Operations Management eleventh edition William J. Stevenson This book is dedicated to you. MANAGEMENT United States. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-352525-9 MHID 0-07-352525-1 Vice president and editor-in-chief: Brent Gordon Stewart Mattson Publisher: Tim Vertovec Executive editor: Richard T. Hercher , Jr. Executive director of development: Ann Torbert Managing development editor: Gail Korosa Vice president and director of marketing: Robin J. Zwettler Marketing director: Brad Marketing manager: Katie Vice president of editing, design, and production: Sesha Senior project manager: Bruce Gin Buyer II: Debra R. Sylvester Interior designer: Laurie J. Keri Johnson Photo researcher: Bill Van Werden Lead media project manager: Kerry Bowler Media project Ron Nelms Cover design: © Design Pics/Bilderbuch 10/12 Times New Roman Compositor: Private Limited R. R. Donnelley Library of Congress Cataloging-in-Publication Data Stevenson, William J. Operations management / William J. Stevenson.—11th ed. p. cm. ISBN-13: 978-0-07-352525-9 (alk. paper) ISBN-10: 0-07-352525-1 (alk. paper) 1. Production management. I. Title. TS155.S7824 2012 2010051901 The McGraw-Hill/Irwin Series Operations and Decision Sciences Operations Management Hill, Manufacturing Strategy: Text & Business Dynamics: Systems Cases, Third Edition or a Complex Operations World, F irst Edition Strategy: Competing in the 21 st Century, Hopp, Supply Chain Science, First Edition First Edition Factory Physics, Stevenson, Operations Management, Eleventh Edition Benton, P urchasing and Supply Chain Third Edition Management, Second Edition Jacobs, Berry, ybark, and V Swink, Melnyk, Cooper, and Hartley, Managing Operations Across the Supply Bowersox, Closs, and Cooper, Supply Manufacturing Planning & Control for Chain, First Edition Chain Logistics Management, Third Supply Chain Management, Sixth Edition Edition Jacobs and Chase, Operations and Supply Thomke, Managing Pr Development: Text and Cases, First Brown and Hyer, Managing Projects: Management: The Core, S econd Edition Edition A Team-Based Approach, First Edition Jacobs and Chase, Operations and Supply Ulrich and Eppinger, P roduct Design and Burt, Petcav Supply Chain Management, Thirteenth Edition Development, Fourth Edition Management, Eighth Edition Jacobs and ybark, Why ERP? F irst Cachon and T Matching Supply Edition Zipkin, F ventory Management, First Edition with Demand: An Introduction to Johnson, Leenders, and Fl Purchasing Operations Management, Second Edition and Supply Management, F ourteenth Quantitative Methods and Management Finch, I nteractive Models for Operations Edition Science and Supply Chain Management, First Larson and Gray, Project Management: Edition The Managerial Process, F ifth Edition Hillier and Hillier, I ntroduction to Management Science: A Modeling and F Ser Olson, Introduction to Information Sys- Case Studies Appr ead- Management: Operations, Strategy, tems Project Management, S econd Edition sheets, Fourth Edition Information Technology, Stevenson and Ozgur, I ntroduction to Gehrlein, Operations Management Cases, Operations Management: Contemporary Management Science with Spreadsheets, First Edition Concepts and Cases, Fifth Edition First Edition Har Technology Simchi-Le , and Simchi-Levi, Management, First Edition Designing and Managing the Supply Hayen, prise Software: Chain: Concepts, Strategies, Case An Introduction, First Edition Studies, Third Edition iii Preface T he material in this book is intended as an introduction to the • New material and more emphasis have been devoted to field of operations management. The topics covered include these topics: both strategic issues and practical applications. Among the Service topics are forecasting, product and service design, capacity Supply chain management ven- Ethical conduct y chain management, and project management. Step-by-step problem solving My purpose in revising this book continues to be to provide • Linear programming is now a chapter rather than a chap- a