. The
descriptions of operations at actual companies in these boxes help the student understand how specific
OM techniques and concepts are used by companies, which also make the topics and concepts easier to
understand. In addition, we have added discussion questions to these boxes to help students and
teachers “connect” the example to the chapter topics.

OM Dialogue Boxes
These boxes include dialogues with recent college business school graduates who are working in
operations management in the real world. They describe how they apply various OM topics in the text
in their own jobs and the value of their own OM training in college. This provides students with a
perspective on the benefit of studying operations management now and its future benefit.

Marginal Notes
Notes are included in the margins that serve the same basic function as notes that students
themselves might write in the margin. They highlight important topics, making it easier for students
to locate them; they summarize important points and key concepts and provide brief definitions of
key terms.

Examples
The primary means of teaching the various quantitative topics in this text is through examples. These
examples are liberally distributed throughout the text to demonstrate how problems are solved in a
clear, straightforward approach to make them easier to understand.

Solved Example Problems

At the end of each chapter, just prior to the homework questions and problems, there is a section with
solved examples to serve as a guide for working the homework problems. These examples are solved in
a detailed step-by-step manner.

Summary of Key Formulas

These summaries at the end of each chapter and supplement include all of the key quantitative formulas
introduced in the chapter in one location for easy reference.

Summary of Key Terms

Located at the end of each chapter these summaries provide a list of key terms introduced in that
chapter and their definitions in one convenient location for quick and easy reference.

Homework Problems, Questions and Cases

Our text contains a large number of end-of-chapter exercises for student assignments. There are over 560
homework problems and 55 more advanced end-of-chapter case problems. There are also 420 end-of-
chapter discussion questions including new questions. Answers to selected odd-numbered homework
problems are included in the back of the book. As we mention in the following “Online Resources for
Instructors” section, Excel spreadsheet solution files are available to the instructor for the majority of the
end-of-chapter problems and cases.
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Preface xix

ONLINE RESOURCES FOR STUDENTS,

WWW.WILEY.COM/ COLLEGE/RUSSELL
No other innovation has affected operations management in the past few years as much as computer
technology and the Internet, and this is no less true in education. Therefore, we make full use of this
technology as a learning and teaching medium in the courses we teach and in our text. Students can link
to the text Web site where an exciting set of Internet resources have been compiled.
The text web site contains animated demo problems, interactive applications and exercises, and direct
links to other sources on the Internet. These various resources and learning tools are organized by chapter
and are flagged in the textbook with a web icon. Here are some of the items found on the text web site.
Web links for companies and concepts discussed in each chapter can be accessed online. These
provide enrichment for those students who want to learn more about a topic, and serve as a valuable
resource for student assignments and papers.
Virtual Tours provided for each chapter bring operations management to life. Selected tours are
accompanied by a set of questions directly related to concepts discussed in the chapter.
Internet Exercises provide up-to-date access to current issues in operations. These add immediacy
to classroom discussions and ensure that operations management topics remain relevant to the student.
Practice Quizzes are provided online where students can get immediate feedback on their progress.

EXCEL FILES OF EXHIBITS

Excel is used extensively throughout the text to solve various quantitative problems and many Excel
illustrations are provided throughout the text.

Exhibit 12.1

Every Excel spreadsheet used to prepare the examples in the text is available on the text Web site for
students and instructors. They are organized by chapter and are listed by their exhibit number. Above is
an example of Exhibit 12.1 from Chapter 12 (Forecasting). Notice the file name is simply the Exhibit
number (i.e., Exhibit 12.1.xls). Please look in each file carefully. In many cases several sheets in one file
have been used to display different parts of a problem, such as a graphical solution as well as a numerical
solution. Example files are also available for MS Project files in Chapter 9.

