Description
MGT 530 – Critical Thinking Assignment
A supply chain is the sequence of organizations—their facilities, functions, and activities—that are involved in producing and delivering a product or service (Stevenson, 2021). A supply chain involves everything related to the product or service from the beginning to the end, which involves everything from the raw materials to the final customer.
For this assignment do the following:
• Select two Middle Eastern organizations and identify their industry, and their products or services.
• Identify supply chain aspects from both of your selected organizations like purchasing issues, supplier issues, logistics, information systems, quality, and customer service, and compare them.
• Explain how Information Technology impacts the Supply Chain Management for both organizations.
• Finally, based on your results, offer recommendations for improvements for each organization.
Directions:
• Your assignment is required to be four to five pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements.
• Support your submission with course material concepts, principles, and theories from the textbook and at least four scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources.
• Formatted according to APA 7th edition and Saudi Electronic University writing standards.
• It is strongly encouraged that you submit all assignments into Turnitin prior to submitting them to your instructor for grading.
The answer:
Unformatted Attachment Preview
Operations Management
Operations Management
FOURTEENTH EDITION
William J. Stevenson
Saunders College of Business
Rochester Institute of Technology
OPERATIONS MANAGEMENT, FOURTEENTH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2015, and
2012. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a
database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not
limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20
ISBN 978-1-260-23889-1 (bound edition)
MHID 1-260-23889-X (bound edition)
ISBN 978-1-260-71842-3 (loose-leaf edition)
MHID 1-260-71842-5 (loose-leaf edition)
Portfolio Manager: Noelle Bathurst
Product Developer: Fran Simon/Katie Ward
Marketing Manager: Harper Christopher
Content Project Managers: Fran Simon/Jamie Koch
Buyer: Sandy Ludovissy
Design: Matt Diamond
Content Licensing Specialist: Jacob Sullivan
Cover Image: Daniel Prudek/Shutterstock
Compositor: SPi Global
All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
Library of Congress Cataloging-in-Publication Data
Library of Congress Cataloging-in-Publication Data
Names: Stevenson, William J., author.
Title: Operations management / William J. Stevenson, Saunders College of
Business, Rochester Institute of Technology.
Description: Fourteenth edition. | New York, NY : McGraw-Hill Education,
[2021] | Includes bibliographical references and index.
Identifiers: LCCN 2019044799 | ISBN 9781260238891 (bound edition ;
acid-free paper) | ISBN 126023889X (bound edition ; acid-free paper) |
ISBN 9781260718423 (loose-leaf edition ; acid-free paper) | ISBN
1260718425 (loose-leaf edition ; acid-free paper)
Subjects: LCSH: Production management.
Classification: LCC TS155 .S7824 2021 | DDC 658.5–dc23
LC record available at https://lccn.loc.gov/2019044799
The internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does
not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not
guarantee the accuracy of the information presented at these sites.
mheducation.com/highered
The McGraw-Hill Series in Operations
and Decision Sciences
Supply Chain Management
Business Research Methods
Business Statistics
Benton
Purchasing and Supply Chain Management
Third Edition
Schindler
Business Research Methods
Thirteenth Edition
Bowerman, Drougas, Duckworth,
Froelich, Hummel, Moninger,
and Schur
Business Statistics and Analytics
in Practice
Ninth Edition
Bowersox, Closs, Cooper, and Bowersox
Supply Chain Logistics Management
Fifth Edition
Burt, Petcavage, and Pinkerton
Supply Management
Eighth Edition
Business Forecasting
Keating and Wilson
Forecasting and Predictive Analytics
Seventh Edition
Business Systems Dynamics
Johnson
Purchasing and Supply Management
Sixteenth Edition
Sterman
Business Dynamics: Systems Thinking
and Modeling for Complex World
Simchi-Levi, Kaminsky, and Simchi-Levi
Designing and Managing the Supply
Chain: Concepts, Strategies, Case Studies
Third Edition
Operations Management
Stock and Manrodt
Supply Chain Management
Project Management
Brown and Hyer
Managing Projects: A Team-Based
Approach
Larson
Project Management: The
Managerial Process
Eighth Edition
Service Operations Management
Bordoloi, Fitzsimmons, and Fitzsimmons
Service Management: Operations,
Strategy, Information Technology
Ninth Edition
Management Science
Hillier and Hillier
Introduction to Management Science:
A Modeling and Case Studies Approach
with Spreadsheets
Sixth Edition
Cachon and Terwiesch
Operations Management
Second Edition
Cachon and Terwiesch
Matching Supply with Demand: An
Introduction to Operations Management
Fourth Edition
Jacobs and Chase
Operations and Supply Chain
Management: The Core
