SEVENTH EDITION Operations Management in the Supply Chain DECISIONS AND CASES Roger Schroeder | Susan Meyer Goldstein Operations Management in the Supply Chain Decisions and Cases The McGraw-Hill Education Series Operations and Decision Sciences OPERATIONS MANAGEMENT Beckman and Rosenfield Operations Strategy: Competing in the 21st Century First Edition Benton Purchasing and Supply Chain Management Third Edition Bowersox, Closs, and Cooper Supply Chain Logistics Management Fifth Edition Brown and Hyer Managing Projects: A Team-Based Approach Second Edition Burt, Petcavage, and Pinkerton Supply Management Ninth Edition Cachon and Terwiesch Operations Management First Edition Cachon and Terwiesch Matching Supply with Demand: An Introduction to Operations Management Fourth Edition Finch Interactive Models for Operations and Supply Chain Management First Edition Fitzsimmons and Fitzsimmons Service Management: Operations, Strategy, Information Technology Eighth Edition Gehrlein Operations Management Cases First Edition Harrison and Samson Technology Management First Edition Hayen SAP R/3 Enterprise Software: An Introduction First Edition Hill Manufacturing Strategy: Text & Cases Third Edition Hopp Supply Chain Science First Edition Hopp and Spearman Factory Physics Third Edition Simchi-Levi, Kaminsky, and Simchi-Levi Designing and Managing the Supply Chain: Concepts, Strategies, Case Studies Third Edition Sterman Business Dynamics: Systems Thinking and Modeling for a Complex World First Edition Stevenson Operations Management Twelfth Edition Jacobs, Berry, Whybark, and Vollmann Manufacturing Planning & Control for Supply Chain Management Sixth Edition Swink, Melnyk, Cooper, and Hartley Managing Operations Across the Supply Chain Third Edition Jacobs and Chase Operations and Supply Chain Management Fourteenth Edition Thomke Managing Product and Service Development: Text and Cases First Edition Jacobs and Chase Operations and Supply Chain Management: The Core Fourth Edition Ulrich and Eppinger Product Design and Development Sixth Edition Jacobs and Whybark Why ERP? First Edition Zipkin Foundations of Inventory Management First Edition Johnson, Leenders, and Flynn Purchasing and Supply Management Fifteenth Edition QUANTITATIVE METHODS AND MANAGEMENT SCIENCE Larson and Gray Project Management: The Managerial Process Sixth Edition Hillier and Hillier Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets Fifth Edition Schroeder and Goldstein Operations Management in the Supply Chain: Decisions and Cases Seventh Edition Stevenson and Ozgur Introduction to Management Science with Spreadsheets First Edition Operations Management in the Supply Chain Decisions and Cases Seventh Edition Roger G Schroeder Susan Meyer Goldstein Carlson School of Management University of Minnesota OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISION AND CASES, SEVENTH EDTION Published by McGraw-Hill Education, Penn Plaza, New York, NY 10121 Copyright © 2018 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2013, 2011, and 2008 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 LWI 21 20 19 18 17 ISBN 978-0-07-783543-9 MHID 0-07-783543-3 Chief Product Officer, SVP Products & Markets: G Scott Virkler Vice President, General Manager, Products & Markets: Marty Lange Managing Director: James Heine Brand Manager: Dolly Womack Product Developer: Camille Corum Marketing Manager: Britney Hermsen Director, Content Design & Delivery: Linda Avenarius Program Manager: Mark Christianson Content Project Managers: Melissa M Leick, Bruce Gin, Timothy Cote Buyer: Laura Fuller Design: Studio Montage, Inc Content Licensing Specialists: Beth Thole Cover Image: © David Vernon/E+/Getty Images Compositor: Aptara®, Inc Printer: LSC Communications 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 Schroeder, Roger G., author | Goldstein, Susan Meyer, author | Operations management in the supply chain : decisions and cases / Roger G Schroeder, Susan Meyer Goldstein, Carlson School of Management, University of Minnesota Operations management Seventh edition | Dubuque : McGraw-Hill Education, 2016 LCCN 2016043564 | ISBN 9780077835439 (alk paper) | ISBN 0077835433 (alk paper) LCSH: Production management | Production management—Case studies | Decision making LCC TS155 S334 2016 | DDC 658.5—dc23 LC record available at https://lccn.loc.gov/2016043564 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 To our families, whose encouragement and love we appreciate —Roger G Schroeder —Susan Meyer Goldstein About the Authors Roger G Schroeder is the Frank A Donaldson Chair in Operations Management Emeritus at the Curtis L Carlson School of Management, University of Minnesota He received a B.S degree in Industrial Engineering with high distinction and a MSIE degree from the University of Minnesota, and a Ph.D from Northwestern University He held positions in the Carlson School of Management as Director of the Ph.D program, Chair of the Operations and Management Science Department, and Co-Director of the Joseph M Juran Center for Leadership in Quality Professor Schroeder has obtained research grants from the National Science Foundation, the Ford Foundation, and the American Production and Inventory Control Society His research is in the areas of quality management, operations strategy, and high-performance manufacturing, and he is among the most widely published and cited researchers in the field of operations management He has been selected as a member of the University of Minnesota Academy of Distinguished Teachers and is a recipient of the Morse Award for outstanding teaching Professor Schroeder received the lifetime achievement award in operations management from the Academy of Management, and he is a Fellow of the Decision Sciences Institute and a Fellow of the Production and Operations Management Society Professor Schroeder has consulted widely with numerous organizations, including 3M, Honeywell, General Mills, Motorola, Golden Valley Foods, and Prudential Life Insurance Company Susan Meyer Goldstein is Associate Professor in the Supply Chain and Operations Department at the Curtis L Carlson School of Management, University of Minnesota She earned a B.S degree in Genetics and Cell Biology and an M.B.A at the University of Minnesota and worked in the health care industry for several years She later obtained a Ph.D in operations management from Fisher College of Business at The Ohio State University She has served on the faculty at the University of Minnesota since 1998 and was a Visiting Professor at the Olin Business School at Washington University in St Louis for two years Her current research investigates the link between service process design and process performance, and she is currently working with a Minnesota hospital that has been achieving one of the lowest heart attack mortality rates in the United States She is also interested in issues related to aging service workers, operations strategy, and service quality Her research has been published in Decision Sciences, Journal of Operations Management, and Production and Operations Management, among others She is Associate Editor at Decision Science Journal, Quality Management Journal, and Service Industries Journal and serves on the editorial boards of many operations and service journals She is the recipient of several research awards and research grants, and received the 2011 Carlson School of Management Teaching Award vi Preface FEATURES Operations management is an exciting and vital field in today’s complex business world Therefore, students in both MBA and undergraduate courses have an urgent need to understand operations—an essential function in every business This textbook on operations management in the supply chain emphasizes decision making in operations with a supply chain orientation The text provides materials of interest to general business students and operations and supply chain management majors By stressing cross-functional decision making, the text provides a unique and current business perspective for all students This is the first text to incorporate cross-functional decision making in every chapter A unique decision framework organizes the material by grouping decisions into five major categories: process, quality, capacity, inventory, and supply chain This framework is intended to make it easy for students to understand the decision role and responsibilities of operations and supply chain management in relation to functions such as marketing and finance See the illustration below The text also provides a balanced treatment of both service and manufacturing firms We continue to emphasize operations in the supply chain with new chapters on sourcing and logistics The most current knowledge is incorporated, including global operations, supply chain management, e-operations, service blueprinting, competency-based strategy, Six Sigma, lean systems, 3D printing, sustainability, supply chain risk, and mass customization Complete coverage is also provided on traditional topics, including process design, service systems, quality management, ERP, inventory control, and scheduling While covering the concepts of operations and supply chain management in 18 chapters, the book also provides 18 case studies The cases are intended to strengthen problem formulation skills and illustrate the concepts presented in the text Long and short case studies are included The