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Brief Contents
1 Using Operations to Create Value 1
Supplement A Decision Making 29
Part 1 Managing Processes 49

2 Process Strategy and Analysis 49
3 Quality and Performance 95
4 Capacity Planning 135
Supplement B Waiting Lines 159
5 Constraint Management 177
6 Lean Systems 207
7 Project Management 237
Part 2 Managing Customer Demand 275

8 Forecasting 275
9 Inventory Management 317
Supplement C Special Inventory Models 359
10 Operations Planning and Scheduling 373
Supplement D Linear Programming 409
11 Resource Planning 437
Part 3 Managing Supply Chains 483

12 Supply Chain Design 483
13 Supply Chain Logistic Networks 511
14 Supply Chain Integration 543
15 Supply Chain Sustainability 577
Appendix Normal Distribution 599
References 601
Glossary 609
Name Index 623
Subject Index 627
Myomlab Supplements
Supplement E Simulation E-1
Supplement F Financial Analysis F-1
Supplement G Acceptance Sampling Plans G-1
Supplement H Measuring Output Rates H-1
Supplement I Learning Curve Analysis I-1
Supplement J Operations Scheduling J-1
Supplement K Layout K-1
vii
This page intentionally left blank
Contents
Preface xv Decision Trees 37
Learning Goals in Review 39
MyOMLab Resources 39
1 Using Operations Key Equations 40
Key Terms 40
to Create Value 1 Solved Problems 40
Disney 1 Problems 43
Role of Operations in an Organization 3
Historical Evolution and Perspectives 4 Part 1 Managing Processes 49
A Process View 4
How Processes Work 5
Nested Processes 5 2 Process Strategy and
Service and Manufacturing Processes 5 Analysis 49
A Supply Chain View 6
Core Processes 7 McDonald’s Corporation 49
Support Processes 7 Process Structure in Services 52
Supply Chain Processes 8 Customer-Contact Matrix 52
Operations Strategy 8 Service Process Structuring 53
Corporate Strategy 9 Process Structure in Manufacturing 54
Market Analysis 11 Product–Process Matrix 54
Competitive Priorities and Capabilities 11 Manufacturing Process Structuring 55
Order Winners and Qualifiers 13 Production and Inventory Strategies 55
Using Competitive Priorities: An Airline Example 14 Layout 56
Identifying Gaps between Competitive Priorities and Process Strategy Decisions 56
Capabilities 14 Customer Involvement 56
Addressing the Trends and Challenges in Operations Managerial Practice 2.1 Customer Involvement at eBay 57
Management 16 Resource Flexibility 58
Productivity Improvement 16 Capital Intensity 58
Global Competition 17 Strategic Fit 60
Managerial Practice 1.1 Japanese Earthquake and Its Supply Decision Patterns for Service Processes 60
Chain Impact 19 Decision Patterns for Manufacturing Processes 61
Ethical, Workforce Diversity, and Environmental Gaining Focus 61
Issues 20 Strategies for Change 62
Designing and Operating Processes and Supply Process Reengineering 62
Chains 20 Process Improvement 63
Adding Value with Process Innovation 21 Process Analysis 63
Learning Goals in Review 22 Documenting and Evaluating the Process 64
MyOMLab Resources 22 Flowcharts 64
Key Equations 22 Work Measurement Techniques 66
Key Terms 23 Process Charts 68
Solved Problems 23 Data Analysis Tools 70
Discussion Questions 24 Redesigning and Managing Process
Problems 25 Improvements 75
Active Model Exercise 27 Questioning and Brainstorming 75
Video Case Using Operations to Create Value at Crayola 27 Benchmarking 76
Case Chad’s Creative Concepts 28 Implementing 76
Supplement A Decision Making 29
Key Terms 79
Break-Even Analysis 29
Solved Problems 79
Evaluating Services or Products 30
Discussion Questions 83
Evaluating Processes 31
Problems 84
Preference Matrix 33
Active Model Exercise 90
Decision Theory 34
Video Case Manufacturing Process Structure Choices 91
Decision Making under Certainty 35
Case Custom Molds, Inc. 92
Decision Making under Uncertainty 35
Case José’s Authentic Mexican Restaurant 94
Decision Making under Risk 36
ix
x Contents
Step 3: Develop Alternatives 144

3 Quality and Performance 95 Step 4: Evaluate the Alternatives 144
Tools for Capacity Planning 146
QVC 95 Waiting-Line Models 146
Costs of Quality 96 Simulation 147
Prevention Costs 97 Decision Trees 147
Appraisal Costs 97 Learning Goals in Review 147
Internal Failure Costs 97 MyOMLab Resources 147
External Failure Costs 97 Key Equations 148
Ethical Failure Costs 97 Key Terms 148
Total Quality Management and Six Sigma 98 Solved Problems 148
Total Quality Management 98 Discussion Questions 150
Managerial Practice 3.1 Quality at Verizon Wireless 100 Problems 150
Six Sigma 101 Video Case Gate Turnaround at Southwest Airlines 156
Acceptance Sampling 102 Case Fitness Plus, Part A 157
Statistical Process Control 103
Variation of Outputs 103
Control Charts 106
Supplement B Waiting Lines: 159
Structure of Waiting-Line Problems 160
Control Charts for Variables 107
Customer Population 160
Control Charts for Attributes 111
The Service System 161
Process Capability 114
Priority Rule 163
Defining Process Capability 114
Probability Distributions 163
Using Continuous Improvement Process to
Arrival Distribution 163
Determine the Capability of a Process 116
Service Time Distribution 164
International Quality Documentation Standards and
Using Waiting-Line Models to Analyze Operations 164
Awards 117
Single-Server Model 165
The ISO 9001:2008 Documentation Standards 117
Multiple-Server Model 167
The ISO 140001:2004 Environmental Management
Little’s Law 168
System 117
Finite-Source Model 169
Benefits of ISO Certification 118
Waiting Lines and Simulation 170
Benefits of the Baldrige Performance Excellence
SimQuick 170
Program 118
Decision Areas for Management 171
Key Equations 119
Key Equations 173
Key Terms 120
Key Terms 173
Solved Problems 121
Solved Problem 174
Problems 174
Problems 124
Video Case Process Performance and Quality at Starwood
Hotels & Resorts 132 5 Constraint Management 177
Experiential Learning Statistical Process Control with a Coin British Petroleum Oil Spill in Gulf of Mexico 177
Catapult 133
The Theory of Constraints 179
Key Principles of the TOC 180
4 Capacity Planning 135
Managing Bottlenecks in Service Processes 181
Managing Bottlenecks in Manufacturing Processes 182
Tesla Motors 135 Identifying Bottlenecks 182
Relieving Bottlenecks 184
Planning Long-Term Capacity 137
Drum-Buffer-Rope Systems 184
Measures of Capacity and Utilization 137
Applying the Theory of Constraints to Product Mix
Economies of Scale 138
Decisions 185
Diseconomies of Scale 138
Managing Constraints in Line Processes 187
Capacity Timing and Sizing Strategies 139
Line Balancing 187
Sizing Capacity Cushions 139
Rebalancing the Assembly Line 191
Timing and Sizing Expansion 140
Managerial Considerations 191
Managerial Practice 4.1 Expansionist Capacity Strategy by
Managerial Practice 5.1 Assembly Line Balancing at
Sharp Corporation 141
Chrysler 192
Linking Capacity and Other Decisions 142
A Systematic Approach to Long-Term Capacity
Decisions 142
Key Equations 193
Step 1: Estimate Capacity Requirements 142
Key Terms 193
Step 2: Identify Gaps 144
Solved Problems 193
Contents xi
Discussion Questions 195 Monitoring Project Resources 257

Problems 195 Controlling Projects 258
Experiential Learning Min-Yo Garment Company 202 Learning Goals in Review 258
Video Case Constraint Management at Southwest Airlines 206 MyOMLab Resources 258
Key Equations 259
Key Terms 259
6 Lean Systems 207 Solved Problems 260
Aldi 207 Problems 264
Continuous Improvement Using a Lean Systems Active Model Exercise 271
Approach 209 Video Case Project Management at the Phoenician 272
Strategic Characteristics of Lean Systems 211 Case The Pert Mustang 273
Supply Chain Considerations in Lean Systems 211
Process Considerations in Lean Systems 212 Part 2 Managing Customer Demand 275
Toyota Production System 216
Designing Lean System Layouts 217
One Worker, Multiple Machines 217
Group Technology 218
8 Forecasting 275
Managerial Practice 6.1 Panasonic Corporation 219 Kimberly-Clark 275

Value Stream Mapping 219 Managing Demand 277
The Kanban System 223 Demand Patterns 277
General Operating Rules 223 Demand Management Options 278
Determining the Number of Containers 224 Key Decisions on Making Forecasts 280
Other Kanban Signals 225 Deciding What to Forecast 280
Operational Benefits and Implementation Issues 225 Choosing the Type of Forecasting Technique 280
Organizational Considerations 226 Forecast Error 281
Process Considerations 226 Cumulative Sum of Forecast Errors 281
Inventory and Scheduling 226 Dispersion of Forecast Errors 282
Learning Goals in Review 227 Mean Absolute Percent Error 282
MyOMLab Resources 227 Computer Support 284
Key Equation 228 Judgment Methods 284
Key Terms 228 Causal Methods: Linear Regression 284
Solved Problems 228 Time-Series Methods 286
Discussion Questions 231 Naïve Forecast 287
Problems 231 Horizontal Patterns: Estimating the Average 287
Video Case Lean Systems at Autoliv 234 Trend Patterns: Using Regression 289
Case Copper Kettle Catering 236 Seasonal Patterns: Using Seasonal Factors 292
Criteria for Selecting Time-Series Methods 294
7
Forecasting as a Process 295
Project Management 237 A Typical Forecasting Process 295
Using Multiple Forecasting Methods 296
XBOX 360 237 Managerial Practice 8.1 Combination Forecasts and the
Defining and Organizing Projects 239 Forecasting Process 297
Defining the Scope and Objectives of a Project 239 Adding Collaboration to the Process 298
Selecting the Project Manager and Team 239 Forecasting as a Nested Process 298
Recognizing Organizational Structure 240 Learning Goals in Review 299
Constructing Project Networks 241 MyOMLab Resources 299
Defining the Work Breakdown Structure 241 Key Equations 299
Diagramming the Network 241 Key Terms 300
Developing the Project Schedule 243 Solved Problems 301
Critical Path 243 Discussion Questions 304
Project Schedule 244 Problems 305
Activity Slack 246 Video Case Forecasting and Supply Chain Management at
Analyzing Cost–Time Trade-Offs 247 Deckers Outdoor Corporation 313
Cost to Crash 247 Case Yankee Fork and Hoe Company 314
Minimizing Costs 248 Experiential Learning 8.1 Forecasting a Vital Energy Statistic 316
Assessing and Analyzing Risks 251
Risk-Management Plans 251
Managerial Plans 7.1 San Francisco—Oakland Bay Bridge 252
Statistical Analysis 253
9 Inventory Management 317
Analyzing Probabilities 255 Inventory Management at Netflix 317
Near-Critical Paths 256 Inventory Trade-Offs 319
Monitoring and Controlling Projects 257 Pressures for Small Inventories 320
Monitoring Project Status 257 Pressures for Large Inventories 320
xii Contents
Managerial Practice 9.1 Inventory Management at Walmart 321 Level 1: Sales and Operations Planning 376
Types of Inventory 322 Level 2: Resource Planning 377
Accounting Inventories 322 Level 3: Scheduling 378
Operational Inventories 323 S&OP Supply Options 378
Inventory Reduction Tactics 325 S&OP Strategies 379
Cycle Inventory 325 Chase Strategy 379
Safety Stock Inventory 325 Level Strategy 379
Anticipation Inventory 325 Constraints and Costs 380
Pipeline Inventory 325 Sales and Operations Planning as a Process 380
ABC Analysis 326 Spreadsheets for Sales and Operations Planning 382
Economic Order Quantity 327 Spreadsheets for a Manufacturer 382
Calculating the EOQ 327 Spreadsheets for a Service Provider 383
Managerial Insights from the EOQ 331 Scheduling 386
Continuous Review System 331 Job and Facility Scheduling 386
Selecting the Reorder Point When Demand and Lead Workforce Scheduling 387
Time Are Constant 332 Managerial Practice 10.1 Scheduling at Air New Zealand 387
Selecting the Reorder Point When Demand Is Sequencing Jobs at a Workstation 390
Variable and Lead Time Is Constant 332 Software Support 392
Selecting the Reorder Point When Both Demand and Learning Goals in Review 393
Lead Time Are Variable 336 MyOMLab Resources 393
Systems Based on the Q System 337 Key Terms 393
Calculating Total Q System Costs 337 Solved Problems 394
Advantages of the Q System 337 Discussion Questions 397
Periodic Review System 338 Problems 397
Selecting the Time between Reviews 339 Active Model Exercise 404
Selecting the Target Inventory Level When Demand Video Case Sales and Operations Planning at Starwood 405
Is Variable and Lead Time Is Constant 339 Case Memorial Hospital 406
Selecting the Target Inventory Level When Demand
and Lead Time Are Variable 341
Systems Based on the P System 341
Supplement D Linear Programming 409
Characteristics of Linear Programming Models 409
Calculating Total P System Costs 341
Formulating a Linear Programming Model 410
Advantages of the P System 341
Graphic Analysis 412
Plot the Constraints 412
Identify the Feasible Region 414
Key Equations 342
Plot the Objective Function Line 415
Key Terms 344
Find the Visual Solution 416
Solved Problems 344
Find the Algebraic Solution 416
Slack and Surplus Variables 417
Problems 348
Sensitivity Analysis 418
Computer Analysis 418
Video Case Inventory Management at Crayola 354
Simplex Method 418
Experiential Learning Swift Electronic Supply, Inc. 355
Computer Output 419
Case Parts Emporium 357
The Transportation Method 421
Transportation Method for Sales and Operations
Supplement C Special Inventory Planning 422
Models 359 Learning Goals in Review 426
Noninstantaneous Replenishment 359 MyOMLab Resources 426
Quantity Discounts 362 Key Terms 426
One-Period Decisions 364 Solved Problems 426
Learning Goals in Review 366 Discussion Questions 429
MyOMLab Resources 366 Problems 429
Key Equations 367
Key Term 367
Solved Problems 367 11 Resource Planning 437
Problems 369 Philips 437
Material Requirements Planning 439
10 Operations Planning and Dependent Demand 439
Master Production Scheduling 440
Scheduling 373 Developing a Master Production Schedule 441
Available-to-Promise Quantities 442
Cooper Tire and Rubber Company 373 Freezing the MPS 443
Levels in Operations Planning and Scheduling 375
Contents xiii
Reconciling the MPS with Sales and Operations

