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1 Creative Operations Management Problem Solving:A Decision-Making Approach 1

1.1 Managerial Decision Making 1

1.2 The Intelligence Phase of the Decision-Making Process 4

1.3 The Design Phase of the Decision-Making Process 10

1.4 The Choice Phase of the Decision-Making Process 14

1.5 An Example:Jackets versus Scrap at the UNEEDA Corporation 16

1.6 Concluding Comments 25

EXERCISES 25

2 Forecasting 27

2.1 Forecasting at the LastEver Corporation 28

2.2 Patterns of Data 33

2.3 Forecasting Approaches 42

2.4 Time Series Analysis 44

2.5 Concluding Comments 56

EXERCISES 56

3 Advanced Forecasting 59

3.1 Extrapolation from the Past 59

3.2 Regression Analysis 63

3.3 Cyclical and Seasonal Issues 71

3.4 Concluding Comments 81

EXERCISES 81

4 Planning Models 85

4.1 The Basic Planning Problem 85

4.2 The Basic Pricing Problem 87

4.3 Nonlinear Cost and Demand Functions 91

4.4 Preparing aFive-YearPlan 96

4.5 The Impact of Pricing 97

4.6 Concluding Comments 99

EXERCISES 100

5 Aggregate Planning and Leaming Curves 103

5.1 The Nature of Aggregate Planning 103

5.2 Tradeoffs between Production and Inventory 103

5.3 Learning Curves 110

5.4 Concluding Comments 112

EXERCISES 113

6 Inventory 117

6.1 Why Hold Inventory? 117

6.2 The Cost ofInventory 118

6.3 Cyclic Inventory Control 119

6.4 The Economic Order Quantity Model 123

6.5 What-IfScenarios 126

6.6 EOQ Model with Price Breaks 130

6.7 Economic Production Lot Size Model 132

6.8 Single-Period Models with Probabilistic Demand 136

6.9 Multi-Period Models with Probabilistic Demand 144

6.10 Concluding Comments 149

EXERCISES 150

7 Material Requirements Planning 153

7.1 Where MRP Fits In 153

7.2 Master Production Schedule 155

7.3 Bill ofMaterials 158

7.4 A Simple MRP Example 162

7.5 Rolling the MRP Schedule 163

7.6 Adding Allocated Inventory and Safety Stock 165

7.7 A More Complex MRP Example 166

7.8 Dealing with Multiple Products 168

7.9 Problems at Central Products Incorporated 171

7.10 Concluding Comments 176

EXERCISES 177

8 Quality:Monitoring Processes Using Charts 181

8.1 Monitoring Processes by Charts:Looking at the Data 181

8.2 Mean Charts 183

8.3 The Run Chart 186

8.4 The R(Range)Chart 186

8.5 Standard Deviation Charts 189

8.6 Using These Charts 189

8.7 Control Charts for Attribute Data 191

8.8 Other Quality Control Charts 194

8.9 Concluding Comments 197

EXERCISES 197

9 Machine Replacement and Maintenance 199

9.1 Machine Replacement Decisions 199

9.2 Machine Maintenance Decisions 206

9.3 Group Maintenance Decisions 211

9.4 Concluding Comments 214

EXERCISES 214

10 Project Management 217

10.1 The Project 217

10.2 The Professor 219

10.3 Network Diagrams 219

10.4 Probabilities 224

10.5 Crunching 229

10.6 Coneluding Comments 234

EXERCISES 235

11 Facility Location Decisions 237

11.1 Factor Weighting 237

11.2 Center-of-Gravity Method 240

11.3 Cosr-Volume Analysis 242

11.4 Concluding Comments 244

EXERCISES 245

12 Risk Analysis and Simulation 247

12.1 Problems Where Uncertainty Is Important 247

12.2 Working the Cough Drop Problem 252

12.3 Generating Random Numbers 259

12.4 Break-Even Analysis under Uncertainty:A Case Study 269

12.5 The Farmer's Problem:Dependent Random Variables 274

12.6 Concluding Comments 277

EXERCISES 277

13 Simulating Operations Management Processes 279

13.1 The Network-Flow Production Process 280

13.2 The Matchstick Shuffling System 280

13.3 The Copy Machine Problem 288

13.4 Why Projects Are Late 297

13.5 The Single Station System 300

13.6 Concluding Comments 304

EXERCISES 304

14 Resource Allocation:Applied Constraint Management 307

14.1 Making Mathematical Programming Relevant for Operations Management 307

14.2 A Production Planning Support System 308

14.3 A Transportation Problem 317

14.4 Concluding Comments 321

EXERCISES 321

Appendix A Using Excel 323

Appendix B The Models 355

For Further Reading 367

Index 368