Fifth Edition
Jacobs and Chase
Operations and Supply Chain Management
Sixteenth Edition
Schroeder and Goldstein
Operations Management: Contemporary
Concepts and Cases
Eighth Edition
Stevenson
Operations Management
Fourteenth Edition
Swink, Melnyk, and Hartley
Managing Operations Across the
Supply Chain
Fourth Edition
Doane and Seward
Applied Statistics in Business and
Economics
Sixth Edition
Doane and Seward
Essential Statistics in Business and
Economics
Third Edition
Lind, Marchal, and Wathen
Basic Statistics for Business and
Economics
Ninth Edition
Lind, Marchal, and Wathen
Statistical Techniques in Business
and Economics
Eighteenth Edition
Jaggia and Kelly
Business Statistics: Communicating
with Numbers
Third Edition
Jaggia and Kelly
Essentials of Business Statistics:
Communicating with Numbers
Second Edition
McGuckian
Connect Master: Business
Statistics
Business Analytics
Jaggia, Kelly, Lertwachara,
and Chen
Business Analytics: Communicating
with Numbers
v
Preface
The material in this book is intended as an introduction to the
field of operations management. The topics covered include
both strategic issues and practical applications. Among the
topics are forecasting, product and service design, capacity
planning, management of quality and quality control, inventory management, scheduling, supply chain management, and
project management.
My purpose in revising this book continues to be to provide
a clear presentation of the concepts, tools, and applications of
the field of operations management. Operations management
is evolving and growing, and I have found updating and
integrating new material to be both rewarding and challenging, particularly due to the plethora of new developments in
the field, while facing the practical limits on the length of
the book.
This text offers a comprehensive and flexible amount
of content that can be selected as appropriate for different
courses and formats, including undergraduate, graduate, and
executive education.
This allows instructors to select the chapters, or portions
of chapters, that are most relevant for their purposes. That
flexibility also extends to the choice of relative weighting
of the qualitative or quantitative aspects of the material, and
the order in which chapters are covered, because chapters do
not depend on sequence. For example, some instructors cover
project management early, others cover quality or lean early,
and so on.
As in previous editions, there are major pedagogical f eatures
designed to help students learn and understand the material.
This section describes the key features of the book, the chapter
elements, the supplements that are available for teaching the
course, highlights of the fourteenth edition, and suggested
applications for classroom instruction. By providing this support, it is our hope that instructors and students will have the
tools to make this learning experience a rewarding one.
What’s New in This Edition
In many places, content has been rewritten or added to
improve clarity, shorten wording, or update information. New
material has been added on supply chains, and other topics.
Some problems are new, and others have been revised. Many
new readings and new photos have been added.
Some of the class preparation exercises have been revised.
The purpose of these exercises is to introduce students to the
subject matter before class in order to enhance classroom
learning. They have proved to be very popular with students, both as an introduction to new material and for study
purposes. These exercises are available in the Instructor’s
Resource Manual. Special thanks to Linda Brooks for her
help in developing the exercises.
Acknowledgments
I want to thank the many contributors to this edition. Reviewers and adopters of the text have provided a “continuously
improving” wealth of ideas and suggestions. It is encouraging to me as an author. I hope all reviewers and readers will
know their suggestions were valuable, were carefully considered, and are sincerely appreciated. The list includes post-
publication reviewers.
Jenyi Chen
Eric Cosnoski
Mark Gershon
Narges Kasiri
Nancy Lambe
Anita Lee-Post
Behnam Nakhai
Rosa Oppenheim
Marilyn Preston
Avanti Sethi
John T. Simon
Lisa Spencer
Nabil Tamimi
Oya Tukel
Theresa Wells
Heath Wilken
Cleveland State University
Lehigh University
Temple University
Ithaca College
University of South Alabama
University of Kentucky
Millersville University of Pennsylvania
Rutgers Business School
Indiana University Southeast
University of Texas at Dallas
Governors State University
California State University, Fresno
University of Scranton
Cleveland State University
University of Wisconsin-Eau Claire
University of Northern Iowa
Additional thanks to the instructors who have contributed extra
material for this edition, including accuracy checkers: Ronny
Richardson, Kennesaw State University and Gary Black,
University of Southern Indiana; Solutions and SmartBook:
Tracie Lee, Idaho State University; PowerPoint Presentations:
Avanti Sethi, University of Texas-Dallas; Test Bank: Leslie
Sukup, Ferris State University.
