Table Of ContentPRODUCTION AND
OPERATIONS MANAGEMENT
ANA PPLMIOEDDE RANP PROACH
5.
JOSEPHMA RTINICH
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PRODUCTIAONNDO PERATIOMNASN AGEMENT
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ABOUT THE AUTHOR
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Joseph S. Martinich Louis), the Engineering Management Department
is Professor of Op of the University of Missouri-Rolla, _and the Indus
era,tiorn; Manage trial Engineering Department of California State
ment at the Univer Polytechnic University-Pomona.
sity of Missouri-St. Dr. Martinich is the co-author (with Arthur P.
Louis. He holds a Hurter) of the book Facility Location and the Theory of
B.S. degree in lnr Production (Kluwer Academic), and he is the au
dustrial Engineer thor of nearly 20 scholarly articles a.nd reviews.
ing from North His work has appeared in leading journals, such
western University: as Decision Sciences, European Journai of Operational
an M.A. in Eco Research, Naval Research Logistics, American Economic
nomics from Cali Review, Journal of Regional Science, and Technological
fornia State University-Fullerton: and a Ph.D. in In Forecasting arid Social Change. His early research fo
dustrial Engineering and Management Sciences cused on the interrelationship between produc
from Northwestern University. He has worked tion technology, process selection, and facility lo
and/or consulted for companies in the steel, oil cation decisions, and the effects of uncertainty
and chemical, paperboard and packaging, retail, and government intervention on these decisions.
business services, and publishing industries, as His current research includes the environmental
well as for governmental and not-for-profit organi aspects of operations management, and the ap
zations. He has held visiting and adjunct faculty plication of Lean Production methods to service
positions at the John M. Olin School of Business systems, not-for-profit organizations, and small
Administration of Washington University (St. businesses.
III
\
I.
I
PREFACE
No one undertakes a five-year writing project with accounting, finance, engineering, MIS, medi
out compelling personal reasons. In my case I had cine, law, and most other professions, will find
taught production and operations management for that a large part of their jobs will be devoted to
12 years to over a thousand students, 98% of whom operational issues.
were not operations management majors but rather • Opening each chapter is an On the Job box,
were majoring in accounting, marketing, finance, which briefly describes the featured per- .
MIS, and several other fields. Few students had any son's opera�ions management activities.
idea what operations management was, and their Many of the people profiled work outside
quantitative skills were quite varied, with many of the operations function of their companies;
them exhibiting severe math anxiety. These factors they include accounting managers, financial
presented several special challenges in teaching officers, customer service and sales person
this course: how to demonstrate the relevance of nel, purchasing managers, engineers, and
operations management to this wide variety of non entrepreneurs. Few had extensive formal
majors; how to teach the thought processes and an training in operations management, but
alytical reasoning required in operations manage most have found that their formal exposure
ment in a mathematically accessible and interesting to operations management, though limited,
way that reduces math anxiety; how to eliminate ar has been invaluable.
tificial separations between quantitative and quali
• Over 200 companies are used to illustrate
tative/behavioral material; and how to make the dis
the applicability and importance of opera
cussion and examples realistic, and familiarize
tions management to a wide variety of or
students with the richness and importance of opera
ganizations, as well as a variety of jobs.
tions, without overwhelming them.
Over the years, I prepared in-class notes, trans • Each chapter contains an In Good Com
parencies, and exercises that addressed these issues pany box, which describes how the pro
in the course, but I found no textbook that adequately filed organization has addressed the oper
assisted the students (and me) in doing so. Many stu ations management issues in that chapter
dents encouraged me to turn my notes into a book be to improve its performance.
cause they found them more readable and interesting 2. To familiarize students with real production sgs
than the text. Little did I know that this "conversion" of tems. Although many of my students hold part
notes would take five years of my life, but I believe the or full-time jobs, most of them are familiar with
result has been a book that will help instructors teach, very few production systems and frequently with
and students learn, about the extent, substance, and only a small part of their own companies, such
excitement of operations management. as the accounts receivable department. Accoun
tants, sales representatives, and computer sys
tems analysts who understand the general na
ture and activities of production systems are
• GOALS AND CORRESPONDING better able to work with and communicate with
FEATURES customers, suppliers, and co-workers and be
more effective in their jobs.
