Post on 04-Feb-2018
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A N O T E T O I N S T R U C T O R S
T H E C O V E R A N D T H E T I T L E
Operations and Supply Management: The Core derives its title from a combinationof ideas and trends. First, in order to be lean and focused, the book presents the im-portant core ideas. A review by Professor Jacobs of the syllabi of over a dozen repre-sentative U.S. universities revealed that, as expected, there was a wide variety of top-ics covered; all of which would lead naturally to a comprehensive text such asOperations Management for Competitive Advantage. The topics covered in all of thesesampled schools, i.e., the consistent or Core topics, is what this text includes, and onlythose.
In addition to that study, the authors participated in a two-session meeting chairedby Mark Berenson at the National DSI meeting in Boston in which faculty suggestedthat four areas ought to be considered core in Operations Management courses.These areas are Processes, Quality, Inventory, and Supply Chain Management,
roughly similar to the sections of this text.Finally, as is well known in the field, success for companies today requires success-
fully managing the entire supply flow, from the sources of the firm, through the value-added processes of the firm, and on to the customers of the firm.
The cover illustration might be considered symbolic or representative of the core aswell as the supply flow.
Just as lava flows from the core of the earth, operations and supply management isthe core of business. Materials must flow through supply processes to create cash out-put and profits.
In Operations and Supply Management: The Core, we take students to the center ofthe business and focus on the core concepts and tools needed to ensure that theseprocesses run smoothly.
I-ii
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Instructors Walkthroug
The following section
highlights the key features
developed to provide you
with the best overall teaching
text available. We hope these
features give you maximum
support while allowing you
to tailor your course to fit the
needs of your students.
Chapter Opener
Chapter10DEMANDMANAGEMENTANDFORECASTING
Afterreadingthechapteryouwill:1. Understandtheroleofforecastingasabasisforsupplychainplanning.
2. Knowhowindependentdemandanddependentdemanddiffer.3. Knowthebasiccomponentsofindependentdemand:average, trend,seasonal,and
randomvariation.4. BecomefamiliarwithcommonqualitativeforecastingtechniquessuchastheDelphi
method.5. Know how to make time series forecasts usingmoving averages, exponential
smoothing,andregression.6. UnderstandhowtheInternetisusedtoimproveforecasting.
250 Wal-MartsDataWarehouse251 DemandManagemen
tDependentdemanddefinedIndependentdemanddefined
252 TypesofForecasting
Timeseriesanalysisdefined252 ComponentsofDemand254 QualitativeTechniquesinForecastingMarketResearch
PanelConsensusHistoricalAnalogyDelphiMethod
256 TimeSeriesAnalysisSimpleMovingAverageExponentialsmoothingdefined
WeightedMovingAverageSmoothingconstantalpha()defined
ExponentialSmoothingSmoothingconstantdelta()defined
ForecastErrorsMean
absolutedeviation(MAD)defined
SourcesofError
Trackingsignaldefined
MeasurementofErrorLinearregressionforecastingdefined
LinearRegressionAnalysis
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I-iv INSTRUCTORSWALKTHROUGH
A P P L E S I P O D H A S I T S O W N P R O D U C T
D E V E L O P M E N T T E A MHow does Apple develop the innovative products it sells? Apple has two separate product
development teams, one organized around its Macintosh computer and the other focused
on the iPod music player. By organizing this way Apple can precisely focus resources on its
amazingly successful products. The iPod has reinvigorated Apple and its bottom line over
the past two years.
Much of theunderlying iPod designwas performed byoutsidecompanies. Consumer elec-
tronics is a fast moving area and using established experts linked together in what could be
called a design chain, Apple was ableto quickly bring the iPod to market.
Apple developed a layered project
that relied on a platform created by a
thirdparty, PortalPlayer,ofSantaClara,
California.PortalPlayerhad developed
a base platform for a variety of audio
systems, including portable digital
music devices, general audio systems,
andstreamingaudio receivers.
Apple started with a vision of
what theplayer shouldbeandwhat it
should look like. The subsequent de-
sign parameters were dictated by its
appearance and form factor. That outside-in perspective helped determine a number of the
components, including the planar lithium battery from Sony and the 1.8-inch Toshiba hard
Opening Vignettes
Each chapter opens with a short vignette to set the stage and help pique studentsinterest in the material about to be studied. A few examples include:
IKEA, Chapter 1, page 5
iPod, Chapter 2, page 21
DHL, Chapter 5, page 107
Solectron, Chapter 9, page 224
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INSTRUCTORSWALKTHROUGH I-v
The Motorola RAZR Cell Phone
The unique design process Motorolas team used for the newhit product.