Special thanks goes out to Lisa Spencer, California State
University-Fresno, for her help with additional readings and
examples.
vii
viii
Preface
Finally, I would like to thank all the people at McGraw-Hill
for their efforts and support. It is always a pleasure to work
with such a professional and competent group of people.
Special thanks go to Noelle Bathurst, Portfolio Manager;
Michele Janicek, Lead Product Developer; Fran Simon and
Katie Ward, Product Developers; Jamie Koch, Assessment
Content Project Manager; Sandy Ludovissy, Buyer; Matt Diamond, Designer; Jacob Sullivan, Content Licensing Specialist; Harper Christopher, Executive Marketing Manager; and
many others who worked behind the scenes.
I would also like to thank the many reviewers of previous
editions for their contributions: Vikas Agrawal, Fayetteville
State University; Bahram Alidaee, University of Mississippi;
Ardavan Asef-Faziri, California State University at Northridge; Prabir Bagchi, George Washington State University;
Gordon F. Bagot, California State University at Los Angeles;
Ravi Behara, Florida Atlantic University; Michael Bendixen,
Nova Southeastern; Ednilson Bernardes, Georgia Southern
University; Prashanth N. Bharadwaj, Indiana University of
Pennsylvania; Greg Bier, University of Missouri at Columbia;
Joseph Biggs, Cal Poly State University; Kimball Bullington,
Middle Tennessee State University; Alan Cannon, University
of Texas at Arlington; Injazz Chen, Cleveland State University; Alan Chow, University of Southern Alabama at Mobile;
Chrwan-Jyh, Oklahoma State University; Chen Chung, University of Kentucky; Robert Clark, Stony Brook University;
Loretta Cochran, Arkansas Tech University; Lewis Coopersmith, Rider University; Richard Crandall, Appalachian State
University; Dinesh Dave, Appalachian State University; Scott
Dellana, East Carolina University; Kathy Dhanda, DePaul
University; Xin Ding, University of Utah; Ellen Dumond,
California State University at Fullerton; Richard Ehrhardt,
University of North Carolina at Greensboro; Kurt Engemann,
Iona College; Diane Ervin, DeVry University; Farzaneh
Fazel, Illinois State University; Wanda Fennell, University of
Mississippi at Hattiesburg; Joy Field, Boston College; Warren Fisher, Stephen F. Austin State University; Lillian Fok,
University of New Orleans; Charles Foley, Columbus State
Community College; Matthew W. Ford, Northern Kentucky
University; Phillip C. Fry, Boise State University; Charles
A. Gates Jr., Aurora University; Tom Gattiker, Boise State
University; Damodar Golhar, Western Michigan University;
Robert Graham, Jacksonville State University; Angappa
Gunasekaran, University of Massachusetts at Dartmouth;
Haresh Gurnani, University of Miami; Terry Harrison, Penn
State University; Vishwanath Hegde, California State University at East Bay; Craig Hill, Georgia State University;
Jim Ho, University of Illinois at Chicago; Seong Hyun Nam,
University of North Dakota; Jonatan Jelen, Mercy College;
Prafulla Joglekar, LaSalle University; Vijay Kannan, Utah
State University; Sunder Kekre, Carnegie-Mellon University;
Jim Keyes, University of Wisconsin at Stout; Seung-Lae Kim,
Drexel University; Beate Klingenberg, Marist College; John
Kros, East Carolina University; Vinod Lall, Minnesota State
University at Moorhead; Kenneth Lawrence, New Jersey
Institute of Technology; Jooh Lee, Rowan University; Anita
Lee-Post, University of Kentucky; Karen Lewis, University of
Mississippi; Bingguang Li, Albany State University; Cheng
Li, California State University at Los Angeles; Maureen P.