Plans 444
MRP Explosion 444
13 Supply Chain Logistic
Bill of Materials 444
Networks 511
Inventory Record 445 Bavarian Motor Works (BMW) 511
Planning Factors 448 Factors Affecting Location Decisions 514
Outputs from MRP 451 Dominant Factors in Manufacturing 514
MRP and the Environment 454 Dominant Factors in Services 515
MRP, Core Processes, and Supply Chain Load–Distance Method 517
Linkages 454 Distance Measures 517
Enterprise Resource Planning 455 Calculating a Load–Distance Score 518
How ERP Systems Are Designed 455 Center of Gravity 518
Managerial Practice 11.1 ERP Implementation by SAP at Dow Break-Even Analysis 520
Corning 456 Transportation Method 522
Resource Planning for Service Providers 457 Setting Up the Initial Tableau 522
Dependent Demand for Services 457 Dummy Plants or Warehouses 523
Bill of Resources 458 Finding a Solution 523
Learning Goals in Review 461 Geographical Information Systems 524
MyOMLab Resources 461 Using GIS 524
Key Terms 462 Managerial Practice 13.1 How Fast-Food Chains Use GIS to
Solved Problems 462 Select Their Sites 525
Discussion Questions 467 The GIS Method for Locating Multiple Facilities 526
Problems 468 Inventory Placement 526
Active Model Exercise 479 A Systematic Location Selection Process 527
Case Flashy Flashers, Inc. 479 Learning Goals in Review 528
Part 3 Managing Supply Chains 483 Key Equations 529
Key Terms 529
12 Supply Chain Design 483

Solved Problems 529
Problems 532
Amazon.com 483
Creating an Effective Supply Chain 485 Video Case Continental Tire: Pursuing a Winning Plant
Supply Chains for Services and Manufacturing 486 Decision 539
Services 486 Case R.U. Reddie for Location 540
Manufacturing 487
Measuring Supply Chain Performance 488
Inventory Measures 488
Financial Measures 490
14 Supply Chain Integration 543
Strategic Options for Supply Chain Design 491 Coral Princess 543
Efficient Supply Chains 492 Supply Chain Disruptions 545
Responsive Supply Chains 492 Causes of Supply Chain Disruptions 545
Designs for Efficient and Responsive Supply Supply Chain Dynamics 547
Chains 493 Integrated Supply Chains 548
Mass Customization 495 New Services or Product Development Process 548
Competitive Advantages 495 Design 549
Supply Chain Design for Mass Customization 496 Analysis 549
Outsourcing Processes 496 Development 549
Managerial Practice 12.1 Building a Supply Chain for the Full Launch 550
Dreamliner 498 Supply Relationship Process 550
Vertical Integration 499 Sourcing 550
Make-or-Buy Decisions 499 Design Collaboration 553
Learning Goals in Review 500 Negotiation 554
MyOMLab Resources 500 Managerial Practice 14.1 The Consequences of Power in an
Key Equations 501 Automotive Supply Chain 554
Key Terms 501 Buying 556
Solved Problem 501 Information Exchange 557
Discussion Questions 502 Order Fulfillment Process 558
Problems 502 Customer Demand Planning 558
Video Case Supply Chain Design at Crayola 505 Supply Planning 558
Experiential Learning Sonic Distributors 506 Production 558
Case Brunswick Distribution, Inc. 507 Logistics 558
xiv Contents
Customer Relationship Process 561 Supply Chain Ethics 591

Marketing 561 Buyer–Supplier Relationships 591
Order Placement 561 Facility Location 592
Customer Service 562 Inventory Management 592
Supply Chain Risk Management 562 Managing Sustainable Supply Chains 592
Operational Risks 562 Learning Goals in Review 593
Financial Risks 563 MyOMLab Resources 593
Security Risks 564 Key Equation 593
Performance Measures 566 Key Terms 594
Learning Goals in Review 566 Solved Problems 594
MyOMLab Resources 566 Discussion Questions 595
Key Equations 567 Problems 595
Key Terms 567 Video Case Supply Chain Sustainability at Clif Bar & Company 597
Solved Problems 567
Problems 569
Appendix Normal Distribution 599
Video Case Sourcing Strategy at Starwood 574
Case Wolf Motors 575 References 601
Glossary 609
15 Supply Chain Name Index 623
Sustainability 577 Subject Index 627
FedEx 577
The Three Elements of Supply Chain Sustainability 579 MyOMLab SUPPLEMENTS
Reverse Logistics 580
Supply Chain Design for Reverse Logistics 581 Supplement E Simulation E-1
Managerial Practice 15.1 Recycling at Walmart 582 Supplement F Financial Analysis F-1
Financial Implications 582
Energy Efficiency 583
Supplement G Acceptance Sampling Plans G-1
Transportation Distance 583 Supplement H Measuring Output Rates H-1
Freight Density 585 Supplement I Learning Curve Analysis I-1
Transportation Mode 587
Disaster Relief Supply Chains 588 Supplement J Operations Scheduling J-1
Organizing for Disaster Relief 588 Supplement K Layout K-1
Managing Disaster Relief Operations 589
Preface
Creating Value through Operations Management
Operations management is a vital topic that every business student needs to understand because it is at
the heart of the creation of wealth for businesses, value for customers, and the improvement in the living
standard of citizens of all countries. Operations managers are responsible for the production of services
and products in an ethical and environmentally responsible way while being responsive to the market.
Sound like a challenge? Add to it the need to manage supply chains of materials, information, and funds
reaching to all areas of the world. While challenging, there are concepts, tools, and methods that manag-
ers use to deal with operating problems in a global environment. The mission of this text is to provide you
with a comprehensive framework for addressing operational and supply chain issues. We accomplish this
mission by using a systemized approach while focusing on issues of current interest to you. It is important
to be efficient and capable with respect to internal processes; however, it is critical for organizations to be
able to link those processes to those of their customers and their suppliers to provide competitive supply
chains. This text is unique in that it builds the concept of a supply chain from the ground up. Starting with
the analysis of business processes and how they relate to the overall operational goals of a firm, our text
proceeds to show how these processes are integrated to form supply chains and how they can be man-
aged to obtain efficient flows of materials, information, and funds. This approach reinforces the concept
that supply chains are only as good as the processes within and across each firm in them.
This text has been thoroughly revised to meet your needs regardless of your major. Any manager
needs to know the global implications of supply chains and how to make decisions in a dynamic envi-
ronment. We address these contemporary issues of interest through opening vignettes and managerial
practices in each chapter. We show you the essential tools you will need to improve process perfor-
mance. Irrespective of your chosen career path or the industry in which you are seeking a career, you will
encounter processes and supply chains. We will show you how to analyze and manage those processes
and supply chains from the perspective of service as well as manufacturing firms. Our philosophy is that
you will learn by doing; consequently, the text has ample opportunities for you to experience the role of
a manager with challenging problems, cases, a library of videos customized to the individual chapters,
simulations, experiential exercises, and tightly integrated online computer resources. With this text, you
will develop the capability to analyze problems and support managerial decisions.
What’s New in the Eleventh Edition?