cases are not just large problems or examples; rather, they are substantial management case studies, including some from the Northwestern, Sheffield, Cranfield, and The Case Centre collections The softcover edition with fewer pages than most introductory books covers all the essentials students need to know about operations management in the supply chain, leaving out only superfluous and tangential topics By limiting the size of the book, we have condensed the material to the basics The book is also available for the first time in digital formats in Connect and LearnSmart versions Decision-making framework for operations in the supply chain Human Resources Suppliers Supply Chain Decisions Finance Process Inventory Information Systems Quality Marketing Customers Capacity Accounting vii viii Preface This book is ideal for regular operations management courses and also case courses and modular courses It is particularly useful for those who desire a cross-functional and decision-making perspective that reaches across the supply chain Instructors can easily supplement the text with their own cases, readings, or course materials as desired The Connect Library and Instructor Resources contain 20 Excel templates designed to assist in solving problems at the end of chapters and the case studies These resources also contain technical chapters on linear programming, simulation, transportation method, and queuing, which can be assigned by the instructor, if desired The resources have PowerPoint slides, solutions manual, the test bank, and web links to companies cited in the Student Internet Exercises in the text Access to these web resources can be obtained from your McGraw-Hill sales representative or directly in the Connect Library A number of pedagogical features are contained in this book x e cel ∙ Operations Leader boxes are included in each chapter to illustrate current practices being implemented by leading firms ∙ Each chapter contains at least three Student Internet Exercises These exercises allow for extended learning about concepts discussed in the chapter ∙ Points of cross-functional emphasis are noted in each chapter by a special symbol—a handshake This highlights the locations of cross-functional aspects of operations decisions ∙ Solved problems are included at the end of quantitative chapters to provide additional examples for students ∙ Excel spreadsheets are keyed to specific problems at the end of chapters KEY CHANGES IN THE SEVENTH EDITION This book is known for its decision orientation and case studies We have strengthened the decision-making framework by addressing new decisions in sourcing, logistics, sustainability, and global supply chains We also added new cases to address these decisions 1. Supply Chain Management. This edition added a new section on Supply Chain It contains two new chapters on Sourcing and Global Logistics The Sourcing chapter contains material on sourcing goals, outsourcing, offshoring, reshoring, supply base optimization, the purchasing cycle, and scorecard weighting The Global Logistics chapter contains material on the role of logistics, transportation modes, distribution centers, logistics networks, location, third-party logistics, and logistics strategy In addition, the Supply Chain Management chapter was moved to this section and updated to add a new section on supply chain risk and another new section on supply chain sustainability This edition now has the latest and best supply chain material available 2. Sustainability. More emphasis is given to sustainability It is now covered in the c hapters on The Operations Function, Operations and Supply Chain Strategy, Process Selection, and Supply Chain Management A new case study is added on Murphy Warehouse: Sustainable Logistics 3. Global. More material is provided on global operations and supply chains With the addition of the Sourcing and Global Logistics chapters, global emphasis now moves beyond operations to the entire supply chain New material on outsourcing, offshoring, and managing global supply chains has been added New cases on global sourcing, global plant location, and global logistics are added Preface ix 4. Other Additions. We have added materials on lean Six Sigma, 3D Printing, big data, analytics, ethics in sourcing, and disaster logistics 5. Digital Versions. Digital versions of the text in McGraw-Hill’s Connect and LearnSmart have been developed The Connect version provides a complete course management system for the instructor and pdf content for students It can be used to customize the course by selecting learning objectives for course coverage, using the test bank for multiple choice questions, automatic grading for selected quantitative problems, and access to all instructor support materials The LearnSmart version provides feedback to students via multiple choice probes for each learning objective The student is directed to return to readings where retention is weak 6. Cases. Eighteen case studies are provided including cases from The Case Centre, and Northwestern, Sheffield, and Cranfield Universities Existing cases have been revised to add current information Ten new cases are added: Altimus Brands: Managing Procurement Risk; Murphy Warehouse Company: Sustainable Logistics; Polaris Industries Inc.—Global Plant Location; Shelter Box: A Decade of Disaster Relief; The Westerfield Physician Practice: Value Stream Mapping; Journey to Perfect: Mayo Clinic and the Path to Quality; The Evolution to Lean Six Sigma in 3M, Inc.; Sage Hill Above Onion Creek: Focusing on Service Process and Qualilty; Toledo Custom Manufacturing: Quality Control; Best Homes: Forecasting INSTRUCTOR RESOURCES Instructor Resource Center www.mhhe.com/schroeder7e The Instructor Resource Center provides complete materials for study and review At this book’s website, instructors have access to teaching support such as electronic files of the ancillary materials: Solutions Manual, Technical Chapters, Excel Spreadsheets, PowerPoint Lecture Slides, Digital Image Library, and Test Bank Solutions Manual. Prepared by the authors, this manual contains solutions to all the end-of-chapter problems and cases Test Bank. The Test Bank includes true/false, multiple-choice, and discussion questions/ problems at varying levels of difficulty EZ Test Online. All test bank questions are available in EZ Test Online, a flexible electronic testing program The answers to all questions are given, along with a rating of the level of difficulty, chapter learning objective met, Bloom’s taxonomy question type, and the AACSB knowledge category PowerPoint Lecture Slides. The PowerPoint slides draw on the highlights of each chapter and provide an opportunity for the instructor to emphasize the key concepts in class discussions Digital Image Library. All the figures in the book are included for insertion in PowerPoint slides or for class discussion Index A ABC analysis, 307 MRP system and, 321 ABC classification, of Inventory, 306–307 Abilities, 140 Abrasive products, 441 Absolute deviation, 196 forecast error, 187 Academics, 33, 38 Accelerator effect see Bullwhip effect Accenture Consulting, 34 Acceptable levels, 27 Acceptable limits, 144 Accounting, 6, 9, 10, 12, 13, 39, 63, 85, 93, 105, 106, 161, 164, 189 Accounting clerk, 105 Accounting decisions, 70 Accounting for inventory, 287, 290 Accounting services, 85 Accounting system, 70 Accounts closing process, 105 Accounts payable office, Accounts receivable, 102, 169 Accounts receivable processing, 102 Accreditation organizations, 153 Across-firm coordination, 352 Action plans, 33 Active involvement, 154 Active processing time, 102 Activities, 6, 14, 25, 33, 74, 77, 83, 85, 92–95, 98–101, 103, 106, 107, 124, 127, 139, 148, 177 Activity finish time, 270 Activity-on-node (AON), 270 Activity scheduling, 247 Activity start time, 270 Actual delivery time, 47 Actual demand, 58 Actual flow rate, 104 Actual processing time, 56 Adaptive exponential smoothing, 199 Adding overtime, 252 Additional investments, Additive manufacturing See 3D printing Add machine time, 250 Administrative, 114, 116, 130, 150, 161, 164 Administrative processes, 130, 131, 164, 176 Administrative systems, 144 Administrator, 95, 105 Adopters of Six Sigma, 446 Advanced information and communications systems, 147 Advanced placement, 74 Advanced planning, 40 Advanced planning and scheduling (APS), 257 Advanced-technology products, 147 Advertising, 7, 28, 84, 120, 140, 203, 227 Advertising gimmick, 84 Aerospace company, 147 Affordable good, 119 Aggregate planning, 224, 226, 246 see also Sales and operations planning (S&OP) chase strategy, 229 costs, 230 example, 231–236 level strategy, 229 options, 227–228 strategies, 229–230 AGI: Goldratt Institute, 259 Agrawal, Anant, 297 Aircraft, 11, 39, 56, 88, 147 Airline industry, 88 Airlines, 11, 14, 84, 88, 115 Airline service, high contact service, 82 Airlines forecast future capacity, 186 Air Nippon Airways, 354 Airplane, 56, 68 Air pollution, 14 Airport, 101–103 Airport security, 101, 102 Air shipments, 390 Air traffic control system, 84 Air transportation, 392, 393 Air travel, 30 Airwick, 225 Alaska pipeline, 393 Alenia Aeronautica, 354 Algae, 28 Aligning, customer needs with engineering specifications, 143 Allen Bradley, 59 Allocated costs, 264 Allocation decision, 246 Allowances, 148–149 All-purpose operation, 26 All-terrain vehicles (ATVs), 449 Alterations, 97 Alterations, suit, 