Lojo, California State University at Sacramento; F. Victor
Lu, St. John’s University; Janet Lyons, Utah State University; James Maddox, Friends University; Gita Mathur, San
Jose State University; Mark McComb, Mississippi College;
George Mechling, Western Carolina University; Scott Metlen,
University of Idaho; Douglas Micklich, Illinois State University; Ajay Mishra, SUNY at Binghamton; Scott S. Morris,
Southern Nazarene University; Philip F. Musa, University of
Alabama at Birmingham; Roy Nersesian, Monmouth University; Jeffrey Ohlmann, University of Iowa at Iowa City; John
Olson, University of St. Thomas; Ozgur Ozluk, San Francisco
State University; Kenneth Paetsch, Cleveland State University; Taeho Park, San Jose State University; Allison Pearson,
Mississippi State University; Patrick Penfield, Syracuse University; Steve Peng, California State University at Hayward;
Richard Peschke, Minnesota State University at Moorhead;
Andru Peters, San Jose State University; Charles Phillips,
Mississippi State University; Frank Pianki, Anderson University; Sharma Pillutla, Towson University; Zinovy Radovilsky, California State University at Hayward; Stephen A.
Raper, University of Missouri at Rolla; Pedro Reyes, Baylor
University; Buddhadev Roychoudhury, Minnesota State University at Mankato; Narendra Rustagi, Howard University;
Herb Schiller, Stony Brook University; Dean T. Scott, DeVry
University; Scott J. Seipel, Middle Tennessee State University; Raj Selladurai, Indiana University; Kaushic Sengupta,
Hofstra University; Kenneth Shaw, Oregon State University;
Dooyoung Shin, Minnesota State University at Mankato;
Michael Shurden, Lander University; Raymond E. Simko,
Myers University; John Simon, Governors State University;
Jake Simons, Georgia Southern University; Charles Smith,
Virginia Commonwealth University; Kenneth Solheim,
DeVry University; Young Son, Bernard M. Baruch College;
Victor Sower, Sam Houston State University; Jeremy Stafford, University of North Alabama; Donna Stewart, University of Wisconsin at Stout; Dothang Truong, Fayetteville State
University; Mike Umble, Baylor University; Javad Varzandeh, California State University at San Bernardino; Timothy
Vaughan, University of Wisconsin at Eau Claire; Emre Veral,
Preface
Baruch College; Mark Vroblefski, University of Arizona;
Gustavo Vulcano, New York University; Walter Wallace,
Georgia State University; James Walters, Ball State University; John Wang, Montclair State University; Tekle Wanorie,
Northwest Missouri State University; Jerry Wei, University
of Notre Dame; Michael Whittenberg, University of Texas;
ix
Geoff Willis, University of Central Oklahoma; Pamela Zelbst,
Sam Houston State University; Jiawei Zhang, NYU; Zhenying Zhao, University of Maryland; Yong-Pin Zhou, University of Washington.
William J. Stevenson
Walkthrough
MAJOR STUDY AND LEARNING FEATURES
A number of key features in this text have been specifically
designed to help introductory students learn, understand, and
apply operations concepts and problem-solving techniques.
Examples with Solutions
Rev.Confirming Pages
Throughout the text, wherever a quantitative or
analytic technique is introduced, an example is
included to illustrate the application of that technique. These are designed to be easy to follow.
Chapter Three Forecasting
EXAMPLE
Determining a Regression Equation
Sales of new houses and three-month lagged unemployment are shown in the following
table. Determine if unemployment levels can be used to predict demand for new houses
and, if so, derive a predictive equation.
Period . . . . . . . . . . . . . 1
Units sold . . . . . . . . . . 20
Unemployment %
(three-month lag)
7.2
1.
2
41
3
17
4
35
5
25
6
31
7
38
8
50
9
15
10
19
11
14
4.0
7.3
5.5
6.8
6.0
5.4
3.6
8.4
7.0
9.0
Plot the data to see if a linear model seems reasonable. In this case, a linear model
seems appropriate for the range of the data.
50
Units sold, y
40
30
20
10
0
2
4
6
8
10
Level of unemployment (%), x
2.
Check the correlation coefficient to confirm that it is not close to zero using the website template, and then obtain the regression equation:
r = −.966
This is a fairly high negative correlation. The regression equation is
y = 71.85 − 6.91x
Note that the equation pertains only to unemployment levels in the range 3.6 to 9.0, because
sample observations covered only that range.
x
103
8
mhhe.com/stevenson14e
S O L U T I O N
Solved Problems
At the end of chapters
and chapter supplements,
“Solved Problems” are
provided to illustrate
problem solving and the
core concepts in the chapter.
