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

Format:

Book

Author/Creator:

Cachon, Gérard.

Contributor:

Terwiesch, Christian.

Alumni and Friends Memorial Book Fund.

Language:

English

Subjects (All):

Production management.

Physical Description:

xvii, 507 pages : illustrations ; 27 cm

Edition:

Third edition.

Place of Publication:

New York, NY : McGraw-Hill, [2013]

Summary:

In two previous editions, Cachon and Terwiesch, Matching Supply with Demand: An Introduction to Operations Management provided a new framework for learning and understanding the key dynamics and drivers of operations management as well as linking those concepts to strategy and management. Continuing this successful model, the new third edition demonstrates how to evaluate arid to transform business processes to increase the competitive advantage of the firm. 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.

This new edition includes substantial updates and improvements, touching almost every chapter of the book. The changes can be broken up into three distinct new categories:

Three new chapters: These include Project Management, Sustainability, and Business Model Innovation-which together provide broadened and state of .the art coverage.

Update of data and case examples: Since the appearance of the second edition the competitive dynamic landscape has affected companies and industries and new business models have been implemented. To respond to the need to stay current, the authors have updated data and case examples throughout the book.

Streamlining of existing content: Content has been streamlined in some sections within the third edition for easier flow and understanding for students. The innovative student/instructor website (www.mhhexom/cachon_terwiesch3e) has also been updated and enhanced. The authors have also updated their website (www.cachon-terwiesch.net). Book jacket.

Contents:

Chapter 1 Introduction 1

1.1 Learning Objectives and Framework 3

1.2 Road Map of the Book 6

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 Inventoiy 23

Seasonal Inventory 24

Cycle Inventory 25

Decoupling Inventory/Buffers 26

Safety Inventory 26

2.6 The Product-Process Matrix 27

2.7 Summary 29

2.8 Further Reading 29

2.9 Practice Problems 29

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

3.7 Summary 48

3.8 Practice Problems 50

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

4.6 Summary 72

4.7 Further Reading 74

4.8 Practice Problems 74

Chapter 5 Project Management 80

5.1 Motivating Example 80

5.2 Critical Path Method 82

5.3 Computing Project Completion Time 83

5.4 Finding the Critical Path and Creating a Gantt Chart 84

5.5 Computing Slack Time 85

5.6 Dealing with Uncertainty 88

Random Activity Times 88

Potential Iteration/Rework Loops 91

Decision Tree/Milestones/Exit Option 91

Unknown Unknowns 92

5.7 How to Accelerate Projects 92

5.8 Literature/Further Reading 94

5.9 Practice Problems 94

Chapter 6 The Link between Operations and Finance 96

6.1 Paul Downs Cabinetmakers 97

6.2 Building an ROIC Tree 98

6.3 Valuing Operational Improvements 103

6.4 Analyzing Operations Based on Financial Data 106

6.5 Summary 111

6.6 Further Reading 112

6.7 Practice Problems 112

Chapter 7 Batching and Other Flow Interruptions: Setup Times and the Economic Order Quantity Model 114

7.1 The Impact of Setups on Capacity 115

7.2 Interaction between Batching and Inventory 118

7.3 Choosing a Batch Size in the Presence of Setup Times 121

7.4 Setup Times and Product Variety 124

7.5 Setup Time Reduction 125

7.6 Balancing Setup Costs with Inventory Costs: The EOQ Model 126

7.7 Observations Related to the Economic Order Quantity 130

7.8 Other Flow Interruptions: Buffer or Suffer 134

7.9 Summary 136

7.10 Further Reading 137

7.11 Practice Problems 137

Chapter 8 Variability and Its Impact on Process Performance: Waiting Time Problems 144

