CONTENTS

Part 1 Introduction
1
Introduction to Operations Management..........................................................................1
2
Competitiveness, Strategy, and Productivity....................................................................7
Part II Forecasting
3
Forecasting......................................................................................................................14
Part III System Design
4
Product and Service Design............................................................................................47
4S Reliability................................................................................................................53
5
Capacity Planning...........................................................................................................59
5S Decision Theory......................................................................................................66
6
Process Selection and Facility Layout............................................................................77
6S Linear Programming..............................................................................................102
7
Design of Work Systems..............................................................................................121
7S Learning Curves....................................................................................................127
8
Location Planning and Analysis...................................................................................143
8S The Transportation Model.....................................................................................162
Part IV Quality
9
Introduction to Quality.................................................................................................170
10
Quality Control.............................................................................................................175
10S Acceptance Sampling..........................................................................................190
11
TQM and Quality Tools................................................................................................195
Part V Supply Chain Management
12
Supply Chain Management..........................................................................................206
12S Purchasing and Supplier Management................................................................211
13
Inventory Management.................................................................................................215
14
Aggregate Planning......................................................................................................239
15
MRP and ERP...............................................................................................................259
16
Just-In-Time Systems...................................................................................................291
16S Maintenance........................................................................................................295
17
Scheduling....................................................................................................................298
Part VI Project Management
18
Project Management.....................................................................................................313
Part VII Waiting Lines and Simulation
19
Waiting Lines................................................................................................................332
19S Simulation...........................................................................................................343

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iv

PREFACE
This Instructor's Manual accompanies Operations Management, 2nd Canadian edition, by William J.
Stevenson and Mehran Hojati. The Instructor's Manual has two main partsReferences, and Teaching
Notes and Solutions.
References
Excel Templates.
This part provides a brief description of how to use the Excel templates and contains chapter-by-chapter
listings of Excel templates.
Video Guide.
This section includes brief summaries of the McGraw-Hill/Irwin OM video series. These videotape
segments consist of plant tours and "real world" operations management problems or issues and
recommended solutions. These videos provide an effective way of demonstrating how companies use the
techniques and methods covered in the textbook to tackle real problems.
Using PageOut
PageOut is a McGraw-Hill custom course Web site development tool that allows you to create and post
your own personal Web site, complete with URL, to give to your students. It can be used free with the
adoption of any McGraw-Hill textbook. Your McGraw-Hill rep can set you up with a User ID and
Password. The PageOut Web site provides additional information and a demo. This section of the
Instructors Manual explains how to download this Instructors Manual from the text Web site for use
with PageOut.
Solutions
This is the main section of the instructor's manual. For each chapter and supplement in the textbook, this
section provides the instructor with teaching notes, answers to discussion and review questions, suggested
answers for memo writing exercises, solutions to problems, answers to questions in readings and
solutions to cases. In addition, selected chapters will contain enrichment modules designed to enhance the
coverage of material. Heres a brief overview.
Teaching Notes: This section will provide a short description of the purpose of the chapter, highlight the
important concepts of the chapter and/or indicate how to use the chapter.
Answers to Discussion and Review Questions: This section contains answers to each of the discussion
and review questions given at the end of each chapter. The answers are designed to be correct and
thorough. The questions cover the key points contained in the chapter and can be assigned either as
homework or as examination questions.
Answers to Memo Writing Exercises: The content of these exercises is similar to the content of the
discussion and review questions. Due to the limitation of space, the answers are not given in the form of
memorandums. However, the content of the answer, though concise, is accurate.
Solutions to Problems: All of the quantitative chapters include numerical end-of-chapter problems. The
textbook contains a rich variety of problems of different lengths and difficulty levels. There is at least one

problem and often multiple problems for each quantitative method or technique covered. Many of the
solutions include graphical output to clarify the results. These problems are appropriate for both
homework and examination purposes.
Solutions/Answers to Case Problems: The length and difficulty of the cases as well as the length of the
solutions/answers varies. Some of the cases require quantitative solutions, others only require a
qualitative answer and some have both quantitative and qualitative components. However, the solutions
and answers are designed to be thorough.
Answers to Questions for Readings: There are many current "readings" that are used to place the topic in
the context of an actual business setting. These "readings" should assist you in demonstrating the
relevance of a topical area to students as well as the application of the methods covered in the textbook.
Complete answers are given to all questions provided at the end of some of the readings.
Enrichment Modules: Due to the space limitations or other considerations, certain topics are not covered
in the textbook. However, an explanation of these selected topics, related exercises, problems and their
complete solutions are provided in several of the enrichment modules to give you additional topical
flexibility and to provide depth or breath to the coverage of the material in various chapters. Some of
these enrichment modules are included as part of the CD-ROM while others are included only as part of
the Instructor's Manual.
It is hoped that instructors who are teaching an introductory course in operations management will find
this manual a useful supplement to the textbook.
Mehran Hojati
University of Saskatchewan