Since the tenth edition, we have been hard at work to make the eleventh edition even better, based upon
the suggestions of adopters and nonadopters. We have carefully monitored for errors in the book and
all supplements. We have more figures, photos, company examples, cases, and problems to test your
understanding of the material. Here are some of the highlights of the many changes:
1. Increased clarity of every chapter by organizing each major head to address one of the learning
goals in the chapter.
2. Ten new chapter openers highlighting the operations of Disney Corporation, QVC, Inc., Tesla
Motors, Aldi Supermarkets, Kimberly-Clark, Netflix, Cooper Tire and Rubber Company, Philips,
Amazon.com, and Coral Princess cruise liner.
3. New Chapter 2, “Process Strategy and Analysis,” which combines the strategy and analysis chapters
of the tenth edition and streamlines the presentation of these important topics.
4. Improved understanding of independent demand inventory control systems, facility location
analysis, and inventory placement with the addition of new figures and numerical examples.
5. Expanded presentation of the bill of resources for services, including figures and a numerical
example, which demonstrates the use of the dependent-demand concept for estimating resource
requirements in a service setting.
6. New section on supply chain risk management that addresses the operational, financial, and
security risks facing supply chain managers today.
7. Five new videos and video cases featuring Crayola, Continental Tire, Some Burros, and W-T Graphix
addressing the topics of operations strategy, process choice, inventory management, s upply chain
design, and facility location.
8. New videos of Solved Problems demonstrating concepts and skills students need to master to make
effective decisions in the operations management workplace. Look for MyOMLab Video in the m
argin
next to these Solved Problems.
xv
xvi Preface
9. Animations that help students understand movement and processes shown in figures that might
be difficult to grasp just by looking at static figures in the printed text. MyOMLab Animation appears
in the margin next to figures that are animated.
10. New MyOMLab Supplement K, “Layout,” which presents techniques for analyzing layouts in
service as well as manufacturing settings.
11. Updated Managerial Practices, giving current examples of operations management to students.
12. New Learning Goals in Review at the end of each chapter, which highlights where each goal is
addressed in the chapter and cross references them with a rich set of MyOMLab resources at the
student’s disposal including Videos, Active Models, Tutors, OM Explorer, and POM for Windows.
13. Refreshed or added nearly 20 percent of the Problems, all of which are now fully coded for
difficulty, arranged by major chapter heads, and represented in MyOMLab.
14. Major overhaul of references, located by chapter sequence at the end of the text.
Chapter-by-Chapter Changes
▪ Chapter Count—Relative to the tenth edition, we have streamlined this edition by combining two
Using Operations to Create Value chapters for a total of only 15 chapters, retaining four supplements in the book, and adding one new
MANAGING PROCESSES supplement in MyOMLab for a total of seven supplements. A central figure in the margin of each
chapter shows how each chapter fits into our general theme of processes to supply chains.
Process Strategy and Analysis
Quality and Performance ▪ Chapter 1, “Using Operations to Create Value,” defines operations management, supply chain
Capacity Planning management, and the overall framework for linking corporate strategy to key operations man-
Constraint Management agement decisions.
Lean Systems
▪ Part 1: Managing Processes—The first part of the text lays the foundation for why a process view
Project Management
is critical for utilizing operations management as a strategic weapon by showing you how to design
MANAGING CUSTOMER DEMAND and manage the internal processes in a firm.
Forecasting ▪ Chapter 2, “Process Strategy and Analysis,” draws together two chapters from the tenth edi-
Inventory Management tion to simplify the discussion of the important topic of process choice, introduce the Six Sigma
Operations Planning and
DMAIC model as a systematic approach to process analysis, and introduce the design-to-order
Scheduling
Resource Planning
production and inventory strategy.
▪ Chapter 3, “Quality and Performance,” with a new opener on QVC, Inc., continues to address
Managing Supply Chains
ethics and the environment and provide the essential statistical tools for identifying the onset of
Supply Chain Design process performance problems.
Supply Chain Logistic Networks
Supply Chain Integration ▪ Chapter 4, “Capacity Planning,” has a new opener on Tesla Motors and focuses on the long-term
Supply Chain Sustainability capacity decisions that define the process capacities of the firm to do business in the future.
▪ Chapter 5, “Constraint Management,” shows how you can get the best output rates within the
process capacities you have to work with.
▪ Chapter 6, “Lean Systems,” with a new opener on Aldi, a global supermarket chain, shows value
stream mapping (VSM) as a major tool for analyzing and improving lean systems and reveals
other methods that you can use to improve system performance.
▪ Chapter 7, “Project Management,” shows the tools managers use to implement the projects
needed to achieve efficient processes and supply chains.
▪ Part 2: Managing Customer Demand—The second part of the text shows how you can estimate
customer demands and satisfy those demands through inventory management, operations plan-
ning and scheduling, and resource planning.
▪ Chapter 8, “Forecasting,” now has a new opener about Kimberly-Clark, a new section on man-
aging demand, and expanded coverage of collaborative planning, forecasting, and replenish-
ment (CPFR) to demonstrate the importance of collaborating up and down the supply chain to
identify service and product demands.
▪ Chapter 9, “Inventory Management,” begins with a new opener on Netflix, includes a simplified
presentation of the types of inventories, and has two new examples and supporting figures for
the continuous review and the periodic review systems.
▪ Chapter 10, “Operations Planning and Scheduling,” has a new opener on Cooper Tire and Rub-
ber Company and shows how operations planning, resource planning, and operations schedul-
ing are linked to provide the core for supply chain design and integration.
▪ Chapter 11, “Resource Planning,” in addition to a new opener on Philips, presents a new ap-
proach for resource planning in services using the bill-of-resources method and includes a new
Solved Problem example with this technique.
Preface xvii
▪ Part 3: Managing Supply Chains—The third part of the text, building upon the tools for managing
processes and customer demands at the level of the firm, provides the tools and perspectives you
will need to manage the flow of materials, information, and funds between your suppliers, your
firm, and your customers.
▪ Chapter 12, “Supply Chain Design,” with a new opener on Amazon.com, now has new sections
addressing “Creating an Effective Supply Chain” and “Strategic Options for Supply Chain De-
sign” to clarify what managers must consider when designing supply chains, and has an ex-
panded discussion of outsourcing strategies to include next-shoring and new decision factors.
▪ Chapter 13, “Supply Chain Logistic Networks,” has been thoroughly revised to clarify the role of
quantitative techniques and how to bring together the quantifiable and non-quantifiable factors
in location decisions. It also has a new section on “Inventory Placement” with two new figures
that clarify the distinction between centralized and forward inventory placement options.
▪ Chapter 14, “Supply Chain Integration,” with a new opener on the Coral Princess cruise ship,
has been thoroughly revised to explain the nature and source of supply chain disruptions, reveal
what supply chain integration is and how it mitigates disruptions between the firm and other
entities in the supply chain. It also includes a new section “Supply Chain Risk Management,”
which explains how to mitigate operational, financial, and security risks.
▪ Chapter 15, “Supply Chain Sustainability,” addresses sustainability, focuses on how supply
chains can support the environment and be socially responsible, and provides quantitative tools
to analyze these issues.
▪ Supplements—The book also offers four supplements that dig deeper on technical topics, and
seven other MyOMLab supplements.
Helping You Learn

Key Features
Several new additions and changes have been made to the book to retain and enhance its theme of
processes and supply chains and to expand these themes through new content, improved Learning
Goals, Managerial Practices, Examples, and End-of-Chapter Problems and Cases. Several key features
designed to help aid in the learning process are highlighted next:
Chapter Opening Vignettes engage and stimulate student interest by profiling how real companies
apply specific operational issues addressed in each chapter.
4
Stan Honda/AFP/Getty Images/Newscom
CapaCity
planning
Tesla’s battery charging station emphasizes the close connection between the electric
car and the batteries that serve as the main source of energy for this new generation
automobile. Tesla’s long-term growth strategies are therefore tied to also expanding its
battery manufacturing capacity.
Tesla Motors
D
riven by a need to reduce dependence on petroleum-based transportation,
a new automobile manufacturing company, Tesla Motors, was formed
by Silicon Valley engineers in 2003 with the idea of making fuel efficient
electric cars that do not have an internal combustion engine and that run only
on rechargeable batteries. Headquartered in Palo Alto, California, Tesla has over
600 employees and an expected revenue of over $3 billion in 2014. Its premium
sedan Model S and cross-over utility vehicle Model X are sold through a network
of 125 company-owned stores and service locations in North America, Europe,
and Asia. Apart from a planned European Research and Development Center in
the United Kingdom in 2015 or 2016, Tesla plans to open manufacturing plants in
China and Europe once global sales pass 500,000 vehicles a year.
In order to meet the growing energy needs of its next-generation
automobiles, Tesla announced plans in 2014 to build the world’s largest battery
factory at an expense of $4–5 billion. This gigantic Gigafactory would occupy
10 million square feet and employ about 6,500 workers once completed. It
would manufacture the 18/650 cell, a cylindrical battery format that is 18 mm
wide and 65 mm tall and favored by Tesla and some laptop manufacturers.
About 8000 such cells, modified with Tesla’s own proprietary chemistry, are
needed to power the 85 kWh drive model S car. The completion of this plant
in 2016–2017 is slated to coincide with the production of a third-generation Tesla
car that would be a smaller version of model S but half priced at $35,000. Along
135
xviii Preface
Learning Goals improve learning by matching each learning goal with a major head in the chapter.
Managerial Practices provide current examples of how companies deal—successfully or unsuccessfully—
with process and supply chain issues facing them as they run their operations.
582 PART 3 Managing Supply ChainS
Managerial
Practice 15.1 Recycling at Walmart
All companies can save money by reducing the amount of waste they
must dispose. Walmart, owing to its size, is certainly no exception. In the United
States alone, Walmart has over 4,000 stores and serves 130 million shoppers a
week. You can imagine the amount of trash that accumulates on a daily basis.
Many trash items, such as loose plastic, plastic hangers, office paper, and alumi-
num cans, are unruly and difficult to collect for recycling. To attack this problem,
Walmart initiated the “super sandwich bale (SSB)” at all of its stores and clubs
324 PART 2
in the United Managing
States. The SSB isCustoMer DeManD
an invention of Jeff Ashby, national accounts
manager for Rocky Mountain Recycling in Salt Lake City. The associates place 10
to 20 inches of cardboard at the bottom of large trash compactors. Commodities,
Pipeline Inventory Inventory that is created
such as loose plastic bags, aluminum cans, plastic hangers, and plastic water
when an order for an item is issued but not yet
Tom Uhlman/AP Photo

and soda bottles, are loaded in, and another layer of cardboard is placed on top.
The compactor then presses the bale into a “sandwich” with 9 to 18 inches of received is called pipeline inventory. This form
recyclables in the middle. The bales are then loaded onto a truck to be recycled of inventory exists because the firm must commit
into various raw materials that will ultimately become products once again. For ex- to enough inventory (on-hand plus in-transit) to
ample, in one of its sustainability programs, Walmart directs recycled plastics and cover the lead time for the order. Longer lead
cardboard to Worldwise, a leader in developing, manufacturing, and marketing A Walmart employee timesthrows used packaging
or higher demands boxesperinto week
a compactor
create more
sustainable pet products, where they are transformed into a stylish and durable as a first step in pipeline
building a super sandwichAs
inventory. bale at a Cincinnati
such, the average pipeline
line of dog beds. Plastic hangers are turned into litter pans, plastic bags into litter area Walmart. The giant retailerbetween
inventory is urging itstwo
suppliers to reduce
stocking points can be
liners, and corrugated cardboard into cat scratchers. To get a sense of the value greenhouse gas measured
emissions on topas ofthe
its own moves demand
average to build moreduring lead
involved, Walmart used to pay trash companies to haul more than one billion plas-
energy-efficient stores,
time, use
DL,alternative
which is fuels
theforaverage
its truck fleet, and
demand for the
tic hangers from its stores and clubs each year. Now, it gets paid 15 to 20 cents
reduce packaging. item per period 1d2 multiplied by the number
a pound for them. The money adds up in a hurry. Who said that reverse logistics
Mike Danneman/Getty Images
supply chains are not profitable? It is clear that environmentally conscious supply of periods in the item’s lead time 1L2 to move
chain operations can literally turn “trash” into “cash.” between the two points, or
Pipeline inventory = DL = dL
Source: Marc Gunther. “The End of Garbage,” FORTUNE, (March 19, 2007), pp. 158–166; “Waste,” http://www.walmartstores.com, (2014); Elaine Jarvik, “Super sandwich
TheBale,”
bale—Utah Man’s Idea Nets Wholesale Recycling,” Desert News, (April 22, 2008); “Walmart Rolls Out the Plastic Sandwich equation assumes that both 2005;
http://www.walmartstores.com, d and L are
“Walmart Annual report 2013, http://www.walmart.com. constants and that L is not affected by the order
or lot size, Q. Changing an item’s lot size does
not directly affect the average level of the pipe-
line inventory. Nonetheless, the lot size can in-
Pipeline inventories result from moving items and materials from one location to another.
environment prompted a backlash against the improper directly affect
disposal pipeline equipment
of electronic inventory inif itdeveloped
is related to
Because trains offer an economical way to transport large quantities of goods, they are a favorite
Examples demonstrate how to apply what students have learned and walk them through the solution
choice to reduce the costs of pipeline inventories.
the lead
countries. The European Union (EU) passed a law requiring
recycle 75 percent of the products they sell in the EU. will
Somechange
time. Inmanufacturers
electronics such a case, pipeline
states independing
the United States
to take back
on thebanned
inventory
relationship
and
e-waste,of L
process modeling good problem-solving techniques. These examples always close with a unique feature
electronic components and the chemical by-products of the recycling process, from landfills
to Q. Example 9.1 shows how this can happen. and are
pipeline inventory considering making electronics manufacturers responsible for managing e-waste.
called Decision
Inventory that is Point,
created whenwhich
an focuses students
Recycling on the
is a major aspect decision
of reverse implications
logistics. Managerial Practice 15.1for managers.
provides an example of
how a major retailer uses recycling to be environmentally responsible.
order for an item is issued but not
yet received.
Financial Implications
ExamplE 9.1 Estimating Inventory
Some firms levels
participate in reverse supply chains by owning and operating processes such as remanufactur-
ing, recycling, or repairing the used products and materials. These firms benefit from reclaiming usable
MyOMLab A plantparts
makesfor monthly shipments of
their manufacturing electric drills
operations or bytoselling
a wholesaler in average
remanufactured lot sizes
products of 280 drills.prices.
at competitive The whole-
If
tutor 9.1 in MyoMLab saler’san
average
originaldemand
equipmentis 70 drills a week,
manufacturer and the
(OEM) lead time
participates in from the plant is 3however,
remanufacturing, weeks. there
The wholesaler
is a fear thatmust
provides a new example to pay for the inventory from the moment the plant makes a shipment. If the wholesaler is willing to increase its
the remanufactured products will cannibalize the sales of the firm’s new products. Often these fears give
practice the estimation of rise quantity
purchase to restrictions
to 350such as floors
units, on the
the plant willprice
givethat can be
priority to charged for remanufactured
the wholesaler and guarantee products,
a leadlimits
time on
of only
inventory levels. the markets where they can be sold, limits on the distribution channels the products can be sold through,
2 weeks. What is the effect on the wholesaler’s cycle and pipeline inventories?
and reduced warranties that can be offered on them. Of course, there are also opportunity costs for not
remanufacturing. There is the danger that environmentally irresponsible product disposal practices on the
SolutIon
part of the firm’s customers may result in the firm facing costly regulatory restrictions in the future. Also,
The wholesaler’s
third-party current cycle and
manufacturers maypipeline inventories
participate are logistics supply chain by collecting or purchasing
in the reverse
the unclaimed old products, remanufacturing them, and then selling them in competition with the firm’s
Q 280
new products. Cycle
Thatinventory
is the case with
= refilled
= laser 140 drills
= printer and inkjet cartridges, which erodes profit margins
for original printer manufacturers 2 2
like Hewlett-Packard, Dell, and Epson.
OtherPipeline
firms, asinventory
well as individuals,
= DL = dL participate in the reverse logistics
= 170 drills>week213 weeks2supply
= 210chain
drillsby supplying
their used products and materials for processing. A continuous supply of these unused products and
Figure 9.3 shows the cycle and pipeline inventories if the wholesaler accepts the new proposal.
FiguRe 9.3 ▶ 1. Enter the average lot size, average demand during a period, and the number of periods of lead time:
Estimating Inventory Levels Using
Average lot size 350
Tutor 9.1 Average demand 70
M15_KRAJ2132_11_SE_C15.indd 582 Lead time 2 11/12/14 5:26 PM
2. To compute cycle inventory, simply divide average lot size by 2. To compute pipeline inventory, multiply
average demand by lead time:
Cycle inventory 175

