129507309-Key-Apics-Cpim-References-2013-130101

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1 1APICS CPIM Basics of SupplyChain Management Reprints

Basics of Supply ChainManagement Committee of the

APICS Curricula andCertification Committee

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1Introduction to MaterialsManagement

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Lean Production Simplified: APlain-Language Guide to theWorlds Most Powerful

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United Nations GlobalCompact: CorporateSustainability in the WorldEconomy

2011DownloadablePDF

UN GlobalCompactOffice

2011 6

http://www.unglobalcompact.org/docs/news_events/8.1/GC_brochure_FINAL.pdf

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_Global_Compact_Management_Model.pdf

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1 1APICS CPIM Master Planningof Resources Reprints

Master Planning of ResourcesCommittee of the APICSCurricula and CertificationCommittee






3 1Manufacturing Planning andControl Systems for Supply

Chain Management

F. Robert Jacobs, William L.Berry, David Clay Whybark and

Thomas E. Vollmann, CFPIM

APICS/CPIM

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1 1APICS CPIM DetailedScheduling and PlanningReprints

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4 1 The Lean ToolboxJohn Bicheno and MatthiasHolweg

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Making Sustainability Work:Best Practices in Managingand Measuring CorporateSocial, Environmental andEconomic Impacts

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6 1Manufacturing Planning andControl Systems for SupplyChain Management

F. Robert Jacobs, William L.Berry, David Clay Whybark andThomas E. Vollmann, CFPIM

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1Designing and Managing theSupply Chain

David Simchi-Levi, PhilipKaminsky and Edith Simchi-Levi

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2Designing and Managing theSupply Chain

David Simchi-Levi, PhilipKaminsky, Edith Simchi-Leviand Ravi Shankar

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1 1APICS CPIM Execution andControl of Operations Reprints

Execution and Control ofOperations Committee of the












7 International



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Production System

Pascal Dennis 2 US PaperbackProductivityPress

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Production System

Pascal Dennis 2 Indian PaperbackProductivityPress

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5 1Manufacturing Planning andControl Systems for SupplyChain Management

F. Robert Jacobs, William L.Berry, David Clay Whybark andThomas E. Vollmann, CFPIM

APICS/CPIM



1 Jurans Quality HandbookJoseph M. Juran and Joseph

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2 1APICS CPIM Execution andControl of Operations PracticeQuestion Booklet

Execution and Control ofOperations Committee of the

APICS Curricula and

Certification Committee





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2 1APICS Strategic Managementof Resources ReferencesSourcebook

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StrategicManagementof Resources(SMR)

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About the Authors viiForeword viiiPreface ixAcknowledgments xvList of Cases xviiCHAPTER 1 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT 1

1.1 What Is Supply Chain Management? 1

1.2 The Development Chain 3

1.3 Global Optimization 4

1.4 Managing Uncertainty and Risk 5

1.5 The Evolution of Supply Chain Management 7

1.6 The Complexity 11

1.7 Key Issues in Supply Chain Management 12

1.8 Book Objectives and Overview 16

Discussion Questions 18CASE: MEDITECH SURGICAL 18

CHAPTER 2 INVENTORY MANAGEMENT AND RISK POOLING 27CASE: STEEL WORKS, INC. 27

2.1 Introduction 31

2.2 Single Stage Inventory Control 33

2.2.1 The Economic Lot Size Model 33

2.2.2 The Effect of Demand Uncertainty 36

2.2.3 Single Period Models 36

2.2.4 Initial Inventory 39

2.2.5 Multiple Order Opportunities 41

2.2.6 Continuous Review Policy 42

2.2.7 Variable Lead Times 45

2.2.8 Periodic Review Policy 452.2.9 Service Level Optimization 47

2.3 Risk Pooling 48

CASE: RISK POOLING 49

2.4 Centralized Versus Decentralized Systems 52

2.5 Managing Inventory in the Supply Chain 52

2.6 Practical Issues 56

2.7 Forecasting 57

2.7. I Judgment Methods 58

2.7.2 Market Research Methods 58

2.7.3 Time-Series Methods 59

2.7.4 Causal Methods 59

2.7.5 Selecting the Appropriate Forecasting Technique 59

Summary 60

Discussion Questions 60CASE: SPORT OBERMEYER 63

CHAPTER 3 NETWORK PLANNING 79CASE: THE Bis CORPORATION 79

3.1 Introduction 81

3.2 Network Design 82

3.2.1 Data Collection 84

3.2.2 Data Aggregation 84

Designing and Managing the Supply ChainDavid Simchi-Levi, Philip Kaminsky, Edith Simchi-Levi and Ravi Shankar