Breakthrough
chargerport, andso on.Scheduled foran hour, themeetingsfre-
quently ran past 7 P.M. The thin clam project became a rebel
outpost. Money wasnt an object or a constraint, but secrecyandspeed were. Theteam prohibited digital picturesof thepro-
ject so that nothing could be inadvertently disseminated by
e-mail. Models of the phone could leave the premises only
when physically carried or accompanied by a team member.
There were two key innovations that allowed the team to make
quantum leaps in thinness, one of the key design features they
aimed at. The first was placing the antenna in the mouthpiece
of the phone instead of at the top. While this had not been
done in cell phones before, it was also a technical challenge.
The second brainstorm was rearranging the phones innards, pri-
marily by placing the battery next to the circuit board, or inter-
nal computer, rather than beneath it. That solution, however,
created a new problem: width. Motorolas human factors ex-
perts had concluded that a phone wider than 49 millimeters
wouldnt fit well in a persons hand. The side-by-side design
yielded a phone 53 millimeters wide. But the RAZR team didnt
accept the companys research as gospel. The team made its
own model to see how a 53-millimeter phone felt and in the
end, theteammembers decided ontheirownthatthe company
was wrong and that four extra millimeters were acceptable.
Thecompanysold its 50-millionthRAZR in June2006! Motorola
will sell more RAZRs this year than Apple will iPods. Several key
players fromthe RAZRdevelopmentteam were asked to appear
at a meeting of top executives at company headquarters. They
werent told why. Then, as the team members filed in, the
Motorola brass awaiting them raised in applause, delivering a
standing ovation. Team members were also told they would berewarded witha significant bonusof stock options.
The new Motorola RAZR was incubated and hatched in color-less cubicles in Libertyville, a northern Chicago suburb. It was a
skunkworks project whose tight-knit team repeatedly flouted
Motorolas own company rules for developing new products.
They kept the project top-secret, even from their colleagues.
They used materials and techniques Motorola had never tried
before. After contentious internal battles, they threw out ac-
cepted models of what a mobile telephone should look and
feel like. In short, the team that created the RAZR broke the
mold, and in the process rejuvenated the company.
To design the look and feel as well as the internal configuration
of a telephone takes a team of specialists, in the case of the
RAZR about 20people. The full team metdaily at4 P.M. inacon-
ference room in Libertyville to hash over the previous days
progress as they worked down a checklist of components: an-tenna, speaker, keypad,camera,and display, light source,battery,
Adapted from RAZRS edge, Fortune Magazine,June 1, 2006.
Breakthrough Boxes
The Breakthroughs provide examples or expansions of the topics presented byhighlighting leading companies practicing new, breakthrough ways to run their
operations. Examples include: America West Boarding, page 8
Motorola RAZR Design, page 24
J. D. Power and Associates Defines Quality, page 141
Capability Sourcing at 7-Eleven, page 191
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I-vi INSTRUCTORSWALKTHROUGH
Example 5.1: Customers in Line
Western National Bank is considering opening a drive-through window for customer service. Man-
agement estimates that customers will arrive at the rate of 15 per hour. The teller who will staff the
window can service customers at the rate of one every three minutes or 20 per hour.
Part 1 Assuming Poisson arrivals and exponential service, find
1. Utilization of the teller.
2. Average number in the waiting line.
3. Average number in the system.
4. Average waiting time in line.
5. Average waiting time in the system, including service.
SOLUTIONPart 1
1. The average utilization of the teller is (using Model 1)
=
=
15
20= 75 percent
2. The average number in the waiting line is
Lq =2
( )=
(15)2
20(20 15)= 2.25 customers
3. The average number in the system is
Ls =
=15
20 15
= 3 customers
4. Average waiting time in line is
Service
ExcelQueue.xls
Examples with Solutions
Examples follow quantitative topics and demonstrate specific procedures andtechniques. Clearly set off from the text, they help students understand thecomputations.
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INSTRUCTORSWALKTHROUGH I-vi
Supply Chain
These icons highlight areas witha direct link to supply chain
management.