Pipeline inventory 140
DEcISIon PoInt
The effect of the new proposal on cycle inventories is to increase them by 35 units, or 25 percent. The reduction
in pipeline inventories, however, is 70 units, or 33 percent. The proposal would reduce the total investment in
cycle and pipeline inventories. Also, it is advantageous to have shorter lead times because the wholesaler only
has to commit to purchases 2 weeks in advance, rather than 3 weeks.
End of Chapter Resources

M09_KRAJ2132_11_SE_C09.indd 324 11/12/14 5:30 PM
▪ Learning Goals in Review guidelines for mastering each learning goal and a list of resources found
in MyOMLab relating to the goal.
▪ Key Equations for review purposes, organized by major chapter head.
▪ Key Terms for review purposes; the page references highlight where the concept was first discussed.
▪ Solved Problems reinforce and help students prepare their homework assignments by detailing
how to solve model problems with the appropriate techniques presented in the chapter.
Preface xix
▪ Discussion Questions test student comprehension of the concepts through the use of short
scenarios.
▪ Problems sharpen students’ quantitative skills by providing a bridge between chapter materials
with a wide selection of homework material. Advanced problems are marked with D to indicate
an increased level of difficulty. Most of the homework problems can be done manually, or students
can utilize a variety of software tools through MyOMLab, which is discussed in a later section.
▪ Conceptual Questions Coverage at least four conceptual questions for each major topic in the
book have been added to MyOMLab.
▪ Active Model Exercises enable students to use provided spreadsheets to do “what-if” analysis of
examples presented in the text to see what would happen if certain parameters were changed.
▪ Video Cases provide a summary of content covered in a series of on-location video profiles of
real-world service and manufacturing companies and challenges they face in their operations.
Questions are included for classroom discussion or assignment purposes.
▪ Cases challenge students to grapple with a capstone problem that can be used as an in-class
exercise or a homework assignment or team project.
▪ Experiential Learning forms students into teams who work both in and out of class on exercises
that actively involve them in team-based discussion questions and decisions. The six exercises
reinforce student learning. Each exercise has been thoroughly tested in class and proven to be a
valuable learning tool.
▪ A Video Library in MyOMLab offers at least one video case for each chapter, which makes for
excellent class discussion and learning. Three tutorials are also included.
Teaching and Learning Support

MyOMLab A key capability of MyOMLab is as an online homework and assessment tool designed to
MyOMLab
help students practice operations management problems and improve their understanding of course
concepts, and to give their instructors feedback on their performance. This online product expands the
student’s learning experience with out-of-class quizzes that are automatically graded and tutorials to
guide the problem solving process, keeping students up to date, and freeing instructors for more cre-
ative use of class time. It also has a wealth of resources to assist students in preparing for class, working
on assignments, and achieving the learning goals for each chapter.
MyOMLab lets you teach your course your way. Use MyOMLab as an out-of-the-box resource
for students who need extra help, or take full advantage of its advanced customization options.
For Instructors
Instructor’s Resource Center—Reached through a link at http://www.pearsonhighered.com/
krajewski, the Instructor’s Resource Center contains the electronic files for the complete Instructor’s
Solutions Manual, PowerPoint lecture presentations, and the Test Bank.
Instructor’s Solutions Manual (0-13-387239-4)—Prepared by Jack Jensen at The University of South

Carolina, this resource begins with the video notes and solutions, followed by chapter-by-chapter
solutions to end-of-chapter questions, problems, and cases. This manual is available for download in
both Word and PDF versions by visiting http://www.pearsonhighered.com/krajewski.
Instructor’s Resource Manual —Prepared by Jack Jensen at The University of South Carolina,
this resource begins with sample syllabi for the course suited to various situations: with or without
M yOMLab, quarter versus seven-week course, undergraduate versus MBA, quantitative versus
qualitative orientation, and process versus supply chain orientation. It then offers generic Instructor
and Student Notes, both of which must be revised to reflect the instructor’s approach to the course. The
Student Notes can be handed out or posted so that the students can have them during class to simplify
note taking and concentrate more on what is being said. The Instructor Notes offer a course outline,
chapter outlines, teaching notes, sample course syllabi, and solutions to the videos. Both Word and
PDF files of this manual are available for download by visiting http://www.pearsonhighered.com/
krajewski.
PowerPoint lecture slides —Chapter-by-chapter files for classroom presentation purposes are
available for download by visiting http://www.pearsonhighered.com/krajewski. PowerPoint slides
can be customized by the instructor and contain most of the images and illustrations featured in the text
as well as lecture notes.
xx Preface
Test Bank—This resource offers an array of questions and problems ranging from easy to difficult.
It includes true/false and multiple-choice questions, which can be accessed by MyOMLab, and
short answer and essay questions. These files are available for download by visiting http://www
.pearsonhighered.com/krajewski.
TestGen —Pearson Education’s test-generating software is available from http://www

.pearsonhighered.com/irc. The software is PC/MAC-compatible and preloaded with all of the Test
Bank questions. You can manually or randomly view test questions and drag and drop to create a test.
You can add or modify test bank questions as needed.
For Students
Besides having access to study plans and tutorial resources in MyOMLab, students can utilize the
following additional course resources within MyOMLab:
OM Explorer—This text-specific software tool consists of Excel worksheets and includes tutors and
solvers.
▪ Tutors provide coaching for more than 60 analytical techniques presented in the text. The tutors
also provide additional examples for learning and practice.
▪ Solvers provide powerful general-purpose routines often encountered in practice. These are great
for experiential exercises and homework problems.
POM for Windows—An easy-to-use software program covers over 25 common OM techniques.
Active Models—These 29 included spreadsheets require students to evaluate different situations based
on problem scenarios.
Download page—This offers access to OM Explorer, POM for Windows, SimQuick, and Active Models,
and a link to a free trial of SmartDraw software.
Acknowledgments
No book is just the work of the authors. We greatly appreciate the assistance and valuable contributions
by several people who made this edition possible. Thanks to Beverly Amer of Aspenleaf Productions
for her efforts in filming and producing the new video segments for this edition and Annie Puciloski
for her diligent work of accuracy checking the book and ancillary materials. Special thanks are due
to H oward Weiss of Temple University whose expertise in upgrading the software for this edition was
greatly appreciated.
Many colleagues at other colleges and universities provided valuable comments and suggestions
for this and previous editions. We would also like to thank the following faculty members who gave
extensive written feedback and commentary to us:
Sal Agnihothri, State University of New York–Binghampton

Timothy Fry, University of South Carolina
Xin James He, Dolan School of Business, Fairfield University
Alan Mackelprang, Georgia Southern University
Paul C. Vanderspek, Colorado State University
We would like to thank the people at Pearson, including Dan Tylman, Kathryn Dinovo, Alison Kalil, Jeff
Holcomb, Anne Fahlgren, Lenny Ann Raper, James Bateman, Courtney Kamauf, and Megan Rees, and
Tammy Haskins at Lumina Datamatics. Without their hard work, dedication, and guidance this book
would not have been possible.
At the University of South Carolina, we gratefully acknowledge Jack Jensen for the stellar contribu-
tions he has made to the development of Instructor’s Solutions Manual and MyOMLab. Thanks go to
Cherry Singhal at the University of South Carolina for her contributions to the eleventh edition. We also
thank our colleague Johnny Rungtusanatham at The Ohio State University for his encouragement and
pedagogical ideas on text revision.
Finally, we thank our families for supporting us during this project involving multiple emails,
teleconference calls and long periods of seclusion. Our wives, Judie, Maya, and Barb, have provided the
love, stability, and encouragement that sustained us while we transformed the tenth edition into the
eleventh.
1
Guido Cozzi/Atlantide/Phototravel/Corbis
Using
Operations to
Create Value
Characters perform at Cinderella’s Castle in Magic Kingdom,
Orlando, Florida, USA.
Disney
D
isney Corporation is an internationally diversified entertainment and
media enterprise comprising of five business segments of media net-
works (e.g., ABC, ESPN networks), parks and resorts (e.g., Disneyland
and Disneyworld), studio entertainment (e.g., Pixar and Marvel studios), con-
sumer products (e.g., toys, apparel, and books), and interactive media (e.g.,
Disney.com). It is one of the 30 companies that has been a part of the Dow
Jones Industrial Average since 1991. With annual revenues of $45 billion
in 2013, Disney is particularly well known for its theme parks that had a
17 percent increase in operating income to $2.2 billion in the last fiscal year
alone. Its largest park, Walt Disney World Resort opened in Orlando, Florida,
in 1971 and includes the Magic Kingdom, Epcot Center, Disney Studios,
and Animal Kingdom.
Disney constantly evaluates and improves its processes to enhance
customer experience. One of its recent innovations is a $1 billion compre-
hensive reservation and ride-planning system that can allow guests to book
rides months in advance through a website or a smartphone app. Dubbed as
MyMagic + , it works through a radio-frequency identification (RFID) chip em-
bedded inside electronic wristbands or bracelets that guests wear once they
check into a Disney theme park. Called MagicBands, they link electronically
to centralized databases and can be used as admission tickets, credit or debit
cards, or hotel room keys. Just by tapping them against electronic sensors,
these MagicBands also become a form of payment for food, entertainment,
1
2 chapter 1 Using Operations to Create Value
and merchandise. Data from these wristbands can help Disney determine
when to add more staff to which rides, decide how many employees in cos-
tumes should roam around at which locations in the park, determine restaurant
menus and which souvenirs should be stocked based on customer prefer-
ences, and even send e-mail or text message alerts to guests when space
opens up in an expedited queue at that guest’s favorite ride such as Space
Mountain or Pirates of the Caribbean. Apart from facilitating crowd control
and data collection, this wearable technology helps Disney seamlessly person-
alize each guest’s experience and change how they play and spend at the
oft-advertised “Most Magical Place on Earth.”
Despite some privacy concerns surrounding the use of RFID chips that
can track a guest’s identity and location within the theme parks, the new
MyMagic + system has multiple advantages. First, when visitors have well-
planned schedules and forward visibility on what they are going to do on a given
day on an hourly basis, they are less likely to jump ship to other theme parks in
the area such as the Sea World or the popular Wizarding World of Harry Potter
by Universal Studios. Second, when the logistics of moving from one attraction
to another are simplified, guests have additional opportunities to spend more
time and money in Disney restaurants and shops. Finally, by using this new
RFID-enabled technology, Disney can effectively increase its capacity when it
is needed the most. For instance, this new system allowed Disney to handle
3,000 additional visitors to the Magic Kingdom in Orlando during the Christmas
rush. With other costs more or less fixed, the incremental revenues from ad-
ditional guests flow directly to the bottom line. Increased profitability through
technological and operational innovations help Disney provide more value to its
guests as well as maintain its leadership position in the entertainment industry
on multiple dimensions. It is also one among many other reasons why despite
the price of entrance tickets crossing an average of $100 per day inclusive of
taxes, an increase of 45 percent since 2005, there is no end in sight to the large
crowds flooding Disney’s theme parks.
Sources: Christopher Palmeri, “Disney Bets $1 Billion on Technology to Track Theme Park Visitors,” Bloomberg
Business Week (March 7, 2014); Justin Bachman, “Disney’s Magic Kingdom Nears $100 Tickets, and the Crowds Keep
Coming,” Bloomberg Business Week (February 25, 2014); http://thewaltdisneycompany.com/about-disney/company-
overview; http://en.wikipedia.org/wiki/Disney (August 18, 2014).
Learning Goals After reading this chapter, you should be able to:
❶ Describe the role of operations in an organization and its ❺ Identify nine competitive priorities used in operations
historical evolution over time. strategy, and explain how a consistent pattern of
❷ Describe the process view of operations in terms of decisions can develop organizational capabilities.
inputs, processes, outputs, information flows, suppliers, ❻ Identify the latest trends in operations management, and
and customers. understand how given these trends, firms can address
❸ Describe the supply chain view of operations in terms of the challenges facing operations and supply chain
linkages between core and support processes. managers in a firm.
❹ Define an operations strategy and its linkage to corporate

strategy and market analysis.
Using Operations to Create Value chapter 1 3
Operations management refers to the systematic design, direction, and control of pro- operations management
cesses that transform inputs into services and products for internal, as well as external customers. As The systematic design, direction,
exemplified by Disney, it can be a source of competitive advantage for firms in both service as well as and control of processes that
manufacturing sectors. transform inputs into services and
This book deals with managing those fundamental activities and processes that organizations use products for internal, as well as
to produce goods and services that people use every day. A process is any activity or group of activities external, customers.
that takes one or more inputs, transforms them, and provides one or more outputs for its customers.
process
For organizational purposes, processes tend to be clustered together into operations. An operation is
a group of resources performing all or part of one or more processes. Processes can be linked together Any activity or group of activities
to form a supply chain, which is the interrelated series of processes within a firm and across different that takes one or more inputs,
firms that produce a service or product to the satisfaction of customers.1 A firm can have multiple sup- transforms them, and provides
ply chains, which vary by the product or service provided. Supply chain management is the synchro- one or more outputs for its
nization of a firm’s processes with those of its suppliers and customers to match the flow of materials, customers.
services, and information with customer demand. As we will learn throughout this book, all firms have
operation
processes and supply chains. Sound operational planning and design of these processes, along with in-
ternal and external coordination within its supply chain, can create wealth and value for a firm’s diverse A group of resources performing
stakeholders. all or part of one or more
processes.
Role of Operations in an Organization supply chain