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EXCEL TEMPLATES
Student and Instructor CDs contain templates and copies of the examples and solved problems from the
textbook. The electronic version of this manual also contains embedded Excel worksheets of the solutions
to some of the problems from the end of some chapters. You may copy the worksheet to Excel or doubleclick to use the embedded version. The templates on the CD use macros (working like black boxes) and
can be used if your class has limited skill in setting up and manipulating Excel worksheets.
If you have a computer and projector in the classroom, you may want to use the templates to help
demonstrate the methods during your lectures. Excel facilitates "what if analysis (e.g. see what happens
to the Exponential smoothing forecast when you change the smoothing constant alpha). Most of the
templates have graphs to visually help the students understand the problems. The templates and graphs
are of course "live," that is they contain formulas and immediately recalculate the effect of your changes.
Once students have become accustomed to using the templates, they should be able to solve more
problems in less time, and hopefully gain a greater understanding of the problems by viewing the
templates as they solve the problems. You should encourage the students to investigate and understand the
solutions presented by the templates. In fact, most templates require active participation by the student in
reaching the solution. However, you may consider that some templates do too much of the work" and
you may want to use these templates as a key and require students to either solve the problems by hand or
with their own spreadsheet solution. Or you may want to go beyond the problem and investigate
sensitivity analysis (spreadsheets are very good at that) or other "finer points" of the problem. You may
also want to assign more difficult problems because the templates generally relieve the student from the
long and tedious calculations. The templates should help the students appreciate the power of
spreadsheets while solving the problems.
Using the Templates on the CD
The templates on the CD are contained in Excel workbooks, one workbook for each chapter or chapter
supplement (e.g. Chap8S.xlt contains the templates for the Supplement to Chapter 8). To use a specific
template, open the workbook for the appropriate chapter and select the template in the index (first
worksheet) or on the worksheet tab (at the bottom of the Excel screen).
Entering Data
Enter data only in cells which are shaded like the cell to the right.

Input Area

You may enter formulas with an equal sign (e.g. =5*.243/12 or =H3).
Deleting Data
To remove data from shaded cells, select the cell(s) and press delete, do not enter a space or zero because
many templates will distinguish between a blank cell and a cell containing the space character or zero.
Copying Data
If you copy data to put it into the input (i.e. shaded) area of a template, be sure to use the Excel edit
command Paste Special Values. Do not use the Paste command to put data into a template as it may
change the formatting including the shading.
You may copy any part (i.e. data or results) of a template to paste into another worksheet.

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Programmed buttons
Command buttons (see right) will allow you to clear the data from a template
or to solve the current problem entered in a templatejust press it.

Command

Notes:
Some of the templates have notes for using the template. The notes are at the
bottom of the template, there may be a hyperlink (e.g. see at right) at the top
of the screen to take you down to the notes.

Notes

Printing a Template
You may print a template by pressing the Print task button or using the File Print command.
Examples and Solved Problems
Data for the examples and solved problems in the text are also included in the workbook for each chapter.
You must enter the data into the appropriate template, either by typing or by Copy and Paste Special
Values (you can only paste in shaded areas - see below).
Template files
These templates are saved as Excel template (.x1t) files, so if you make changes and save the file, a
number will be added to the end of the file name (e.g. file.xlt becomes file1.xlt) to prevent you from
storing over the original.
Using Solver
Some templates (e.g. Linear Programming and Transportation) use the Excel Add In Solver. You must use
the Tools Add-Ins command to add in Solver before using these templates. You may solve (i.e. optimize)
the problem by pressing the Solve button or using the Tools Solver command.
Round off
There are several types of round off. First, the Solver Add-In has a set precision which also results in an
extremely small round off error (e.g. 1.234E-10) and these numbers may be treated as zero. Second, the
templates do not round off numbers, but the textbook does (e.g. probabilities for the normal distribution
are rounded off to 3-4 places), this will result in small but noticeable differences between results in
templates and the textbook.

