| |
| |
| |
| Introduction | |
| |
| |
| |
| Learning Objectives and Framework | |
| |
| |
| |
| Road Map of the Book | |
| |
| |
| |
| The Process View of the Organization | |
| |
| |
| |
| Presbyterian Hospital in Philadelphia | |
| |
| |
| |
| Three Measures of Process Performance | |
| |
| |
| |
| Little's Law | |
| |
| |
| |
| Inventory Turns and Inventory Costs | |
| |
| |
| |
| Five Reasons to Hold Inventory | |
| |
| |
| Pipeline Inventory | |
| |
| |
| Seasonal Inventory | |
| |
| |
| Cycle Inventory | |
| |
| |
| Decoupling Inventory/Buffers | |
| |
| |
| Safety Inventory | |
| |
| |
| |
| The Product-Process Matrix | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Readings | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Understanding the Supply Process: Evaluating Process Capacity | |
| |
| |
| |
| How to Draw a Process Flow Diagram | |
| |
| |
| |
| Bottleneck, Process Capacity, and Flow Rate (Throughput) | |
| |
| |
| |
| How Long Does It Take to Produce a Certain Amount of Supply? | |
| |
| |
| |
| Process Utilization and Capacity Utilization | |
| |
| |
| |
| Workload and Implied Utilization | |
| |
| |
| |
| Multiple Types of Flow Units | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Estimating and Reducing Labor Costs | |
| |
| |
| |
| Analyzing an Assembly Operation | |
| |
| |
| |
| Time to Process a Quantity X Starting with an Empty Process | |
| |
| |
| |
| Labor Content and Idle Time | |
| |
| |
| |
| Increasing Capacity by Line Balancing | |
| |
| |
| |
| Scale Up to Higher Volume | |
| |
| |
| Increasing Capacity by Replicating the Line | |
| |
| |
| Increasing Capacity by Selectively Adding Workers | |
| |
| |
| Increasing Capacity by Further Specializing Tasks | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Readings | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| The Link between Operations and Finance | |
| |
| |
| |
| Paul Downs Cabinetmakers | |
| |
| |
| |
| Building an ROIC Tree | |
| |
| |
| |
| Valuing Operational Improvements | |
| |
| |
| |
| Analyzing Operations Based on Financial Data | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Readings | |
| |
| |
| |
| Practice Problem | |
| |
| |
| |
| Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model | |
| |
| |
| |
| The Impact of Setups on Capacity | |
| |
| |
| |
| Interaction between Batching and Inventory | |
| |
| |
| |
| Choosing a Batch Size in the Presence of Setup Times | |
| |
| |
| |
| Balancing Setup Costs with Inventory Costs: The EOQ Model | |
| |
| |
| |
| Observations Related to the Economic Order Quantity | |
| |
| |
| |
| Transfer Batches | |
| |
| |
| |
| Setup Time Reduction | |
| |
| |
| |
| Other Flow Interruptions: Buffer or Suffer | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Variability and Its Impact on Process Performance: Waiting Time Problems | |
| |
| |
| |
| Motivating Example: A Somewhat Unrealistic Call Center | |
| |
| |
| |
| Variability: Where It Comes From and How It Can Be Measured | |
| |
| |
| |
| Analyzing an Arrival Process | |
| |
| |
| Stationary Arrivals | |
| |
| |
| Exponential Interarrival Times | |
| |
| |
| Nonexponential Interarrival Times | |
| |
| |
| Summary: Analyzing an Arrival Process | |
| |
| |
| |
| Service Time Variability | |
| |
| |
| |
| Predicting the Average Waiting Time for the Case of One Resource | |
| |
| |
| |
| Predicting the Average Waiting Time for the Case of Multiple Resources | |
| |
| |
| |
| Service Levels in Waiting Time Problems | |
| |
| |
| |
| Economic Implications: Generating a Staffing Plan | |
| |
| |
| |
| Impact of Pooling: Economies of Scale | |
| |
| |
| |
| Priority Rules in Waiting Lines | |
| |
| |
| Service-Time-Dependent Priority Rules | |
| |
| |
| Service-Time-Independent Priority Rules | |
| |
| |
| |
| Reducing Variability | |
| |
| |
| Ways to Reduce Arrival Variability | |
| |
| |
| Ways to Reduce Service Time Variability | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| The Impact of Variability on Process Performance: Throughput Losses | |
| |
| |
| |
| Motivating Examples: Why Averages Do Not Work | |
| |
| |
| |
| Ambulance Diversion | |
| |
| |
| |
| Throughput Loss for a Simple Process | |
| |
| |
| |
| Customer Impatience and Throughput Loss | |
| |
| |
| |
| Several Resources with Variability in Sequence | |
| |
| |
| The Role of Buffers | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Quality Management, Statistical Process Control, and Six-Sigma Capability | |
| |
| |
| |
| Controlling Variation: Practical Motivation | |
| |
| |
| |
| The Two Types of Variation | |
| |
| |
| |
| Constructing Control Charts | |
| |
| |
| |
| Control Chart Example from a Service Setting | |
| |
| |
| |
| Design Specifications and Process Capability | |
| |
| |
| |
| Attribute Control Charts | |
| |
| |
| |
| Robust Process Design | |
| |
| |
| |
| Impact of Yields and Defects on Process Flow | |
| |
| |
| Rework | |
| |
| |
| Eliminating Flow Units from the Process | |
| |
| |
| Cost Economics and Location of Test Points | |
| |
| |
| Defects and Variability | |
| |
| |
| |