• Chapter 3, therefore, provides tours of
In writing this book I had the following goals:
four production systems. These tours,
I. To demonstrate the importa11ce of operatio11s which include both manufacturing and
management to 11011-mafors. Anyone seeking a service operations, describe the main ac
supervisory or managerial career in marketing, tivities involved in producing the compa-
v
VI Preface
nies' products, whether it be a roll of liner titative and qualitative aspects of P/OM
board or a title insurance policy. More im must be integrated to solve real problems
. portantly, the chapter identifies opera and bring together the topics of the chap
tional problems and issues important to ter and related chapters. With two excep
the success of the company. These discus tions (Walt Disney World and Southwest
sions preview and motivate the topics to Airlines). the companies used are ficti
be covered in the remainder of the book. tious, but the problems underlying most
• The end-of-chapter Cases and ·some in of the cases are a synthesis of. actual situa
text examples have also been designed to tions from my experiences and those of
provide descriptions of real production colleagues or from w�itten reports. The
systems or parts of systems. cases are quite different from those in
other books in that they tell a story of the
3. To make the topics realistic and applicable. Be
problem and how it was solved. They
cause of their work experiences, students want
demonstrate the problems that occur in
to see how the topic applies to their.jobs. They
implementation; the unexpected events
have also encountered the ambiguities, "messi
that can occur; and how behavioral and
ness," and unanticipated consequences of real
quantitative tools can be combined to ob
situations, so they will not accept tools that
tain better solutions than either one alone
work only in idealized worlds.
can achieve. Although the cases are not
• I have used real examples extensively to designed for "solution," discussion ques
show how companies and workers are
tions are provided wjth each one.
confronting P/OM issues and problems.
4. To provide a state-oHfte art treatment of topics.
Over I 00 photos make the people, compa
In the past 20 years, businesses have radically
nies, and situations more tangible.
changed the way they design and produce
• Many of the illustrative examples are a bit
goods and services; they have redesigned jobs
. longer and "messier" than the "toy" problems
and work systems, quality management sys
commonly used in texts. Typically, a single
tems, and material management and inventory
example will grow in complexity and realism
systems, and they have changed tne technolo
as the discussion progresses and additional
gies they use at a dizzying pace. Terms such as
factors are introduced. For example, Chapter
lean production, just-in-time production, electronic
7 first presents the rationale, thought
data interchange, total quality management, concur
process, and mechanics of a standard heuris
rent engineering, and cellular production have en
tic for designing a single repetitive flow
tered the vernacular of the business press.
process (assembly line). Unlike many P/OM
texts, however, this chapter then discusses • These approaches and methodologies are
methods for improving the design, including not simply tacked onto this book as a sepa
switching heuristics and nonquantitative rate "new methods" section resembling a
considerations involving staffing, technol glossary. They are discussed extensively
ogy, and task synergies. More advanced top throughout the book in an integrated fash
ics, such as the use of parallel work-stations, ion. For example, not only is Chapter 11 de
parallel production lines, and the effects of voted entirely to quality management, total
randomness and variation on the production quality management principles and tech
system, are presented for instructors who niques are woven into the chapters on op
wish to cover the topic in greater depth. erations strategy, product design, process
Without being smothered in mathematical design, job design, and lean production.
calculations, students can see the complex • Entire chapters or substantial sections,
ity of operational problems and possible ap not just brief abstracts, are devoted to top
proaches to resolving them and become fa ics such as lean and just-in-time production, cel
miliar with available tools. lular production, and vendor relations.
• The end-of-chapter Cases provide de • Attention to the ecological implications of opera
tailed and realistic examples of how quan- tions decisions has been increasing, and not
Preface VII
simply because of environmental regula, • When presenting quantitative material I
tions. Several chapters contain sections that have tried to focus on the thought-process
point out, and illustrate with real examples, of how to approach various types of prob
the opportunities that exist for companies to lems, and when and why the approach pre
increase profits by designing products and sented is appropriate in practice.
production processes and managing opera • To a large extent, I have avoided present
tions in an environmentally sound manner. ing quantitative material in a fashion
5. To emphasize the strategic role of operations in or where assumptions and formulas are
ganizations. The major changes occurring in stated, followed by a "toy" numerical ex
business have involved fundamental changes in ample where the student simply substi
strategy. Companies such as Hewlett-Packard, tutes numbers for variables. Because my
Southwest Airlines, Walt Disney, Wal-Mart, Toy illustrative examples explain the rationale of
ota, and Chrysler have become successful not the approach and the reasons for each step, the
simply because they have marketed their prod mathematical steps are more intuitive,
ucts well, but because they have developed pro less magical, and more likely to be com
duction systems that allow them to excel in vari prehended and retained by students.