Global
Global icons identify internationalexamples and text discussion.
Cross FunctionalThese icons highlight areaswhere operations managementconcepts link and integratewith other business functions.
Interactive OperationsManagement
These icons direct students toInteractive OperationsManagement Java applets thatare available on the text Web site
Internet
These icons highlight exercisesthat direct students to theInternet for research.
SupplyChain
Global
Excel
These icons point out conceptswhere Excel templates areavailable on the DVD and textWeb site.
CrossFunctional
InteractiveOperationsManagement
Internet
Excel
Tutorials
The tutorial icons highlight linksto the ScreenCam tutorials on theDVD included with the text.
Tutorials
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I-viii INSTRUCTORSWALKTHROUGHI-viii INSTRUCTORSWALKTHROUGH
MANUFACTURING PROCESSES chapter 4 83
e x h i b i t 4 . 1ProductProcess Matrix: Framework Describing Layout Strategies
ManufacturingCell
Project
Low Product Volume High
Low
one-of-a-kind
Highstandardizedcommodity
product
ProductStandardization
Workcenter
AssemblyLine
ContinuousProcess
Photos and Exhibits
Over fifty photos and over two hundred exhibits are included in the text, to enhancethe visual appeal and clarify text discussions. Many of the photos illustrateadditional examples of companies that utilize the operations and supply chainconcepts in their business.
TOYOTAPRIUSES AND OTHER VEHICLES CLAD IN
PROTECTIVE COVERING AWAIT SHIPMENT TO
U.S.DEALERS AT THELONGBEACH, CA, PORT.
IN2006 THE VALUE OF THE COMPANYS
INVENTORY TOTALED ABOUT 1.62 TRILLION
AND THE COST OF GOODS SOLD WAS
15.73 TRILLION. SOTOYOTAS INVENTORY
TURNED OVER ABOUT9.7 TIMES PER YEAR, OR
ROUGHLY38 DAYS OF INVENTORY ON HAND.
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INSTRUCTORSWALKTHROUGH I-ix
S o l v e d P r o b l e m s
SOLVED PROBLEM 1
Sunrise Baking Company markets doughnuts through a chain of food stores. It has been experi-
encing over-and underproductionbecause of forecastingerrors.The followingdata are its demand
in dozens of doughnuts for the past four weeks. Doughnuts are made for the following day; for
example, Sundays doughnut production is for Mondays sales, Mondays production is for
Tuesdays sales, and so forth. The bakery is closed Saturday, so Fridays production must satisfydemand for both Saturday and Sunday.
4 WEEKS AGO 3 WEEKS AGO 2 WEEKS AGO LAST WEEK
Monday 2,200 2,400 2,300 2,400
Tuesday 2,000 2,100 2,200 2,200
Wednesday 2,300 2,400 2,300 2,500
Thursday 1,800 1,900 1,800 2,000
Friday 1,900 1,800 2,100 2,000
Saturday
Sunday 2,800 2,700 3,000 2,900
Make a forecast for this week on the following basis:
a. Daily, using a simple four-week moving average.
b. Daily, using a weighted average of 0.40, 0.30, 0.20, and 0.10 for the past four weeks.
c. Sunrise is also planning its purchasesof ingredients for bread production. If bread demandhad
been forecast for last week at 22,000 loaves and only 21,000 loaves were actually demanded,
what would Sunrises forecast be forthis week using exponential smoothingwith= 0.10?
d. Suppose, with the forecast made in c, this weeks demand actually turns out to be 22,500. What
would the new forecast be for the next week?
Solution
a. Simple moving average, four-week.
Monday2,400+ 2,300+ 2,400+ 2,200
4 =
9,300
4 = 2,325 doz.
Tuesday2,200+ 2,200+ 2,100+ 2,000
4 =
8,500
4 = 2,125 doz.
Wednesday2,500+ 2,300+ 2,400+ 2,300
4 =
9,500
4 = 2,375 doz.
Thursday2,000+ 1,800+ 1,900+ 1,800
4 =
7,500
4 = 1,875 doz.
Excel:Forecasting
Solved Problems
Representative example problems are placed at the end of appropriate chapters.Each includes a detailed, worked-out solution and provides another level of supportfor students before they try problems on their own.
