Operations and supply management the core robert jacobs, richard chase 2ed

TABLE OF CONTENTS Introduction Videos included on the student DVD Additional pedagogical resources that come with the book Chapter Outlines, Tips, Case Teaching Notes and Extra Cases

INSTRUCTOR’S RESOURCE MANUAL

ACKNOWLEDGEMENTS

I am indebted to all of my colleagues who have contributed to this manual Very

few of the ideas contained in here are totally original Thanks much to all of you

for spending so much time discussing how you do things in class and allowing

me to share your ideas in this manual

F Robert Jacobs

TABLE OF CONTENTS

Introduction

Videos included on the student DVD

Additional pedagogical resources that come with the book

Chapter Outlines, Tips, Case Teaching Notes and Extra Cases

Chapter 1 – Operations and Supply Chain Management

Internet Exercise: Harley-Davidson Motorcycles Wyatt Earp – The Buffalo Hunter! (Extra Case)

Chapter 2 - Strategy and Sustainability

Case: The Tao of Timbuk2 – Teaching Note

Chapter 3 – Strategic Capacity Management

Case: Shouldice Hospital – A Cut Above – Teaching Note

Chapter 4– Production Processes

Case: Designing Toshiba’s Notebook Computer Line – Teaching Note

Extra Case: Manufacturing – The Great Crapshoot

Chapter 5 – Service Processes

Case: Community Hospital Evening Operating Room – Teaching

Note Extra Case: Listen-Up.com

Chapter 6 – Quality Management and Six-sigma

Hank Kolb – Director of Quality Assurance – Teaching Note Classroom Exercise – M&M’s – Process Capability for the Halloween Packs (Extra Case)

Chapter 7 – Projects

Case: Cell Phone Design – Teaching Note

Chapter 8 – Global sourcing and Procurement

Case: Pepe Jeans – Teaching Note Internet Exercise: Playing the Beer Distribution Game Over the Internet – Overview and Instructions

Chapter 9 – Location, Logistics and Distribution

Case: Applichem – The Transportation Problem – Teaching Note

Chapter 10 – Lean and Sustainable Supply Chains

Case: Quality Parts Company – Teaching Note Case: Value Stream Mapping – Teaching Note Case: Pro Fishing Boats – A Value Stream Mapping Exercise – Teaching Note

Internet Exercise: The E-Ops Game – Instruction (Extra Case)

Chapter 11 – Demand Management and Forecasting

Case: Altavox Electronics – Teaching Note

Chapter 12 – Aggregate Operations Planning

Case: Bradford Manufacturing – Planning Plant Production – Teaching Note

Chapter 13 – Inventory Control

Case: Hewlett-Packard – Supplying the DeskJet Printer in Europe –Teaching Note

Case: Finish Line (Extra Case)

Chapter 14 – Material Requirements Planning

Case: Brunswick Motors, Inc – An Introductory Case for MRP –Teaching note

Appendix

The McGraw-Hill/Irwin Video Series

INTRODUCTION

Clearly, teaching Operations and Supply Chain Management (OSCM) can be a

significant challenge This is particularly true in a school dominated by Accounting

or Finance majors We have found that, if designed correctly, the OSCM course can

easily be one of the most popular Students like the “hands-on” orientation of the

topics and can see the direct applicability of the material The purposes of this

instructor’s resource guide are twofold First, it is designed to help in the

development of an introductory OSCM course Our second purpose is to provide

some ideas for innovative ways that a particular topic can be presented

This book is the result of our research into what instructors what to teach in the core

OSCM course The title, Operations and Supply Management: The Core, reflects

current interest in Supply Chain Management The book is designed to include

topics that are appropriate for an overview of Operations Management while

emphasizing Supply Chain concepts It is our view that operations management and

supply chain management is an integrated topic that spans the traditional

Operations Management, Purchasing and Logistics fields Supply chain

management focuses on the flows of material through the network all the way from

fourth and third tier supplies all the way out to the final customer Supply chain

management seems to place less emphasis on “internal” factory operations which

has traditionally been a core operations management focus (i.e MRP and

scheduling) Traditional operations management focuses on coordination from first

tier suppliers, through the factory, and out to the warehouse

This book reflects the shift in interest to supply chain We have included a chapter

on MRP, but have not included scheduling in the book Further we have included

chapters on “strategic sourcing” and “logistics” in the book Detailed “internal”

Operations Management

Supply Chain Management

1st tier suppliers

“n” tier

operations topics related to facility layout have been deemphasized and materials on

job design and work measurement are not included

The book is divided into 14 concise chapters Our intent was to design a book that

could be used cover to cover in an introductory Operations and Supply Chain

Management course In developing each chapter we considered how students

would view the material All chapters are approximately the same in length Our

attempt is to balance managerial concepts and analysis This balance does not

work out perfectly as some topics are intrinsically more “managerial” and others

more “analytical” Each chapter includes material that should work well

pedagogically in a number of ways For those who want to emphasize analysis,

problems are developed in each chapter and solved problems included at the end of

each chapter The short cases at the end of each chapter all require some analysis

and usually have some managerial issues that can be discussed as well The cases

are also designed to “stretch” the topic so that students discover new insights in

each topic

Discussion of 2 nd Edition Revisions

In developing the revisions for the 2nd edition, we have been very careful to make the

sections and chapters as modular as possible Even though this book is designed to

be covered in its entirety in a class we realize that you may want to rearrange topics

and even drop some topics from the course Our discussions concerning the current

lineup of chapters were extensive, but we realized that no matter what we ended up

with, it was a compromise We know from experience that the current lineup works

well Another popular way to use the book is to cover the last section first; we know

this works as well

In this 2nd edition, we have significantly strengthened the supply chain

management material This is particularly true in the areas of purchasing and

strategic sourcing, and in lean supply chain analysis Another major emphasis is in

the area of sustainability as it relates to operations and supply chain processes