97 Alternative ideas, 38 Alternator belt, 119 Altimus, 474–476 Altoona, Pennsylvania, 86 Altoona Hospital, 86 Amazon.com, 14, 357, 393, 400 American Express, 175 American industry, 154 American Society for Quality (ASQ), 160 Analytics, Analytic skills, 277 Analytics method, 358, 361 Andersen Windows, 223, 402 Anticipation inventory, 289 AON, activity-on-node, 270 APICS, Association for Operations Management, Apple Inc., 222, 344, 345, 358, 368, 380, 396 APS, advanced planning and scheduling, 257 Araten, Michael, 375 ARC Advisory Group, 306 Architectural display models, 67 Arora, Mandeep, 297 Ashley Furniture Industries, 404 Asking questions, process-flow analysis, 100 Assemble-to-order (ATO) process, 58, 59, 60, 65 Assembly-line approach, 61 Assembly-line flow, 53 automobile manufacturing processes, 54 Assembly-line method, of house production, 57 Assembly-line operations, 54 Assembly-line process, 55, 56 Assignable cause, 163 Association for Operations Management, APICS, 4, 309 Assurance, 142 Atlantic Fasteners, 83 ATM, 79 ATM self-service appeals, 79 ATM transactions, 80 Attribute control chart, 165, 166 Attribute measurement, 162 Automating services, 85 Automobile assembly processes, 120 Automobile manufacturing processes, 54 Automobile producers, 66 Autozone, 306 Availability, 141 Availability of data, 10 Available capacity, 246, 256 Average demand, 104 Average waiting time, 101, 102 Avis Ltd., 333 487 488 Index B Bacardi Rum, 220 Background check, 254 Backlogs, 227 Back office, 75 Back order, 58 Back order costs, 230, 231 Backward integration, supply chain, 352 Backward pass, 270, 271–272 Backward scheduling, 252 Baldrige Award, 346 Baldrige category, 155 Baldrige criteria, 154, 156 Baldrige criteria for performance excellence, 435 Banaag, Ariston, 225 Banks, 2, 6, 29, 75, 79, 88, 89, 159 Banquet, 266 Bar chart in projects, 268 Bar coding, 287 Batch flow, 54 metal brackets, 55 Batch operations, 55 jumbled flow, 55 process layout, 55 Batch process, 57, 247 job shops, 56 Batch scheduling, 247–248, 250–251 Batteries, electric auto, 411–412 B2B, business-to-business, 356 B2B relationships, 204 B2C, business-to-consumer, 356 Bechtel Corporation, 264 Behavioral skills, 277 Behavior of competitors, 219 Benchmarking, 23 BestBuy, 356, 396 Best decision, 3, 10 Best Homes, 447–448 Best practices, 3, 6, 9, 10 Beverage manufacturing, 246 Bias, 196 Big data analytics, 203 Big Dig, 263–264 Bill of materials (BOM) MRP system, 327 parts-explosion process, 322, 325 Black-belt, 174 Black & Decker, 30 BMW, 223, 224 Body of knowledge, 4, 267, 268 Boeing, 56, 353, 354 Boeing 787 Dreamliner, 353, 354 Boeing production, 266 Boeing’s supplier rating system, 147 BOM see Bill of materials (BOM) Boston, Massachusetts, 263 Bottlenecks, 103, 252, 257, 417 Bottleneck scheduling, 257 Bottleneck work center, 257 Brazilian Football Confederation, 248 Break-bulk DCs, 394 British Airways, 30 Budgeting, 226 Buffer, inventory, 287, 288, 298 Building construction, 264 Bullwhip effect, 349–351, 355 Business-group level, 147 Business intelligence, Business metrics, Business model, Business organization, 93 Business process outsourcing (BPO), 371–372 Business process reengineering (BPR), 106 Business report, 269–272 Business results, 4, 153, 154 Business strategy, 20, 26, 27, 219–220 Business-to-business (B2B), 356 Business-to-consumer (B2C), 356 Business travelers, BYD, 409, 410–414 C CAD, computer-aided design systems, 39 Cadbury Schweppes, 278 CAD system, used for product design, 39 Calgon, 225 Canadian Quality Prize, 162 Cantaloupe Systems, 296, 297 Capability, 42 Capability variability, 81 Capacity, 12, 24, 28, 102 amount of, 220–221 defined, 217–218 effective, 218 emergency, 218 and lead time, 255–256 measurement, 217 utilization of, 217–218 Capacity allocation, 246 Capacity cushion, 220 Capacity decisions, 188 hierarchy of, 216–217 Capacity of resource, 103 Capacity planning, 216–245 aggregate planning (see Aggregate planning) capacity, defined, 217–218 costs, 230 cross-functional nature of S&OP, 226–227 decisions, 216–217 example, 231–236 facilities decisions, 219–224 MRP system, 328 options, 227–228 sales and operations planning (S&OP), 224–225 strategies, 229–230 Capital cost, 290 Capital investment, 54 Capital requirements, 61 Carbon dioxide emissions, Cardinal Health, Cargill, 364 Caribou Coffee, 222 Carrying cost, 290, 293–294 Cash-to-cash cycle time, 348 Caterpillar, 29 CAT (catastrophe) teams, 88 Causal forecasting methods, 200, 201 econometric models, 201 Cause-and-effect (CE) diagram, 172, 175 for loose connections, 173 Cellular layout, 126 Cellular manufacturing, 125, 126 Center line, 164 Center-of-gravity analytics, 398–399 Certified suppliers, 147 Certifying, 146 Chambers, John, 357 Changan Automobile, 333 Changing layout, 125 Changing quality assumptions, 152 Changing supplier relations, 129 Chase strategy, 229, 231, 234, 235 Check sheet, 170 Chengdu Aircraft Group, 354 Chipotle, 26 Chrysler, 411 Churchill Downs Kentucky, 267 Cisco Systems, Inc., 357, 402 CISS, Ltd., 309 Citigroup, 175 Classical decomposition method, 213 Cleaning area, improvements, 131 Cleanliness, Clean-slate approach, 353 Closed-loop MRP system, 319 see also Materials requirements planning (MRP) system Closing projects, 267 Cloud computing, 87 for MRP system, 327 service firms using, 87 Coca-Cola, 29 Coke, 14 Collaboration, 42 Index Collaborative planning, forecasting, and replenishment (CPFR), 203 B2B relationships, 204 benefits and costs, 203 customer and supplier exchange information, 204 Co-location, 128 Commodity markets, Commodity-style policies, 65 Common causes, 164 Common flowcharting symbols, 99 Common ground, Communications in projects, 268 Communication skills, Communication tool, 43 Competence, 18 Competitive advantage, 18, 28 Competitors, behavior of, 219 Complementary offerings, 227 Complete service package, 76 Completion date, 252, 272–273, 274 Completion time, 266, 271, 272, 275–277 Component devaluation costs, 295 Computerized forecasting systems, 199 Computer system design, 264, 268 Concept development, 38 Concurrent engineering, 40, 41 Conflicting objectives, 247 Conformance quality, 152 Consolidated Electric Company, 458–459 Consolidation DCs, 394 Constant processing time, 250 Constant-time networks, 269–274 Constraint-based bottleneck scheduling, 257 Constraints, 248, 253–254 Constraints, theory of, 253–254 Construction company, 148 Construction projects, 278 Containers, 392 Continuity, 230 Continuous improvement, 170 Continuous improvement concepts, 170 Continuous process, 53 Continuous production, 53 Continuous production processes, 54 Continuous review system (Q system), 396–300 example, 299–300 vs P system in practice, 304–306 Contrast pollution prevention, 68 Control, 256 Control chart constants, 167 Control chart(s), 168, 173 using, 167–168 variable measurements, 168 Control costs, 148 Control of projects, 264, 265–267 Conway, Catherine, 362 Cooperative arrangements, 228 Coordination, 352 Core competence, 369–370, 402, 404 Corporate strategy, 20 Cost accounting, 253 Cost control, 264, 268 Cost of capital, 290 Cost of quality, 147 Cost of storage, 290 Cost(s), 403 see also specific entries aggregate planning, 230 example, 373 of facilities, 219 inventory, 290–291 off-shoring, 373–374 outsourcing, 370 of quality, 149 supply chain, 348 transportation, 390 Cost variances, 253 Council of Logistics Management, 347 Council of Supply Chain Management Professionals (CSCMP), 4, 347, 387 Courtroom scheduling, 257–258 CPM, critical path method, 274–277 CR, critical ratio, 255 Crash cost, 275, 276 Crash time, 275, 276 Create value, 115 Critical constraint, 253 Critical control points, 161 Critical path, 272–273 Critical path method (CPM), 274–277 Critical ratio (CR), 255 Cross-docking DCs, 394–395 Cross-functional cooperation, 63 Cross-functional decision making, 11, 12, 69 Cross-functional decision responsibility, Cross-functional effort, 32 Cross-functional integration, within organization, 14 Cross-functional nature, of S&OP, 226–227 Cross-functional product design, 40 Cross-functional teams, 32, 93 partnerships, 355 in projects, 265, 266, 277 in supply chain system improvements, 355 Cross-functional teamwork, scheduling, 247 Cross-sourcing, 376–377 Cross-training, 126 CSCMP, Council of Supply Chain management Professionals, 4, 347, 387 Cultural change, Mayo Clinic, 436 Cushion, large, 220 Cushion, moderate, 220 Cushion, small, 220–221 Custom-built house, 57 Customer attributes (CAs), 43, 44 easy to pedal, 45 Customer contact, 80, 81 Customer contact, degree, 80 Customer contact matrix, 80 Customer-directed operations, 14 Customer-driven approach, Customer due date, 257 Customer expectations, 140 Customer goodwill, 229 Customer-introduced variability, 81 Customer loyalty, 87 Customer needs, 6, 14, 88, 107 Customer orders, 60, 246, 417, 470 Customer perspective, 139 Customer preferences, 19 Customer pull, 118 Customer requirements, quality, 139 Customer-routed services, 77 Customers, Mayo Clinic, 435 Customers, needs, 79 Customer satisfactions, 47, 79, 139 Customer service, 226, 228, 230, 247 Customers’ expectations, 139 Customer specifications, 58, 171 Customer’s requirements, 417 Customers’ rising expectations, 105 Customer value, 19, 46 Customer variability, 82 Customized analytical model, 199 Cycle, 191 Cycle counting, 328 Cycle inventory, 289 Cycle time, 247, 348 Cycle-time reduction, 247 Cyclical