ONLINE RESOURCES FOR INSTRUCTORS

www.wiley.com/college/russell

Instructor’s Manual The Instructor’s Manual, updated by the authors, features sample course syllabi,
chapter outlines, teaching notes, experiential exercises, alternate examples to those provided in the text,
pause and reflect questions for classroom discussion, practice quizzes, videos guide, projects,
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xx Preface

Test Bank Fully revised from the previous edition by Scott Hedin of Gonzaga University this test bank
consists of true/false, multiple-choice, short answer, and essay questions. All questions have been
carefully accuracy-checked to ensure the highest quality of materials for our customers. The questions
are also available electronically on the textbook support site. The Computerized Test Bank, for use on a
PC running Windows, is from a test-generating program that allows instructors to modify and add
questions in order to customize their exams.

PowerPoint Presentation Slides The PowerPoint presentation slides, revised by Lance Matheson of
Virginia Tech, include outlines for every chapter, exhibits from the text, and additional examples,
providing instructors with a number of learning opportunities for students. The PowerPoint slides can be
accessed on the instructor’s portion of the 7th edition Web site and lecture notes accompany each slide.

Instructor Solutions Manual The Instructor Solutions Manual, updated by the authors, features
detailed answers to end-of-chapter questions, homework problems, and case problems.

Excel Homework Solutions and Excel Exhibit Files This new edition includes of 560 end-of-chapter
homework problems and 55 case problems. Excel solution files for the instructor are provided on the
Web site for the majority of these problems. In addition, Microsoft Project solution files are provided for
most of the homework problems in Chapter 9 (Project Management). Excel worksheets for class
handouts or homework assignments are provided for QFD, process flow charts, MRP matrices, and
others. Excel exhibit files for every example in the text solved with Excel are provided as templates for
solving similar problems for both student and instructor and are available on the text website.

Web Quizzes These online quizzes, revised by Scott Hedin of Gonzaga University vary in level of
difficulty and are designed to help your students evaluate their individual progress through a chapter.
Web quizzes are available on the student portion of the Web site. Here students will have the ability to
test themselves with 15–20 questions per chapter that include true-false and multiple choice questions.

OM Tools OM Tools is an Excel add-in designed to accompany the Russell/Taylor, Operations

Management, 7th edition text. The software consists of 18 modules with over 60 problem types. OM
Tools is easy to use and interpret, and is accompanied by a help file with text references.

Virtual Tours Are online tours of service and production facilities. These are made available to students
on the student portion of the website, along with questions that help students apply the concepts they’ve
learned in the text to real-world companies. Answers to the Virtual Tours questions are available to
professors on the instructor Web site.

Wiley Operations Management Video Series, Winners of the Malcolm Baldrige Award Wiley Video
Series for Operations Management: Winners of the Malcolm Baldrige Award. Clips feature interviews and
footage from the inside of major companies. These videos are accompanied by a video guide, found on
the 7th edition instructor Web site. Please go to www.wiley.com/college/russell, then to the Supplements
section, to get information on how to access a DVD of the videos.

OM Student Videos Offered on DVD and on the instructor companion website, we offer a collection of
videos done by students that provide excellent examples of the concepts illustrated in the text. These
videos can be accessed on the instructor companion Website. Please go to www.wiley.com/college/
russell, then to the Supplements section, for more information.

Business Extra Select Business Extra Select enables you to add copyright-cleared articles, cases, and
readings from such leading business resources as INSEAD, Ivey, Harvard Business School Cases,
Fortune, The Economist, The Wall Street Journal, and more. You can create your own custom CoursePack,
combining these resources with content from Wiley’s business textbooks, your own content such as
lecture notes, and any other third-party content.

ONLINE RESOURCES FOR INSTRUCTORS

WWW.WILEY.COM/COLLEGE/RUSSELL

WileyPLUS
WileyPLUS is an innovative, research-based, online environment for effective teaching and learning.
E1FPREF01.qxd 8/5/10 12:02 PM Page xxi

Preface xxi

What do students receive with WileyPLUS?