8.1 Motivating Example: A Somewhat Unrealistic Call Center 145

8.2 Variability: Where It Comes From and How It Can Be Measured 147

8.3 Analyzing an Arrival Process 149

Stationary Arrivals 151

Exponential Interarrival Times 153

Nonexponential Interarrival Times 154

Summary: Analyzing an Arrival Process 155

8.4 Processing Time Variability 155

8.5 Predicting the Average Waiting Time for the Case of One Resource 157

8.6 Predicting the Average Waiting Time for the Case of Multiple Resources 161

8.7 Service Levels in Waiting Time Problems 164

8.8 Economic Implications: Generating a Staffing Plan 165

8.9 Impact of Pooling: Economies of Scale 168

8.10 Priority Rules in Waiting Lines 172

Processing-Time-Dependent Priority Rules 172

Processing-Time-Independent Priority Rules 172

8.11 Reducing Variability 173

Ways to Reduce Arrival Variability 173

Ways to Reduce Processing Time Variability 174

8.12 Summary 176

8.13 Further Reading 177

8.14 Practice Problems 177

Chapter 9 The Impact of Variability on Process Performance: Throughput Losses 183

9.1 Motivating Examples: Why Averages Do Not Work 183

9.2 Ambulance Diversion 184

9.3 Throughput Loss for a Simple Process 185

9.4 Customer Impatience and Throughput Loss 189

9.5 Several Resources with Variability in Sequence 191

The Role of Buffers 192

9.6 Summary 194

9.7 Further Reading 195

9.8 Practice Problems 195

Chapter 10 Quality Management, Statistical Process Control, and Six-Sigma Capability 198

10.1 Controlling Variation: Practical Motivation 199

10.2 The Two Types of Variation 200

10.3 Constructing Control Charts 202

10.4 Control Chart Example from a Service Setting 205

10.5 Design Specifications and Process Capability 208

10.6 Attribute Control Charts 210

10.7 Robust Process Design 211

10.8 Impact of Yields and Defects on Process Flow 214

Rework 215

Eliminating Flow Units from the Process 216

Cost Economics and Location of Test Points 217

Defects and Variability 218

10.9 A Process for Improvement 218

10.10 Further Reading 220

10.11 Practice Problems 220

Chapter 11 Lean Operations and the Toyota Production System 222

11.1 The History of Toyota 222

11.2 TPS Framework 224

11.3 The Seven Sources of Waste 225

11.4 JIT: Matching Supply with Demand 228

Achieve One-Unit-at-a-Time Flow 228

Produce at the Rate of Customer Demand 229

Implement Pull Systems 229

11.5 Quality Management 231

11.6 Exposing Problems through Inventory Reduction 233

11.7 Flexibility 234

11.8 Standardization of Work and Reduction of Variability 236

11.9 Human Resource Practices 236

11.10 Lean Transformation 237

11.11 Further Reading 239

11.12 Practice Problems 239

Chapter 12 Betting on Uncertain Demand: The Newsvendor Model 240

12.1 O'Neill Inc. 241

12.2 An Introduction to the Newsvendor Model 243

12.3 Constructing a Demand Forecast 243

12.4 The Expected Profit-Maximizing Order Quantity 250

12.5 Performance Measures 254

Expected Lost Sales 255

Expected Sales 256

Expected Leftover Inventory 257

Expected Profit 257

In-Stock Probability and Stockont Probability 258

12.6 Choosing an Order Quantity to Meet a Service Objective 259

12.7 Managerial Lessons 259

12.8 Summary 262

12.9 Further Reading 263

12.10 Practice Problems 263

Chapter 13 Assemble-to-Order, Make-to-Order, and Quick Response with Reactive Capacity 270

13.1 Evaluating and Minimizing the Newsvendor's Demand-Supply Mismatch Cost 271

13.2 When Is the Mismatch Cost High? 273

13.3 Reducing Mismatch Costs with Make-to-Order 276

13.4 Quick Response with Reactive Capacity 277

13.5 Summary 281

13.6 Further Reading 282

13.7 Practice Problems 282

Chapter 14 Service Levels and Lead Times in Supply Chains: The Order-up-to Inventory Model 287