changes, 191 D Data accuracy, MRP system, 331–332 Data availability, 202 Data collection, 170 Data pattern, 202 DC see Distribution centers (DC) DC Comics, 388 Decision making, 1, 5, 9, 11 forecasting, 188 marketing, 188 types of, 188 Decision-making framework, Decision-making orientation, 345 Decision-making process, 107 489 490 Index Decision-making responsibilities, Decisions, capacity, 216–217 long-range, 216 medium-range, 216–217 short-range, 216, 217 Decomposition, 212 Deere & Company, 29, 415 Delivering quality, 127 Delivery, 27, 403 Delivery, operations objective, 22 Delivery date, 256 Delivery lead times, 418 Delivery objective, 25 Delivery performance, 347 Delivery problems, outsourcing and, 369, 371 Delivery systems, 318 Delivery time, 250, 403 Dell, 65, 367, 370 Dell notebooks, 48 Delphi method, 190 Delta Airlines, 14, 253 Demand, 8, 10 anticipated changes in, 389 dependent, 291–292, 320 independent, 291–292 normal percentages, 299 probability distribution of, 298 Demand changes, 194 Demand forecasting, 447–448 Demand management, 227, 347 Demand rate, 287–288, 290, 292 Demand Solutions, 225 Deming, 150 Deming’s 14 management principles, 151 Dependent demand, 285, 320 defined, 291 example, 285 requirements philosophy, 292 vs independent demand, 291–292 Deseasonalized moving average, 213 Design for Six Sigma, DFSS, 442 Designs, 19 Deterioration costs, 290, 295, 296 Detroit Quality Brushes, 375 DFSS, design for Six Sigma, 442 Diesel-electric trucks, 33 Differential pricing, 227 Direct cost, 264 Direct-sales company, Direct-selling system, Discounts, 314 Diseconomies of scale, 221–222 Dispatching, 254–255 Dispatching rules, 248, 254–256, 329 Distinctive competence, 24 for operations, 28 Distinctive competencies, 25, 28 Distribution, Distribution centers (DC), 394–396 break-bulk, 394 consolidation, 394 cross-docking, 394–395 functions, 395–396 number of, 399–401 Distribution channel, 344 Distribution management, Distribution of goods or services, 11 Distribution Requirements Planning (DRP), 330 Distribution sites, Distribution system, 353 DMAIC methodology, 177 DMAIC model, 442 DMAIC process, 174 Dock blankets, 479 Dole, 304 Domestic outsourcing, 372 see also Outsourcing Dow Chemical, 346 DRP, Distribution Requirements Planning, 330 Dual sourcing, 377 Due date, 250, 252, 255, 257 Duration of activity, 268, 271, 272 Duration time, 269–270, 271, 272 DVD players, 29 E Early finish (EF), 270–272 Early start (ES), 270–272 Early supplier selection, 128 Earthquake, 358 Eastern Gear, 409, 417–419 eBags.com, 357 eBay.com, 357 ECO, engineering-change-order system, 327, 371 Eco-Friendly London Grocery Store, 362 E-commerce (electronic commerce), 356 Economic order quantity (EOQ), 292–296, 390, 427, 463 calculating, 314–315 MRP system and, 321 Economic production and purchase, inventories, 289 Economics, transportation, 389–390 Economies of scale, 65, 221 Economies of scope, 65 ECR Europe, 356 EDI, electronic data interchange, 328 EF, early finish, 270–272 Effective capacity, 218 Effective Inventory Mgmt Inc., 309 Efficiency of process, 56 Efficient consumer response (ECR), 355, 356 E.I du Pont de Nemours & Co., 274 80-20 rule, 361 Electric cars see Electric vehicles (EVs) Electric-power companies, 318 Electric vehicles (EVs), 410–411 Electronic commerce (e-commerce), 356 Electronic data interchange (EDI), 328 Electronic Health Record (EHR), 431 Emergency capacity, 218 Empathy, 142 Employee-focused approach, 85 Employee retention, productivity, 88 Energy, 3, Energy and environmental (E2) wastes, 131 ENERGY STAR, 69 Energy Star Certification, 479 Engaging workers, 126 Engineering-change-order (ECO) system, 327, 371 Engineering characteristics (ECs), 45 delivery time, 47 EnrDel, 411 Ensure flow, 117 Enterprise resource planning (ERP) system, 331–333 S&OP and, 226 Environmental concerns, 68 Environmental groups, 33 Environmentally friendly, Environmentally sound practices, 131 Environmentally sustainable, 32 Environmental sustainability, 14 EOQ see Economic order quantity (EOQ) e-procurement, 356 Equipment, 2, 7, 11, 19, 24, 32, 47, 63, 64, 66, 68, 93, 101, 118, 124, 125, 147 Equipment allocation, 246 Equipment change, 101 Equipment decisions, 188 ERP system see Enterprise resource planning (ERP) system Error, 145 Error-free flow, 118, 120 ES, early start, 270–272 Ethical behavior, outsourcing and, 369 Evaluation of Gantt chart performance, 250 of job performance, 257 of machine performance, 250 Everything dump, 103 Excess capacity, 252, 253 Expedia.com, 357 Expediter, 418 Explicit services, 75, 76, 77 Index Exponential smoothing, 194, 195, 196 Exponential smoothing forecast, 192, 197 External environments, 13 External failure costs, 148 External service value, 88 External setup, 124 F Facilitate implementation, 130 Facilitating goods, 75, 76 Facilitation of job flow, 252 Facilities costs of, 219 general-purpose, 224 location, 222–223 market-focused, 223 process-focused, 224 product-focused, 223 size of, 221–222 types of, 223–224 Facilities decisions, 219–224, 246 location, 222–223 timing, 219, 222 Facilities strategy, 219–220 Facility location, 15 Factories, 247 Factory goals, 257 Factory line approach, 62 Failure costs, 148 Family-of-parts sourcing, 128 Farm equipment, 29 Fashion industry, 29 Fast changeover, 66 Fast food, 29 Fast-moving career, 13 FCS see Finite capacity scheduling (FCS) Federal Express, 14, 83, 84, 346, 365, 387, 391, 393, 394, 399 Field service, 141 Finance, 3, 5, 6, Finance and accounting, 12 Finance in inventory, 286, 290 Financial incentives, of management team, 23 Financial performance, 147 Finished goods, 287, 288, 289 Finished goods inventories, 6, 59, 72, 287, 289, 347 Finite capacity scheduling (FCS), 248, 251–252, 254, 256, 328 delivery date, 256 Fire services, 255 First come, first served (FCFS), 255 Fit, 202 Fitness for use, 139 5S, 119, 130 5S + Safety, 120 Whys, 119, 130, 132 Whys technique, 119 Fixed order period system see Periodic review system Fixed order quantity system see Continuous review system Fixed-quantity bins, 121 Flexibility, 22, 26, 27, 348, 403 Flexibility objective, 26 Flexible automation, 66 Flexible equipment, 26 Flexible workforce, 127 Flextronics, 380 Flowcharts, 92, 170 Flow of materials, supply chain, 343–344 Flow-process charting, 95 Flow rate, 103, 104 Focused factory, 64 Focused operations, features of, 64 Food company, 32 Food quality, 24 Food supply chain, Footwear industry, global, 474 Ford, 29, 67, 411 Ford Motor company, 36, 361, 368, 380 Forecast accuracy, 197 Forecast error, 193 Forecasting, 186, 350 bias, 196 for decision making, 188 demand, 447–448 importance, 186 method selection, evaluating factors, 202 moving, 192, 193 MRP vs order-point systems, 321 time-series, 191, 192 under- or over-forecasting, 187 uses and methods, 189 Forecast sales, 214 For-profit, Forward integration, supply chain, 352 Forward pass, 270, 271, 272, 274, 276 Forward scheduling, 252 +4 points, 150 FoxConn, 345 FoxMeyer Drugs, 333 Framework of operations decisions, Frank, Barney, 263 Front-end loader hydraulics, 172 Front office, 75 Fuel gauges, 64 Fujitsu, 358 Full crash time, 277 Full-service life insurance firm, 113 Function, 5, Functional areas, 11 491 Functional strategy, 20 Fund-raising, 264 Furniture making, 55 G Gantt chart, 248–251 delivery date, 256 example, 268, 273–274 in projects, 268–269, 277 vs network method, 268–269 Gas-powered engine, 410–411 Gemba, 116, 130 General Electric, 175, 344 Generalized network, 277 General Mills, 32, 363 General Motors, 67, 124, 411 General-purpose equipment, 55, 56, 57 General-purpose facilities, 224 Global business, 15 Global consolidation, 30 Global corporation, 29, 30 Global economy, 2, 16 Global expansion, operations strategy for, 19 Global footwear industry, 474 Globalization of operations and supply chains, 15 of service, 14 in service management, 84 Global leader, Global logistics, 386–407 see also Logistics Global markets, 29 Global product design, 30 Goldman Sachs, 229 Goldratt, Eliyahu, 253 Goldratt Institute, 259 Golf course, 256 Goods and services, 2, 5, 14, 15, 127 Goodwill, 229 Google Analytics, 203 Government, 33 Government services, 2, 73, 129 Graph, 268 Green, Green energy, “Greenfield” Knoxville decision, 416 Green products, 13 Gross requirements, 323, 325, 326 Guarantees, 82 H Haiti Earthquake (2010), 481 Hand hygiene, at Mayo Clinic, 437 Hardware, 70 492 Index Harrah’s Cherokee Casino & Hotel, 187 Health care value stream map, 117 Hefty Beer Company, 231–236 Hennepin County Medical Center, 218 Herbalife, Heuristic procedures, 250 Heuristics, 250 Hewlett-Packard, 63, 295, 349, 353, 354, 395 Hewlett-Packard printers, 66 Hierarchy of capacity decisions, 216–217 High-contact services, 82 Hiring, 227 Hiring costs, 230, 455–456 Histogram, 170 Holding cost, 290 Home Depot, 400 Honeywell, 64, 175 Hospital patients, 250–251 Hospitals, 246, 247, 250–251, 255, 318 House construction, 57 Household cleaning products, S&OP for, 225 House of quality, 43, 45, 46 Human resource planning, 226 Human resources, 12 Human resources function, 69 Human resources in projects, 268 Hybrid systems, 304 Hybrid vehicles, 410–411 I Idiosyncratic, 29 Idle time, 250, 253 IKEA stores, 80 Imitators, 30 Implementing lean thinking, 131 Implicit services, 75, 76, 77 Important strategic decisions, in operations, 24 Independent demand, 285 defined, 291 example, 285 probability distribution of, 298–299 replenishment