• Solved Problems are provided at the end
ous ways: introducing new products more
quickly, producing products of higher quality or of all chapters that contain quantitative
at lower cost than competitors, or being more· material. The solutions for these problems
responsive and flexible in the timeliness of de are explained in detail, providing further
livery and variety of products produced. reinforcement and practice for students.
• Chapter 2, therefore, provides an extensive
discussion of the role of operations in the devel-.
opment and execution of an organization's strategy. • ORGANIZATION OF THE BOOK
The need for compatibility between the
marketing strategy, such as one based on
providing customized products, and the The general organization of the book is consistent
operations strategy and production system with most P/OM courses. It begins with general back
is emphasized. Numerous real-world exam ground information on operations management, strat
ples and numerical illustrations are used to egy, and production processes. It then discusses is
show how companies can, and have, ex sues related to the design of production systems. . The
ploited operational strengths. final part focuses on shorter-term operations plan-·
• Subsequent chapters dealing with system de ning and control decisions. Three features of the orga
sign issues reinforce and expand the discus nization of the book should also assist instruction.
sion of operations strategy, such as how ca Topics are Integrated and reinforced. Topics such
pacity and facility location decisions can be as quality management and lean production per
used to enhance competitive position. meate so many aspects of operations that it is ar
6. To make the quantitative models and tools ac tificial to segment totally their coverage from
cessible. The proliferation of computers and other operations management topics. For exam
model-based software has made the use of ple, mistake-proofing of jobs (poka yoke) is a com
quantitative models and methods in opera mon tool used in quality management, but not to
tions management more wide-spread and im include it in the job design chapter would be to
portant rather than less so. However, the form omit an important job design principle. For this
and level of knowledge students need regard reason, many popular topics are covered in more
ing quantitative methods has changed. Every than one place in the book. Typically, one chapter
student needs to develop the ability to analyze will provide detailed discussion of the topic, but it
a situation or problem, identify what informa will be discussed within other relevant chapters as
tion is known, structure the problem, identify well. This approach allows instructors to omit
what is to be determined, and select a method chapters from the course and still be able to cover
for finding the solution. desired topics.
VIII Preface
Quantitative a11d qualitative topics are integrated.
• OTHER FEATURES
To perform good operational planning and to solve
operational problems, a manager must uti_lize a wide
In addition to the features mentioned earlier-On
set of skills and knowledge. A theme of this book is
that quantitative methods are tools to be used as part the Job and In Good Company profiles, End-of
Chapter Cases, Plant Tours, and Solved
of the decision-making process, not an end in them
Problems-the book contains several other fea
seives. Too often operations·management topics and
tures that support the learning process:
problems are divided into mutually exclusive cate
gories--quantitative or qualitative-where one and • Chapter Summaries. The most impor
only one approach is presented. I have organized the tant issues discussed in the chapter are
book by general topics or problems and have in presented in one- or two-sentence state
cluded whatever knowledge or skills are helpful or ments at the end of each chapter. These
ap'Jropriate. For example, Chapter 9 not only pre reinforce key ideas and provide a quick ref
sents mathematical models of queueing systems, it erence for the main ideas.
also considers "qualitative" issues,• such as the rela • Highlighted Formulas and Key Formulas Sec
tive advantages of single waiting lines and express tion. The most important and frequently
servers, the psychology of waiting, and selection of needed formulas and equations are high
appropriate performance measures. lighted with color in the body of the chapter.
They are then printed together at the end of
Tf11· hook is flexible a11d usable by a wide audie11ce. the chapter for easy reference when stu
Material in this book has been used at four universi dents are solving numerical problems.
'.ies in both undergraduate and graduate business • Highlighted Key Terms and Key Terms Sec
courses and in a senior level engineering manage tio11. Key terms are highlighted in bold
ment course with success. The topics covered in in where they are first defined and then are
troductory P/OM courses vary considerably from listed at the end of each chapter with the
school to school and instructor to instructor. There page number cited where their definition
fore, this book contains all the standard P/OM top was given.