Sustainability has been woven into the book in several areas including strategy,

quality management and value stream mapping, purchasing and global sourcing,

and lean supply chain analysis Sustainably is a topic that fits well within operation

and supply chain management due to the strong tie between being green and being

efficient This is sometimes a synergistic relationship, but often involves a difficult

trade-off that needs to be considered The reality of global customers, global

suppliers, and global supply chains has made the global firm recognizes the

importance of being both lean and green to ensure competitiveness

We have reorganized the book slightly based on input from users First, we

split out the Strategy material from the first chapter and created a new chapter

focused on Strategy and Sustainability Another change was to move Project

Management from Chapter 2 to Chapter 6 and it is now part of the section on

Manufacturing and Service Processes

A major new feature is a “Super Quiz” included at the end of each chapter

This is designed to allow students to see how well they understand the material

using a format that is similar to what they might see in an exam The questions are

designed in a short answer fill-in-the-blank format Many of the questions are

straight forward, but in each chapter we have included a few more insightful

questions that require true understanding of the material You may want to go over

these questions with your students as part of a review session prior to an exam

The following are a list of the major revisions in each chapter:

• Chapter 1 – Operations and Supply Chain Management - Here we refocused

this chapter on understanding what Operations and Supply Chain

Management is all about, its origins, and how it relates to current business

practice We split the strategy material out into chapter 2 to make room for

better coverage of the basics Now we introduce the SCORE “Plan, Source,

Make, Deliver, Return” framework for understanding how the processes in the

supply chain must integrate

• Chapter 2 – Strategy and Sustainability - This is a new strategy chapter The

chapter has an introduction to sustainability and triple-bottom-line material

(people, planet, and profit) We have also included new material on the

“process” for creating a strategy

• Chapter 3 – Strategic Capacity Management – Based on reviews, we

removed the Learning Curve problem from this chapter and moved it to an

Appendix The Decision Tree problem is still included in the chapter

• Chapter 4 – Production Processes – Note here that we have re-titled this

chapter to “Production” processes, rather than “Manufacturing” This is a

subtle but important change as it generalizes the chapter We have added

material from the SCORE model (Make-Source-Deliver) and added the

concept of “customer order decoupling point” to the chapter We have added

a quick example of process mapping and a clean explanation of Little’s Law

with examples of how to do the calculations

• Chapter 5 – Service Processes – We have added new material on “virtual

services” and now include “service blueprinting” in the chapter

• Chapter 6 – Quality Management and Six-Sigma – Here we added c-charts to

the material This was requested by a number of reviewers Some notation

was also cleaned up in the chapter

• Chapter 7 – Projects – Based on reviews, PERT (CPM with Three Activity

Time Estimates) was added to the chapter We also cleaned up the

explanation of crashing

• Chapter 8 – Global Sourcing and Procurement – A new introduction on “The

Green Supply Chain” was added Information on different types of sourcing

processes including Vendor Management Inventory has been added A

Green Sourcing process that includes material on the Total Cost of

Ownership with an example and new problems has been added

• Chapter 9 – Location, Logistics and Distribution – The chapter has been

streamlined and a new puzzle type problem call “Supply and Demand” has

been added

• Chapter 10 – Lean and Sustainability – New material on “Green Supply

Chains” has been added and we show how this relates to being “Lean” A

major new section on Value Stream Mapping including examples and new

problems has been added to the chapter All the “lean” material has been

consolidated into this chapter including discussion of the Toyota Production

System concepts, “pull” concepts, and developing supplier networks to

support lean processes

• Chapter 11 – Demand Management – Here we have updated CPFR and

moved it up in the chapter so that it can be used to discuss the importance of

an integrated process for managing demand In terms of actual forecasting

techniques, regression is now the first technique discussed due to its general

applicability We have also added “decomposition” techniques (seasonal

indexes) to this discussion Example and problems have been added to

support this material

• Chapter 12 – Aggregate Operations Planning – Based on requests from

reviewers, we have added a Service aggregate planning example to the

chapter

• Chapter 13 – Inventory Control – Based on requests from reviewers, we have

added the Price-Break Model (quantity discounts) to the chapter

• Chapter 14 – Material Requirements Planning – Here we have added

Enterprise Resource Planning (ERP) system material to the chapter Our

Reviewers indicated they would like this included

Thank you for using our books in the past and considering this new offering for the

future Operations and Supply Chain Management is a dynamic discipline, with new

concepts appearing frequently The challenge for a textbook is not only to capture

these concepts but also to anchor them to the existing body of knowledge in an

understandable way

F Robert Jacobs

Videos included on the Student Operations Management Videos DVD:

§ DHL Global Delivery Service

§ The Product-Process matrix

§ Queuing at Disney World

§ Louisville Slugger Aluminum Bat Plant Tour

§ Green Product Design and PHILL at Honda

§ Logistics and Customer Service at FedEx

§ Ford Supply chain Management

§ Ford Supplier Organization

§ Ford Flexible Manufacturing

§ Project Management at Six Flags

§ Service Processing at BuyCostumes.com

§ Six Sigma at Caterpillar

§ Green Manufacturing at Xerox

Excel Templates included on the text Web site (www.mhhe.com/jacobs2e):

Chapter 2: Productivity Measures

Chapter 3: Capacity

Decision Trees

Shouldice Hospital

Chapter 4: Breakeven Analysis

Breakeven Analysis Template Toshiba Chapter 5: Expected Length

Queue Queue Models Chapter 6: SPC

SPC Templates Chapter 7: Cell Phone Designs

PM Solved Problems

Project Management CPM Template

Chapter 8: U.S Airfilter

Chapter 9: Applichem

U.S Pharmaceutical Centroid Method Template Chapter 11: Altavox Data

Components of Demand Forecasting

Forecasting Templates Chapter 12: Aggregate Planning

Aggregate Planning Solved Problem Bradford Manufacturing

Chapter 13: HP DeskJet

Inventory Control Inventory Control Template Chapter 14: Solved Problem

Appendix B Learning Curves

ScreenCam Tutorials on the text Web site ( www.mhhe.com/jacobs2e ):