These have been carefully
prepared to help students
understand the steps
involved in solving different
types of problems. The Excel
logo indicates that a spreadsheet is available on the
text’s website.
2.
Strategy formulation is critical because strategies provide direction for the organization, so they
can play a role in the success or failure of a business organization.
3.
Functional strategies and supply chain strategies need to be aligned with the goals and strategies
of the overall organization.
4.
The three primary business strategies are low cost, responsiveness, and differentiation.
5.
Productivity is a key factor in the cost of goods and services. Increases in productivity can
become a competitive advantage.
6.
High productivity is particularly important for organizations that have a strategy of low costs.
competitiveness, 42
core competencies, 46
environmental scanning, 48
goals, 44
mission, 44
mission statement, 44
operations strategy, 51
order qualifiers, 48
order winners, 48
productivity, 56
quality-based strategies, 52
strategies, 44
SWOT, 48
tactics, 45
time-based strategies, 53
SOLVED PROBLEMS
Computing Productivity
A company that processes fruits and vegetables is able to produce 400 cases of canned peaches in
one-half hour with four workers. What is labor productivity?
400 cases
Quantity produced
Labor productivity = ________________ = ________________________
Labor hours
4 workers × 1 / 2 hour / worker
Problem 1
mhhe.com/stevenson14e
Solution
= 200 cases per labor hour
Computing Multifactor Productivity
A wrapping-paper company produced 2,000 rolls of paper in one day. Labor cost was $160, material
cost was $50, and overhead was $320. Determine the multifactor productivity.
Quantity produced
Multifactor productivity = ______________________________
Labor cost + Material cost + Overhead
Problem 2
mhhe.com/stevenson14e
Solution
2,000 rolls
= _______________ = 3.77 rolls per dollar input
$160 + $50 + $320
A variation of the multifactor productivity calculation incorporates the standard price in the
numerator by multiplying the units by the standard price.Rev.Confirming Pages
Computing Multifactor Productivity
Compute the multifactor productivity measure for an eight-hour day in which the usable output was
300 units, produced by three workers who used 600 pounds of materials. Workers have an hourly
wage of $20, and material cost is $1 per pound. Overhead is 1.5 times labor cost.
TABLE 16.5 Excel solution for Example 2a
KEY TERMS
Chapter Sixteen Scheduling Usable output
707
Multifactor productivity = __________________________________
Labor cost + Material cost + Overhead cost
300 units
= _____________________________________________________
(3 workers × 8 hours × $20 / hour) + (600 pounds × $1 / pound) +
(3 workers × 8 hours × $20 / hour × 1.50)
300 units
= ________________
$480 + $600 + $720
= .167 units of output per dollar of input
Problem 3
mhhe.com/stevenson14e
Solution
Excel Spreadsheet
Solutions
ste3889X_ch02_040-073.indd
63
Where applicable, the
examples and solved
problems include screen
shots of a spreadsheet
solution.
09/04/19 09:59 AM
Source: Microsoft
c.
Using earliest due date as the selection criterion, the job sequence is C-A-E-B-D-F.
The measures of effectiveness are as follows (see table):
(1) Average flow time: 110/6 = 18.33 days
(2) Average tardiness: 38/6 = 6.33 days
(3) Average number of jobs at the work center: 110/41 = 2.68
xi
CHAPTER ELEMENTS
Within each chapter, you will find the following elements
that are designed to facilitate study and learning. All of
these have been carefully developed over many editions and
have proven to be successful.
Learning Objectives
Every chapter and supplement lists the learning
objectives to achieve when studying the chapter
material. The learning objectives are also
included next to the specific material in the
margins of the text.
Rev.Confirming Pages
Rev.Confirming Pages
4
Product and Service
Design
C H A P T E R
LEARNING OBJECTIVES
After completing this chapter, you should be able to:
LO4.1
Explain the strategic importance of product and service design.
LO4.2
Describe what product and service design does.
LO4.3
Name the key questions of product and service design.
LO4.4
Identify some reasons for design or redesign.
LO4.5
List some of the main sources of design ideas.
LO4.6
Discuss the importance of legal, ethical, and sustainability considerations in product and service design.
LO4.7
Explain the purpose and goal of life-cycle assessment.
LO4.8
Explain the phrase “the 3 Rs.”
LO4.9
Briefly describe the phases in product design and development.
LO4.10
Discuss several key issues in product or service design.
LO4.11
Discuss the two key issues in service design.