philosophy, 292 vs dependent demand, 291–292 Independent demand inventory, 286–316 ABC classification of, 306–307 advanced models, 314 continuous review system, 296–300 costs, 290–291 defining, 287–288 economic order quantity (EOQ), 292–296 overview, 286–287 P and Q systems, using, 304–306 periodic review system, 300–303 price breaks, 314–315 purpose, 289–290 uniform lot delivery, 315 vendor managed inventory, 306 Indirect Costs, 443 Inflexible equipment, 47 Information and knowledge management, Mayo Clinic, 435 Information package, 40 Information system(s), 6, 9, 10, 12, 70 changes to, 356 integrated, MRP system as, 320 Information technology (IT), 24, 381 support for MRP system, 331 Information technology (IT) resources, 87 In-house total cost, 372 INMASS ERP, 335 Innovation, 369 Innovative quality practices, 28 Innovator strategies, 26 Input, 3, 5, 6, Insourcing, 369–372 Installation of equipment, 264, 278 Institute for Supply Management (ISM), 4, 345, 381 Insurance company, 88, 107 Intangibility, 74 Intangible benefit, Integrating decisions, 11 Integration of decisions internally and externally, 14 Interdependencies, projects, 268 Interface, 12 Interference, 250 Interfunctional cooperation, 37 Interfunctional view, 37 Internal consumption, Internal customers, 161 Internal environments, 13 Internal failure costs, 148 Internal service quality, 88 Internal setup, 124 Internal user-buyer interface, 378 International employment, International travel, Internet, 356–358, 378 Internet auctions, 356 Internet shopping, 77 Interstate highway, 263 Inventory-carrying costs, 230 Inventory control systems, 25, 30 Inventory decisions, 8, 188 Inventory(ies), 4, 5, 8, 10, 12, 24, 28, 253 ABC classification of, 306–307 anticipation inventory, 289 carrying, 228 continuous review system, 296–300 costs, 290–291 cycle inventory, 289 defined, 287–288 economic production and purchase, 289 EOQ model, 292–296 finished goods, 287, 289, 347 hold, 118 MRO, 292 periodic review system, 301–303 pipeline/transit inventory, 289 purpose of, 289–290 raw materials, 287, 289, 347 total cost, 293–294, 295 uncertainties, protect against, 289 VMI, 306 work-in-process, 287, 289, 347 Inventory level, 293, 304–306 monitoring, with P system, 302 vs service level, 304–306 Inventory management, 286–287, 301 Inventory panic, 351 Inventory records, MRP system, 327–328 Inventory reports, Inventory turnover, 305 iPad2, 358 iPhone, 146, 344, 345, 396 ISO 9000 certification, 38, 153 ISO 14000 Certification, 480 ISO Certified, 153 ISO 9000 Standards, 38, 152 Item cost, 290 I-35W Mississippi River bridge collapse (August, 2007), 218 J JDA Factory Planner, 320 Jda software, 405 JDA Supply Chain Planner, 320 Job interference, 249, 250 Job priority, 252, 254, 329 Job scheduling, 246 Job sequence, 249, 250 Job shop information system, 70 Job shops, 56, 247 Job waiting time, 250 Joint replacement, at Mayo Clinic, 437 Jumbled flow, 55 Juran, Joseph, 150, 151 JustFoodERP system, 333 Just-In-Time (JIT) manufacturing, 114 K Kaizen events, 130 Kanban cards, 123 Index Kanban system, 121, 122, 123 controlling flow, 121 square at honeywell, 122 Kellogg, 199 Kentucky Derby horse race, 267 K’Nex Brands, 375 Knowledge and information systems, Mayo Clinic, 438 L Labor, Labor allocation, 246 Labor costs, 13, 19, 230, 235, 353 Labor force, 228, 230 Late finish (LF), 270–272 Late start (LS), 270–272 Lawn King, 454–457 Layoff costs, 230 Layoffs, 227, 235–236 Leadership Mayo Clinic, 435 MRP system and, 332 Lead time, 58, 292, 298, 299, 305–306, 329 and capacity, 255–256 planned, 322, 323 and priority, 256 safety lead time, 330 Lean, implementation of, 129 Lean concepts, 131 Lean production, 114 Lean production systems, 125, 127, 128 Lean projects, 177 Lean Six Sigma (LSS), 444–445 Lean supplier partnerships, 128 Lean systems, 121, 355–356, 358 and Six Sigma, 176 Lean tenets, 115, 129, 130, 131 Lean thinking, 6, 113, 114, 115, 116 Lean thinking techniques, 119 LEED certification, 479 Legal department, Leisure travelers, Less-than-truckload (LTL), 391, 393 Level, 191 Level strategy, 229 Level workforce, 229 Level-workforce strategy, 455 LF, late finish, 270–272 LG Electronics, 367, 380 Life-cycle analogy method, 191 Life-or-death situation, 255 Limited menu, 7, 19 Lincoln Logs Linear programming (LP), 275 Linear regression forecasting, 200 Line process, 247 Line supervisor, Lithium, 411 Little’s Law, 101, 102 Load, 247, 248 Loan office, Local for local model, 29 Location, facilities, 222–223 qualitative factors, 222 quantitative factors, 222 Location decision, 397–398 Logistics, 4, defined, 387 distribution centers, 394–396 function, 72 global, 386–407 and inventory control systems, 30 networks, 396–401 principles, 387 reverse, 395–396 role in supply chain management, 387–389 sustainable, 477–480 third-party logistics provider (3PL), 401–403 transportation systems, 389–394 warehousing, 394–396 Logistics Management journal, 405 Logistics managers, Logistics networks, 396–401 example, 398–399 location, 397–399 Logistics strategy, 403–404 Logistic warehouse network, 404 Long range, 189 Long-range capacity decisions, 216 Long-term strategic relationship, 128 Loss, costs of, 290 Lot-for-lot policy, 321 Lot-for-lot (L4L) production, 323, 325, 326 Lot sizing, MRP system, 325–326 Low-contact services, 80, 82 Low-cost objective, 25 Low-cost supply chain, 31 Lower control limit, 164 Lower specification limit (LSL), 168 Lowest-cost strategy, 235 Low price, 424 Low risk, 42 Low-volume product, 62 LP, linear programming, 275 LS, late start, 270–272 Lysol, 225 M Machine operators, 122 Machine scheduling problem, 250 Machine utilization, 250 493 Maintainability, 141 Maintaining equipment, 125 Maintenance, repair, and operating supplies (MRO) inventories, 292 Maintenance, repair, and overhaul (MRO) operations, 253 Make-buy decision, 378 Makespan, 250 Make-to-order (MTO) process, 58, 59, 60, 70 Make-to-stock (MTS) process, 58 MTO vs ATO, 59 Making people happy, 20, 22 Making process selection decisions, 68 Malcolm Baldrige National Quality Award, 154, 155 Mallick, D N., 67 Management by fact, 154 Management decisions in project, 265 Management participation, MRP system and, 332 Managing suppliers, 146 Manufacturing, 2, 3, 5, 11, 16, 18 Manufacturing aggregate planning, 240–241 Manufacturing busines, Manufacturing cells, 428–429 Manufacturing company, Manufacturing culture, Manufacturing execution system (MES), 329 Manufacturing facility, 15 Manufacturing managers, 2, 124 Manufacturing operations, 2, 3, scheduling, 247 Manufacturing organizations, 74, 157 characteristics, 74 Manufacturing processes, 29, 73 Manufacturing projects, 264 MAPE normalization, 198 Market-focused facilities, 223 Marketing, 5, 9, 10, 11, 12 S&OP, 226 Marketing, decision making, 188 Marketing and operations, 226, 227 Marketing decisions, 70 Marketing functions, 67 Marketing objectives, 23 Market pull, 37 Market share, 424, 441 Market surveys, 47, 191, 418 Massachusetts Turnpike Authority, 264 Mass customization, 65, 66 advantages and disadvantages of, 65 Mass transit system, 144 Master schedule, 471 Master schedule(ing), 120, 318, 320–321, 326–327 Matching supply to demand, 121 Material inputs, 15 494 Index Materials costs, 264 Materials plan, parts-explosion process, 322–323, 324 Materials requirements, 257 Materials requirements planning (MRP) system, 317–339, 426 ABC principle and, 321 application, 330–331 bill of materials (BOM), 327 capacity planning, 328 closed-loop, 319 cloud computing for, 327 data accuracy, 331–332 defined, 317 described, 318–320 elements, 326–329 EOQ model and, 321 example, 331 forecasting, 321 implementation, 331–332 as information system, 320 inventory records, 327–328 IT support, 331 lot sizing, 325–326 management support, 332 master schedule, 318 master scheduling, 326–327 operation, 329–330 order-launching MRP system, 328 overview, 317–318 parts-explosion process, 318, 321–326 production control, 319 purchasing function, 328 requirements philosophy, 320–321 shop-floor control subsystem, 329 successful, 330–331 user knowledge, 332 vs order-point systems, 320–321 Mathematical optimization models, 223 Matrix, process dimension (vertical) of, 62 Mattel, 371 Mayo Clinic, 433–438 McDonald’s, 19, 20, 25, 85 McKinsey, 355 Mean time between failure (MTBF), 141 Mean time to repair (MTTR), 141 Measuring process flows, 92 Medium range, 189 Medium-range aggregate planning, 216 MES, manufacturing execution system, 329 Messier-Bugatti, 354 Methods of integration, 14 Metrics, Microsoft, 30, 367, 380, 396 Microsoft Dynamics NAV, 333 Microsoft Project, 277, 279 Midwest Bolt Company, 167 Military invasion, 264 Milliken & Company, 161 Minimum makespan, 250 Minimum waiting time, 250 Min/Max decision rules, 304 Min-neapolis Heart Institute (MHI), 121 Misalignment, 40 Missile launchers, 264 Mistake-proofing, 145 Mitsubishi Heavy Industries, 354 Mitsubishi shipyard, 43 Modular design, 47, 48 benefits of, 47 Dell Computer Corporation, 48 Modular design ideas, 47 Modular production, 65, 67 Monitor erratic demand, 197 Monster.com, Montgomery County Public Schools (MCPS), 74 Motivating employees, 23 Motorola, 174, 175 Movies, 264 Moving average, 192 Moving-average forecasts, 193 MRI, magnetic resonance imaging facility, 94 MRP system see Materials requirements planning (MRP) system Muda, 116 Multimode transportation, 392 Multiple suppliers, 376–377 Murphy Warehouse Company (MWC), 476–480 N