An interrelated series of
Broadly speaking, operations and supply chain management underlie all departments and functions in
processes within and across
a business. Whether you aspire to manage a department or a particular process within it, or you just
firms that produces a service
want to understand how the process you are a part of fits into the overall fabric of the business, you need
or product to the satisfaction of
to understand the principles of operations and supply chain management.
customers.
Operations serve as an excellent career path to upper management positions in many organiza-
tions. The reason is that operations managers are responsible for key decisions that affect the success of supply chain management
the organization. In manufacturing firms, the head of operations usually holds the title chief operations The synchronization of a firm’s
officer (COO) or vice president of manufacturing (or of production or operations). The corresponding processes with those of its
title in a service organization might be COO or vice president (or director) of operations. Reporting to suppliers and customers to match
the head of operations are the managers of departments such as customer service, production and in- the flow of materials, services,
ventory control, and quality assurance. and information with customer
Figure 1.1 shows operations as one of the key functions within an organization. The circular rela- demand.
tionships in Figure 1.1 highlight the importance of the coordination among the three mainline functions
of any business, namely, (1) operations, (2) marketing, and (3) finance. Each function is unique and
has its own knowledge and skill areas, primary responsibilities, processes, and decision domains. From
an external perspective, finance generates resources, capital, and funds from investors and sales of its
goods and services in the marketplace. Based on business strategy, the finance and operations functions
then decide how to invest these resources and convert them into physical
assets and material inputs. Operations subsequently transforms these mate- Finance
rial and service inputs into product and service outputs. These outputs must
match the characteristics that can be sold in the selected markets by mar- Acquires financial
keting. Marketing is responsible for producing sales revenue of the outputs, resources and capital
which become returns to investors and capital for supporting operations. for inputs
Functions such as accounting, information systems, human resources, and
engineering make the firm complete by providing essential information, ser-
vices, and other managerial support.
Material & Sales
These relationships provide direction for the business as a whole and Service Inputs Revenue
are aligned to the same strategic intent. It is important to understand the Support Functions
entire circle, and not just the individual functional areas. How well these
functions work together determines the effectiveness of the organization. • Accounting
Functions should be integrated and should pursue a common strategy. Suc- • Information Systems
• Human Resources
cess depends on how well they are able to do so. No part of this circle can
• Engineering
be dismissed or minimized without loss of effectiveness, and regardless of
how departments and functions are individually managed; they are always Operations Marketing
linked together through processes. Thus, a firm competes not only by offer- Translates Generates sales
ing new services and products, creative marketing, and skillful finance but materials and Product & of outputs
also through its unique competencies in operations and sound management services into Service Outputs
of core processes. outputs
▲ Figure 1.1
Integration between Different Functional Areas of a Business
1
The terms supply chain and value chain are sometimes used interchangeably.
4 chapter 1 Using Operations to Create Value
Historical Evolution and Perspectives

The history of modern operations and supply chain management is rich and over two hundred years
old, even though its practice has been around in one form or another for centuries. James Watt invented
the steam engine in 1785. The subsequent establishment of
railroads facilitated efficient movement of goods through-
out Europe, and eventually even in distant colonies such
as India. With the invention of the cotton gin in 1794, Eli
Whitney introduced the concept of interchangeable parts.
It revolutionized the art of machine-based manufacturing,
and coupled with the invention of the steam engine, lead
to the great industrial revolution in England and the rest of
Europe. The textile industry was one of the earliest indus-
tries to be mechanized. The industrial revolution gradually
spread to the United States and the rest of the world in the
nineteenth century and was accompanied by such great
innovations as the internal combustion engine, steam-
powered ships, metallurgy of iron making, large-scale
production of chemicals, and invention of machine tools,
Martyn Goddard/Corbis
among others. The foundations of modern manufacturing

and technological breakthroughs were also inspired by the
creation of a mechanical computer by Charles Babbage in
the early part of the nineteenth century. He also pioneered
the concept of division of labor, which laid the foundation
The Ford Motor Company, founded in 1903, produced about one million Model T’s for scientific management of operations and supply chain
in 1921 alone. management that was further improved upon by Frederick
Taylor in 1911.
Three other landmark events from the twentieth century define the history of operations and sup-
ply chain management. First is the invention of the assembly line for the Model T car by Henry Ford in
1909. The era of mass production was born, where complex products like automobiles could be manu-
factured in large numbers at affordable prices through repetitive manufacturing. Second, Alfred Sloan in
the 1930s introduced the idea of strategic planning for achieving product proliferation and variety, with
the newly founded General Motors Corporation offering “a car for every purse and purpose.” Finally,
with the publication of the Toyota Production System book in Japanese in 1978, Taiichi Ohno laid the
groundwork for removing wasteful activities from an organization, a concept that we explore further in
this book while learning about lean systems.
The recent history of operations and supply chains over the past three decades has been steeped
in technological advances. The 1980s were characterized by wide availability of computer-aided design
(CAD), computer-aided manufacturing (CAM), and automation. Information technology applications
started playing an increasingly important role in the 1990s and started connecting the firm with its ex-
tended enterprise through Enterprise Resource Planning Systems and outsourced technology hosting
for supply chain solutions. Service organizations like Federal Express, United Parcel Service (UPS), and
Walmart also became sophisticated users of information technology in operations, logistics, and man-
agement of supply chains. The new millennium has seen an acceleration of this trend, along with an in-
creased focus on sustainability and the natural environment. We cover all these ideas and topical areas
in greater detail throughout this book.
A Process View
You might wonder why we begin by looking at processes rather than at departments or even the firm.
The reason is that a process view of the firm provides a much more relevant picture of the way firms ac-
tually work. Departments typically have their own set of objectives, a set of resources with capabilities to
achieve those objectives, and managers and employees responsible for performance. Some processes,
such as billing, may be so specific that they are contained wholly within a single department, such as
accounting.
The concept of a process, however, can be much broader. A process can have its own set of objec-
tives, involve a work flow that cuts across departmental boundaries, and require resources from several
departments. You will see examples throughout this text of companies that discovered how to use their
processes to gain a competitive advantage. You will notice that the key to success in many organizations
is a keen understanding of how their processes work, since an organization is only as effective as its
processes. Therefore, operations management is relevant and important for all students, regardless of
major, because all departments have processes that must be managed effectively to gain a competitive
advantage.
Using Operations to Create Value chapter 1 5
How Processes Work External environment
Figure 1.2 shows how processes work in an organization. Any process

has inputs and outputs. Inputs can include a combination of human Internal and external
customers
resources (workers and managers), capital (equipment and facilities),
purchased materials and services, land, and energy. The numbered Inputs Outputs
circles in Figure 1.2 represent operations through which services, • Workers Processes and • Goods
products, or customers pass and where processes are performed. The • Managers operations • Services
arrows represent flows and can cross because one job or customer • Equipment
1 3
can have different requirements (and thus a different flow pattern) • Facilities
than the next job or customer. • Materials 5
Processes provide outputs to customers. These outputs may of- • Land 2 4
• Energy
ten be services (that can take the form of information) or tangible
products. Every process and every person in an organization has
Information on
customers. Some are external customers, who may be end users or
performance
intermediaries (e.g., manufacturers, financial institutions, or retail-
ers) buying the firm’s finished services or products. Others are in-
ternal customers, who may be employees in the firm whose process inputs are actually the outputs of ▲ Figure 1.2
earlier processes managed within the firm. Either way, processes must be managed with the customer Processes and Operations
in mind.
In a similar fashion, every process and every person in an organization relies on suppliers. External external customers
suppliers may be other businesses or individuals who provide the resources, services, products, and
A customer who is either an
materials for the firm’s short-term and long-term needs. Processes also have internal suppliers, who
end user or an intermediary
may be employees or processes that supply important information or materials.
(e.g., manufacturers, financial
Inputs and outputs vary depending on the service or product provided. For example, inputs at a
institutions, or retailers) buying
jewelry store include merchandise, the store building, registers, the jeweler, and customers; outputs to
the firm’s finished services or
external customers are services and sold merchandise. Inputs to a factory manufacturing blue jeans in-
products.
clude denim, machines, the plant, workers, managers, and services provided by outside consultants;
outputs are clothing and supporting services. The fundamental role of inputs, processes, and customer internal customers
outputs holds true for processes at all organizations.
One or more employees or
Figure 1.2 can represent a whole firm, a department, a small group, or even a single individ-
processes that rely on inputs from
ual. Each one has inputs and uses processes at various operations to provide outputs. The dashed
other employees or processes to
lines represent two special types of input: participation by customers and information on perfor-
perform their work.
mance from both internal and external sources. Participation by customers occurs not only when
they receive outputs but also when they take an active part in the processes, such as when students external suppliers
participate in a class discussion. Information on performance includes internal reports on customer The businesses or individuals
service or inventory levels and external information from market research, government reports, or who provide the resources,
telephone calls from suppliers. Managers need all types of information to manage processes most services, products, and materials
effectively. for the firm’s short-term and
long-term needs.
Nested Processes internal suppliers
Processes can be broken down into subprocesses, which in turn can be broken down further into still The employees or processes that
more subprocesses. We refer to this concept of a process within a process as a nested process. It may be supply important information or
helpful to separate one part of a process from another for several reasons. One person or one department materials to a firm’s processes.
may be unable to perform all parts of the process, or different parts of the process may require different
skills. Some parts of the process may be designed for routine work while other parts may be geared for nested process
customized work. The concept of nested processes is illustrated in greater detail in Chapter 2, “Process The concept of a process within
Strategy and Analysis,” where we reinforce the need to understand and improve activities within a busi- a process.
ness and each process’s inputs and outputs.
Service and Manufacturing Processes