Chapter 12 Aggregate Planning

Chapter 13 Inventory Control

Additional pedagogical resources that come with the book:

Instructor’s Resource CD

§ Instructor’s Resource Manual

§ Case notes and classroom exercises

§ Test Bank and Computerized Test Bank

§ PowerPoint Lecture slides

§ Digital Image Library (text exhibits)

§ Problem Solutions Manual

Text Web site (www.mhhe.com/jacobs2e )

Student

§ PowerPoint slides

§ Online quizzes

§ Excel templates McGraw-Hill Video library

Short clips of all major concepts

Video case studies

CASE TEACHING NOTES AND IDEAS FOR INNOVATIVE

SESSIONS

Chapter 1 – Operations and Supply Chain Management

Quick Supply Chains Enable Retailers to Get Fashions to Market Lickety-Split

What is Operations and Supply Management?

Operations and Supply Processes

Differences Between Services and Goods

Efficiency, effectiveness, and Value

Careers in Operations and Supply Management

Historical Development of Operations and Supply Management

Current Issues in Operations and Supply Management

Case: Harley-Davidson Motorcycles

Overview

Chapter one provides a very quick introduction to the field of operations and supply

chain management The importance of this introduction should not be discounted as

many students enter the introductory course with little prior knowledge of the subject

In this introduction we stress why it is important for managers to understand the

area In this text, we stress the “supply chain management” side of operations

management, which corresponds well to the strong interest in supply chain

management in industry During this course, the student will become familiar with

the design and management of a firms supply chain and the major traditional

operations topics are also covered This course should round out a sound

management preparation for non-Supply Chain and Operations majors and provide

Operations and Supply Chain majors with a solid foundation of principles leading to

greater in-depth knowledge of the field

In recent years, the world has witnessed a revolution in manufacturing In large part,

this has occurred as companies have recognized the strategic importance of the

operations management function In this chapter we introduce the

Source-Make-Deliver-Return framework that has been popularized by the Supply-Chain Council in

Exhibit 1.3 The text chapter also provides a discussion of the differences between

service and manufacturing firms and how this difference actually is a continuum of

varying characteristics This underlies the belief that operations management in

service firms will become of greater strategic importance

The chapter also gives an overview of what to expect is one chooses Operations

and Supply Chain Management as a career Differences in entry level marketing

and finance job and how they compare to OSCM jobs are compared Typical

management and staff jobs are also described together with the responsibilities of

the Chief Operating Officer in a firm

The chapter finishes with material describing a historical perspective on the area and

the “hot” current issues that firms must deal with in OSCM In this section, we lay

the ground work for developing a perspective related to Sustainability and Triple

Bottom Line strategic priorities which are revisited in multiple sections of the book

Teaching Tips

You might want to assign the Harley-Davidson (HD) Motorcycle exercise (page 19)

as this case gets students thinking about OSCM issues in a fun way will get you into

the “strategic” material in the next chapter The web site is designed so that

customers can quickly customize their dream motorcycle and visually see it The

discussion can center on how important this customization is to customers wanting

these motorcycles How HD delivers the dream is really a supply chain issue Be

sure and bring out the notion of the order winner and qualifiers in the discussion (see

teaching not below)

An alternative case is the “Wyatt Earp – Buffalo Hunter” case that is very good for

breaking the ice Students find it quick reading and discussion of the process,

technology and environmental issues flow easily

The “Wyatt Earp – Buffalo Hunter” case that is very good for breaking the ice

Students find it quick reading and discussion of the process, technology and

environmental issues flow easily You can just pass this case out at the beginning of

class or better yet post it to a website with the discussion questions prior to the first

class Many students are just getting their books and are not in a position to do

things from the book in their first class, so the little Wyatt Earp case is something

quick that can get them started

What ever you decide to do to start out the class, talk about products and companies

that students are familiar with No industrial job shop or assembly line talk in the first

few classes

Internet Exercise: Harley-Davidson Motorcycles ( www.Harley-Davidson.com )

– Teaching Note

1 How many different bike configurations do you think are possible? Could every

customer have a different bike? To make this a little simpler, what if HD only had

two types of bikes, three handle bar choices, 4 saddle bag combinations, and 2

exhaust pipe choices? How many combinations are possible?

I am sure that if you could actually figure the number of combinations it would be in

the 1,000s based on the options on the web site The calculation for the problem

given is simple: 2 x 3 x 4 x 2 = 48

2 To keep things simple, HD has the dealer install virtually all of these options

What would be the trade-off involved if HD installed these options at the factory

versus having the dealers install the options

Introduce the next question by asking… “What is ND had to stock all or these

combinations in inventory at each dealer?” This can lead to a good discussion You

can introduce the idea of postponement and compare this to the selection of paint at

a hardware store

3 How important is this customization to HD’s marketing strategy?

HD motorcycles are definitely high end products Having a unique bike is very much

part of the concept associated with HD products You can extend this discussion

into HD apparel and HD branding of other products Ford, for example, has

produced an HD custom truck Uniqueness and customization is important to

justifying the high price and perceived value of these products

EXTRA CASE

Wyatt Earp - The Buffalo Hunter

F Robert Jacobs, Indiana University

The legend of Wyatt Earp lives on largely based on his exploits as a gunfighter and

Marshall of the frontier West in the 1880s The classic tales of the shootout at the

O.K Corral in Tombstone or his sawed-off shotgun duel with Curly Bill are possibly

the most celebrated gunfights of frontier history and can not fail to stir the reader's

imagination Wyatt lived to be over 80 years old, long enough to recount his story to