clear presentation of the concepts, tools, and applications ter supplement, to allo xibility on when and of the field of operations management. Operations manage- where it is used. ment is evolving and growing, and I have found updating and integrating new material to be both rewarding and challeng- • There is added emphasis on ethics in every chapter. ing, particularly due to the plethora of new developments in • Throughout the text, there are new, updated readings and the f hile facing the practical limits on the length of the photos to provide students with a motivating view of the book. y. • Availab Video/DVD series V This Eleventh Edition Contains a vations in operations at companies such as Zappos.com, Xerox, Burton Snow- Considerable Amount of Material . . . boards, F much more than one could hope to cover in a single semes- ter. However, there is also considerab Acknowledgments what material to cover. This allows instructors to select the chapters, or portions of chapters, that are most relevant for I w er the their purposes. xibility also extends to the choice of recent editions, reviewers and adopters of the text have provided relative weighting of the qualitative or quantitative aspects of a “continuously improving” wealth of ideas and suggestions. It the material. is encouraging to me as an author. I hope all reviewers and A s in previous editions, there are major pedagogical features w their suggestions were valuable, were care- y appreciated. The list includes ey features of the book, the chapter post-publication reviewers, focus group participants, and man- elements, the supplements that are available for teaching the uscript reviewers: Vikas Agrawal, F ay ville State Univer- course, highlights of the eleventh edition, and suggested appli- sity; Bahram Alidaee, University of M ississippi; Chen Chung, Univ t Clark, Stony Brook Univ is our hope that instr ve the tools to Kathy Dhanda, DePaul Univ ver- e this learning e warding one. sity of North Carolina at Greensboro; W isher, Stephen F. Austin State Univ xel Univ Jooh Lee, Rowan Univ , San Jose State Uni- What’s New in This Edition v Univ w, This edition has been revised to incorporate and integrate Oregon State University; Michael Shurden, Lander Univ changes in the field of Operations Management, and the John Simon, Governors State Univ Y many suggestions for improvement receiv uctors ge; Timothy Vaughan, Univ Wiscon- around the world who are using the text. The following are sin at Eau Claire; Pamela Zelbst, Sam Houston State Univer- key among the revisions: sity; Tekle W thw v . Other contributors included accuracy checkers: Michael • The sequence of chapters has been changed to improve Godfrey, University of W osh and Pamela w. Zelbst, Sam Houston State University; T Alan • A tutorial has been added on working with the normal C annon, University of Texas at Arlington; Power Points: distribution. David Cook, Old Dominion University; Data Sets: Mehdi • A list of key points has been added to ev . Kaighobadi, Florida Atlantic University; Excel Templates and v vi Preface Tangedahl, University of Montana; Univ J im Keyes, University of Wisconsin at Stout; Beate Instructors Manual: Michael Godfre amela Zelbst. Klingenber ho v Vinod Lall, Minnesota State Univ helped design and develop content in Connect™ Operations K wrence, New Jersey Institute of T gy; Anita Management y Richardson of Southern Lee-Post, University of K wis, University of Polytechnic State Univ ho created Guided Examples Albany State University; Cheng Li, and Shyam Jha, Univ Arizona, Nancy Lambe, Uni- California State University at Los . Lojo, versity of South Alabama, and Andrew Manikas, University California State University at Sacramento; F. Victor Lu, St. of W osh, who designed the new assignable s University; Janet Lyons, Utah State University; James interactive applications. Maddox, F versity; Mark McComb, Mississippi F inally I would like to thank all the people at McGra College; George Mechling, W v t. It is always a pleasure to Scott