National Association of Purchasing Managers, 347 National Center for Disease Control Institute for Occupational Safety and Health, 41 Nestlé, 29 Net requirement, 323, 325 Network diagrams in projects, 270, 271, 272, 277 Network method(s) in projects, 268 vs Gantt chart, 268–269 Network of queues, 247 Networks, generalized, 277 New Green Initiatives, 480 New office opening, 268 New-product design, 36, 48 New-product design process, 40 New-product development (NPD), 36, 38 New-product introduction, 37 New-product review, 148 New products, 6, 11 New York City Criminal Court, 257 Nolan, Scott, 415, 416 Nonprofit, 2, 4, 16, 73 Nonprofit organizations, 16 Non-value-added steps, 25 Non-value-adding activities, 124 Non-value-adding time, 116 Nonwasteful flow, 117 Nordstrom, 14 Normal cost, 275–277 Normal time, 275, 276 NPD, new-product development, 36, 38 NPD team, 48 Nuclear disaster, 358 O Objectives projects, 264–265 scheduling, 246 Obsolescence costs, 290, 295, 296 Ocean transportation, 392–393 Office, opening, 268 Offices, 247 Off-shoring, 85, 353–354, 373–375 costs of, 373–374 example, 373 outsourcing and, 373 qualitative factors, 374 reshoring, 374–375 Offshoring professional services, to India, 86 Offshoring services, 86 One-touch setups, 124 On-hand inventory, 296 Online ordering, 357–358 Online retailers, 400 On-order inventory, 296 On-time job completion, 257 Operating expenses, 253 Operations, 13 challenges facing, 13 Operations and supply chains, 30 Operations capability, 24 Operations decisions, 24 Operations department, Operations function, 11 Operations management, defined, 2, Operations mission, 21 Operations objectives, 22, 25, 247 definitions, 22 typical, 22 Operations processes, 25 Operations service system, 77 Index Operations strategic decisions, 26 Operations strategy, define, 18 Operations strategy process, 21 Operator inspection, 162 Optimal job sequencing algorithm, 250 Optimal schedule, 250 Optimal sequence, 250 Oracle ERP system, 333 Oracle software, 279 Order entry, 356 Order fulfillment, 357–358 approaches, 58 Order fulfillment processes, 58 Ordering cost, 290, 293–294 Ordering frequency, 293 Order-launching MRP system, 328 Order penetration point, 60, 61 Order-point systems forecasting, 321 replenishment philosophy, 320–321 vs MRP system, 320–321 Order qualifiers, 27 Order winners, 27 Organization chart, 419, 470 Original Cakerie, 333 Outcome-based metrics, 74 Outsourcing, 228, 353–354, 369–372, 403–404 advantages, 370, 371 defined, 369 disadvantages, 371–372 domestic, 372 example, 372 goals, 369 lower costs and investment, 370 offshoring and, 373 qualitative costs, 372 quality risk and delivery problems, minimizing, 369, 371 scale economies, 370 of services, 85 social responsibility and ethical behavior, 369 supply chain disruption risks, 371 technologies, 369, 370 total cost analysis, 372 total costs reduction, 369 transaction costs, 371–372 Overhead costs, 253 Overtime, 228 Overtime costs, 230, 231, 233 Ownership, 403–404 P Pacific Kitchen & Home, 396 Packages, 83 Paperwork reduction, in receiving and inspection, 129 Pareto, Vilfredo, 306 Pareto diagram, 171, 172, 173 Parker Hannifin, 229 Parsons Brinckerhoff, 264 Partnerships, 355 Parts explosion, 471 Parts-explosion process, MRP system, 318, 321–326 bill of materials (BOM), 322, 325 gross requirements, 323, 325, 326 lot sizing, 325–326 materials plan, 322–323, 324 net requirement, 323, 325 planned lead times, 322, 323 planned order receipt, 323 planned order releases, 323–325 purchase orders, 318, 325 revised material plan, 325–326 shop orders, 318, 325 time-phased materials plan, 325–326 Parts per million (ppm), 169, 174 Parts withdrawal system, 121 Part-time labor, 228 Part-time labor costs, 228, 230 Passenger airplanes, 264 Passing of jobs, 251–252 “Pay-on-scan” agreements, 306 Peak capacity see Capacity Peak demand, 191, 227, 235 Pennsylvania Railroad, 368 Perfection, defined, 119 Performance, 264–265 Performance excellence, Baldrige criteria for, 435 Performance metrics, 98 Performance monitoring, 266 Performance specifications, 266 Periodic review, 304 Periodic review system (P system), 301–303 example, 303 vs Q system in practice, 304–306 Personal trainers, 77 Personnel planning, 226 “P&G Advisor” program, 42 Philips, 29 Physical distribution, 344 Physical supply, 344 Physicians, 246 Physicians’ Clinic of Iowa (PCI), 152, 153 Picking operations, flow-process chart, 98, 99 Pilot production/testing, 38, 39 Pipeline inventory, 289 Pipelines, as mode of transportation, 392, 393 Pizza U.S.A., 11 Planned events, 217 495 Planned lead times, parts-explosion process, 322, 323 Planned order receipt, 323 Planned order releases, parts-explosion process, 323–325 Planning and control systems, 256–258 Planning implementation, 143 Planning options, 227–228 Planning projects, 263–284 Plan process, SCOR model, 346 Plant capacity, 257 Plant shutdown, 264, 274, 278 Plant start-up, 264, 274, 278 Plant-within-a-plant (PWP), 64 Point of sale data, 287, 291 Poka-yoke, 145 Polaris Industries, 449–453 Polaris vehicles, 449 Police department, 254 Police services, 255 Policy service department, Political changes, 13 Pollution control technologies, 68 Pollution practices, 68 Pollution prevention, 68 Post-it Notes supply chain, 353 Postponement, 66 Postponement strategy, 354 Potential inefficiency, 81 Precedence relation(ship)s, 268, 270, 271, 273–274 Predicted demand, 219 Prediction, 202 Predictive model, 203 Preemptive rule, 255 Preemptive strategy, 222 Preferred suppliers, 377 Preventative maintenance, 125 Prevent defects, 162 Prevention, 148 Prevention costs, 148 Price breaks, 314–315, 473 Price out, 230 Price protection costs, 295 PriceWaterhouseCoopers, 365 Pricing, 227 PrideSports, 375 Primavera Software, 279 Priority, job, 252, 254 Priority and lead time, 256 Priority dispatching rules, 254–256 Priority rule, 255 Probability distribution of demand, 298 standard normal, areas under, 1A Problem-solving technique, 119 Process, 9, 24, 28 496 Index Process, eliminate unnecessary steps, 107 Process analysis to improve clinical drug trials, 95 Process capabilities, 101, 168 defined, 168 Process capability index, 168 computation, 170 examples, 169 Process characteristics, 57 Process characteristics matrix, 61 Process control, 107, 163 Process control system, using control charts, 163 Process decisions, 7, 62 Process design, 39 Processes management, Mayo Clinic, 435 Process-flow, measuring, 101 Process-flow analysis, 92, 100, 101 Process flowcharting, 95 Process-flow questions, about performance, 100 Process-focused facilities, 224 Processing time, 249, 250, 255–256 Process layout, 55 Process mapping, 95 Process ownership, 98 Process quality control, 163 Process redesign, 104, 106, 107 Process selection choices, 70 Process selection decisions, 52, 61, 69 Process simplification, supply chain, 353 Process technology, 11 Process thinking, 93 Process types, 56 in scheduling, 247 Process view of business, 5, 93, 94 Process waste, 131 Procter & Gamble, 344, 349 Procurement in projects, 268 Product characteristics, 19 Product cost, 39 Product design, 38, 39 Product design phase, 41 Product development, 278 Product development process, at Ford, 37 Product-flow characteristics, contrast and compare, 52–57 Product-focused facilities, 223 Product imitator, 26 Product innovator, 26 Production, 11 Production and distribution of goods or services, 11 Production department, Production-line approach, 84 Production management, Production planning, 455 Production process, 5, 6, 118, 247 Production process, baby strollers, 424–425 Production prototypes, 39 Production sequencing, 246 Productive employees, 88 Productive systems, 12, 13 Productivity, 443, 455 Product layout, 55 Product leadership and quality, 441 Product measurements, 142 Product-process matrix, 62, 63, 79 Product quality, 19, 39, 140, 142, 146 characterization, 140 Product return costs, 295 Product vs service, 75 Profit leverage effect, 368 Progressive Corporation, 88 Project closing, 267 Project completion time, 271, 272, 275–277 Project control, 265–267 Project cost, 264, 265, 268, 275, 276 Project form, of operations, 56 Project integration, 268 Project management, 277–278 Project Management Institute, 264, 267, 268 Project management office (PMO), 267 Project management profession, 267 Project manager, 267 Project objectives, 264–265 Project plan, 266 Project planning, 265–267 Project planning and scheduling, 263–278 Project(s), 247 contrasted with ongoing operations, 264 defined, 264 examples, 264 quality, 265, 268 Project scheduling, 266, 268–278 Project scope, 268 Project team, 264, 265 Project trade-offs, 264–265 Promotion, 227 Prototypes, 67 P system (periodic review system), 301–303 example, 303 vs Q system in practice, 304–306 Pull system, 118, 427–428 Purchase orders, 318, 325, 379 Purchasing, 367 see also Sourcing challenges facing, 380–381 cost savings and, 380 MRP system, 328 professional role, 381 strategic role, 380 supply chain risk management, 381 Purchasing cycle, 377–380 finding suppliers, 378 internal user-buyer interface, 378 sourcing and make-buy decision, 378 supplier relationship management, 379 supplier selection, 378–379 Push system, 118 Q Q system (continuous review system), 296–300, 301 example, 299–300 vs P system in practice, 304–306 Qualitative/causal methods, 202 Qualitative costs offshoring, 374 outsourcing, 372 Qualitative forecasting methods, 