Matching supply with demand : an introduction to operations management / Gérard Cachon, Christian Terwiesch.

Format:

Book

Author/Creator:

Cachon, Gérard.

Contributor:

Terwiesch, Christian.

Rosengarten Family Fund.

Language:

English

Subjects (All):

Production management.

Physical Description:

xv, 485 pages : illustrations ; 27 cm

Edition:

Second edition.

Place of Publication:

Boston : McGraw-Hill/Irwin, [2009]

Summary:

In its successful first edition, Matching Supply with Demand: An Introduction to Operations Management provided a new framework for operations management. With the second edition, the authors improve that framework. They have added new chapters on the link between finance and operations and on lean operations and the Toyota Production System. In addition, they have expanded the coverage of quality management, statistical process control, and six-sigma capability, and updated the existing material and provided new problems and examples.

Continuing its successful first-edition model, the book demonstrates how to evaluate and transform business processes and supply chains to avoid too much or too little supply relative to market demand, thereby increasing a firm's competitive advantage over its rivals. The text is both rigorous-analytical models are presented in depth-and relevant-solutions are developed for real business situations-while detailed examples, summary exhibits, and solved problems make the material easily accessible to students.

Contents:

1.1 Learning Objectives and Framework 3

Chapter 2 The Process View of the Organization 10

2.1 Presbyterian Hospital in Philadelphia 10

2.2 Three Measures of Process Performance 15

2.3 Little's Law 16

2.4 Inventory Turns and Inventory Costs 19

2.5 Five Reasons to Hold Inventory 23

Pipeline Inventory 23

Seasonal Inventory 24

Cycle Inventory 25

Decoupling Inventory/Buffers 26

Safety Inventory 26

2.6 The Product-Process Matrix 27

Chapter 3 Understanding the Supply Process: Evaluating Process Capacity 32

3.1 How to Draw a Process Flow Diagram 33

3.2 Bottleneck, Process Capacity, and Flow Rate (Throughput) 38

3.3 How Long Does It Take to Produce a Certain Amount of Supply? 40

3.4 Process Utilization and Capacity Utilization 41

3.5 Workload and Implied Utilization 43

3.6 Multiple Types of Flow Units 44

Chapter 4 Estimating and Reducing Labor Costs 56

4.1 Analyzing an Assembly Operation 56

4.2 Time to Process a Quantity X Starting with an Empty Process 58

4.3 Labor Content and Idle Time 60

4.4 Increasing Capacity by Line Balancing 63

4.5 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

Chapter 5 The Link between Operations and Finance 80

5.1 Paul Downs Cabinetmakers 81

5.2 Building an ROIC Tree 82

5.3 Valuing Operational Improvements 87

5.4 Analyzing Operations Based on Financial Data 90

Chapter 6 Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model 97

6.1 The Impact of Setups on Capacity 98

6.2 Interaction between Batching and Inventory 101

6.3 Choosing a Batch Size in the Presence of Setup Times 103

6.4 Balancing Setup Costs with Inventory Costs: The EOQ Model 106

6.5 Observations Related to the Economic Order Quantity 110

6.6 Transfer Batches 114

6.7 Setup Time Reduction 114

6.8 Other Flow Interruptions: Buffer or Suffer 115

Chapter 7 Variability and Its Impact on Process Performance: Waiting Time Problems 124

7.1 Motivating Example: A Somewhat Unrealistic Call Center 125

7.2 Variability: Where It Comes From and How It Can Be Measured 127

7.3 Analyzing an Arrival Process 129

Stationary Arrivals 131

Exponential Interarrival Times 133

Nonexponential Interarrival Times 134

Summary: Analyzing an Arrival Process 135

7.4 Service Time Variability 135

7.5 Predicting the Average Waiting Time for the Case of One Resource 137

7.6 Predicting the Average Waiting Time for the Case of Multiple Resources 141

7.7 Service Levels in Waiting Time Problems 144

7.8 Economic Implications: Generating a Staffing Plan 145

7.9 Impact of Pooling: Economies of Scale 148

7.10 Priority Rules in Waiting Lines 152

Service-Time-Dependent Priority Rules 152

Service-Time-Independent Priority Rules 152

7.11 Reducing Variability 153

Ways to Reduce Arrival Variability 153

Ways to Reduce Service Time Variability 154

Chapter 8 The Impact of Variability on Process Performance: Throughput Losses 163

