Inventory Levels for the EOQ Model ) ) (t Iy ( or nt e v In Slope=–(cid:31) Q T Time t All-units discount average annual cost function 240 230 ) Q G( 220 G0(Q) G (Q) 1 210 G (Q) 2 200 190 180 100 200 300 400 500 600 700 800 9001,000 1,100 1,200 Q Changes in Inventory Over Time for Continuous-review (Q, R) System y or nt e v R n I Q (cid:31) Order Order Time placed arrives Nahmias-Olsen FrontMatter.fm Page 1 Tuesday, December 30, 2014 10:01 AM SEVENTH EDITION PRODUCTION AND Operations Analysis …. Nahmias-Olsen FrontMatter.fm Page 2 Tuesday, December 30, 2014 10:01 AM SEVENTH EDITION PRODUCTION AND Operations Analysis S T R A T E G Y • Q U A L I T Y (cid:129) A N A L Y T I C S (cid:129) A P P L I C A T I O N Steven Nahmias Santa Clara University Tava Lennon Olsen University of Auckland WAVELAND PRESS, INC. Long Grove, Illinois Nahmias-Olsen FrontMatter.fm Page 3 Tuesday, December 30, 2014 10:01 AM For information about this book, contact: Waveland Press, Inc. 4180 IL Route 83, Suite 101 Long Grove, IL 60047-9580 (847) 634-0081 [email protected] www.waveland.com Copyright © 2015 by Steven Nahmias and Tava Lennon Olsen 10-digit ISBN 1-4786-2306-3 13-digit ISBN 978-1-4786-2306-9 All rights reserved. No part of this book may be reproduced, stored in a retrieval sys- tem, or transmitted in any form or by any means without permission in writing from the publisher. Printed in the United States of America 7 6 5 4 3 2 1 nah77856_fm.qxd 7/23/12 8:41 AM Page iv I dedicate this seventh edition to my lucky seven, Library of Congress Cataloging-in-Publication Data my beautiful wife Vivian, whose birthday falls on Nahmias, Steven. the seventh of February. Production and operations analysis / Steven Nahmias. -- 7th ed. p. cm. — Steven Nahmias Includes index. ISBN-13: 978-1-935938-25-5 To my family. 1. Production management. I. Title. Tava Lennon Olsen Cover Image:(c) Brand X Pictures / www.fotosearch.com Copyright © 2012 by Wohl Publishing, Inc., Morristown, NJ 07960. All rights reserved. Printed in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permission(s), write to us at: Wohl Publishing, Inc. 45 S Park Place #223 Morristown NJ 07960 12345678910 ISBN: 978-1-935938-25-5 nah77856_fm_new.indd 5 18/12/14 10:21 PM Brief Contents About the Author xv 7 Service Operations Management 367 Preface xvi Supplement 2 Queueing Techniques 417 Introduction xvii 8 Push and Pull Production Control Systems: MRP and JIT 437 1 Strategy and Competition 1 9 Operations Scheduling 490 10 Project Scheduling 543 2 Forecasting 52 11 Facilities Layout and Location 593 3 Sales and Operations Planning 128 12 Quality and Assurance 666 Supplement 1 Linear Programming 169 13 Reliability and Maintainability 742 4 Inventory Control Subject to Known Demand 198 5 Inventory Control Subject to Uncertain Appendix: TAbles 796 Demand 249 6 Supply Chain Management 315 index 814 vi nah77856_fm_new.indd 6 18/12/14 10:21 PM Contents About the Author xv 1.11 Capacity Growth Planning: A Long-Term Strategic Problem 38 Preface xvi Economies of Scale and Economies of Scope 38 Introduction xvii Make or Buy: A Prototype Capacity Expansion Problem 39 Chapter 1 Dynamic Capacity Expansion Policy 40 Strategy and Competition 1 Issues in Plant Location 44 Problems for Section 1.11 46 Chapter Overview 1 1.12 Summary 47 Snapshot Application: Apple Adopts a New Additional Problems for Chapter 1 48 Business Strategy and Shifts Its Core Appendix 1–A Present Worth Calculations 50 Competency from Computers to Portable Bibliography 51 Electronics 3 1.1 Manufacturing Matters 5 Chapter 2 Manufacturing Jobs Outlook 7 Forecasting 52 1.2 A Framework for Operations Strategy 8 Strategic Dimensions 9 Chapter Overview 52 1.3 Competing in the Global Marketplace 10 2.1 The Time Horizon in Forecasting 55 Snapshot Application: Global Manufacturing 2.2 Characteristics of Forecasts 56 Strategies in the Automobile Industry 13 2.3 Subjective Forecasting Methods 57 Problems for Sections 1.1–1.3 13 2.4 Objective Forecasting Methods 58 1.4 Strategic Initiatives: Reengineering the Causal Models 58 Business Process 14 Time Series Methods 59 1.5 Strategic Initiatives: Just-in-Time 17 Snapshot Application: Advanced Forecasting, 1.6 Strategic Initiatives: Time-Based Inc., Serves The Semiconductor Industry 60 Competition 19 Problems for Sections 2.1–2.4 60 1.7 Strategic Initiatives: Competing on 2.5 Notation Conventions 62 Quality 20 2.6 Evaluating Forecasts 62 Problems for Sections 1.4–1.7 22 Problems for Section 2.6 64 1.8 Strategic Initiatives: Servicization 23 Snapshot Application: Pfizer Bets Big on Servicization: Moving Downstream 23 Forecasts of Drug Sales 65 The IBM Story 24 2.7 Methods for Forecasting Stationary Series 66 Performance Based Contracts 25 Moving Averages 66 Leasing Versus Buying 25 Problems on Moving Averages 69 Green Leasing 26 Exponential Smoothing 69 Problems for Section 1.8 27 Multiple-Step-Ahead Forecasts 73 1.9 Matching Process and Product Life Cycles 27 Comparison of Exponential Smoothing and The Product Life Cycle 27 Moving Averages 74 The Process Life Cycle 28 Problems for Section 2.7 75 The Product–Process Matrix 29 Snapshot Application: Sport obermeyer slashes Problems for Section 1.9 31 costs with improved forecasting 76 1.10 Learning and Experience Curves 31 2.8 Trend-Based Methods 77 Learning Curves 32 Regression Analysis 77 Experience Curves 34 Problems for Section 2.8 78 Learning and Experience Curves and Double Exponential Smoothing Using Holt’s Manufacturing Strategy 36 Method 79 Problems for Section 1.10 36 More Problems for Section 2.8 80 vii nah77856_fm_new.indd 7 18/12/14 10:21 PM