Two major types of processes are (1) service and (2) manufacturing. Service processes pervade the busi-
ness world and have a prominent place in our discussion of operations management. Manufacturing
processes are also important; without them the products we enjoy as part of our daily lives would not
exist. In addition, manufacturing gives rise to service opportunities.
Differences Why do we distinguish between service and manufacturing processes? The answer
lies at the heart of the design of competitive processes. While Figure 1.3 shows several distinctions
between service and manufacturing processes along a continuum, the two key differences that we
discuss in detail are (1) the nature of their output and (2) the degree of customer contact. In general,
manufacturing processes also have longer response times, are more capital intensive, and their quality
can be measured more easily than those of service processes.
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philosophy that he himself drew inspiration from any of such
sources.
If James has drawn to himself the greatest reading public of all
American philosophers, it is because in him each man can find the
sanction for himself. Without dogmatism or pedantry, James is the
voice of all individual human experiences. In him, each man can find
a sympathetic auditor, and words vivid with the language of the
street, encouraging his endeavours or at least pointing out the
significance of his experiences for the great business of living.
Sometimes James listens to human confessions with a suppressed
cry of pain and recalls wistfully “A Certain Blindness in Human
Beings,” or asks “Is Life Worth Living?” Once with indignation at “the
delicate intellectualities and subtleties and scrupulosities” of
philosophy he confronts “the host of guileless thoroughfed thinkers”
with the radical realities of Morrison I. Swift, only to partially retract a
few pages later with the admission, for him grudgingly given, that the
Absolute may afford its believers a certain comfort and is “in so far
forth” true. We live after all in an open universe, the lid is off and time
relentlessly operates for the production of novelties. No empiricist
can give a decision until the evidence is all in, and in the nature of
the case this can never happen.
Such openness of interest forefends the possibility of James’
founding a school of philosophy. It also renders all his younger
contemporaries in some measure his disciples. Popularly he is the
refuge of the mystics and heterodox, the spiritualists and the cranks
who seek the sanction of academic scholarship and certified dignity.
There are more things in the philosophies of these who call him
master than are dreamed of in his philosophy. In academic
philosophy there is a dual descent of the James tradition. As a
principle of negative criticism, it may be turned into its opposite, as
with Hocking, who enunciates the extreme form of the pragmatic
principle, If a theory is not interesting, it is false—and utilizes it for his
realistic, mystic, idealistic absolutism. The philosophy of Henri
Bergson, that has been widely read in this country, reinforces this
mystical spiritual side, but American mysticism has popularly tended
to degenerate into the occultisms of second-rate credulous minds.
On the other hand, for those in whom the conflict of science and
religion is settling itself on the side of science, the principle of
pragmatism lends itself to the interpretation originally intended by
Charles Peirce, the author of the term, as an experimentalism, a
search for verifiable hypotheses after the manner of the sciences.
But this side of the doctrine is the one that has been developed by
John Dewey.
Professor Dewey is without question the leading American
philosopher, both from the thoroughness of his analyses and the
vigour of his appeal to the American public. In discarding the
Hegelian Idealism in which he was trained, he is thoroughly aligned
with the New America. In him science has wholly won, and although
of New England, Vermont, ancestry, there remains not a trace of the
New Englander’s romantic spiritual longings for contact with a vast
unknown. His dogmatic faiths, and no man is without such faiths,
relate to evolution, democracy, and the all-decisive authority of
experience.
For Dewey, as for the Realists, psychology is the study of human
behaviour. For him mind is the instrument by which we overcome
obstacles and thinking takes place only when action is checked.
Hence in the conventional sense there are no abstractions. Our
concepts are instruments by which we take hold of reality. If we need
instruments to manufacture instruments, or to facilitate their use,
these instruments are also concepts. We may call them abstract, but
they are not thereby removed from the realm of experienced fact.
Since, therefore, our real interest is not in things as they are in
themselves, but in what we can do with them, our judgments are
judgments of value, and value is determined by practice. Such
judgments imply an incomplete physical situation and look toward its
completion. But the will to believe is gone. There is no shadow of
James’ faith in the practicality of emotional satisfactions, or in his
voluntaristic psychology. Our “sensations are not the elements out of
which perceptions are composed, constituted, or constructed; they
are the finest, most carefully discriminated objects of perception.”
Early critics, particularly among the realists, have accused Dewey of
subjectivism, but except in the sense that an individual must be
recognized as one term in the reaction to a situation, and the realists
themselves do this, there is no ground for the charge.
Such a philosophy as Dewey’s is nothing if it is not put to work.
And here is his greatest hold on American life. Like most Americans,
he has no sympathy for the lazy, and even the over-reflective may
suffer from the contamination of sloth; the true American wants to
see results, and here is a philosophy in which results are the
supreme end. Reform is, for America, a sort of sport and this
philosophy involves nothing but reform. Metaphysical subtleties and
visions leave the busy man cold; here they are taboo.
Professor Dewey puts his philosophy to work in the fields of
ethics and education. Perhaps his ethics is the least satisfactory,
howsoever promising its beginnings. Moral codes become the
expression of group-approval. But they easily pass into tradition, get
out of touch with fact, are superannuated. The highest virtue is
intelligence and with intelligence one can recognize the uniqueness
of every moral situation and develop from it its own criteria of
judgment. Progress in morals consists in raising the general level of
intelligence and extending the group whose approvals are significant
from a social class to the nation, a notion of highest appeal to
Democracy, with its faith in the individual man. But with Dewey the
limit of group expansion is humanity, and this may verge on
dangerous (unfortunately) radicalism. Dewey’s weapon against
conventional ethics is two-edged. For the intelligent man perhaps
there is no better actual moral standard than that springing from
intelligent specific judgments, but for the uneducated, it is only too
easy to identify intelligence with sentimental opinion and to let
practice degenerate into legislative repression.
After all, judgments of practice do face incomplete situations and
the problem is not only to complete but also to determine the manner
in which the completion shall be brought about. What men transform
is not merely the world, but themselves, and the ethics is incomplete
without some further consideration of such questions as what are
human natures, and what do we want them to become. But perhaps
such questions are too dangerously near metaphysics to have
appealed to Dewey’s powers of analysis. At any rate, the general
effectiveness of his ethics is weakened by his neglect of attention to
principles in some sense at least ultimate.
In education Dewey’s philosophy has its most complete vitality,
for here he is dealing with concrete needs and the means of
satisfying them. The problem of education is to integrate knowledge
and life. He finds no joy in information for information’s sake.
Curiosity may be the gift of the child, but it must be utilized to equip
the man to hold his own in a world of industrialism and democracy.
Yet Dewey’s sympathies are with spontaneity. He is a Rousseau with
a new methodology. Connected with the Laboratory School at
Chicago from 1896 to 1903, he has since followed with sympathetic
interest all radical experimentation from the methods of Madame
Montessori to those of the Gary Schools. The vast erudition
amassed in this field, and his careful and unprejudiced study of
children, has made him competent above all men to speak critically
of methods and results.
In regard to education, he has given a fuller consideration of the
ends to be attained than in the case of ethics. The end is seen as
continued growth, springing from the existing conditions, freeing
activity, and flexible in its adaptation to circumstances. The
educational result is social efficiency and culture. This efficiency
does not, however, imply accepting existing economic conditions as
final, and its cultural aspect, good citizenship, includes with the more
specific positive virtues, those characteristics that make a man a
good companion. Culture is a complete ripening of the personality.
“What is termed spiritual culture has usually been futile, with
something rotten about it, just because it has been conceived as a
thing which a man might have internally—and therefore exclusively.”
The antithesis between sacrificing oneself for others, or others for
oneself, is an unreal figment of the imagination, a tragic product of
certain spiritual and religious thinking.
Professor Dewey well understands the dangers that lurk behind
such terms as social efficiency and good citizenship. To him
sympathy is much more than a mere feeling: it is, as he says it
should be, “a cultivated imagination for what men have in common
and a rebellion at whatever unnecessarily divides them.” But his very
gift of clear vision, his penetration of the shams of dogma, economic
and social, leads him to treat these things with scant respect. In
consequence his fellow-philosophers, the educators over whom his
influence is profound, and the public suspect him of radicalism. Only
too often, to avoid suspicion of themselves, they turn his doctrine to
the very uses that he condemns: industrial efficiency for them
becomes identical with business expedience; the school, a trade
school; culture, a detached æstheticism to be condemned; and
democracy, the privilege of thinking and acting like everybody else.
The greatest weakness of Dewey’s philosophy, and it is serious,
for Dewey as no other American philosopher grasps principles
through which American civilization might be transformed for the
better—lies in its lack of a metaphysics. Not, of course, a
transcendentalism or a religious mysticism, but above all an
interpretation of human nature. Emotionality represents a phase of
the behaviour process too real to deny, yet it has no place in
Dewey’s philosophy of man. Human longings and aspirations are
facts as real as the materials of industry. Most men remain religious.
Must they rest with quack mystics or unintelligent dogmatists? What
is religion giving them that they crave? Is it a form of art, an attitude
toward the ideal, or some interpretation of the forces of nature that
they seek to grasp? Professor Dewey is himself a lover of art, but
what place has art in his philosophy? If it is an instrument of
education, what end does it serve, and how is it to be utilized? The
pragmatic ethics gives no guarantee that the moral criteria
developed by specific situations will always be the same even for
two men equally intelligent. Perhaps, in spite of the paradox, there
may be several best solutions. If so, this fact has some significance
rooted in man’s nature and his relations to the world that philosophy
should disclose. Such supplementation need not change the
character of the results, but it might forefend them from
misinterpretation and abuse.
With all its incompleteness, Dewey’s philosophy is undeniably
that of the America of to-day. What shall we say of the future? No
nation in the world has more abused its philosophies than ours. The
inspirational elements of our idealisms have become the panderings
of sentimentalists. The vitalizing forces of our pragmatisms threaten
to congeal into the dogmata of cash-success. The war has
intensified our national self-satisfaction. We tend to condemn all
vision as radical, hence unsound, hence evil, hence to be put down.
Philosophy thrives in the atmosphere of the Bacchæ:
“What else is Wisdom? What of man’s endeavour

Or God’s high grace, so lovely and so great?
To stand from fear set free, to breathe and wait;
To hold a hand uplifted over Hate;
And shall not loveliness be loved for ever?”
But what have we now of this atmosphere?