LO4.12
List the characteristics of well-designed service systems.
LO4.13
List some guidelines for successful service design.
C H A P T E R
4.1
Mark Lennihan/AP Images
4.11 Service Design 165
Overview of Service Design 166
Differences between
Service Design and
Product Design 166
Phases in the Service Design
Process 167
Service Blueprinting 168
Characteristics of WellDesigned Service Systems 168
Challenges of Service
Design 169
Guidelines for Successful
Service Design 169
4.12 Operations Strategy 170
Operations Tour: High Acres
Landfill 174
Chapter Supplement:
Reliability 176
O U T L I N E
Introduction 140
4.7
What Does Product and Service
Design Do? 140
Objectives of Product and
Service Design 141
Key Questions 141
Reasons for Product or Service
Design or Redesign 141
4.2
Idea Generation 142
4.3
Legal and Ethical
Considerations 144
4.4
Human Factors 145
4.5
Cultural Factors 145
4.6
Global Product and Service
Design 146
4.8
Environmental Factors:
Sustainability 146
Designing for Mass
Customization 154
Reliability 156
Robust Design 157
Degree of Newness 158
Quality Function Deployment 158
The Kano Model 160
Cradle-to-Grave Assessment 146
End-of-Life Programs 147
The Three Rs: Reduce, Reuse,
and Recycle 147
Reduce: Value Analysis 147
Reuse: Remanufacturing 148
Recycle 149
4.9
Other Design
Considerations 151
4.10 Designing for Production 163
Strategies for Product or
Service Life Stages 151
Product Life Cycle
Management 153
Degree of Standardization 153
Phases in Product Design
and Development 162
Concurrent Engineering 163
Computer-Aided Design
(CAD) 164
Production Requirements 165
Component Commonality 165
The essence of a business organization is the products and services it offers, and every
LO4.1 Explain the strateaspect of the organization and its supply chain are structured around those products
gic importance of product
and services. Organizations that have well-designed products or services are more
and service design.
likely to realize their goals than those with poorly designed products or services. Hence,
organizations have a strategic interest in product and service design. Product or service design should be closely tied
to an organization’s strategy. It is a major factor in cost, quality, time-to-market, customer satisfaction, and competitive
advantage. Consequently, marketing, finance, operations, accounting, IT, and HR need to be involved. Demand forecasts and projected costs are important, as is the expected impact on the supply chain. It is significant to note that an
important cause of operations failures can be traced to faulty design. Designs that have not been well thought out, or
are incorrectly implemented, or instructions for assembly or usage that are wrong or unclear, can be the cause of product and service failures, leading to lawsuits, injuries and deaths, product recalls, and damaged reputations.
continued
138
ste3889X_ch04_138-175.indd 138
139
08/01/19 07:17 AM
ste3889X_ch04_138-175.indd
139
Chapter Outlines
Opening Vignettes
Every chapter and supplement includes an
outline of the topics covered.
Each chapter opens with an introduction to the
important operations topics covered in the chapter.
This enables students to see the relevance of
operations management in order to actively engage
in learning the material.
xii
08/01/19 07:17 AM
Figures and Photos
The text includes photographs and
graphic illustrations to support
student learning and provide interest
and motivation. Approximately 100
carefully selected photos highlight
the 14th edition. The photos illustrate
applications of operations and supply
chain concepts in many successful
companies. More than 400 graphic
illustrations, more than any other
text in the field, are included and all
are color coded with pedagogical
consistency to assist students in
understanding concepts.
56
Chapter Two
A major key to Apple’s continued
success is its ability to keep pushing
the boundaries of innovation. Apple
has demonstrated how to create
growth by dreaming up products so
new and ingenious that they have
upended one industry after another.
Rev.Confirming Pages
246
Chapter Six
Process Selection and Facility Layout
FIGURE 6.1
Process selection and
capacity planning influence
system design
Inputs
Outputs
Forecasting
Facilities and
equipment
Capacity
Planning
Product and
service design
Layout
Rev.Confirming Pages
Process
Selection
Technological
change
Work
design
Competitiveness, Strategy, and Productivity
LO6.1 Explain the
strategic importance of
process selection and the
influence it has on the
organization and its supply
chain.