Stuart Lake for the book Wyatt Earp: Frontier Marshall1 (published by Pocket

Books)

Apparently, Wyatt was quite a financial success long before he became a marshal

He learned how to hunt and shoot buffalo when only 15 years old By the time he

was 20, the Kansas City and Caldwell buffalo hunters knew him as one of the best in

the west His methods for hunting buffalo were very different from the established

practices of the time

Outside the marshal's office in Caldwell, veteran hunters would meet to compare the

season's hunt Success was measured solely by animals killed and cash received

for the hides and meat Wyatt realized that what was important was the gain after

expenditures for horses, wagons, supplies, and skinners' wages were considered

Any hunter could boast of the money in his pockets at the end of a season, but few

could say accurately how much was gain

The Ways of the Veteran Hunters

The buffalo hunter of 1871 set out for the range with five four-horse wagons, with

one driver, the stocktender, camp watchman, and cook; and four others to skin the

kill The hunter provided horses, wagons, and supplies for several months Money

received for hides and meat would be divided into two equal parts; one went to the

hunter, and from his share, he paid all expenses The second was again split into as

many shares as there were drivers, skinners and helpers with each getting a share

as his seasonal wage It was believed that no really top-notch buffalo hunter would

stoop to skinning the animals he shot Each person in the party had a specific

assigned job, and none would do something below their level of dignity

The weapon of choice at the time was the Sharps "Fifty" rifle These rifles, which all

right-minded buffalo hunters carried, weighed more than twenty pounds The gun

shot a slug of lead two inches in length, a half-inch in diameter, weighing

approximately an eighth of a pound The Sharps was the best weapon obtainable

for long-range shooting, but notable among its drawbacks were the cost of

1 Parts of this case are from Chapter 5, "The Buffalo Range."

ammunition and the fact that the rifle's accuracy was seriously affected by continued

rapid fire To prevent damaging the rifle, the wise user, ran a water-soaked rag

through the barrel after every second or third shot and let the metal cool

Wyatt recounted that "early white hunters had followed the Indian practice of

shooting buffalo from the back of a horse galloping full tilt at the edge of a

stampeding herd In skin hunting this did not pay Shooting from horseback could

not be as accurate as from a stand, and the animals killed during a run would be

strung for miles across the prairie, making a lot of travel for the skinners, with the

added certainty that many hides would be missed Also, every buffalo left alive

would be stampeded clear out of the country in a day's hunt, and the killers would

have to move camp or wait for another herd

"In stories about Buffalo Bill Cody and other Western characters who went into the

circus business, I've read of a single horseman holding a bunch of buffalo stock-still

by riding around and around them for hours and shooting as he rode That was an

impossibility Two minutes after the horseman started his riding and shooting, there

would not have been a buffalo within rifle range Buffalo would stampede instantly at

the sight or smell of a man on horseback; they would ignore a man on foot, or eye

him in curiosity That was why hide hunters shoot from a stand

Wyatt goes on to recount the methods of current hunters "A Hunter would drag his

Sharps to a rise of ground giving a good view of the herd, pick a bunch of animals,

set his rest-sticks2 and start shooting He aimed to hit an animal on the edge of the

bunch, the leader if possible, just back of the foreleg and about one third of the way

up the body If the slug went true, the animal would drop in his tracks or stagger a

few steps and fall Strangely enough, the buffalo paid no attention to the report of

the rifle and very little, if any, to one that fell

"A first-class hunter would kill with almost every shot, and if he was good, he could

drop game until some buffalo still on his feet chanced to sniff closely at one that had

fallen Then it was up to the hunter to drop the sniffer before he could spread his

excitement over the smell of blood If he could do this, the slaughter might continue,

but eventually the blood scent became so strong that several animals noticed it

They would bellow and paw, their frenzy would spread to the bunches nearby, and

suddenly the whole herd was off on a wild run The hunter could kill no more until he

found conditions suitable for another stand

"Where large parties of hunters were working the plains by such methods in fairly

close quarters, the periodical scarcity of buffalo was a certainty With the best of

luck, a single hunter might kill one hundred buffalo in a day, from several stands

That would be all that four skinners could handle I found that the average bunch

2 A shooting rest was two sticks tied together, X-fashion, set in the ground to support the rifle while the

marksman aimed and fired

would stampede by the time thirty or forty had been killed Only the best of hunters

could average 50 kills a day, thirty to forty was more common

Wyatt Earp's Buffalo Hunting Method

The first flaw which Wyatt Earp saw was that the average hunter outfitted in

expectation of killing one hundred buffalo a day, and selling each animal's hide and

meat for two to five dollars, depending upon size and quality In place of five

wagons and twenty-odd horses, Wyatt purchased one wagon, four sound animals

for harness and one to ride He engaged an experienced skinner in a straight

profit-sharing scheme Wyatt was to finance the hunt; the skinner would drive and cook;

and, greatly to the disgust of older hands, Wyatt was to assist in skinning and

butchering At the end of the hunt, Wyatt was to keep the team and wagon, deduct

all other expenses from the gross receipts, and share any net equally with his

skinner

In contrast to the use of the Sharps rifle, Wyatt killed buffalo with a shotgun Wyatt

was well acquainted with the buffalo's idiosyncrasy of stampeding at the sight or

scent of a man on horseback, but generally ignoring one on foot He intended to

make use of this in reaching shotgun range of the herds He purchased a

breech-loading gun, with apparatus for rebreech-loading shells, and this, with a supply of powder,

lead, and caps, was to constitute his hunting arsenal He loaded a single

one-and-one-half-ounce slug to the shell He knew that at any range under one hundred

yards he could score as accurately with his shotgun as any rifleman

Wyatt described his approach: "My system for hunting buffalo was to work my way

on foot nearer to the herds than the rifle users like to locate The shorter range of

my shotgun made this necessary, but I could fire the piece as rapidly as I wished

without harming it I planned to get within fifty yards of the buffalo before I started

shooting, and at that range pick off selected animals I would shoot until I had

downed all the skinner and I could handle that day I figured to offset the danger of

a stampede by finishing my kill before the animals smelled blood and then working

the herd away quietly in the direction I wanted it to go To do this, I would stand up,

wave my coat in the air, and shout The buffalo would probably move away quietly if