189, 190 Qualitative forecasts, 189 Quality, 12, 24, 27, 140, 147 characteristics, 165 as customer requirements, 139 projects, 265, 268 types of, 141 Quality academy, Mayo Clinic, 437–438 Quality at source, 163 Quality categories, cost of, 149 Quality control, 142 goal of, 161 Quality control charts, 164, 175, 439–440 example, 164 Quality control methods, 161 Quality control system, 161 Quality cycle, 142, 143 mass transit system, 144 Quality deployment, at Mayo Clinic, 435–436 Quality effects profitability, 150 Quality function deployment (QFD), 43, 48 bicycle design by use, 44 for Pizza U.S.A delivery, 45 service industries, 45 Quality improvement, 142, 150, 156 Quality improvement efforts fail, 156 Quality management, 138, 139 Quality management planning supply chain, integrated, 145 Quality manager, Quality measurements, 168 Quality objective, 25, 26 Quality of conformance, 140 Quality of design, 140 Quality percentage, 169 Quality performance, 348 Quality pioneers, 150 Quality planner, standards and tolerances, 144 Index Quality planning, 142 Quality problems, 419, 422 Quality production, 441 Quality risks, outsourcing and, 369, 371 Quality trilogy, 150, 151 Quality vs schedule, 152 Quantitative forecasting methods, 189 Queues, 247, 253, 255 Queue time, 255 Queuing, 102 R Race cars, 125 Radical redesign, Process redesign Radio-frequency identification (RFID), 287 Rail, as mode of transportation, 391, 393 Rail shipments, 390 Random error, 191, 192 Random number table, 2A Range, 6, 22 forecast error, 187 Raw materials inventories, 287, 289, 347 R&D, 264 Real-time adjustments, 255 Real-time processing, 255 Reckitt Benckiser, 225 Record-keeping costs, 290 Recycled inputs, 69 Recycling, Recycling outputs, 69 Red Crescent, 402 Red Cross, 402 Reduced setup times, 125 Reducing lead time, 123 Reducing setup time, 124 and lot sizes, 124 Reengineering the Corporation, 106 Refrigeration company, 64 Regression example, 201 Relationship matrix, 44 Relationships, projects, 268 Reliability, 141, 142 Remanufacturing, 69 Reorder point, 296–297, 298–299 Repetitive manufacturing, 120 Repetitive manufacturing technologies, 114 Replenishment lead time, 349, 350–351, 352 Replenishment philosophy, 292 order-point systems, 320–321 Request for Proposal (RFP), 378 Request for Quotation (RFQ), 378 Requirements philosophy, 292 MRP system, 320–321 Reservations, 227 Reshoring, 374–375 Resilience, supply chain, 358–360 Resource-constrained networks, 278 Resources, 268, 278 Resources for projects, 265 Resource utilization, 253 Responsiveness, 142 Restaurants, 2, 19, 20, 24, 73, 76, 318 Retailers, 32 Retail Pro, 309 Retirement community, 256 Return process, SCOR model, 346 Reverse auction, 378 Reverse engineered, 74 Reverse logistics, 395–396, 402 Review period, 302 Revising picking methods, 101 Rewarding, 126 RFID, radio-frequency identification, 287 RFP, Request for Proposal, 378 RFQ, Request for Quotation, 378 Risk, supply chain analysis of, 359–361 defined, 360 Ritz-Carlton Hotel Company, 139 RODA, 301 Rolling production schedule, 473 Rolls- Royce, 354 Rotary Millennium Project, 482 Rush orders, 419 Ryder, 402 S Saatsoglou, Gabriel H., 302 Safe harbor, 351 Safety capacity, 330 Safety lead time, 330 Safety stock, 289, 329–330 Sage Hill Inn Above Onion Creek, 420–422 Sales, 225, 230, 232 Sales and operations planning (S&OP) see also Aggregate planning characteristics, 224 cross-functional nature of, 226–227 cross-functional teams for, 355 decision options, 227–228 decisions, 224 defined, 224–225 demand management, 227 for household cleaning products, 225 supply and demand, 225 supply management, 227–228 Sales forecast, 225, 232, 233, 234 Sales office, Sales opportunities, 27 Sales revenue, 11 Samsung, 222, 396 497 SAP ERP, 332–333 SAP Inc., 332, 335 Satisfied employees, 88 Scale economies, 370 Scarce resources, 252 Scatter diagram, 172 Schedule, 39, 246–262 Schedule performance, 250 Scheduling, finite capacity, 328 Scheduling algorithms, 268 Scheduling differentiated from aggregate planning, 246–247 Scheduling in project management, 266 Scheduling methods, 268–269 Scheduling operations, 246–258 see also Project scheduling batch scheduling, 247–248 dispatching rules, 254–256 finite capacity scheduling (FCS), 251–252 Gantt chart, 248–251 overview, 246–247 planning and control systems, 256–258 theory of constraints (TOC), 253–254 Schools, 247 Schroeder, R G., 67 SCM see Supply chain management (SCM) SCOR, Supply Chain Operations Reference model, 345–346, 365 Screening, 230, 231 Seasonal exponential smoothing method, 212 Seasonal forecast calculations, 214 Seasonality, 191 Seasonal toy sales, 213 Security screeners, 102 Seed device, 297 Self-service by customers, 79 Senior management, 174 Sequence dependence, 250 Sequential process, 40 Service, modes of transportation, 390 Service blueprint(ing), 95, 97, 101 Service delivery system design, 73, 88 Service delivery system matrix, 78 operations service system, 77 organize variety of service, 77 product-process matrix, 79 Service delivery systems, 81 Service economy, 73 Service guarantees, 73, 74, 82, 83, 84 components, 83 Service industries, 159, 250–251 Service industries control charts, 168 Service inputs, Service level, 58, 297–299, 304–306 vs inventory level, 304–306 498 Index Service management, 82 Service operations, 5, scheduling, 2, 3, 247 Service operations, theory of constraints, 253 Service organization, characteristics, 74 Service outsourcing, 85 Service process design, 73 Service-product bundle, 75, 76 Service-profit chain, 87, 88, 89 Service provider, 74 time of production, 74 Service quality, 142, 146, 403 Service recovery, 82 UPS, 83 Services, 2, 3, 14 priority rules, 255 Services aggregate planning, 238–240 Services packages, various products, comparison of, 76 Service workers, 89 SERVQUAL, 142, 420 Setup cost, 290, 293 Setup time, 247, 252, 253, 257 Setup time reduction, 252, 253, 257 Seven forms of waste, 116 Seven quality tools, 170, 171, 172 Seven tools of quality control, 170 Shareholder value, 23 Shelterbox, 481–484 Shewhart, Walter A., 159 Shipping costs, 390 Ships, 264 Shop-floor control subsystem, MRP system, 329 Shop loading, 328 Shop orders, 318, 325 Shortest processing time (SPT), 255–256 Short range, 189 Short-range capacity decisions, 216 Short-run activity, 247 Short-term decisions, 246 Shutdown, 264, 274, 278 Simple exponential smoothing, 195 Simultaneous development process, 40 Simultaneous production and consumption, 74 Single setups, 124 Single supplier, 376–377 Single-unit production, 125 6S, 119, 120 Six Sigma, 174, 175, 177 and lean, 176 Six Sigma adopters, 446 Six Sigma at 3M, 441–446 Skid-steer loader, 415–416 supplier integration in, 416 Slack, 269, 272–273, 274, 277 Slack periods, Smile training, 89 Snow skiing, 191 Soccer scheduling, 248 Social changes, 13 Social responsibility, outsourcing and, 369 Society, Soft drinks, 29 Software, 70 Software application, 106 Software design, 254 Sohel, A R., 67 Sony, 396 S&OP see Sales and operations planning (S&OP) Source process, SCOR model, 346 Sourcing, 367–385 see also Purchasing defined, 368 goals of, 369 importance of, 368 insourcing, 369–372 offshoring, 373–375 outsourcing, 369–372 overview, 367–368 purchasing cycle, 377–380 supply base optimization, 375–377 Southern Toro Distributor, 463–469 Space allocation, 246 Spare parts, 285, 291, 292 Special causes, 164 Speed of output, 121 Spend analysis, 375 Sport Obermeyer, 31, 32 SPT, shortest processing time, 255–256 S-shaped curve, 191 Stabilized master schedule, 120 Standard costs, 253 Standard cost variance, 253 Standard deviation, 168 error forecasting, 187 Standard facility, Standardization toward excellence, Mayo Clinic, 436–437 hand hygiene, 437 joint replacement, 437 warfarin use, 437 Standard normal probability distribution, areas under, 1A Starbucks, 14, 30, 222 Start activity, 257 Start time, 266, 270, 271, 272 Start-up, 264, 274, 278 Start-up capital, State of statistical control, 163 Statistical process control (SPC), 162, 163 Stein Mart, 393, 394 Steve Banker, 306 Stockout costs, 230, 290–291 Stockout probability, 297 Stockouts, 292 Stock position, 296, 301 Storage cost, 290 Strategic alternatives, 27 Strategic decisions, 23, 25 in operations, 24 Strategic planning, Mayo Clinic, 435 Strive for perfection, 119 Subcontracting, 228, 230, 231, 252, 257 Subcontracting costs, 230 SUBWAY, 59, 60 Subway ride, 75 Successful process redesign, 105 Summit Brewery, 305 Superior-quality products, 26 SuperValu, 394 Supplement, 211 Supplier certification, 146, 162 Supplier integration, 415–416 in skid-steer loader, 416 Supplier management, 146 Supplier quality management, 146 Supplier rating performance system, 147 Supplier relationship management, 379 Supplier relationships, 127 Supplier(s), 8, 9, 128 development, 381 evaluation, 475 finding, 378 new-product development team, 42 preferred, 377 selection, 378–379 selection, flowchart for, 96 selection, retail store, 96 single/multiple, 376–377 total number of, 376 Suppliers design batteries, 43 Suppliers receive production, 122 Supply, 428, 441, 443 Supply and demand, 102 S&OP and, 225 Supply base reduction, 353 Supply chain, 3, 5, 6, 9, 24 backward integration, 352 bullwhip effect, 349–351 defined, 343 disruption risks, outsourcing and, 371 dynamics, 349–351 ensuring quality in, 146 example, 351 flow of materials, 343–344 forward integration, 352 four-tier, 349–351 Internet and, 