6.1 INTRODUCTION
Process selection refers to deciding on the way production of goods or services will be organized. It has major implications for capacity planning, layout of facilities, equipment, and
design of work systems. Process selection occurs as a matter of course when new products or
services are being planned. However, it also occurs periodically due to technological changes
in products or equipment, as well as competitive pressures. Figure 6.1 provides an overview
of where process selection and capacity planning fit into system design. Forecasts, product
and service design, and technological considerations all influence capacity planning and process selection. Moreover, capacity and process selection are interrelated, and are often done in
concert. They, in turn, affect facility and equipment choices, layout, and work design.
How an organization approaches process selection is determined by the organization’s process strategy. Key aspects include:
• Capital intensity: The mix of equipment and labor that will be used by the organization.
• Process flexibility: The degree to which the system can be adjusted to changes in
processing requirements due to such factors as changes in product or service design,
changes in volume processed, and changes in technology.
Pieter Beens/Shutterstock
Moreover, this approach pays little attention to suppliers and government regulations, and
community, environmental, and sustainability issues are missing. These are closely linked,
theoftwo
and business organizations LO6.2
need to Name
be aware
the impact they are having in these areas and
Process
choice
demand-driven.
main factors
that influence
respond accordingly. Otherwise,
organizations
may be subject
to attack
by is
pressure
groups The two key questions in process selection are:
process selection.
and risk damage to their reputation.
6.2 PROCESS SELECTION
1.
2.
LO2.6 Define the term
productivity and explain
why it is important to companies and to countries.
Productivity A measure of
the effective use of resources,
usually expressed as the ratio
of output to input.
How much variety will the process need to be able to handle?
How much volume will the process need to be able to handle?
Answers to these questions will serve as a guide to selecting an appropriate process. Usually, volume and variety are inversely related; a higher level of one means a lower level of the
other. However, the need for flexibility of personnel and equipment is directly related to the
One of the primary responsibilities of a manager is to achieve productive use of an organizalevel
of variety the
will need to handle: The lower the variety, the less the need for
tion’s resources. The term productivity is used to describe this.
Productivity
is anprocess
index that
flexibility,
while
the higher
the variety, the greater the need for flexibility. For example, if a
measures output (goods and services) relative to the input (labor,
materials,
energy,
and other
worker’s
job to
in input:
a bakery is to make cakes, both the equipment and the worker will do the same
resources) used to produce it. It is usually expressed as the ratio
of output
thing day after day, with little need for flexibility. But if the worker has to make cakes, pies,
Output
cookies, brownies, and croissants,
both the worker and the equipment must have the flexibilProductivity = ______
(2–1)
Input
ity to be able to handle the different requirements of each type of product.
Thereitisisanother
aspect
of variety that is important. Variety means either having dedicated
Although productivity is important for all business organizations,
particularly
impordifferentthe
product or service, or if not, having to get equipment ready every
tant for organizations that use a strategy of low cost, becauseoperations
the higherfor
theeach
productivity,
time there is the need to change the product being produced or the service being provided.
lower the cost of the output.
2.7 PRODUCTIVITY
A productivity ratio can be computed for a single operation, a department, an organization, or an entire country. In business organizations, productivity ratios are used for planning
workforce requirements, scheduling equipment, financial analysis, and other important tasks.
Productivity has important implications for business organizations and for entire nations.
For nonprofit organizations, higher productivity means lower costs; for profit-based organizations, productivity is an important factor in determining how competitive a company is. For
a nation, the rate of productivity
growth is of great importance. Productivity growth is the
ste3889X_ch06_244-299.indd 246
increase in productivity from one period to the next relative to the productivity in the preceding period. Thus,
Current productivity − Previous productivity
Productivity growth = _____________________________________ × 100
Previous productivity
(2–2)
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Rev.Confirming Pages
Chapter Five
Strategic Capacity Planning for Products and Services
213
Operations Strategies
5.12 OPERATIONS STRATEGY
An Operations Strategy section
The strategic implications of capacity decisions can be enormous, impacting all areas of the
organization. From an operations management standpoint, capacity decisions establish a set
is included at the end of most
of conditions within which operations will be required to function. Hence, it is extremely
chapters. These sections discuss
important to include input from operations management people in making capacity decisions.
how the chapters’ concepts can
Flexibility can be a key issue in capacity decisions, although flexibility is not always an
option, particularly in capital-intensive industries. However, where possible, flexibility allows
be applied and how they impact
an organization to be agile—that is, responsive to changes in the marketplace. Also, it reduces
the operations of a company.
to a certai