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I-x INSTRUCTORSWALKTHROUGH
K e y T e r m s
Inventory The stock of any item or resource used in an
organization.
Independent demand The demands for various items are
unrelated to each other.
Dependent demand The need for any one item is a direct re-
sult of the need for some other item, usually an item of which
it is a part.
Fixedorderquantitymodel (orQ-model) An inventorycon-
trol model where the amount requisitioned is fixed and the
actual ordering is triggered by inventory dropping to a speci-
fied level of inventory.
Fixedtime period model (or P-model) An inventory control
model that specifies inventory is ordered at the end of a
predetermined time period. The interval of time between
orders is fixed and the order quantity varies.
Inventory position The amount on-hand plus on-order
minus backordered quantities. In the case where inventory
has been allocated for special purposes, the inventory posi-
tion is reduced by these allocated amounts.
Safety stock The amount of inventory carried in addition to
the expected demand.
Cycle counting A physical inventory-taking technique in
which inventory is counted on a frequent basis rather than
once or twice a year.
Key Terms
The unique vocabulary of Operations and Supply Managementis highlighted in theKey Terms section at the end of each chapter and includes definitions.
F o r m u l a R e v i e w
Single-period model. Cumulative probability of not selling the last unit. Ratio of marginal cost of un-
derestimating demand and marginal cost of overestimating demand.
[12.1] P Cu
Co + Cu
Q-model. Total annual cost for an order Q, a per-unit cost C, setup cost S, and per-unit holding
costH.
[12.2] TC= DC+D
QS+
Q
2H
Q-model. Optimal (or economic) order quantity.
[12.3] Qopt =
2DS
H
Formula Reviews
These lists at the end of chapters summarize formulas in one spot for easy studentaccess and review.
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Cases
Located at the end of most chapters, thirteen cases allow students to think criticallyabout issues discussed in the chapter. Cases include:
Cell Phone Design, Chapter 2, page 48
Toshiba, Chapter 4, page 103
Altavox Electronics, Chapter 10, page 281
Brunswick Motors, Chapter 13, page 371
C A S E : D e s i g n i n g To s h i b a s N o t e b o o k
C o m p u t e r L i n e
Toshihiro Nakamura, manufacturing engineering sectionmanager, examined the prototype assembly process sheet
(shown in Exhibit 4.7) for the newest subnotebook computer
model. With every new model introduced, management felt
that the assembly line had to increase productivity and lower
costs, usually resulting in changes to the assembly process.
When a new model was designed, considerable attention was
directed toward reducing the number of components and sim-
plifying parts production and assembly requirements. This
new computer was a marvel of high-tech, low-cost innova-
tion and should give Toshiba an advantage during the upcom-
ing fall/winter selling season.
Production of the subnotebook was scheduled to begin in
10 days. Initial production for the new model was to be at
150 units per day, increasing to 250 units per day the follow-
ing week (management thought that eventually production
would reach 300 units per day). Assembly lines at the plant
normally were staffed by 10 operators who worked at a 14.4-meter-long assembly line. The line could accommodate up to
12 operators if there was a need. The line normally operated
for 7.5 hours a day (employees worked from 8:15 A.M. to
5:00 P.M. and regular hours included 1 hour of unpaid lunch
and 15 minutes of scheduled breaks). It is possible to run one,
two, or three hours of overtime, but employees need at least
three days notice for planning purposes.
T h e A s s e m b l y L i n eAt the head of the assembly line, a computer displayed the
daily production schedule, consisting of a list of model types
edul
when they were needed. The material supply system was verytightly coordinated and worked well.
The assembly line consisted of a 14.4-meter conveyor belt
that carried the computers, separated at 1.2-meter intervals by
white stripes on the belt. Workers stood shoulder to shoulder
on one side of the conveyor and worked on the units as they
moved by. In addition to 10 assembly workers, a highly
skilled worker, called a supporter, was assigned to each
line. The supporter moved along the line, assisting workers
who were falling behind and replacing workers who needed
to take a break. Supporters also made decisions about what to
do when problems were encountered during the assembly
process (such as a defective part). The line speed and the
number of workers varied from day to day, depending on
production demand and the workers skills and availability.
Although the assembly line was designed for 10 workers, the
number of workers could vary between 8 and 12.