8.1 Motivating Examples: Why Averages Do Not Work 163

8.2 Ambulance Diversion 164

8.3 Throughput Loss for a Simple Process 165

8.4 Customer Impatience and Throughput Loss 169

8.5 Several Resources with Variability in Sequence 171

The Role of Buffers 172

Chapter 9 Quality Management, Statistical Process Control, and Six-Sigma Capability 178

9.1 Controlling Variation: Practical Motivation 179

9.2 The Two Types of Variation 180

9.3 Constructing Control Charts 182

9.4 Control Chart Example from a Service Setting 185

9.5 Design Specifications and Process Capability 188

9.6 Attribute Control Charts 190

9.7 Robust Process Design 192

9.8 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

9.9 A Process for Improvement 198

Chapter 10 Lean Operations and the Toyota Production System 202

10.1 The History of Toyota 202

10.2 TPS Framework 204

10.3 The Seven Sources of Waste 205

10.4 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

10.5 Quality Management 211

10.6 Exposing Problems through Inventory Reduction 213

10.7 Flexibility 214

10.8 Standardization of Work and Reduction of Variability 215

10.9 Human Resource Practices 216

10.10 Lean Transformation 217

Chapter 11 Betting on Uncertain Demand: The Newsvendor Model 220

11.1 O'Neill Inc. 221

11.2 An Introduction to the Newsvendor Model 223

11.3 Constructing a Demand Forecast 223

11.4 The Expected Profit-Maximizing Order Quantity 232

11.5 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

11.6 Other Objectives for Choosing an Order Quantity 242

11.7 Managerial Lessons 244

Chapter 12 Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity 256

12.1 Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost 257

12.2 When Is the Mismatch Cost High? 259

12.3 Reducing Mismatch Costs with Make-to-Order 262

12.4 Quick Response with Reactive Capacity 263

Unlimited, but Expensive, Reactive Capacity 263

Limited Reactive Capacity 267

Chapter 13 Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model 283

13.1 Medtronic's Supply Chain 284

13.2 The Order-up-to Model Design and Implementation 287

13.3 The End-of-Period Inventory Level 290

13.4 Choosing Demand Distributions 291

13.5 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

13.6 Choosing an Order-up-to Level to Meet a Service Target 300

An In-Stock Probability Target 301

A Fill Rate Target 301

13.7 Choosing an Appropriate Service Level 304

13.8 Controlling Ordering Costs 307

13.9 Medtronic Wrap-up 310

13.10 Managerial Insights 312

Chapter 14 Risk-Pooling Strategies to Reduce and Hedge Uncertainty 321

14.1 Location Pooling 321

Pooling Medtronic's Field Inventory 322

Medtronic's Distribution Center(s) 326

Electronic Commerce 328

14.2 Product Pooling 330

14.3 Lead Time Pooling: Consolidated Distribution and Delayed Differentiation 336

Consolidated Distribution 336

Delayed Differentiation 341

14.4 Capacity Pooling with Flexible Manufacturing 344

Chapter 15 Revenue Management with Capacity Controls 357

15.1 Revenue Management and Margin Arithmetic 357

15.2 Protection Levels and Booking Limits 359

15.3 Overbooking 365

15.4 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

Chapter 16 Supply Chain Coordination 377

16.1 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

16.2 Bullwhip Effect: Mitigating Strategies 388

Sharing Information 389

Smoothing the Flow of Product 389

Eliminating Pathological Incentives 390

Using Vendor-Managed Inventory 390

16.3 Incentive Conflicts in a Sunglasses Supply Chain 392

16.4 Buy-Back Contracts 395

16.5 More Supply Chain Contracts 401

Quantity Discounts 401

Options Contracts 401

Revenue Sharing 401

Quantity Flexibility Contracts 402

Price Protection 402

Appendix A Statistics Tutorial 406

Appendix C Evaluation of the Loss Function 427

Appendix D Equations and Approximations 430

Appendix E Solutions to Selected Practice Problems 437

Index of Key "How to" Exhibits 474

Summary of Key Notation and Equations 475.

Notes:

Includes index.

Local Notes:

Acquired for the Penn Libraries with assistance from the Rosengarten Family Fund.

ISBN:

9780073525167

0073525162

OCLC:

191732546

Online:

Publisher description