ics, from which an instructor can customize his or • End-of-Chapter Problems. The book con
her course. Further, almost all chapters are suffi tains approximately 250 end-of-chapter
ciently self-contained so any set of chapters can be problems. I have intentionally tried to pro
combined for a course. vide a set of problems with a wide range of
Instructors should find this text very flexible difficulty from the very direct and simple to
with respect to the degree of mathematical content relatively complex mini-cases requiring con
desired in the course. By choosing to include or siderable analysis and possibly the use of
omit individual chapter sections, Chapter Supple computer software. (The most difficult ones
ments, or Tutorials, instructors can use this book are designated by an asterisk • .) To a large
for courses ranging from those with quite modest to extent, the problems have been constructed
very substantial mathematical emphasis. The core in pairs; problems I and 2 address the same
of the book only assumes students have prerequi topic, and so on. In general, even-numbered
site knowledge of college algebra and basic proba problems will only use data from other
bility and statistics. For those schools that wish to even-numbered problems and similarly for
introduce management science tools, such as linear odd-numbered problems. The answers to al
programming or simulation, as part of the P/OM most all odd-numbered problems are given
course, three Tutorials provide in-depth introduc at the end of the book.
tions with special focus on how these tools can be • Discussion and Review Questions. Over
used for operations management. At those schools 270 questions are provided at the end of
where students have more advanced mathematical the chapters. These not only help students
preparation, such as a prerequisite management review the important topics, but many re
science course, the tutorials can either be omitted quire students to relate the topics to their
or sections of them can be used to illustrate the ap own experiences and to draw upon several
plication of these tools to P/OM topics. topics together to an,·;:cr the que:::tions.
Preface IX
sion of various companies and industries, and for
• SUPPLEMENTARY MATERIALS
their reinforcement of key concepts in the text. Each
segment is approximately 3-5 minutes long and can
be used to introduce topics to students and provide
a real-_world context for related concepts. Addition
ally, a selection of plant tour videos are available,
related to companies and industries in the text.
So�ware Animated Simulations. This selection of
Instructor's Guide. The Instructor's Guide was writ software simulations of key concepts from the text
ten by the author to make sure it was compatible are designed for use in classroom presentation. The
with the themes and style of the text. For each chap simulations, including queuing and IIT scheduling,
ter, the Guide contains: (I) a list of learning objec allow instructors to demonstrate the effects of key
tives, (2) possible in-class exercises to motivate or il parameters.
lustrate the chapter topic, (3) suggested examples or
Supplement CD-ROM. This CD-ROM contains all
additional comments instructors can use to illus
of the supplements for this text (excluding video) in
trate topics, (4) solutions to all end-of-chapter prob
computerized form, allowing instructors to print.
lems, (5) answers to review and discussion ques
edit. and project the material as needed. Instructors
tions where there is a dominant answer (for many
may print out any of the material for their own use
questions, especially those requiring students to use
or for distribution to students. Also included on the
their own experiences no single answer exists). and
CD-ROM are the Software Animated Simulations,
(6) possible answers to the case questions.
the PowerPoint Presentations, and the text illustra
PowerPoint Presentation. These PowerPoint lec tions. Available for 1MB or IBM compatibles.
ture slides contain a combination of key concepts,
images, and examples from the text. Developed by
Lance Matheson of Virginia Tech, the slides are di
• ACKNOWLEDGMENTS
vided into a thorough presentation file for each
chapter, and consist of over 600 instructional im
This book is the result of hard work by many people.
ages. Designed according to the organization of the
First, I would like to thank the hundreds of students
material in the text, this series of electronic trans
who used parts of this book in class and provided
parencies can be used for classroom presentation to
helpful feedback. I would especially like to thank
reinforce P/OM concepts visually and graphically.
Carolyne Weigel Schriefer, my research assistant for
Computer Software. Software developed by Y. this book. I am also grateful to Professor L. S. ·
Chang (developer of OSOM™ Prentice Hall) is avail Hiraoka's P/OM students at Kean College of New
able with the book. However, the book is designed Jersey, who told us what pedagogical elements were
so it can be used with any of the standard operations most useful to them as they studied and who evalu
management or management science packages. ated the proposed design of the text. Second, I
would like to thank the following faculty reviewers
Test Bank. Including objective questions and
who reviewed various drafts very conscientiously
problems, as well as short-answer and essay ques
and provided superb comments to improve the style
tions,,the Test Bank has been designed to meet the
and content of the text.
varying testing needs of instructors.
John Buzacott York University
Computerized Test Bank. The entire Test Bank is
Barbara Flynn Iowa State University
also available in a computerized form, allowing in
Frank Forst Loyola University of Chicago
structors to create and modify exams. It is available
Gregory Frazier University of Oregon
in a Windows format for IBM and IBM compatibles.
Manton Gibbs Indiana University of Per;msyl
Video Tapes. The Wiley/Nightly Business Report vania
Video contains segments from the highly respected S. K. Goyal Concordia University, Mon
. Nightly Business Report that have been selected for treal
their applicability to P/OM concepts, their discus- Jeff Heyl DePaul University