A Research-based Design. WileyPLUS provides an online environment that integrates relevant
resources, including the entire digital textbook, in an easy-to-navigate framework that helps students
study more effectively.
• WileyPLUS adds structure by organizing textbook content into smaller, more manageable “chunks”.
• Related media, examples, and sample practice items reinforce the learning objectives.
• Innovative features such as calendars, visual progress tracking and self-evaluation tools improve
time management and strengthen areas of weakness.
One-on-one Engagement. With WileyPLUS for Russell/Taylor, Operations Management, 7th ed. text,
students receive 24/7 access to resources that promote positive learning outcomes. Students engage
with related examples (in various media) and sample practice items, including:
• Animations based on key illustrations in each chapter
• Office Hours Videos, created by Jearl Walker, including: video sample problems, video discussions
of key concepts and topics, and math help videos
• Concept Simulations
• Interactive LearningWare problems
• Physics Simulations (interactive)
• Physics Demonstrations (video)
• Links to real world application examples from The Flying Circus of Physics
• Guided Online (GO) Tutorial problems
• Concept Questions
Measurable Outcomes. Throughout each study session, students can assess their progress and gain
immediate feedback. WileyPLUS provides precise reporting of strengths and weaknesses, as well as
individualized quizzes, so that students are confident they are spending their time on the right things.
With WileyPLUS, students always know the exact outcome of their efforts.

What do instructors receive with WileyPLUS?

WileyPLUS provides reliable, customizable resources that reinforce course goals inside and outside of
the classroom as well as visibility into individual student progress. Pre-created materials and activities
help instructors optimize their time:
Customizable Course Plan: WileyPLUS comes with a pre-created Course Plan designed by a subject
matter expert uniquely for this course. Simple drag-and-drop tools make it easy to assign the course
plan as-is or modify it to reflect your course syllabus.
Pre-created Activity Types Include:
• Questions
• Readings and resources
• Presentation
• Print Tests
• Concept Mastery
• Project
Course Materials and Assessment Content:
• Lecture Notes PowerPoint Slides
• Classroom Response System (Clicker) Questions
• Image Gallery
• Instructor’s Manual
• Gradable Reading Assignment Questions (embedded with online text)
• Question Assignments: all end-of-chapter problems coded algorithmically with hints, links to text,
whiteboard/show work feature and instructor controlled problem solving help.
• Testbank
Gradebook: WileyPLUS provides instant access to reports on trends in class performance, student use
of course materials and progress towards learning objectives, helping inform decisions and drive
classroom discussions.

WileyPLUS. Learn More. www.wileyplus.com.

Powered by proven technology and built on a foundation of cognitive research, WileyPLUS has
enriched the education of millions of students, in over 20 countries around the world.
E1FLAST01.qxd 8/5/10 12:07 PM Page xxii

Acknowledgments

T
he writing and revision of a textbook, like any large project, requires the help and creative
energy of many people, and this is certainly not the exception. We especially appreciate the
confidence, support, help, and friendship of our editor at Wiley. We also thank the Wiley staff
members who helped with our book including:

Sarah Vernon, Assistant Editor; Lise Johnson, Executive
Editor; Alison Morris, Media Editor; Elena Santa-
Maria, Associate Media Editor; Karolina Zarychta,
Marketing Manager; Anna Melhorn, Production Editor;
and numerous other people who work behind the scenes
to whom we never saw or talked. We are indebted to the
reviewers of the text including: Robert Donnelly;
Robert Aboolian, California State University San
Marcos; Ajay Aggarwal, Millsaps College; Fred
Anderson, Indiana University of Pennsylvania; Beni
Asllani, University of Tennessee Chattanooga; Anteneh
Ayanso, University of Connecticut, Storrs; Brent Bandy,
University of Wisconsin, Oshkosh; Joe Biggs,
California Polytechnic State University; Tom
Bramorski, University of Wisconsin, Whitewater;
Kimball Bullington, Middle Tennessee State University;
Cem Canel, University of North Carolina, Wilmington;
Janice Cerveny, Florida Atlantic University; Robert
Clark, SUNY Stony Brook; Ajay Das, Baruch College
CUNY; Kathy Dhanda, University of Portland; Susan
Emens, Kent State University; Yee Fok, University of
New Orleans; Phillip Fry, Boise State University; Mark
Gershon, Temple University; Robert Greve, Oklahoma
State University; Robert Frese, Maryville University;
Jay Jayaram, University of South Carolina, Columbia;
Vaidy Jayaraman, University of Miami; Serge Karalli,
DePaul University; William Kime, University of New
Mexico; Peter Klein, Ohio University; Howard Kraye,
University of New Mexico, Albuquerque; John Kros,
East Carolina University; Gopalan Kutty, Mansfield
University; Bingguang Li, Albany State University;
Royce Lorentz, Slippery Rock University; Sheldon Lou,
California State University, San Marcos; Ken Mannino,
Milwaukee School of Engineering; Lance Matheson,
Virgina Tech; Duncan McDougall, Plymouth State
University; Jaideep Motwani, Grand Valley State
University; Hilary Moyes, University of Pittsburgh;
Barin Nag, Towson University; Ozgur Ozluk, San
Francisco State University; Amer Qureshi, University of
Texas Arlington; Jim Robison, Sonoma State
University; Raj Selladurai, Indiana University
Northwest; Robert Setaputro, University of Wisconisin,
Milwaukee; Jacob Simons, Georgia Southern
University; Marilyn Smith, Winthrop University; Donna
Stewart, University of Wisconsin, Stout; Donald Stout,
St. Martin’s College; Dothang Truong, Fayetteville
State University; Elizabeth Trybus, California State
University, Northridge; Ray Vankataraman,
Pennsylvania State University, Erie; Timothy Vaughan,
University of Wisconsin, Eau Claire; Mark
Vrobelfski, University of Arizona; Gustavo Vulcano, New
York University; Kevin Watson, University of New
Orleans; Michel Whittenberg, University of Texas,
Arlington; Hulya Yazici, University of Wisconsin, La
Crosse; Jinfeng Yue, Middle Tennessee State
University; and Xiaoqun Zhang, Pennsylvania State
University, Harrisburg. We also thank the reviewers of
the sixth edition including: Ajay Aggarwal, Millsaps
College; Binguang Li, Albany State University;
Christina McCart, Roanoke College; Cuneyt Altinoz,
East Carolina University; Dana Johnson, Michigan
Technical University; David Frantz, Indiana University;
Donald Stout, St. Martin’s University; Doug Hales,
University of Rhode Island; Drew Stapleton, University
of Wisconsin, LaCrosse; Fataneh Taghaboni-Dutta,
University of Michigan, Flint; Ike Ehie, Kansas State
University; John Hebert, University of Akron; John
Kros, East Carolina University; Kaushik Sengupta,
Hofstra University; Larry White, Eastern Illinois
University; Lewis Coopersmith, Rider University;
Mohammad Sedaghat, Fairleigh Dickinson University;
Morgan Henrie, University of Alaska, Anchorage; Phil
Fry, Boise State University; Robert Aboolian, California
State University, San Marcos; Robert Clark, SUNY,
Stony Brook; Scott Hedin, Gonzaga University; Susan
Emens, Kent State University, Trumbull; Tom Wilder,
California State University, Chico; Zhiwei Zhu,
University of Louisiana, Lafayette.

They contributed numerous suggestions, comments, and ideas that dramatically improved and
changed this edition. We would also like to thank David Frantz, Indiana University for his insightful
suggestions about the book title. We offer our sincere thanks to these colleagues and hope that they can
take some satisfaction in their contribution to our final product. We wish to thank our students who
have class-tested, critiqued, and contributed to the first six editions and this seventh edition from a
consumer’s point of view. We thank colleagues Kellie Keeling, University of Denver, for her
extensive work on OM Tools; Laura Clark, Virginia Tech, for her help with WileyPLUS; Anita Lee
Post, University of Kentucky, who accuracy checked all of the supplements for this text; and
Franklin Warren, PhD student, for his assistance in numerous capacities. We are especially grateful
to Tracy McCoy and Sylvia Seavey at Virginia Tech for their unstinting help, hard work, and patience.

R.S.R. and B.W.T.