14.1 Medtronic's Supply Chain 288

14.2 The Order-up-to Model Design and Implementation 291

14.3 The End-of-Period Inventory Level 294

14.4 Choosing Demand Distributions 295

14.5 Performance Measures 299

In-Stock and Stockout Probability 299

Expected Back Order 301

Expected On-Hand Inventory 302

Pipeline Inventory/Expected On-Order Inventory 303

14.6 Choosing an Order-up-to Level to Meet a Service Target 304

14.7 Choosing an Appropriate Service Level 304

14.8 Controlling Ordering Costs 308

14.9 Managerial Insights 311

14.10 Summary 313

14.11 Further Reading 314

14.12 Practice Problems 314

Chapter 15 Risk-Pooling Strategies to Reduce and Hedge Uncertainty 319

15.1 Location Pooling 319

Pooling Medtronic's Field Inventory 320

Medtronic's Distribution Center(s) 324

Electronic Commerce 325

15.2 Product Pooling 326

15.3 Lead Time Pooling: Consolidated Distribution and Delayed Differentiation 333

Consolidated

Distribution 333

Delayed Differentiation 338

15.4 Capacity Pooling with Flexible Manufacturing 341

15.5 Summary 347

15.6 Further Reading 348

15.7 Practice Problems 348

Chapter 16 Revenue Management with Capacity Controls 353

16.1 Revenue Management and Margin Arithmetic 353

16.2 Protection Levels and Booking Limits 355

16.3 Overbooking 361

16.4 Implementation of Revenue Management 363

Demand Forecasting 363

Dynamic Decisions 364

Variability in Available Capacity 364

Reservations Coming in Groups 364

Effective Segmenting of Customers 364

Multiple Fare Classes 364

Software Implementation 365

Variation in Capacity Purchase: Not All Customers Purchase One Unit of Capacity 365

16.5 Summary 367

16.6 Further Reading 368

16.7 Practice Problems 368

Chapter 17 Supply Chain Coordination 373

17.1 The Bullwhip Effect: Causes and Consequences 373

Order Synchronization 376

Order Batching 377

Trade Promotions and Forward Buying 378

Reactive and Overreactive Ordering 382

Shortage Gaming 383

17.2 Bullwhip Effect: Mitigating Strategies 384

Sharing Information 384

Smoothing the Flow of Product 385

Eliminating Pathological Incentives 385

Using Vendor-Managed Inventory 386

The Countereffect to the Bullwhip Effect: Production Smoothing 388

17.3 Incentive Conflicts in a Sunglasses Supply Chain 389

17.4 Buy-Back Contracts 392

17.5 More Supply Chain Contracts 395

Quantity Discounts 395

Options Contracts 395

Revenue Sharing 396

Quantity Flexibility Contracts 396

Price Protection 397

17.6 Summary 397

17.7 Further Reading 398

17.8 Practice Problems 398

Chapter 18 Sustainable Operations 401

18.1 Sustainability: Background 401

Energy 401

Water 404

Material 404

Agriculture, Fishing, and Forestry 404

People 405

18.2 Sustainability: The Business Case 405

18.3 Sustainability and Operations Management 406

18.4 Summary 409

18.5 Further Reading 409

18.6 Practice Problems 409

Chapter 19 Business Model Innovation 410

19.1 Zipcar and Netflix 410

19.2 Innovation and Value Creation 412

19.3 The Customer Value Curve: The Demand Side of Business Model Innovation 414

19.4 Solutions: The Supply Side of Business Model Innovation 417

Process Timing 418

Process Location 419

Process Standardization 421

19.5 Unsuccessful Business Model Innovation 422

19.6 Summary 423

19.7 Further Reading 423.

Notes:

Includes bibliographical references and index.

Local Notes:

Acquired for the Penn Libraries with assistance from the Alumni and Friends Memorial Book Fund.

ISBN:

9780073525204

0073525200

OCLC:

761334758