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OPERATIONS MANAGEMENT VIDEO GUIDE

The McGraw-Hill/Irwin OM Video Series includes professionally developed videotapes showing students
real applications of key manufacturing and service topics. Each tape contains plant tours to help students
see how companies are using operations management concepts and techniques to be productive and
competitive. Here is a brief synopsis of each segment and a listing of the appropriate chapters in the
textbook.

Volume I Tapes 1 & 2 (ISBN 0-256-12349-7)

Tape 1
Lean Production (13 minutes) This segment shows and discusses how Lean Production (Just-in-Time) is
used at Caterpillar, Cummings Engine, and Navistar. Interviews with upper management at the three
companies bring out the importance of customer-driven "pull" systems and how the companies employ
KIT, Kanban, Jidoka, and MRP II to perform better. (Chapter 11TQM and Quality Tools; Chapter
16JIT)
Quality (13 minutes) The Baldrige Award ceremony opens this segment, which goes on to list the seven
basic quality tools. Then Zytec, Motorola, and Hewlett Packard are used as examples. (Chapter
9Introduction to Quality; Chapter 11TQM and Quality Tools)
The Manufacturing Process (10 minutes) This segment presents the product-process matrix, from
customized, low-volume to mechanized, high-volume manufacturing. Most of the segment is on-site
scenes from a tool and die shop, Caterpillar, Ford, and Nucor Steel. (Chapter 6Process Selection and
Facility Layout)
Tape 2
Computer-Integrated Manufacturing (12 minutes) This segment presents an on-site tour of the Nucor
Steel minimill, focusing on the process and computer system. Included are interviews with the plant
manager, controller, and caster foreman. It includes good illustrations of controls, process manufacturing,
automation, and productivity. (Chapter 2Competitiveness, Strategy, and Productivity; Chapter 6Process
Selection and Facility Layout)
Manufacturing Inventory (11 minutes) This segment contrasts Navistar's high turnover-low inventory
heavy truck manufacturing system with the high inventory-service parts business at Caterpillar.s parts
distribution network Interviews bring out Navistar's inventory reduction efforts as well as Caterpillar's
responsiveness and the corresponding effects on inventory and costs. (Chapter 13Inventory
Management; Chapter 15MRP & ERP)
Service (11 minutes) This segment features First National Bank of Chicago and particularly the
operations aspect of its check-clearing system. Interviews are included, which help reiterate the point that
service businesses use "operations" principles to deliver quality "products." (Chapter 4Product and
Service Design)

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Volume II (ISBN 0-256-1596-7)

Service Systems and the Service-System Design Matrix (12 minutes) First National Bank of Chicago is
again highlighted with a survey of their customer services. This segment highlights the distinctions
between automated low contact services and highly customized face-to-face encounters. It also relates
these examples to other service companies and includes interview segments with managers. (Chapter
4Product and Service Design; Chapter 6Process Design)
Improving Operations Methods (12 minutes) This segment illustrates how Bernard Welding Equipment
Company reduced set-up time and changed from a push to pull system to better serve their customers. The
tape illustrates how a high variety of products (3,000 different configurations) can be custom assembled
for quick response to customer orders. Topics touched on are Kanban, TQM, team approach, and JIT.
(Chapter 11TQM; Chapters 15JIT)
Layout Improvements and Equipment Strategies (10 minutes) This segment again features Bernard
Welding, this time illustrating a reconfigured layout based on process flow as opposed to process type.
The segment also shows other improvements such as the layout of the electrical network and equipment.
(Chapter 6Process Selection and Facility Layout)
Supplier Development Outreach Program (16 minutes) From Toyota, this tape describes changes and
improvements made at Flex-n-Gate, a manufacturer in Danville, Illinois which supplies Toyota with
pickup truck bumpers. Toyota Supplier Development Institute engineers consulted with Flex-n-Gate in
the process. It includes factory footage and interviews with the purchasing manager, project manager,
development engineer, and plant manager. (Chapter 16Just-In-Time Systems; Chapter 12Supply Chain
Management)

Volume III (ISBN 0-256-19528-5)