Exhibit 4.7 provides details of how the engineers who de-signed the new subnotebook computer felt that the new line
should be organized. These engineers design the line assum-
ing that one notebook is assembled every two minutes by
10 line workers. In words, the following is a brief description
of what each operator does:
1 The first operator lays out the major components of a
computer between two white lines on the conveyor.
2 The second operator enters the bar codes on those
components into a centralized computer system by
scanning the bar codes with a hand-held scanning
wand. On a shelf above the conveyor, portable com-
puters dis lay the operations that are performed at
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Text Web Site
The Online Learning Center
at www.mhhe.com/jacobs1efeatures InteractiveOperations Managementapplets, practice quizzes,Internet links, Excelspreadsheets, PowerPointlecture slides, OMresources, and chapter-by-chapters study aids forstudents.
Student DVD-ROM
The Student DVD-ROMpackaged free with each
new copy of the textincludes practice quizzes,ScreenCam tutorials, Excelspreadsheets, full-lengthvideos, PowerPoint slides,Web links, and additionalresources.
I-xii INSTRUCTORSWALKTHROUGH
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INSTRUCTORSWALKTHROUGH I-xii
S T R U C T U R I N G T H E S E R V I C EE N C O U N T E R : S E R V I C E - S Y S T E MD E S I G N M A T R I XService encounters can be configured in a number of different ways. The service-system
design matrix in Exhibit 5.1 identifies six common alternatives.
The top of the matrix shows the degree of customer/server contact: the buffered core,
which is physically separated from the customer; thepermeable system, which is penetra-
bleby thecustomervia phone or face-to-facecontact;and thereactivesystem, which is both
penetrable and reactive to the customers requirements. The left side of the matrix showswhat we believe to be a logical marketing proposition, namely, that the greater the amount
of contact, the greater the sales opportunity; the right side shows the impact on production
efficiency as the customer exerts more influence on the operation.The entries within the matrix list the ways in which service can be delivered. At one
extreme, service contact is by mail; customers have little interaction with the system. At
the other extreme, customers have it their way through face-to-face contact. The remain-
ing four entries in the exhibit contain varying degrees of interaction.
As one would guess, production efficiency decreases as the customer has more contact
ce e f s
Vol. XI
Service System Design
Matrix
Vol. X
Operations Management
Featuring St. Alexius
Medical Center
Video Icons
These margin icons include the title of a segment in the McGraw-Hill/IrwinOperations Management Video series that enhances the text discussion.
. s le solution.
8 Shoney Video Concepts produces a line o v deodisc players to be linked to personal com-
puters for video games. Videodiscs have much faster access time than tape. With such a
computer/video link, thegamebecomes a very realisticexperience.In a simpledriving game
where the joystick steers the vehicle, for example, rather than seeing computer graphics on
thescreen,the playeris actuallyviewinga segment ofa videodiscshotfroma real movingve-
hicle.Dependingon theactionof theplayer(hittinga guardrail,for example),the disc moves
virtuallyinstantaneously to that segment andthe playerbecomes part of an actualaccident of
real vehicles (staged, of course).
Shoney is tryingto determinea production plan forthe next 12 months. The main criterion
for this plan is that theemployment level is to be held constant over theperiod.Shoney is con-
tinuing in its R&D efforts to develop new applications and prefers not to cause any adverse
feeling with the local workforce. For thesame reason, allemployees shouldput in full work-weeks, even if this is not thelowest-cost alternative. The forecast forthe next 12 monthsis
MONTH FORECAST DEMAND MONTH FORECAST DEMAND
January 600 July 200
February 800 August 200
March 900 September 300
April 600 October 700
May 400 November 800
June 300 December 900
cost is $200 per s een materials a
8. Workforce required=
10(6700 200)/
8(249)= 33.
Total cost= $34,520.
Check Answers
These answers provide instructors with a quick reference in class.
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OMC
The Operations Management Center Supersite at www.mhhe.com/pom offers awealth of edited and organized OM resources including links to Operations
ManagementBusinessWeekarticles, OM Organizations, and virtual tours ofoperations in real companies.
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Instructor CD-ROM
The Instructor Resource CD provides a library of video clips, PowerPoint slides,text figures, and digital versions of the teaching supplements including the Test
Bank (in Word) and the E-Z Test Computerized Testing System, InstructorsSolutions Manual, and Instructors Resource Manual.
INSTRUCTORSWALKTHROUGH I-xv