I got them started before they scented blood Then the skinner and I would get to

work In practice, my idea worked out exactly as I had calculated it would

"Some people called my method foolhardy To me, it was simply a question of

whether or not I could outguess a buffalo The best answer is that there never was a

moment during my three seasons as a buffalo hunter when I was in danger from a

stampede, nor a day when I hunted that I did not have a profitable kill My lowest

score for a single stand was eighteen buffalo, the highest, twenty-seven I shot one

stand a day, which meant twenty to thirty-five dollars apiece for the skinner and

myself every day we worked That was cash in hand, not hopes

"No wonder the average buffalo hunter was glad that the code forbade him to skin

his kill; skinning was hard, dirty work My skinner kept out of sight with the wagon

until I had finished shooting Then he came on the job In skinning a buffalo, we slit

down the inside of each leg and along the belly from neck to tail The legs and a

strip along each side of the belly-cut were skinned out and the neck skinned all the

way around The head skin was not taken We gathered the heavy neck hide into a

bunch around which we looped a short length of rope, and a horse hitched to the

other end ripped the hide off We did it every time this way

"In camp, we dusted the hides and the ground nearby with poison to keep off flies

and bugs, and pegged out the skins, flesh-side up In the dry prairie air, first curing

took but a day or so The hides were then turned, and, after they had cured so

water would not injure them, they were stacked in piles, hair-side up, until we hauled

them to a hide buyer's station, or a buyer's wagon came to our camp

Wyatt Earp - The Legend

The success of Wyatt Earp's venture against cherished customs became legend to

the ranks of the buffalo hunters Time after time on checking tallies, the lone hunter

found that, while some had killed greater numbers than he from the given stands, or

had larger seasonal totals, his daily count of hides was well above average

Rudimentary arithmetic proved that his profits were much higher

Wyatt recounts the inevitable demise of the great buffalo herds: "With all the buffalo

I saw in the days when they roamed the range, I shall never forget a herd we sighted

in the fall of '71 We had seen a few small bunches, but none that I stopped for, as I

wanted to make camp as permanent as possible We had crossed the Medicine

Lodge when the plenticity of buffalo sign indicated that we were closing on a sizable

herd I went to a rise possibly three hundred feet above the creek bottom The sight

that greeted me as I topped the hill soon disappeared for all time

"I stood on the highest point within miles To the west and south, the prairie rolled in

mounds and level stretches pitted with buffalo wallow as far as I could see, twenty or

thirty miles For all that distance the range was packed with grazing buffalo

" I signaled my skinner to join me 'My God!' he said, 'there must be a million.'

"It might give a better idea of the results of buffalo hunting to jump ahead seven

years to 1878, when Bill Tilghman, Bat Masterson, and I went buffalo hunting for

sport We traveled due west from Dodge City more than one hundred miles along

the Arkansas River, south to the Cimmarron, and east to Crooked Creek again, at

the height of the best hunting season over what in 1871 had been the greatest

buffalo ground in the world Grass was as plentiful and as succulent as ever, but we

never saw a buffalo The herds were gone, wiped out."

Discussion Questions:

• Compare Wyatt's buffalo hunting to the approach used by the old timers?

• What are the key elements of business success from an operations

perspective?

• Relate these ideas to Wyatt's approach

• Were the buffalo hunters irresponsible in killing off the great buffalo herds as

they did?

Teaching Note: Wyatt Earp – The Buffalo Hunter! - Labor Productivity,

Operations Technology, Quality, Environmental Impact

This useful case will not become dated The goal with this case is to have students

recognize what is needed to compete successfully in a business from an operations

standpoint The impact of labor productivity, operations technology, quality, and the

environment, are stressed in the case discussion Parallels can easily be drawn

between the buffalo hunting business of the old West and business today Students

with virtually any background can quickly understand the buffalo-hunting situation

US students will be familiar with the Wyatt Earp character, and a surprising number

of foreign students have viewed the original television series

Case Discussion Questions:

• Compare Wyatt's buffalo hunting to the approach used by the old timers?

• What are the key elements of business success from an operations

perspective?

• Relate these ideas to Wyatt's approach

• Were the buffalo hunters irresponsible in killing off the great buffalo herds as

they did?

Session Outline:

(First 10 minutes of the class)

You might start the class with a clip from Tombstone The scene showing the

shootout at the O.K Coral is good Others have used a clip from Kevin Costner’s

Dancing with Wolves

(Next 5 minutes)

Following this, begin the class with the question: Who is this Wyatt Earp character?

What is he best known for?

This should get the class going Those not familiar with the legend will learn that

Wyatt was an interesting character

(Next 20 minutes)

Compare Wyatt's buffalo hunting approach to the approach used by the old timers?

Why was Wyatt's approach superior?

Cover all the details here:

Size of the hunting party 6-7 persons verses 2

Type of firearm: Sharps "Fifty" rifle verses shotgun

Ammunition carried: The heavy bullets verse reloads for the shotgun shells

Method of shooting: Long-range verses short range

Control of the herd: Random, try to quickly shoot curious buffalo verses control the

movement of the herd

Job assignments: Very specific, no sharing of responsibility verses sharing of duties

Daily kill goal: 100 buffalo, unreachable verses 25, which could be regularly

accomplished

Method of compensation: Hunter responsible for covering costs verses profit split

after expenses

(Next 20 minutes)

What are the keys to business success from an operations perspective?