356–358 Index mitigation framework, 359 order fulfillment, 357 order placement, 357 performance improvement, 347–349 performance measurement, 347–349 physical distribution, 344 physical supply, 344 process simplification, 353 redesigning, 450 risk and resilience, 358–361 structural improvements, 352–354 supply chain management and, 343–347 sustainability of, 361–364 system improvements, 354–356 vertical integration, 353 Supply chain collaboration, 42 Supply-Chain Council, 346 Supply chain management (SCM), 342–366 defined, 345 logistics role in, 387–389 overview, 342–343 SCOR model, 345–346 supply chain and, 343–347 technology and, 356–358 Supply chain managers, 13–15 Supply Chain Operations Reference (SCOR) model, 345–346, 365 Supply chain resilience, 358–360 Supply chain risk analysis of, 359–361 defined, 360 Supply chain risk management, 381 Supply chain strategies, 30, 31, 32, 33 Supply chain structure, 352 backward integration, 352 forward integration, 352 improvements, 352–354 vertical integration, 353 Supply chain systems, 352 cross-functional teams in, 355 improvements, 354–356 information systems, 356 lean systems, 355–356 Supply management, 227–228 Supply rate, 287, 288 Support services costs, 264 Sustainability, of natural environment, 14 of supply chain, 361–364 Sustainable competitive advantage, 30 Sustainable logistics, 477–480 Sustainable methods, 69 Sustainable operations, 32, 33 Swim lane flowchart, 97 Syngenta, 225 System, 93 System boundaries, 93 Systems flowchart, 96, 97 T Taiwan Semiconductor Manufacturing Company (TSMC), 344 Takt time, 121 Tangible benefits, Tangibles, 142 Target Corporation, 291, 356, 368, 394 Target level, 301, 302 Target value, 46 Task scheduling, 246 Taylor scheduling software, 259 Team responsible, 98 Teamwork, 41 Technical expertise, 42 Technologies supporting service delivery, 84 Technology(ies), 369, 381 see also Information technology outsourcing, 369, 370 supply chain management and, 356–358 Technology misalignment, 40 Technology push, 37 Temporary labor, 228 Tesla, 411 Texas Instruments, 346 Theory of constraints (TOC), 253–254 Theory of constraints in project management, 278 Third-party logistics provider (3PL), 401–403 3D images, 388 3D printer, and printed objects, 68 3D printing, 40, 52, 67, 68 advantages and disadvantages of, 65 3M, 27, 28, 29, 115, 154, 175, 176 3M and Six Sigma, 441–446 3M Canada, 320, 353 3M corporate strategy, 27 Throughput, 253, 254, 255, 257 Throughput ratio (TR), 56 Throughput time, 102, 104, 348 Time, supply chain, 348 Time-cost function, 274 Time-cost relationship, 274–275 Time-cost trade-off, 274 Time management in projects, 268 Time-phased budget, 266 Time-phased materials plan, parts-explosion process, 325–326, 330 Time-phased plan, 247 Time schedule, 266 Time series, 211 499 Time-series data, 193, 196 decomposition of, 191 Time-series forecasting methods, 200 Time-series methods, 191, 199 Time-series model, 202, 211 Timing of facilities decisions, 219, 222 Timken Company, 370 TOC, theory of constraints, 253–254 Toledo Custom Manufacturing (TCM), 43–440 Toro, 227, 463–469 Total cost, 230, 232, 233, 234 inventory, 293–294, 295 offshoring, 373–374 outsourcing, 369, 370, 372 Total supply chain throughput time, 348 Toyota, 358 Toyota Motor Manufacturing Kentucky, Inc (TMMK), 115 Toyota Plant, 115 Toyota Production System (TPS), 114 ToysPlus, 470–473 Tracking signal, 198, 199 Trade-off decision, 247 Trade-offs, 45 cost of, 149 between ordering frequency and inventory level, 293 projects, 264–265 between service level and inventory level, 304–306 Traffic congestion, 263–264 Training, 93 Training costs, 230, 231 Transaction costs, 371–372 Transaction information systems, 358 Transformation processes, 5, 68, 92, 98, 100 inside organizations, Transformation system, 11 Transit inventory, 289 Transportation, 389–394 cost, 390 economics, 389–390 example, 389, 393 government role in, 389 logistics strategy, 404 modes of, 390–392 modes selection, 392–393 service, 390 Travelers Insurance, 229 Trend, 191 Trend-adjusted exponential smoothing, 211 Triple bottom line, 362 Truckload (TL), 391 Truckload carriers, 391 Trucks, as mode of transportation, 391, 393 500 Index Trust, 379 Tsunami, 358 Tunnel, 263, 264 TVs, 29, 202 Typical inputs, defined, 11 Typical outputs, defined, 11 U Ultimate customer, Uncertainty(ies), 329, 330 protect against, inventory and, 289 Undertime, 228 Undertime costs, 230 Unfamiliar product, 41 Uniformity, Uniform load, 120 Uniform lot delivery, 315 Unit cost, 348 Unit item cost, 293 University, 247 Upper control limit, 164 Upper specification limit (USL), 168 U.S Environmental Protection Agency, 69 U.S Green Building Council (USGBC), 478 U.S Postal Service, 391, 393, 394, 399 U.S Stroller, 424–429 Use/decision characteristics, 202 User knowledge, MRP system and, 332 User Solutions, Inc., 335 Utilization, 217–218, 247, 250, 253, 255 V Value stream, 116 Value-stream mapping, 116, 430–432 Vanish, 225 Variable measurement, 168 Variables control chart, 167 Variables measurement, 162 Vending machines, 297 Vendor managed inventory (VMI), 306 Vertical integration, supply chain, 353 VICC, 95 Vilfredo Pareto, 171 Villages, 256 Virtual prototypes, 39 Visual diagram, 95 Visual inspection, 212 VMI, vendor managed inventory, 306 Voice of the customer, 14 W Wait-and-see strategy, 222 Waiting time, 248, 249, 250 Walmart, 14, 25, 30, 33, 203, 356, 375, 394, 400, 401, 402, 403 Walmart management, 33 Warehouses, 394–396, 399–401 logistic network, 404 Warehousing, 394–396 Warfarin, 437 Waste, 14, 116 Waste, in Health Care, 129 Water level (inventory), 287–288 Waterloo Manufacturing Software, 259 Water routes, for transportation, 391–392, 393 WBS, work-breakdown structure, 266 Weather, 455 Web-based methods, 328 Web-enabled service, 14 Weighted moving average, 194 Weighted scoring method, 379 Well-designed quality control system, 163 Well-functioning processes, 77 Western Digital, 367 Westerville Physician Practice, 430–432 Wikipedia, 405 WIP, work-in-process inventory, 247, 287, 289, 347 Within-firm coordination, 352 Work-breakdown structure (WBS), 266 Work center, 121, 247, 249, 251–252 Workers, 125 Workforce, 3, 26, 30 Workforce, Mayo Clinic, 435 Workforce policies, 30 Work-in-process (WIP) inventory, 247, 287, 289, 347 Work requirements, 257 World Food Program, 402 Z Zara, 352–353, 386–387 Zedler, Peter, 396 ACRONYMS IN OPERATIONS AND SUPPLY CHAIN MANAGEMENT 3PL Third-Party Logistics Provider AON Activity on Node (Method) APICS American Production and Inventory Control Society APS Advanced Planning and Scheduling ASQ American Society for Quality ATO Assemble-to-Order B2B Business-to-Business B2C Business-to-Consumer BOM Bill of Material BPR Business Process Re-engineering Cp and Cpk Process Capability Indexes CA Customer Attributes CAD Computer-Aided/Assisted Design CAM Computer-Aided Manufacturing CE Cause-and-Effect (Diagram) CFE Cumulative (Sum) of Forecast Errors CL Center Line (Control charts) CPFR Collaborative Planning Forecasting and Replenishment CPM Critical Path Method CR Critical Ratio DC Distribution Center DMAIC Define, Measure, Analyze, Improve, Control DRP Distribution Requirement Planning EC Engineering Characteristics ECR Efficient Consumer Response EDI Electronic Data Interchange Model EOQ Economic Order Quantity ERP Enterprise Resources Planning FCFS First Come, First Served FCS Finite Capacity Scheduling ISM Institute for Supply Management ISO International Organization for Standardization JIT Just-in-Time (System) LCL Lower Control Limit LSL Lower Specification Limit LTL Less-than-Truckload MAD Mean-Absolute Deviation (of Forecast Errors) MAPE Mean Absolute Percentage Errors MBNQA Malcolm Baldrige National Quality Award MRO Maintenance Repair and Operating Supplies (Inventory) MRP Materials Requirements Planning MSE Mean Square Error MTBF Mean Time Between Failure MTO Make-to-Order MTS Make-to-Stock MTTR Mean Time to Repair NPD New Product Development POS Point of Sale PWP Plant-within-a-Plant QFD Quality Function Deployment QR Quick Response RFID Radio Frequency Identification RFP Request for Proposal RFQ Request for Quotation ROI Return on Investment RONA Return on Net Assets ROP Reorder Point S&OP Sales and Operations Planning SCOR Supply Chain Operations Reference Model SCM Supply Chain Management SKU Stock-Keeping Unit SPC Statistical Process Control SPT Shortest Processing Time SQC Statistical Quality Control TL Truck Load TOC Theory of Constraints TPS Toyota Production System TQM Total Quality Management TR Throughput Ratio TS Tracking Signal UCL Upper Control Limit USL Upper Specification Limit VMI Vendor Managed Inventory WIP Work-in-Process Inventory For additional acronyms and detailed definitions, see the OM Encyclopedia by Arthur Hill or www.poms.org 501 ... Management 342 16.1 Supply Chain and Supply Chain Management 343 16.2 Measuring Supply Chain Performance 347 16.3 Supply Chain Dynamics The Bullwhip Effect 349 16.4 Improving Supply Chain Performance ... responsibilities of operations and supply chain management as process, quality, capacity, inventory, and supply chain These decisions provide the framework for organizing the text and describing what operations. .. management in the supply chain This means we deal with operations in the larger context of its supply chain, including external suppliers and customers Before discussing the larger supply chain implications,