E1C01.qxd 8/2/10 10:18 AM Page 1

PART I Chapter
Operations Management

Web resources for

this chapter include
OM Tools Software
Introduction to
1
Internet Exercises
Online Practice Quizzes Operations and
Lecture Slides in
PowerPoint
Virtual Tours
Supply Chain
Excel Exhibits
Company and Resource
Weblinks
Management
www.wiley.com/college/russell In this chapter, you will learn about . . .
The Operations Function

The Evolution of Operations and

Supply Chain Management

Globalization

Productivity and Competitiveness

Strategy and Operations

Organization of This Text

Learning Objectives of This Course

Operations and Supply Chain

Management FOR CHOCOLATE

T
HROUGHOUT THIS TEXT, we’ll use chocolate to introduce the topics to
be covered in each chapter. The cacao bean, from which chocolate is
made, is the third most traded raw material in the world. We’ll trace
the path of cacao beans through the supply chain from South America and
the Ivory Coast of Africa through the roasters, brokers, and importers, to
global factories and regional distribution centers, to local stores and other
outlets that sell the myriad types of chocolate products. We’ll look at large
and small companies, specialty products, mass-produced products, and
services. We’ll cover design and quality, processes and technology, planning
and control, supply chains, and more. At each stage we’ll illustrate how the
principles of operations and supply chain management can be applied. Join
us on this journey through the world of chocolate.
Another random document with
no related content on Scribd:
 DECORATIONS awarded to Norman Prince by the French Government
CROIX DE GUERRE (Red and green ribbon)
Star, won for being cited in L’Ordre du Jour of his Division for having been the only
one of twenty-five aviators to reach Douai in 1915.
First Palm, won for being cited in L’Ordre du Jour of the French Army for having
brought down an enemy avion.
Second Palm, for having brought down two enemy avions on the same day—at
the same time receiving the
Third Palm, cited in L’Ordre du Jour for having brought down a fourth enemy avion,
and for meritorious service in a raid on the Mauser ammunition works at
Oberndorf—at the same time receiving the
MÉDAILLE MILITAIRE (Yellow and green ribbon)
CROIX DE LA LÉGION D’HONNEUR (Red ribbon)

Rev. Dr. Endicott Peabody of the Groton School wrote: “I must tell
you how deeply Mrs. Peabody and I sympathize with you in
Norman’s death. He gave his life in a great cause. That will be a
comfort to you both, and he met his death with the courage that is
characteristic of his family. Even with these considerations, I realize
that your hearts must be heavy. It will please you to know that one of
Norman’s classmates at Groton, who had followed his career in
France with keen interest, has sent a contribution toward a memorial
that he desires established at the school.”
Speaking for the Harvard Class of 1909 of which Norman was a
member, its Secretary, Francis A. Harding, said: “On behalf of the
Harvard Class of 1909, I wish to express the very deep regret which
every Harvard man, and especially every classmate of Norman’s,
has felt after reading the announcement of his death in France. To
those of us who knew Norman intimately, the news of his death
comes as a distinct shock, and every member of our class feels
proud to have known and to have been affiliated with one who had
the courage to give in such a noble way everything he possessed to
the great cause in which he believed.”
From South Carolina Senator Tillman wrote: “Your son gave his
young life in defense of what all of us know is a sacred cause. He
was a twentieth century Lafayette, a modern knight errant whose
statue will yet grace the capital of France. Prince? Yes, a Prince
indeed—‘sans peur et sans reproche.’”
Many other thoughtful and tender messages came from others,
friends and strangers, at home and abroad, testifying their
commingled sorrow and admiration. Senator Henry Cabot Lodge
telegraphed from Washington this tribute:

“Nothing could have been more gallant than his life—

nothing finer than his death in a great cause, dear to his
heart.”

An eloquent and fitting epitaph!

TO NORMAN PRINCE
From a Boston Boy, in France, American Ambulance Field Service,
October 20, 1916.

Gone is the honored boy bird

He’ll fly no more for France,
His spirit though,—a silent word
That over all the Earth is heard,—
Commands her friends Advance!

His courage and devotion tried

Must all the world convince
He was, as all of us decide,
And France, for love of whom he died,
In name and deed—a Prince.

The Riverside Press

CAMBRIDGE. MASSACHUSETTS
U. S. A
*** END OF THE PROJECT GUTENBERG EBOOK NORMAN
PRINCE ***

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