Introduce the concepts of people, plants (the location), process, parts (ammunition,

salt, food, etc.), plan Further, stress the importance of low cost, high quality, and

predictability of the process

Relate these ideas to the details of Wyatt's approach

Point out how Wyatt ensured quality with his approach Recall the procedure used

for skinning and field curing the buffalo Show how this procedure guaranteed the

quality of his skins

In addition, students will realize that the basic ideas, which were important back in

the days of Wyatt Earp, are still just as important

(Last 10 minutes)

End the class with a discussion of environmental responsibility

Were the buffalo hunters irresponsible in killing off the great buffalo herds as they

Chapter 2 – Strategy and Sustainability

How IKEA Design Its Sexy Prices

A Sustainable Strategy

What is Operations and Supply Strategy?

Strategic Fit: Fitting Operational Activities to Strategy

Productivity Measurement

How Does Wall Street Evaluate Operations Performance?

Case: The Tao of Timbuk2

Overview

Major material on how operations and supply chain processes must fit the strategy

of the firm are included in the chapter The chapter begins with discussion of how

the operations and supply chain strategy of the firm relates to corporate

responsibility and sustainability The “Triple Bottom Line” framework is discussed,

that being the social, economic and environmental health of the firm’s stakeholders

To our knowledge, we are the first OSCM textbook to include this important material

Material that relates to the process of developing a strategy and managing it on an

ongoing basis is included in the chapter

Teaching Tips

An interesting exercise is to debate the concept of factory focus While Skinner felt

that manufacturers should adopt a focused approach (hence the advent of “Skinner

walls” and “plants within plants”), others are now arguing that firms can

simultaneously achieve different strategic objectives such as quality, speed, and low

cost The question is then asked: Where does organizational learning fit into this

discussion?

In chapter 1, we have included an Internet exercise based around Harley-Davidson

Motorcycles, this is a good case to get students thinking about some of the

trade-offs involved in sourcing and delivering product to demand customers The

concepts of order winner and qualifiers can be developed with this case As a

follow-up in this chapter is the Timbuk2 case If you have the resources, the

Timbuk2 case can be a fun exercise Log onto the website and order a case, and

then discuss what it takes for them to custom make the bag You can then give the

bag to someone in the class based on some type of participation criteria This will

get the students engaged in the class very quickly

Case: Timbuk2 3 - Teaching Note

You can have a lot of fun with this case Start off by logging on to the Timbk2

website and explore what is going on there If you have a little money in a teaching

account you might actually order a custom bag and give it away or raffle it off in

class, this will really get their attention You make a big deal of it all when the back

comes in and you give it to the lucky student This also helps to reinforce the topic

with the students

1 Consider the two categories of products that Timbk2 makes and sells For the

custom messenger bag, what are the key competitive dimensions that are driving

sales? Are their competitive priorities different for the new laptop bags sourced in

China?

This is one of the “other dimensions” and in this case it is the customization of the

bag Other than being able to get the colors they prefer, the customer also get

pockets that meet the unique needs the customer has in mind They can be

successful with standardizing the laptop bags since the purpose here is pretty well

defined

2 Compare the assembly line in China to that in San Francisco along the following

dimensions: (1) volume or rate of production, (2) required skill of the workers, (3)

level of automation, and (4) amount of raw materials and finished goods inventory

finished goods

Low High Low High raw materials, virtually no finished goods

3 Draw two diagrams, one depicting the supply chain for those products sourced in

China and the other depicting the bags produced in San Francisco Show all the

major steps including raw material, manufacturing, finished goods, distribution

3 Many thanks to Kyle Cattani for the idea behind this case He does this regularly in his MBA class at Indiana

University

inventory, and transportation Other than manufacturing cost, what other costs

should Timbuk2 consider when making the sourcing decision?

The big cost other than manufacturing is the cost to transport material to the USA

versus the cost of transporting the completed bags to the USA Here we assume

that the material would be sourced in China This is probably not a bad assumption

Raw

Materials

(China)

Raw MaterialsInventory

Bag Fabricationand Assembly(China)

Finished BagsInventory(USA)

Bag Fabricationand Assembly(USA)

Transport

to USA

Bag Fabrication and Assembly in China

Bag Fabrication and Assembly in USA

Chapter 3 – Strategic Capacity Management

Shouldice Hospital: Hernia Surgery Innovation

Capacity Management in Operations

Capacity Planning Concepts

Economies and Diseconomies of Scale

Capacity Focus

Capacity Flexibility

Capacity Planning

Considerations in Changing Capacity

Determining Capacity Requirements

Using Decision Trees to Evaluate Capacity Alternatives

Planning Service Capacity

Capacity Planning in Service versus Manufacturing

Capacity Utilization and Service Quality

Case: Shouldice Hospital – A Cut Above

Overview

Capacity related decisions could either enhance or worsen competitiveness over the

long term Capacity is discussed in the chapter from both economic and managerial

perspectives The economic concepts of best operating level and economies of

scale are discussed From a managerial perspective, the capacity planning process,

decision trees and multi-site service growth concepts are discussed

Teaching Tips

The Shouldice Hospital case included in the book is a sure winner This case can

be augmented with the web site, a spreadsheet, and a video tape www.elsolucionario.net

Case: Shouldice Hospital - A Cut Above - Teaching Note

Mon - Fri Operations with 90 beds (30 patients per day)

Mon - Fri Operations with 135 beds (minimum)

Can the capacity of the rest of Shouldice keep up?

One operating room can handle about 1 patient every hour Since there are five

operating rooms, each must be able to handle 45/5 or 9 patients per day This

means they must be operated 9 hours a day In order to finish operating early

enough for all patients to recover by the evening, Shouldice would probably have to

add operating room capacity although it might be easy to just start earlier in the day

With 45 patients each day the total number of operations each week is 225 The 12

surgeons would need to do between 18 and 19 each week or between 3 and 4 a

day This should be feasible and even if it were not Shouldice could hire some

additional surgeons These guys would be making over $450,000/year (3 ops/day x

5 days/week x 50 weeks/yr x $600 = $450,000)!