At Christmas-time, the American Philosophical Association
devoted three sessions to the discussion of the Rôle of the
Philosopher in Modern Life. From report, opinion was divided
between those who would have him a social reformer, to the
exclusion of contemplative background, and those with a greater
sense of playing safe, who would have him turn to history, of any
sort, or contemplation quite detached from social consequences. Let
us hope these opinions are not to be taken seriously. Our social
reformers are not all like Dewey, whose neglect of basic reflection is
probably not as great as the omission of such reflections from his
published works would indicate. Nor is an academic chair generally
suited to the specific contacts with life from which successful reforms
must be shaped. On the other hand, abstract contemplation with the
pedagogic reinforcements advocated, will confirm the popular
American sentiment against reflection, if it is true, as Dewey asserts,
that education must be an outgrowth of existing conditions.
Fortunately genius, if such there be amongst us, will not submit to
the opinions of the American Philosophic Association. If philosophy
can find freedom, perhaps America can yet find philosophy.
Harold Chapman Brown
THE LITERARY LIFE
AMONG all the figures which, in Mrs. Wharton’s “The Age of
Innocence,” make up the pallid little social foreground, the still more
pallid middle distance, of the New York of forty years ago, there is
none more pallid than the figure of Ned Winsett, the “man of letters
untimely born in a world that had no need of letters.” Winsett, we are
told, “had published one volume of brief and exquisite literary
appreciations,” of which one hundred and twenty copies had been
sold, and had then abandoned his calling and taken an obscure post
on a women’s weekly. “On the subject of Hearth-fires (as the paper
was called) he was inexhaustibly entertaining,” says Mrs. Wharton;
“but beneath his fun lurked the sterile bitterness of the still young
man who has tried and given up.” Sterile bitterness, a bright futility, a
beginning without a future: that is the story of Ned Winsett.
One feels, as one turns Mrs. Wharton’s pages, how symbolic this
is of the literary life in America. I shall say nothing of the other arts,
though the vital conditions of all the arts have surely much in
common; I shall say nothing of America before the Civil War, for the
America that New England dominated was a different nation from
ours. But what immediately strikes one, as one surveys the history of
our literature during the last half century, is the singular impotence of
its creative spirit. That we have and have always had an abundance
of talent is, I think, no less evident: what I mean is that so little of this
talent succeeds in effectuating itself. Of how many of our modern
writers can it be said that their work reveals a continuous growth, or
indeed any growth, that they hold their ground tenaciously and
preserve their sap from one decade to another? Where, to speak
relatively, the characteristic evolution of the European writer is one of
an ever-increasing differentiation, a progress toward the creation, the
possession of a world absolutely his own (the world of Shaw, the
world of Hardy, the world of Hamsun, of Gorky, of Anatole France),
the American writer, having struck out with his new note, becomes—
how often!—progressively less and less himself. The blighted career,
the arrested career, the diverted career are, with us, the rule. The
chronic state of our literature is that of a youthful promise which is
never redeemed.
The great writer, the grand écrivain, has at the best of times
appeared but once or twice in America: that is another matter. I am
speaking, as I say, of the last half century, and I am speaking of the
rank and file. There are those who will deny this characterization of
our literature, pointing to what they consider the robust and
wholesome corpus of our “normal” fiction. But this fiction, in its way,
precisely corroborates my point. What is the quality of the spirit
behind it? How much does it contain of that creative element the
character of which consists in dominating life instead of being
dominated by it? Have these novelists of ours any world of their own
as distinguished from the world they observe and reflect, the world
they share with their neighbours? Is it a personal vision that informs
them, or a mob-vision? The Danish writer, Johannes V. Jensen, has
described their work as “journalism under exceptionally fortunate
conditions.” Journalism, on the whole, it assuredly is, and the chief of
these fortunate conditions (fortunate for journalism!) has been the
general failure of the writers in question to establish and develop
themselves as individuals; as they have rendered unto Cæsar what
was intended for God, is it any wonder that Cæsar has waxed so
fat? “The unfortunate thing,” writes Mr. Montrose J. Moses, “is that
the American drama”—but the observation is equally true of this
fiction of ours—“has had many brilliant promises which have finally
thinned out and never materialized.” And again: “The American
dramatist has always taken his logic second-hand; he has always
allowed his theatrical sense to be a slave to managerial
circumstance.” The two statements are complementary, and they
apply, as I say, to the whole of this “normal” literature of ours.
Managerial circumstance? Let us call it local patriotism, the spirit of
the times, the hunger of the public for this, that, or the other: to some
one of these demands, these promptings from without, the “normal”
American writer always allows himself to become a slave. It is the
fact, indeed, of his being a slave to some demand from without that
makes him “normal”—and something else than an artist.
The flourishing exterior of the main body of our contemporary
literature, in short, represents anything but the integrity of an inner
well-being. But even aside from this, one can count on one’s two
hands the American writers who are able to carry on the
development and unfolding of their individualities, year in, year out,
as every competent man of affairs carries on his business. What fate
overtakes the rest? Shall I begin to run over some of those names,
familiar to us all, names that have signified so much promise and are
lost in what Gautier calls “the limbo where moan (in the company of
babes) still-born vocations, abortive attempts, larvæ of ideas that
have won neither wings nor shapes”? Shall I mention the writers—
but they are countless!—who have lapsed into silence, or have
involved themselves in barren eccentricities, or have been turned
into machines? The poets who, at the very outset of their careers,
find themselves extinguished like so many candles? The novelists
who have been unable to grow up, and remain withered boys of
seventeen? The critics who find themselves overtaken in mid-career
by a hardening of the spiritual arteries? Our writers all but universally
lack the power of growth, the endurance that enables one to
continue to produce personal work after the freshness of youth has
gone. Weeds and wild flowers! Weeds without beauty or fragrance,
and wild flowers that cannot survive the heat of the day.
Such is the aspect of our contemporary literature; beside that of
almost any European country, it is indeed one long list of spiritual
casualties. For it is not that the talent is wanting, but that somehow
this talent fails to fulfil itself.
This being so, how much one would like to assume, with certain
of our critics, that the American writer is a sort of Samson bound with
the brass fetters of the Philistines and requiring only to have those
fetters cast off in order to be able to conquer the world! That, as I
understand it, is the position of Mr. Dreiser, who recently remarked of
certain of our novelists: “They succeeded in writing but one book
before the iron hand of convention took hold of them.” There is this
to be said for the argument, that if the American writer as a type
shows less resistance than the European writer it is plainly because
he has been insufficiently equipped, stimulated, nourished by the
society into which he has been born. In this sense the American
environment is answerable for the literature it has produced. But
what is significant is that the American writer does show less
resistance; as literature is nothing but the expression of power, of the
creative will, of “free will,” in short, is it not more accurate to say, not
that the “iron hand of convention” takes hold of our writers, but that
our writers yield to the “iron hand of convention”? Samson had lost
his virility before the Philistines bound him; it was because he had
lost his virility that the Philistines were able to bind him. The
American writer who “goes wrong” is in a similar case. “I have read,”
says Mr. Dreiser, of Jack London, “several short stories which proved
what he could do. But he did not feel that he cared for want and
public indifference. Hence his many excellent romances.” He did not
feel that he cared for want and public indifference. Even Mr. Dreiser,
as we observe, determinist that he is, admits a margin of free will, for
he represents Jack London as having made a choice. What
concerns us now, however, is not a theoretical but a practical
question, the fact, namely, that the American writer as a rule is
actuated not by faith but by fear, that he cannot meet the obstacles
of “want and public indifference” as the European writer meets them,
that he is, indeed, and as if by nature, a journeyman and a hireling.
As we see, then, the creative will in this country is a very weak
and sickly plant. Of the innumerable talents that are always
emerging about us there are few that come to any sort of fruition: the
rest wither early; they are transformed into those neuroses that
flourish on our soil as orchids flourish in the green jungle. The sense
of this failure is written all over our literature. Do we not know what
depths of disappointment underlay the cynicism of Mark Twain and
Henry Adams and Ambrose Bierce? Have we failed to recognize, in
the surly contempt with which the author of “The Story of a Country
Town” habitually speaks of writers and writing, the unconscious cry
of sour grapes of a man whose creative life was arrested in youth?
Are we unaware of the bitterness with which, in certain letters of his
later years, Jack London regretted the miscarriage of his gift? There
is no denying that for half a century the American writer as a type
has gone down in defeat.
Now why is this so? Why does the American writer, relatively
speaking, show less resistance than the European writer? Plainly, as
I have just said, because he has been insufficiently equipped,
stimulated, nourished by the society into which he has been born. If
our creative spirits are unable to grow and mature, it is a sign that
there is something wanting in the soil from which they spring and in
the conditions that surround them. Is it not, for that matter, a sign of
some more general failure in our life?
“At the present moment,” wrote Mr. Chesterton in one of his early
essays (“The Fallacy of the Young Nation”), struck by the curious
anæmia of those few artists of ours who have succeeded in
developing themselves, usually by escaping from the American
environment; “at the present moment the matter which America has
very seriously to consider is not how near it is to its birth and
beginning, but how near it may be to its end.... The English colonies
have produced no great artists, and that fact may prove that they are
still full of silent possibilities and reserve force. But America has
produced great artists and that fact most certainly means that she is
full of a fine futility and the end of all things. Whatever the American
men of genius are, they are not young gods making a young world.
Is the art of Whistler a brave, barbaric art, happy and headlong?
Does Mr. Henry James infect us with the spirit of a school-boy? No,
the colonies have not spoken, and they are safe. Their silence may
be the silence of the unborn. But out of America has come a sweet
and startling cry, as unmistakable as the cry of a dying man.” That
there is truth behind this, that the soil of our society is at least arid
and impoverished, is indicated by the testimony of our own poets;
one has only to consider what George Cabot Lodge wrote in 1904, in
one of his letters: “We are a dying race, as every race must be of
which the men are, as men and not accumulators, third-rate”; one
has only to consider the writings of Messrs. Frost, Robinson, and
Masters, in whose presentation of our life, in the West as well as in
the East, the individual as a spiritual unit invariably suffers defeat.
Fifty years ago J. A. Froude, on a visit to this country, wrote to one of
his friends: “From what I see of the Eastern states I do not anticipate
any very great things as likely to come out of the Americans.... They
are generous with their money, have much tenderness and quiet
good humour; but the Anglo-Saxon power is running to seed and I
don’t think will revive.” When we consider the general colourlessness
and insipidity of our latter-day life (faithfully reflected in the novels of
Howells and his successors), the absence from it of profound
passions and intense convictions, of any representative individuals
who can be compared in spiritual force with Emerson, Thoreau, and
so many of their contemporaries, its uniformity and its uniform
tepidity, then the familiar saying, “Our age has been an age of
management, not of ideas or of men,” assumes indeed a very
sinister import. I go back to the poet Lodge’s letters. “Was there
ever,” he writes, “such an anomaly as the American man? In
practical affairs his cynicism, energy, and capacity are simply
stupefying, and in every other respect he is a sentimental idiot
possessing neither the interest, the capacity, nor the desire for even
the most elementary processes of independent thought.... His wife
finds him so sexually inapt that she refuses to bear him children and
so drivelling in every way except as a money-getter that she compels
him to expend his energies solely in that direction while she leads a
discontented, sterile, stunted life....” Is this to be denied? And does it
not in part explain that extraordinary lovelessness of the American
scene which has bred the note of a universal resentment in so much
of our contemporary fiction? As well expect figs from thistles as any
considerable number of men from such a soil who are robust enough
to prefer spiritual to material victories and who are capable of
achieving them.
It is unnecessary to go back to Taine in order to realize that here
we have a matrix as unpropitious as possible for literature and art. If
our writers wither early, if they are too generally pliant, passive,
acquiescent, anæmic, how much is this not due to the heritage of
pioneering, with its burden of isolation, nervous strain, excessive
work and all the racial habits that these have engendered?
Certainly, for example, if there is anything that counts in the
formation of the creative spirit it is that long infancy to which John
Fiske, rightly or wrongly, attributed the emergence of man from the
lower species. In the childhood of almost every great writer one finds
this protracted incubation, this slow stretch of years in which the
unresisting organism opens itself to the influences of life. It was so
with Hawthorne, it was so with Whitman in the pastoral America of a
century ago: they were able to mature, these brooding spirits,
because they had given themselves for so long to life before they
began to react upon it. That is the old-world childhood still, in a
measure; how different it is from the modern American childhood
may be seen if one compares, for example, the first book
(“Boyhood”) of “Pelle the Conqueror” with any of those innumerable
tales in which our novelists show us that in order to succeed in life
one cannot be up and doing too soon. The whole temper of our
society, if one is to judge from these documents, is to hustle the
American out of his childhood, teaching him at no age at all how to
repel life and get the best of it and build up the defences behind
which he is going to fight for his place in the sun. Who can deny that
this racial habit succeeds in its unconscious aim, which is to produce
sharp-witted men of business? But could anything be deadlier to the
poet, the artist, the writer?
Everything in such an environment, it goes without saying, tends
to repress the creative and to stimulate the competitive impulses. A
certain Irish poet has observed that all he ever learned of poetry he
got from talking with peasants along the road. Whitman might have
said almost as much, even of New York, the New York of seventy
years ago. But what nourishment do they offer the receptive spirit to-
day, the harassed, inhibited mob of our fellow-countrymen, eaten up
with the “itch of ill-advised activity,” what encouragement to become
anything but an automaton like themselves? And what direction, in
such a society, does the instinct of emulation receive, that powerful
instinct of adolescence? A certain visitor of Whitman’s has described
him as living in a house “as cheerless as an ash-barrel,” a house
indeed “like that in which a very destitute mechanic” might have
lived. Is it not symbolic, that picture, of the esteem in which our
democracy holds the poet? If to-day the man of many dollars is no
longer the hero of the editorial page and the baccalaureate address,
still, or rather more than ever, it is the “aggressive” type that
overshadows every corner of our civilization; the intellectual man
who has gone his own way and refused to flatter the majority was
never less the hero or even the subject of intelligent interest; at best
ignored, at worst (and usually) pointed out as a crank, he is only a
“warning” to youth, which is exceedingly susceptible in these
matters. But how can one begin to enumerate the elements in our
society that contribute to form a selection constantly working against