Reengineering at Caterpillar (11 minutes) This segment describes a real program undertaken at
Caterpillar's Mossville Engine Center to reengineer the drawing process for engines. The five-step
procedure this cross-functional group followed streamlined the process while improving customer
satisfaction and quality. It also reduced time and costs. Interviews with team members are included.
(Chapter 4Product and Service Design)
Washburn Guitars (12 minutes) Washburn Guitars manufactures and sells over 150,000 guitars annually.
This video provides an on-site overview of their job shop production system with special emphasis on
production scheduling priorities and their use of a flexible N.C.. machine. (Chapter 6Process Types;
Chapter 14Aggregate Planning; Chapter 17Scheduling)
Shouldice Hospital (16 minutes) This video, originally produced by Canadian National Broadcasting,
describes the unique and specialized service product of Shouldice Hospitalhernia surgery. The entire
process of delivery of the product is examined, along with the unique level of customer satisfaction.
(Chapter 4Product and Service Design; Chapter 5Capacity Planning; Chapter 6Process Design)

Volume IV (ISBN 0-256-21570-7)

Tape 1
Value-driven Production at Trek (9 minutes) This segment describes the distinctive approach Trek uses
to manufacture high quality, mass-customized bikes for their customers. On-site footage features
interviews and examples of unique uses of material, testing and assembly. (Chapter 2Competitiveness;
Chapter4Product Design; Chapter 6Process Selection and Facility Layout; Chapter 11TQM)
Scheduling ServicesThe United Solution (9 minutes) This segment presents an overview of the staff
scheduling system used by United Airlines in planning and delivering over 2,200 trips with 500 planes per
day. Interviews with the developers of the PEGASYS computer system, along with discussions with key
flight scheduling, equipment scheduling, and maintenance scheduling personnel lay out the procedures
and issues United must deal with to efficiently deliver service in the travel industry. (Chapter
17Scheduling)
Quality Product and Process Design at Detroit Diesel (11 minutes) This segment describes the focus on
quality, from design of products through the actual manufacturing of engines, including the highly
successful Series 60 engine. Interviews with owner Roger Penske, the product manager and assembly
workers are included. Also included are on-site examples of the use of technology and talent to increase
quality through product and process design. (Chapter 4Product and Service Design; Chapter 6Process
Design; Chapter 9Introduction to Quality; Chapter 11TQM)
Tape 2
Production Tour of the Vision Light System at Federal Signal (12 minutes) This segment follows the
production and assembly process for Vision Lights at Federal Signal Corporation. This begins with the
original bill of materials schedule through incoming parts and kit inspections, and several assembly and
sub-assembly processes. Interviews with the master scheduler, operations manager and supervisors, in
purchasing are included and all footage is on-site. (Chapter 14Aggregate Planning; Chapter 15MRP &
ERP)
JIT at Federal Signal (12 minutes) This segment presents the use of both "big" and "little" JIT concepts
at Federal Signal to reduce waste, improve quality, and closely meet customer demand in manufacturing a
variety of products. On-site examples of Kanban, work cells, and supplier relations are featured as well as
short interviews with engineers and employees. (Chapter 11TQM; Chapter 16JIT)

Volume V (ISBN # 0-07-366182-1)

Tri-stateConverting to a JIT SystemAssessment (10 minutes) This segment features plans of
converting the layout of the production facility to accommodate additional capacity at Tri-State
Industries. Interviews with managers and consultants are included. The plant tour shows different aspects
of a traditional batch processing operation. This video segment also illustrates how the suggested changes
in the production system and facility layout can facilitate the implementation of a JIT system. (Chapter
6Process Selection and Facility Layout; Chapter 16JIT Systems)

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Tri-stateConverting to JITImplementation (9:50 minutes) This segment is a continuation of the

previous segment entitled converting to a JIT System. It demonstrates the reconfiguration of the facility
from a batch process to work cells at Tri-State Industries. It also presents how this change enabled TriState to reduce material handling cost, work-in-process inventory and floor space requirements. In
addition, the segment also includes the use of Kanban and an illustration of a method for reducing
machine setup time. (Chapter 6Process Selection and Facility Layout; Chapter 16JIT Systems)
International LogisticsFeaturing American President Lines (11 minutes) This segment describes
planning, management and implementation of international logistics operations for American Presidents
Lines. The video includes discussion and illustration of transportation routes, transportation schedules,
modes of transportation (concentrates on water and rail). This segment also illustrates effective methods
of loading/unloading, computerized tracking/identification systems and their use in timely delivery of
products. (Chapter 12Supply Chain Management; Chapter 12 SupplementLogistics; Chapter 13
Inventory Control)