Using the financial data given in the fourth discussion question it is easy to justify the

expansion to 135 beds The following is the analysis as presented in the

Chapter 4 – Production Processes

Toshiba: Producer of the First Notebook Computer

Production Processes

Production Process Mapping and Little’s Law

How Production Processes Are Organized

Flexible and U-Shaped Line Layouts

Mixed-Model Line Balancing

Case: Designing Toshiba’s Notebook Computer Line

Overview

This chapter introduces how processes need to be design to match the volume and

variety characteristics of the products that a company must produce A new version

of the product-process matrix is the major concept used in this explanation Notice

that this matrix includes manufacturing cells as a major type of processes

Break-even analysis is also covered in the chapter The design of assembly lines is the

major problem covered in the chapter We give additional coverage of process

analysis in chapter 6 – Six-Sigma Quality

Teaching Tips:

Have the students look at their notebook computers and think about how you would

make these In the case at the end of the chapter, they will study this process

Remember to stress the idea of cycle time, and balance-delay (idle time) in the

design of this system These concepts are important to the analysis of any system

If you have the time to take the students on a plant tour, this is a sure winner Have

them categorize the types of processes they see on the tour

Case: Designing Toshiba’s Notebook Computer Line - Teaching Note

What is the daily capacity of the assembly line designed by the engineers?

1 100 Lay out principal components on conveyor 1 100 80

2 6 Peel adhesive backing from cover assembly 1 106 74

3 4 Put screws for Opn 8 in foam tray, place on belt 1 110 70

4 50 Scan serial number barcode 2 50 130

5 13 Connect LCD cable-1 to LCD-Printed Circuit Board (PCB) 2 63 117

6 16 Connect LCD cable-1 to LCD display panel 2 79 101

7 13 Connect LCD cable-2 to LCD-PCB 2 92 88

8 16 Screw LCD-PCB into cover assembly 2 108 72

9 6 Put screws for Opns 13, 16 in foam tray on belt 2 114 66

10 26 Install LCD display panel in cover assembly 3 26 154

11 10 Fold and insulate cables 3 36 144

12 13 Install LCD frame in cover assembly 3 49 131

14 6 Place PCB-1 in base assembly 3 78 102

15 6 Install CPU bracket on PCB-1 3 84 96

16 13 Screw CPU bracket into base assembly 3 97 83

17 4 Put screws for Opn 23 in foam tray 3 101 79

18 15 Connect ribbon cable to hard disk drive (HDD) 4 15 165

19 11 Connect ribbon cable to PCB-1 4 26 154

20 8 Place insulator sheet on HDD 4 34 146

24 6 Install condenser microphone in holder 4 69 111

25 13 Connect microphone cable to PCB-1 4 82 98

26 8 Tape microphone cable down 4 90 90

27 13 Connect backup battery to PCB-2 and install in base 4 103 77

28 4 Put screws for Opn 31 in foam tray 4 107 73

29 6 Install support frame on base assembly 5 6 174

32 8 Install Accupoint pointing device pressure sensor 5 33 147

33 11 Connect PCB-5 to PCB-2 and PCB-4 5 44 136

34 6 Set speaker holder on base 5 50 130

35 11 Install speaker holder and connect cable to PCB-2 5 61 119

36 10 Install clock battery on PCB-4 5 71 109

37 10 Tape down speaker and battery cable 5 81 99

38 16 Check voltage of clock batter and backup battery 5 97 83

39 6 Put screws for Opns 44, 46 in foam tray 5 103 77

40 13 Install wrist rest over Accupoint buttons 6 13 167

41 6 Connect LCD cable to PCB-1 6 19 161

43 5 Install keyboard support plate to base 6 30 150

44 23 Screw in support plate 6 53 127

45 18 Install keyboard, connect cable and set in base 6 71 109

48 10 Place cushion pads on LCD mask 6 107 73

49 18 Place protective seal on LCD display 7 18 162

50 10 Place brand name seal on LCD mask 7 28 152

51 11 Place brand name seal on outside of cover 7 39 141

52 8 Connect cable to DVD drive 7 47 133

55 6 Put screws for Opns 56, 57 in foam tray 7 108 72

56 58 Turn over machine and put screws in base 8 58 122

57 8 Put in grounding screw 8 66 114

58 8 Install connector protective flap 8 74 106

60 6 Install battery cover on battery pack 8 88 92

62 31 Insert memory card for hardware test and start software 9 31 149

63 208 Software load (does not require operator) 9 100.3333333 79.66666667

64 71 Test DVD, LCD, keyboard, and pointer, remove memory 9 171.3333333 8.666666667

65 5 Place unit on shock test platform 10 5 175

68 15 Place unit on rack for burn-in 10 105 75

From the spreadsheet we see that task 63 has a cycle time that is longer than the

required cycle time which is 180 seconds (to produce 150 units) In the case, this is

discussed and we see that 3 units are tested in parallel at task 63 and there is

essentially no labor associated with the task Taking this into consideration we see

that the cycle time of task 63 is reduced to 102 seconds So even though the work

content is 310 seconds per unit, the cycle time of the 9th station is 102 seconds since

that is the time required by the operators So given this, it appears that the line is

capable of producing 150 computers per day

That 2th station is clearly the bottleneck with a cycle time of 114 seconds Given this

it would be possible to at least theoretically reduce the cycle time to 114 seconds

The capacity of the line running with a cycle time of 114 seconds would be 7.5(60 x

60)/114 = 236.8 or 236 computers

2 Running at maximum capacity, what is the efficiency of the line?

Running with a cycle time of 114 seconds the efficiency of the line is

Efficiency = work content / (number of stations x cycle time)

Efficiency = (1258-208)/(10 x 114) = 9211 (92 percent)

This assumes that there is only one operator at each station Note that we have not

included the time to run the software check since this is not a manual task

3 How should the line be redesigned to operate at the target 300 units per day

assuming that no overtime will be used? What is the efficiency of your new

design?

