ISBN-10:
0073525162
ISBN-13:
2900073525166
Pub. Date:
04/07/2008
Publisher:
McGraw-Hill Companies, The
Matching Supply with Demand: An Introduction to Operations Management: An Introduction to Operations Management / Edition 2

Matching Supply with Demand: An Introduction to Operations Management: An Introduction to Operations Management / Edition 2

by Gerard Cachon
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  • Product Details

    ISBN-13: 2900073525166
    Publisher: McGraw-Hill Companies, The
    Publication date: 04/07/2008
    Edition description: Older Edition
    Pages: 504
    Product dimensions: 6.50(w) x 1.50(h) x 9.50(d)

    Table of Contents


    Introduction     1
    Learning Objectives and Framework     3
    Road Map of the Book     6
    The Process View of the Organization     10
    Presbyterian Hospital in Philadelphia     10
    Three Measures of Process Performance     15
    Little's Law     16
    Inventory Turns and Inventory Costs     19
    Five Reasons to Hold Inventory     23
    Pipeline Inventory     23
    Seasonal Inventory     24
    Cycle Inventory     25
    Decoupling Inventory/Buffers     26
    Safety Inventory     26
    The Product-Process Matrix     27
    Summary     29
    Further Readings     29
    Practice Problems     29
    Understanding the Supply Process: Evaluating Process Capacity     32
    How to Draw a Process Flow Diagram     33
    Bottleneck, Process Capacity, and Flow Rate (Throughput)     38
    How Long Does It Take to Produce a Certain Amount of Supply?     40
    Process Utilization and Capacity Utilization     41
    Workload and Implied Utilization     43
    Multiple Types of Flow Units     44
    Summary     48
    Practice Problems     50
    Estimating and Reducing Labor Costs     56
    Analyzing an Assembly Operation     56
    Time to Process a Quantity X Starting with an Empty Process     58
    Labor Content and Idle Time     60
    Increasing Capacity by Line Balancing     63
    Scale Up to Higher Volume     66
    Increasing Capacity by Replicating the Line     67
    Increasing Capacity by Selectively Adding Workers     67
    Increasing Capacity by Further Specializing Tasks     69
    Summary     72
    Further Readings     74
    Practice Problems     74
    The Link between Operations and Finance     80
    Paul Downs Cabinetmakers     81
    Building an ROIC Tree     82
    Valuing Operational Improvements     87
    Analyzing Operations Based on Financial Data     90
    Summary     95
    Further Readings     95
    Practice Problem     95
    Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model     97
    The Impact of Setups on Capacity     98
    Interaction between Batching and Inventory     101
    Choosing a Batch Size in the Presence of Setup Times     103
    Balancing Setup Costs with Inventory Costs: The EOQ Model     106
    Observations Related to the Economic Order Quantity     110
    Transfer Batches     114
    Setup Time Reduction     114
    Other Flow Interruptions: Buffer or Suffer     115
    Summary     117
    Further Reading     119
    Practice Problems     119
    Variability and Its Impact on Process Performance: Waiting Time Problems     124
    Motivating Example: A Somewhat Unrealistic Call Center     125
    Variability: Where It Comes From and How It Can Be Measured     127
    Analyzing an Arrival Process     129
    Stationary Arrivals     131
    Exponential Interarrival Times     133
    Nonexponential Interarrival Times     134
    Summary: Analyzing an Arrival Process     135
    Service Time Variability     135
    Predicting the Average Waiting Time for the Case of One Resource     137
    Predicting the Average Waiting Time for the Case of Multiple Resources     141
    Service Levels in Waiting Time Problems     144
    Economic Implications: Generating a Staffing Plan     145
    Impact of Pooling: Economies of Scale     148
    Priority Rules in Waiting Lines     152
    Service-Time-Dependent Priority Rules      152
    Service-Time-Independent Priority Rules     152
    Reducing Variability     153
    Ways to Reduce Arrival Variability     153
    Ways to Reduce Service Time Variability     154
    Summary     156
    Further Reading     157
    Practice Problems     157
    The Impact of Variability on Process Performance: Throughput Losses     163
    Motivating Examples: Why Averages Do Not Work     163
    Ambulance Diversion     164
    Throughput Loss for a Simple Process     165
    Customer Impatience and Throughput Loss     169
    Several Resources with Variability in Sequence     171
    The Role of Buffers     172
    Summary     174
    Further Reading     175
    Practice Problems     175
    Quality Management, Statistical Process Control, and Six-Sigma Capability     178
    Controlling Variation: Practical Motivation     179
    The Two Types of Variation     180
    Constructing Control Charts     182
    Control Chart Example from a Service Setting     185
    Design Specifications and Process Capability     188
    Attribute Control Charts     190
    Robust Process Design      192
    Impact of Yields and Defects on Process Flow     194
    Rework     195
    Eliminating Flow Units from the Process     196