| A Process for Improvement | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Lean Operations and the Toyota Production System | |
| |
| |
| |
| The History of Toyota | |
| |
| |
| |
| TPS Framework | |
| |
| |
| |
| The Seven Sources of Waste | |
| |
| |
| |
| JIT: Matching Supply with Demand | |
| |
| |
| Achieve One-Unit-at-a-Time Flow | |
| |
| |
| Produce at the Rate of Customer Demand | |
| |
| |
| Implement Pull Systems | |
| |
| |
| |
| Quality Management | |
| |
| |
| |
| Exposing Problems through Inventory Reduction | |
| |
| |
| |
| Flexibility | |
| |
| |
| |
| Standardization of Work and Reduction of Variability | |
| |
| |
| |
| Human Resource Practices | |
| |
| |
| |
| Lean Transformation | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Betting on Uncertain Demand: The Newsvendor Model | |
| |
| |
| |
| O'Neill Inc. | |
| |
| |
| |
| An Introduction to the Newsvendor Model | |
| |
| |
| |
| Constructing a Demand Forecast | |
| |
| |
| |
| The Expected Profit-Maximizing Order Quantity | |
| |
| |
| |
| Performance Measures | |
| |
| |
| Expected Lost Sales | |
| |
| |
| Expected Sales | |
| |
| |
| Expected Leftover Inventory | |
| |
| |
| Expected Profit | |
| |
| |
| Fill Rate | |
| |
| |
| In-Stock Probability and Stockout Probability | |
| |
| |
| |
| Other Objectives for Choosing an Order Quantity | |
| |
| |
| |
| Managerial Lessons | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity | |
| |
| |
| |
| Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost | |
| |
| |
| |
| When Is the Mismatch Cost High? | |
| |
| |
| |
| Reducing Mismatch Costs with Make-to-Order | |
| |
| |
| |
| Quick Response with Reactive Capacity | |
| |
| |
| Unlimited, but Expensive, Reactive Capacity | |
| |
| |
| Limited Reactive Capacity | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model | |
| |
| |
| |
| Medtronic's Supply Chain | |
| |
| |
| |
| The Order-up-to Model Design and Implementation | |
| |
| |
| |
| The End-of-Period Inventory Level | |
| |
| |
| |
| Choosing Demand Distributions | |
| |
| |
| |
| Performance Measures | |
| |
| |
| In-Stock and Stockout Probability | |
| |
| |
| Expected Back Order | |
| |
| |
| Fill Rate | |
| |
| |
| Expected On-Hand Inventory | |
| |
| |
| Pipeline Inventory/Expected On-Order Inventory | |
| |
| |
| |
| Choosing an Order-up-to Level to Meet a Service Target | |
| |
| |
| An In-Stock Probability Target | |
| |
| |
| A Fill Rate Target | |
| |
| |
| |
| Choosing an Appropriate Service Level | |
| |
| |
| |
| Controlling Ordering Costs | |
| |
| |
| |
| Medtronic Wrap-up | |
| |
| |
| |
| Managerial Insights | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Risk-Pooling Strategies to Reduce and Hedge Uncertainty | |
| |
| |
| |
| Location Pooling | |
| |
| |
| Pooling Medtronic's Field Inventory | |
| |
| |
| Medtronic's Distribution Center(s) | |
| |
| |
| Electronic Commerce | |
| |
| |
| |
| Product Pooling | |
| |
| |
| |
| Lead Time Pooling: Consolidated Distribution and Delayed Differentiation | |
| |
| |
| Consolidated Distribution | |
| |
| |
| Delayed Differentiation | |
| |
| |
| |
| Capacity Pooling with Flexible Manufacturing | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Revenue Management with Capacity Controls | |
| |
| |
| |
| Revenue Management and Margin Arithmetic | |
| |
| |
| |
| Protection Levels and Booking Limits | |
| |
| |
| |
| Overbooking | |
| |
| |
| |
| Implementation of Revenue Management | |
| |
| |
| Demand Forecasting | |
| |
| |
| Dynamic Decisions | |
| |
| |
| Variability in Available Capacity | |
| |
| |
| Reservations Coming in Groups | |
| |
| |
| Effective Segmenting of Customers | |
| |
| |
| Multiple Fare Classes | |
| |
| |
| Software Implementation | |
| |
| |
| Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacity | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Supply Chain Coordination | |
| |
| |
| |
| The Bullwhip Effect: Causes and Consequences | |
| |
| |
| Order Synchronization | |
| |
| |
| Order Batching | |
| |
| |
| Trade Promotions and Forward Buying | |
| |
| |
| Reactive and Overreactive Ordering | |
| |
| |
| Shortage Gaming | |
| |
| |
| |
| Bullwhip Effect: Mitigating Strategies | |
| |
| |
| Sharing Information | |
| |
| |
| Smoothing the Flow of Product | |
| |
| |
| Eliminating Pathological Incentives | |
| |
| |
| Using Vendor-Managed Inventory | |
| |
| |
| |
| Incentive Conflicts in a Sunglasses Supply Chain | |
| |
| |
| |
| Buy-Back Contracts | |
| |
| |
| |
| More Supply Chain Contracts | |
| |
| |
| Quantity Discounts | |
| |
| |
| Options Contracts | |
| |
| |
| Revenue Sharing | |
| |
| |
| Quantity Flexibility Contracts | |
| |
| |
| Price Protection | |
| |
| |
| |
| Summary | |
| |
| |
| |
| Further Reading | |
| |
| |
| |
| Practice Problems | |
| |
| |
| |
| Statistics Tutorial | |
| |
| |
| |
| Tables | |
| |
| |
| |
| Evaluation of the Loss Function | |
| |
| |
| |
| Equations and Approximations | |
| |
| |
| |
| Solutions to Selected Practice Problems | |
| |
| |
| Glossary | |
| |
| |
| References | |
| |
| |
| Index of Key "How to" Exhibits | |
| |
| |
| Summary of Key Notation and Equations | |
| |
| |
| Index | |