Metlen, Univ work with such a professional and competent group of people. State Univ Aja , Executive Editor; Gail Scott S. Mor n Nazarene University; Philip F. Korosa, Managing Developmental Editor; Bruce Gin, Project Musa, University of Alabama at Bir Manager; Debra Sylvester, Buyer II; Katie et- Nam, University of North Dakota; Roy Nersesian, Monmouth y Bowler and Univ versity of St. Thomas; y eri Johnson, Photo O hlmann, Univ wa at Iowa City; Research and many others who worked “behind the scenes.” Francisco State University; Kenneth Paetsch, Cleveland State I would also lik y reviewers of previ- Univ Taeho Park, San Jose State University; Allison utions. v Asef-F Pearson, Mississippi State Univ P enf v Nor Prabir Bagchi, Syracuse University; Steve Peng, California State Univ George Washington State University; Gordon F. Bagot, at Ha eschke, Minnesota State University at California State Univ vi Behara, Moorhead; u Peters, San Jose State Univ Atlantic Univ M ichael Bendixen, Nova Southeastern; Phillips, Mississippi State Univ versity; Prashanth Univ Towson University; Zino N. Bharadw v ania; Greg Bier, Rado , California State University at Hayward; Stephen University of Missouri at Columbia; Joseph Biggs, Cal Poly A. Raper, University of Missouri at Rolla; Pedro Reyes, State University; Kimball Bullington, Middle Tennessee State Baylor University; Buddhadev Roychoudhury, Minnesota University; Alan University of Texas at Arlington; State University at Mankato; ward Uni- veland State University; A lan Chow, Univer- v , Stony Brook Univ T n Alabama at Mobile; DeVry Univ . Seipel, Middle Tennessee State State University; Tech Univer- University; Raj Selladurai, Indiana University; D ooy v R ichard Crandall, Shin, Minnesota State Univ ymond E. Appalachian State Univ Dinesh Dave, Appalachian Simko, Myers University; Jake Simons, Geor State University; Scott Dellana, East Carolina Univ Xin University; Charles Smith, Virginia Commonwealth Uni- Ding, University of Utah; v v V ictor Sower, v K Sam Houston State University; Jerem versity of v azel, Illinois State Univ Alabama; wart, University of Wisconsin at W anda Fennell, Univ g; J oy Stout; Dothang Truong, Fayetteville State University; M ike F Boston College; Lillian Fok, Univ w Orleans; Umble, Baylor Univ Javad Varzandeh, California State Charles Foley, Columbus ge; Matthew University at San Bernardino; V College; W. F v , Boise Mark Vroblefski, University of Arizona; Gustavo Vulcano, v A. Gates Jr., Aurora University; Tom New York University; Walter Wallace, Georgia State Uni- , Boise State University; Damodar Golhar, W v James Walters, Ball State University; Wang, Michig v ville State Uni- Montclair State Univ Jerry Wei, Univ versity; v Dame; Michael g, University of Texas; Geoff at Haresh Gurnani, University of Miami; Terry Willis, University of Central Oklahoma; Jiawei Zhang, Har enn State University; Vishwanath Hegde, Zhenying Zhao, University of Maryland; Yong-Pin Zhou, State University at East Bay; Craig Hill, Georgia State Univer- University of Washington. versity of Illinois at Chicago; Jonatan Jelen, Mercy Colle glekar, LaSalle Univ ijay v gie-Mellon William J. Stevenson Walkthrough MAJOR STUDY AND LEARNING FEATURES Examples with Solutions EXAMPLE 7 SOLUTION Solved Problems Problem 1 Solution Excel Spreadsheet Solutions CHAPTER ELEMENTS Chapter Outlines 1 Introduction to Operations Management CHAPTER 2 Competitiveness, Strategy and Productivity 3 Forecasting 45 PSrtoradtuecgti ca nCda pSaecrvitiyc eP lDanensiignng for Products and Services 6 PLaroycoeusts Selection and Facility 78 WLoocarkt iDone sPilgann nainndg Maneda sAunraelmyseinst 9 Management of Quality 10 Quality Control 11 AScghgeredgualitneg Planning and Master 12 MRP and ERP 13 Inventory Management 14 JIT and Lean Operations 15 Supply Chain Management 16 Scheduling LEARNING OBJECTIVES 17 Project Management 5 18 Management of Waiting Lines 19 Linear Programming 1 6 2 7 3 8 4 Opening Vignettes Learning Objectives Figures and Photos FIGURE 2.2 Icons S S