    Cost Economics and Location of Test Points     196
    Defects and Variability     197
    A Process for Improvement     198
    Further Reading     200
    Practice Problems     200
    Lean Operations and the Toyota Production System     202
    The History of Toyota     202
    TPS Framework     204
    The Seven Sources of Waste     205
    JIT: Matching Supply with Demand     208
    Achieve One-Unit-at-a-Time Flow     208
    Produce at the Rate of Customer Demand     209
    Implement Pull Systems     209
    Quality Management     211
    Exposing Problems through Inventory Reduction     213
    Flexibility     214
    Standardization of Work and Reduction of Variability     215
    Human Resource Practices     216
    Lean Transformation     217
    Further Reading     218
    Practice Problems     218
    Betting on Uncertain Demand: The Newsvendor Model     220
    O'Neill Inc.     221
    An Introduction to the Newsvendor Model      223
    Constructing a Demand Forecast     223
    The Expected Profit-Maximizing Order Quantity     232
    Performance Measures     236
    Expected Lost Sales     237
    Expected Sales     239
    Expected Leftover Inventory     239
    Expected Profit     240
    Fill Rate     240
    In-Stock Probability and Stockout Probability     241
    Other Objectives for Choosing an Order Quantity     242
    Managerial Lessons     244
    Summary     246
    Further Reading     248
    Practice Problems     248
    Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity     256
    Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost     257
    When Is the Mismatch Cost High?     259
    Reducing Mismatch Costs with Make-to-Order     262
    Quick Response with Reactive Capacity     263
    Unlimited, but Expensive, Reactive Capacity     263
    Limited Reactive Capacity     267
    Summary     274
    Further Reading     276
    Practice Problems     276
    Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model      283
    Medtronic's Supply Chain     284
    The Order-up-to Model Design and Implementation     287
    The End-of-Period Inventory Level     290
    Choosing Demand Distributions     291
    Performance Measures     295
    In-Stock and Stockout Probability     295
    Expected Back Order     297
    Fill Rate     298
    Expected On-Hand Inventory     299
    Pipeline Inventory/Expected On-Order Inventory     300
    Choosing an Order-up-to Level to Meet a Service Target     300
    An In-Stock Probability Target     301
    A Fill Rate Target     301
    Choosing an Appropriate Service Level     304
    Controlling Ordering Costs     307
    Medtronic Wrap-up     310
    Managerial Insights     312
    Summary     315
    Further Reading     316
    Practice Problems     316
    Risk-Pooling Strategies to Reduce and Hedge Uncertainty     321
    Location Pooling     321
    Pooling Medtronic's Field Inventory     322
    Medtronic's Distribution Center(s)     326
    Electronic Commerce     328
    Product Pooling     330
    Lead Time Pooling: Consolidated Distribution and Delayed Differentiation     336
    Consolidated Distribution     336
    Delayed Differentiation     341
    Capacity Pooling with Flexible Manufacturing     344
    Summary     349
    Further Reading     352
    Practice Problems     352
    Revenue Management with Capacity Controls     357
    Revenue Management and Margin Arithmetic     357
    Protection Levels and Booking Limits     359
    Overbooking     365
    Implementation of Revenue Management     367
    Demand Forecasting     368
    Dynamic Decisions     368
    Variability in Available Capacity     368
    Reservations Coming in Groups     368
    Effective Segmenting of Customers     368
    Multiple Fare Classes     369
    Software Implementation     369
    Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacity     369
    Summary     371
    Further Reading     372
    Practice Problems     372
    Supply Chain Coordination     377
    The Bullwhip Effect: Causes and Consequences     377
    Order Synchronization     380
    Order Batching     382
    Trade Promotions and Forward Buying     383
    Reactive and Overreactive Ordering     386
    Shortage Gaming     387
    Bullwhip Effect: Mitigating Strategies     388
    Sharing Information     389
    Smoothing the Flow of Product     389
    Eliminating Pathological Incentives     390
    Using Vendor-Managed Inventory     390
    Incentive Conflicts in a Sunglasses Supply Chain     392
    Buy-Back Contracts     395
    More Supply Chain Contracts     401
    Quantity Discounts     401
    Options Contracts     401
    Revenue Sharing     401
    Quantity Flexibility Contracts     402
    Price Protection     402
    Summary     403
    Further Reading     403
    Practice Problems     403
    Statistics Tutorial     406
    Tables     415
    Evaluation of the Loss Function     427
    Equations and Approximations     430
    Solutions to Selected Practice Problems     437
    Glossary     462
    References     471
    Index of Key "How to" Exhibits     474
    Summary of Key Notation and Equations     475
    Index     479

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