Volume VI (ISBN # 007366193-7)

Product Design and Manufacturing at Tri-State Industries (8:40 minutes) This video provides an
overview of several key design issues considered during the development and manufacturing process
setup for new trailers made by TriState Industries in Indiana. Designer Don Keller discusses tools and
methods he used, as well as how they took customer preference into account. Illustrations of the
manufacturing specifications in the plant are included. (Chapter 4Product and Service Design)
Project ManagementBuilding the Alton 'Super Bridge' (12:52 minutes) This segment follows the
story of building of the Alton, Illinois super bridge across the Mississippi River and is based on a twohour PBS documentary on the subject. Highlights include descriptions of design, the construction process,
and even weather issues that project managers had to deal with in completing the project. Interviews with
managers and contractors are included. (Chapter 18Project Management)
Valuation of Operations at ABTco (11:47 minutes) This video describes manufacturing product and
process changes made at ABTco, a US and Canadian building products producer that led to a 300 percent
increase in overall corporate value in just one year. Besides "rightsizing," ABT reallocated and expanded
capacity, invested in new and improved technology, reduced inventory, and developed and added 50 new
products to their offerings. Interviews with key managers and footage from plants in North Carolina and
Michigan are included. (Chapter 2Strategy; Chapter 4Product and Service Design; Chapter 5
Capacity; Chapter 6Process Selection and Facility Layout)

Volume VII (ISBN # 007-243781-2)

Segment OneManufacturing Quality featuring Honda (Approx. 12 minutes) This segment introduces
the general approach Honda Motor company has taken to ensuring top quality in its Marysville and East
Liberty plants. Issues Honda dealt with are described as well as solutions such as rotating assignments for
employees, teamwork in pursuit and elimination of problems, careful tracking and communication of
causes of defects, and close communications with suppliers. Interviews with team leaders and plant
managers are included. (Chapter 9Introduction to Quality; Chapter 11TQM and Quality Tools)
Segment TwoA Day in the life of Quality at Honda (Approx 9 minutes) This segment shows specific
quality oriented workings at the East Liberty Ohio plant. The day begins with a manager meeting
outlining manufacturing results and variations that might lead to defects, then follows as they are tracked
down and examined in closer detail. Several examples of operations methods used to improve quality are
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shown along with some discussion of different control methods for specific types of operations at Honda.
(Chapter 10Quality Control; Chapter 11TQM and Quality Tools)
Segment ThreeStatistical Process ControlFeaturing Honda (Approx 7 minutes) This segment
describes Honda's SPC efforts in several areas, and then focuses on one process test for door closing
speeds. An out of control situation is discovered and remedied. (Chapter 10Quality Control)

Volume VIII (ISBN # 0072504722)

JIT at McDonald's (12:03) This video describes market, production, and service issues that McDonald's
evaluated and considered in designing its new "Made For You" production system. Interviews with Claire
Babrowski, Executive Vice President of World-Wide Restaurant Systems and Bob Marshall, Assistant
Vice President of US Operations, as well as illustrations and demonstrations of the processes in the new
JIT kitchen system are included. (Chapter 6Process Selection and Facility Layout; Chapter 16JIT
Systems)
Made for You Process Implementation featuring McDonald's (12:21) This program describes the
implementation and change over to the new McDonald's "Made for You" System, a massive project
completed in only 18 months. Claire Babrowski, Executive Vice President of World-Wide Restaurant
Systems and Bob Marsha1, Assistant Vice President of US Operations discuss local store and
organizational issues they faced during the implementation process and how they dealt with them.
(Chapter 6Process Selection and Facility Layout; Chapter 18Project Management)
Robotics and Technology featuring Genesis Systems Group (11:52) This segment features the
manufacturing process design done by Genesis Systems Group, a maker of robotic manufacturing
equipment. System criteria, customer demands, analysis, design specifications and simulations are used in
developing a new automated robotic welding system for an auto industry supplier, American Axle and
Manufacturing (AAM), a Genesis client. (Chapter 6Process Selection and Facility Layout (automation))

xiii