the survival of the creative type? By cutting off the sources that
nourish it, by lending prestige to the acquisitive and destroying the
glamour of the creative career, everything in America conspires to
divert the spirit from its natural course, seizing upon the instincts of
youth and turning them into a single narrow channel.
Here, of course, I touch upon the main fact of American history.
That traditional drag, if one may so express it, in the direction of the
practical, which has been the law of our civilization, would alone
explain why our literature and art have never been more than half-
hearted. To abandon the unpopular and unremunerative career of
painting for the useful and lucrative career of invention must have
seemed natural and inevitable to Robert Fulton and Samuel Morse.
So strong is this racial compulsion, so feeble is the hold which
Americans have upon ultimate values, that one can scarcely find to-
day a scientist or a scholar who, for the sake of science or
scholarship, will refuse an opportunity to become the money-
gathering president of some insignificant university. Thus our
intellectual life has always been ancillary to the life of business and
organization: have we forgotten that the good Washington Irving
himself, the father of American letters, thought it by no means
beneath his dignity to serve as a sort of glorified press-agent for
John Jacob Astor?
It is certainly true that none of these unfavourable factors of
American life could have had such a baleful effect upon our literature
if there had been others to counteract them. An aristocratic tradition,
if we had ever had it, would have kept open among us the right of
way of the free individual, would have preserved the claims of mere
living. “It is curious to observe,” writes Nietzsche in one of his letters,
“how any one who soon leaves the traditional highway in order to
travel on his own proper path always has more or less the sense of
being an exile, a condemned criminal, a fugitive from mankind.” If
that is true in the old world, where society is so much more complex
and offers the individual so much more latitude, how few could ever
have had the strength in a society like ours, which has always placed
such an enormous premium on conformity, to become and to remain
themselves? Is it fanciful indeed to see in the famous “remorse” of
Poe the traces left by this dereliction of the tribal law upon the
unconscious mind of an artist of unique force and courage? Similarly,
a tradition of voluntary poverty would have provided us with an
escape from the importunities of bourgeois custom. But aside from
the fact that even so simple a principle as this depends largely for its
life on precedent (Whitman and the painter Ryder are almost alone
among latter-day Americans in having discovered it for themselves),
aside from the fact that to secede from the bourgeois system is, in
America, to subject oneself to peculiar penalties (did it ever occur to
Mark Twain that he could be honourably poor?)—aside from all this,
poverty in the new world is by no means the same thing as poverty
in the old: one has only to think of Charles Lamb and all the riches
that London freely gave him, all the public resources he had at his
disposal, to appreciate the difference. With us poverty means in the
end an almost inevitable intellectual starvation. Consider such a
plaint as Sidney Lanier’s: “I could never describe to you” (he writes
to Bayard Taylor) “what a mere drought and famine my life has been,
as regards that multitude of matters which I fancy one absorbs when
one is in an atmosphere of art, or when one is in conversational
relationship with men of letters, with travellers, with persons who
have either seen, or written, or done large things. Perhaps you know
that, with us of the younger generation in the South since the war,
pretty much the whole of life has been merely not dying.” That is
what poverty means in America, poverty and isolation, for Lanier,
whose talent, as we can see to-day, was hopelessly crippled by it,
was mistaken if he supposed that there was anything peculiar to the
South in that plight of his: it has been the plight of the sensitive man
everywhere in America and at all times. Add to poverty the want of a
society devoted to intellectual things and we have such a fate as
Herman Melville’s in New York. “What he lacked,” wrote Mr. Frank
Jewett Mather the other day, explaining the singular evaporation of
Melville’s talent, “was possibly only health and nerve, but perhaps
even more, companionship of a friendly, critical, understanding sort.
In London, where he must have been hounded out of his corner, I
can imagine Melville carrying the reflective vein to literary
completion.” Truly Samuel Butler was right when he jotted down the
following observation in his note-book: “America will have her
geniuses, as every other country has, in fact she has already had
one in Walt Whitman, but I do not think America is a good place in
which to be a genius. A genius can never expect to have a good time
anywhere, if he is a genuine article, but America is about the last
place in which life will be endurable at all for an inspired writer of any
kind.”
To such circumstances as these, I say, the weakness of our
literary life is due. If we had lacked nothing else indeed, the lack of
great leaders, of a strong and self-respecting literary guild, even of
an enlightened publishing system would have sufficed to account for
much of it. To consider the last point first: in the philosophy of
American publishing, popularity has been regarded not only as a
practical advantage but as a virtue as well. Thanks to the peculiar
character of our democracy, our publishers have been able to
persuade themselves that a book which fails to appeal to the
ordinary citizen cannot be good on other grounds. Thus, if we had
had to depend on the established system, the present revival in our
letters, tentative as it is, would have been still more sadly
handicapped. The history of Mr. Dreiser’s “Sister Carrie” is enough to
suggest what may well have been the fate of many an incipient
author less persistent than he. It is certain, in any case, that many
another, at a critical moment, has drifted away from literature
because of the lack in our publishing world of those opportunities for
a semi-creative hack-work which have provided countless European
writers with a foothold and even a guideway. The Grub Street of
London and Paris is a purgatory, but as long as it exists, with its
humble instrumentalities, translating, editing, reviewing, one can at
least survive until one has either lost or found oneself: it scarcely
needs to be pointed out that the American magazine, with its
mechanical exactions, which levy such a terrible toll upon one’s
individuality, is anything but an advantageous substitute. Till one has
found oneself, the less one is subjected to such powerful, such
essentially depolarizing influences, the better; the most mediocre
institutions, if they enable one at the same time to maintain one’s
contact with literature and to keep body and soul together, are as life
is to death beside them. How many English writers owe their ultimate
salvation to such trivial agencies as T. P.’s Weekly? In America,
where nothing of the kind has existed until lately, or nothing
adequate to the number of those who might have benefitted by it, the
literary aspirant is lost unless his powers mature at once.
But the lack of great leaders, of a strong and self-respecting
literary guild (the one results from the other)—is not this our chief
misfortune? In the best of circumstances, and considering all the
devils that beset the creative spirit, a strong impulse is scarcely
enough to carry one through: one must feel not only that one is doing
what one wishes to do but that what one is doing matters. If dozens
of American writers have fallen by the wayside because they have
met with insuperable obstacles, dozens of others have fallen, with all
their gifts, because they have lost interest in their work, because
they have ceased to “see the necessity” of it. This is just the point
where the presence of a leader, of a local tradition, a school, a guild
makes all the difference. “With the masters I converse,” writes
Gauguin in his journal. “Their example fortifies me. When I am
tempted to falter I blush before them.” If that could have been true of
Gauguin, the “Wolf,” who walked by himself as few have walked,
what shall we say of other men whose artistic integrity, whose faith in
themselves, is exposed every day to the corroding influences of a
third-rate civilization? It would be all very well if literature were
merely a mode of “having a good time;” I am speaking of those, the
real artists, who, with Nietzsche, make a distinction (illusory perhaps)
between “happiness” and “work,” and I say that these men have
always fed on the thought of greatness and on the propinquity of
greatness. It was not for nothing that Turgeniev bore in his memory,
as a talisman, the image of Pushkin; that Gorky, having seen Tolstoy
once, sitting among the boulders on the seashore, felt everything in
him blending in one happy thought, “I am not an orphan on the earth,
so long as this man lives on it.” The presence of such men
immeasurably raises the morale of the literary life: that is what
Chekhov meant when he said, “I am afraid of Tolstoy’s death,” and is
it not true that the whole contemporary literature of England has
drawn virtue from Thomas Hardy? The sense that one is working in
a great line: this, more than anything else perhaps, renews one’s
confidence in the “quaint mania of passing one’s life wearing oneself
out over words,” as Flaubert called it, in the still greater folly of
pursuing one’s ego when everything in life combines to punish one
for doing so. The successful pursuit of the ego is what makes
literature; this requires not only a certain inner intensity but a certain
courage, and it is doubtful whether, in any nation, any considerable
number of men can summon up that courage and maintain it unless
they have seen the thing done. The very notion that such a life is
either possible or desirable, the notion that such a life exists even,
can hardly occur to the rank and file: some individual has to start the
ball rolling, some individual of extraordinary force and audacity, and
where is that individual to be found in our modern American
literature? Whitman is the unique instance, for Henry James, with all
his admirable conscience, was at once an exile and a man of
singularly low vitality; and Whitman was not only essentially of an
earlier generation, he was an invalid who folded his hands in mid-
career.
Of those others what can we say, those others whose gifts have
fitted them to be our leaders? Mr. Howells once observed of the
American drama of the last few decades that “mainly it has been gay
as our prevalent mood is, mainly it has been honest, as our habit is,
in cases where we believe we can afford it.” In this gently ironical
pleasantry one seems to discern the true spirit of modern American
letters. But it was Howells himself who, in order to arrive at the
doctrine that “the more smiling aspects of life are the more
American,” deliberately, as he has told us, and professed realist that
he was, averted his eyes from the darker side of life. And Mark
Twain suppressed his real beliefs about man and the universe. And
Henry Adams refused to sponsor in public the novels that revealed
what he considered to be the truth about American society. Thus
spake Zarathustra: “There is no harsher misfortune in all the fate of
man than when the mighty ones of earth are not also the most
excellent.” At its very headwaters, as we see, this modern literature
of ours has failed to flow clear: the creative impulse in these men,
richly endowed as they were, was checked and compromised by too
many other impulses, social and commercial. If one is to blame
anything for this it is the immense insecurity of our life, which is due
to its chaotic nature; for one is not entitled to expect greatness even
of those who have the greatest gifts, and of these men Henry Adams
was alone secure; of Howells and Mark Twain, Westerners as they
were, it may be said that they were obliged to compromise,
consciously or unconsciously, in order to gain a foothold in the only
corner of the country where men could exist as writers at all. But if
these men were unable to establish their independence (one has
only to recall the notorious Gorky dinner in order to perceive the full
ignominy of their position), what must one expect to find in the rank
and file? Great men form a sort of wind shield behind which the rest
of their profession are able to build up their own defences; they
establish a right of way for the others; they command a respect for
their profession, they arouse in the public a concern for it, an interest
in it, from which the others benefit. As things are, the literary guild in
America is not respected, nor does it respect itself. In “My Literary
Passions” Howells, after saying that his early reading gave him no
standing among other boys, observes: “I have since found that
literature gives one no more certain station in the world of men’s
activities, either idle or useful. We literary folk try to believe that it
does, but that is all nonsense. At every period of life among boys or
men we are accepted when they are at leisure and want to be
amused, and at best we are tolerated rather than accepted.”
Pathetic? Pusillanimous? Abject? Pathetic, I suppose. Imagine
Maxim Gorky or Knut Hamsun or Bernard Shaw “trying to believe”
that literature gives him a certain station in the world of men’s
activities, conceiving for a moment that any activity could exceed his
in dignity! Howells, we observe, conscientious craftsman as he was,
instinctively shared, in regard to the significance of his vocation, the
feeling of our pragmatic philosophers, who have been obliged to
justify the intellectual life by showing how useful it is—not to mention
Mr. R. W. Chambers, who has remarked that writers “are not held in
excessive esteem by really busy people, the general idea being—
which is usually true—that literature is a godsend to those unfitted
for real work.” After this one can easily understand why our novelists
take such pains to be mistaken for business men and succeed so
admirably in their effort. One can easily understand why Jack
London preferred the glory of his model ranch and his hygienic
pigsties to the approval of his artistic conscience.
So much for the conditions, or at least a few of them, that have
prevented our literature from getting its head above water. If America
is littered with extinct talents, the halt, the maimed and the blind, it is
for reasons with which we are all too familiar; and we to whom the
creative life is nothing less than the principle of human movement,
and its welfare the true sign of human health, look upon this
wreckage of everything that is most precious to society and ask
ourselves what our fathers meant when they extolled the progress of
our civilization. But let us look facts in the face. Mr. Sinclair Lewis
asserts that we are in the midst of a revival and that we are too
humble in supposing that our contemporary literature is inferior to
that of England. That we are in the midst of a revival I have no doubt,
but it is the sustained career that makes a literature; without the
evidence of this we can hope much but we can affirm nothing. What
we can see is that, with all its hope, the morale of the literary
profession in this country is just what its antecedents have made it. I
am reminded of the observation of a friend who has reason to know,
that the Catholic Church in America, great as it is in numbers and
organization, still depends on the old world for its models, its task-
masters and its inspiration; for the American priest, as a rule, does
not feel the vocation as the European feels it. I am reminded of the
American labour movement which, prosperous as it is in comparison
with the labour movements of Europe, is unparalleled for the
feebleness of its representatives. I am reminded of certain brief
experiences in the American university world which have led me to
believe that the professors who radiate a genuine light and warmth
are far more likely to be Russians, Germans, Englishmen, Irishmen,
Dutchmen, Swedes and Finns than the children of ’76. That old
hostility of the pioneers to the special career still operates to prevent
in the American mind the powerful, concentrated pursuit of any non-
utilitarian way of life: meanwhile everything else in our society tends

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Management: Processes and Supply

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Part 1 Managing Processes 49

Part 2 Managing Customer Demand 275

Part 3 Managing Supply Chains 483

Appendix Normal Distribution 599

Step 3: Develop Alternatives 144

Discussion Questions 195 Monitoring Project Resources 257

Managerial Practice 6.1 Panasonic Corporation 219 Kimberly-Clark 275

Reconciling the MPS with Sales and Operations

12 Supply Chain Design 483

Customer Relationship Process 561 Supply Chain Ethics 591

What’s New in the Eleventh Edition?

Helping You Learn

Tom Uhlman/AP Photo

Cycle inventory 175

End of Chapter Resources

Teaching and Learning Support

Instructor’s Solutions Manual (0-13-387239-4)—Prepared by Jack Jensen at The University of South

TestGen —Pearson Education’s test-generating software is available from http://www

Sal Agnihothri, State University of New York–Binghampton

❹ Define an operations strategy and its linkage to corporate

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Historical Evolution and Perspectives

among others. The foundations of modern manufacturing

How Processes Work External environment

Figure 1.2 shows how processes work in an organization. Any process

Service and Manufacturing Processes

“What else is Wisdom? What of man’s endeavour

But what have we now of this atmosphere?

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