To get 300 units per day, we need to get the cycle time down to 7.5 x 60 x 60/300 =

90 seconds

The following is one solution to the problem Note the problem with task 1 which has

a cycle time of 100 seconds To solve the problem in this solution, I have just

run parallel stations here (two workers would be needed) We still have the

problem with task 63, and this solution just assumes that we can load 4

Here we assume the first station is duplicated, with two workers and the time

associated with task 63 is not included

4 What other issues might Toshihiro consider when bringing the new assembly

line up to speed?

There are major issues associated with whether the tasks can be split as shown in

this new line Some engineering might have to be done to design these new

workstations Moving from a cycle time of 3 minutes to 90 seconds is significant A

lot more material would need to be feed to the line with the new configuration In

addition, the added speed might result in a lot of congestion since the extra 4

workers need to be fit in some way The current line can only accommodate 10

workers

EXTRA CASE

Manufacturing - The Great Crapshoot

Introduction

Those individuals who have been involved with manufacturing every day know it can

be a very tough, but potentially rewarding activity The Great Crapshoot gives you

the chance to delve beyond the obvious and get a fresh perspective on how the

game of manufacturing really works

Objective of the game

Just like a real manufacturing facility, the goal of this game is to maximize the goods

shipped out of the door and to minimize inventory4 The game is played over a

20-toss period, which represents 20 days of manufacturing, or roughly a month's work

At the end of 20 tosses, each team of 6 players (1 player for each Workstation)

calculates the total number of shipped chips, and the total of all work-in-process

inventory The Team having the best score (highest number shipped, lowest

inventory) of all the teams playing the game wins

Rules of play

All those playing The Great Crapshoot are operating a production plant whose

product is chips The chips arrive at your plant (handed out at the game's start) as

raw material It is your job to process these chips through the 6 Workstations in the

plant so they may become finished chips and be shipped out as sold goods Chips

in between workstations are work-in-process (WIP) inventory

There are two important phenomena existing in a real manufacturing plant that also

exist here:

(1) Dependent Events: chips cannot move on to Work Station 2 without first passing

through Workstation 1 Likewise all chips must move from 1 to 2 to 3, etc.,

and can be shipped only after passing through Workstation 6

(2) Statistical Fluctuations: the number of chips that can be processed by Work

Station 1 and moved to Workstation 2 is controlled by Workstation 1's die

toss In a real plant, average output is made up of good days and bad days

On good days with perfect attendance and no breakdowns or distractions,

4Only work-in-process inventory in this game Finished chips are immediately

shipped; consequently, there is no finished goods inventory

output is high On bad days, with breakdowns, process and quality problems,

accidents, excessive absenteeism, material shortages, etc., output is low In

any case, output will vary around an average according to the latter factors

Each Workstation foreman takes his die and tosses at the same time as the others

One such round of tosses constitutes a day of production in the plant After the toss,

each foreman moves the number of chips forward indicated by the die If the die

toss exceeds the total number of chips available in WIP, only the existing number of

chips is moved forward

Questions to consider prior to start of game

(1) How many chips do you expect to complete during the 20-day period?

(2) How much work-in-process should you have at the end of the 20-day period?

(3) How much time should it take to process a chip from Raw Materials to

completion at Work Station 6?

Questions to consider after playing the game

(1) How many chips did you actually complete during the 20 day period?

(2) How did work-in-process inventory vary during the game? How much did you

have at the beginning of the game? How much at the end?

(3) Explain what is going on?

(4) How did the time is takes to process a chip vary from the beginning of the game

to the end?

Manufacturing – The Great Crapshoot – Teaching Note

This is a great little exercise and it really makes your student think It takes about 60

minutes to complete the entire exercise You will need 1 die for each student and

approximately 100 chips per six-person team Explain how the game will be played

at the beginning, and that everyone will move from one period to the next at the

same time (this is very important) In other words, you will pace the entire system

Start out with four chips between each workstation and a pile of chips in front of the

first workstation

Go through the “Questions to consider prior to start of game” first Then, start

playing the game

Start slowly at first, making sure that your students are all making their moves at the

same time, and that they are all recording their results Stop at the end of the first

10 periods and collect intermediate data from each team

Complete the last 10 periods and then go through the “questions to consider after

playing the game.”

Questions to consider prior to start of game

(1) How many chips do you expect to complete during the 20-day period?

The students should calculate that 70 chips should be produced (20 x 3.5)

(2) How much work-in-process should you have at the end of the 20-day period?

You may get some different ideas from the teams Most will probably agree that if

we start with 20, we should end with 20 Tell them that they should not count the

inventory before the first workstation, nor should they count the finished goods

(3) How much time should it take to process a chip from Raw Materials to

completion at Work Station 6?

Most will probably say six periods

Questions to consider after playing the game

(1) How many chips did you actually complete during the 20 day period?

They should have completed much less than the 70 that was expected This is due

to the loss of throughput caused by the starving that sometimes occurs at

workstations 2 though 6

(2) How did work-in-process inventory vary during the game? How much did you

have at the beginning of the game? How much at the end?

They should all have more work-in-process inventory This is due to the fact that the

first workstation is never starved and the others are starved More work is going into

the system than is coming out The WIP should theoretically build to infinity!

(3) Explain what is going on?

You should try to get them to realize how the bottleneck moves depending on the

amount of WIP in front of a workstation

(3) How did the time is takes to process a chip vary from the beginning of the game

to the end?

It goes up depending on the amount of WIP

It is good to end by asking them what could be done to fix the system There are

many ideas such as the following:

- Reduce the variance in the processes

- Pace the line in some way

- Add more capacity at workstations 2 through 6