ISBN: 9780070666986

Table of Contents

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3.2.3 Transportation Rates 88

3.2.4 Mileage Estimation 89

3.2.5 Warehouse Costs 90

3.2.6 Warehouse Capacities 91

3.2.7 Potential Warehouse Locations 92

3.2.8 Service Level Requirements 92

3.2.9 Future Demand 92

3.2.10 Model and Data Validation 923.2.11 Solution Techniques 93

3.2.12 Key Features of a Network Configuration SCP 96

3.3 Inventory Positioning and Logistics Coordination 97

3.3. I Strategic Safety Stock 97

CASE: ELECCOMP INC. 99

3.3.2 Integrating Inventory Positioning and Network Design 105

3.4 Resource Allocation 106

Summary 109

Discussion Questions 110

CASE: H. C. STARCK, INC. 111

CHAPTER 4 SUPPLY CONTRACTS 127CASE: AMERICAN TOOL WORKS 127

4.1 Introduction 1284.2 Strategic Components 129

4.2.1 Supply Contracts 129

4.2.2 Limitations 134

4.3 Contracts for Make-to-Stock/Make-to-Order Supply Chains 135

4.4 Contracts with Asymmetric Information 139

4.5 Contracts for Nonstrategic Components 140

Summary 142


CHAPTER 5 THE VALUE OF INFORMATION 147CASE: BARILLA SpA (A) 147

5.1 Introduction 158

5.2 The Bullwhip Effect 159

5.2.1 Quantifying the Bullwhip Effect 161

5.2.2 The Impact of Centralized Information on the Bullwhip Effect 163

5.2.3 Methods for Coping with the Bullwhip Effect 166

5.3 Information Sharing and Incentives 167

5.4 Effective Forecasts 169

5.5 Information for the Coordination of Systems 169

5.6 Locating Desired Products 170

5.7 Lead-Time Reduction 171

5.8 Information and Supply Chain Trade-offs 171

5.8.1 Conflicting Objectives in the Supply Chain 172

5.8.2 Designing the Supply Chain for Conflicting Goals 172

5.9 Decreasing Marginal Value of Information 175

Summary 176


CASE: REEBOK NFL REPLICA JERSEYS: A CASE FOR POSTPONEMENT 177

CHAPTER 6 SUPPLY CHAIN INTEGRATION 185CASE: DELL INC.: IMPROVING THE FLEXIBILITY OF THE DESKTOP PC SUPPLY

CHAIN 185

6.1 introduction 195

6.2 Push, Pull, and Push-Pull Systems 195

6.2.1 Push-Based Supply Chain 195

6.2.2 Pull-Based Supply Chain 196

6.2.3 Push-Pull Supply Chain 197

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6.2.4 Identifying the Appropriate Supply Chain Strategy 198

6.2.5 Implementing a Push-Pull Strategy 200

6.3 The Impact of Lead Time 202

6.4 Demand-Driven Strategies 204

6.5 The Impact of the Internet on Supply Chain Strategies 205

6.5.1 What Is E-Business? 206

6.5.2 The Grocery Industry 207

6.5.3 The Book Industry 2076.5.4 The Retail Industry 208

6.5.5 Impact on Transportation and Fulfillment 209

Summary 209


CASE: THE GREAT INVENTORY CORRECTION 210

CHAPTER 7 DISTRIBUTION STRATEGIES 215CASE: AMAZON.COM'S EUROPEAN DISTRIBUTION STRATEGY 215


7.2 Direct Shipment Distribution Strategies 238

7.3 Intermediate Inventory Storage Point Strategies 239

7.3.1 Traditional Warehousing 240

7.3.2 Cross-Docking 241

7.3.3 Inventory Pooling 2427.4 Transshipment 247

7.5 Selecting an Appropriate Strategy 247

Summary 248


CHAPTER 8 STRATEGIC ALLIANCES 251CASE: HOW KIMBERLY-CLARK KEEPS CLIENT COSTCO IN DIAPERS 251


8.2 A Framework for Strategic Alliances 256

8.3 Third-Party Logistics 257

8.3.1 What Is 3PL? 258

8.3.2 Advantages and Disadvantages of 3PL 258

8.3.3 3PL Issues and Requirements 260

8.3.4 3PL Implementation Issues 261

8.4 Retailer-Supplier Partnerships 262

8.4.1 Types of RSP 262

8.4.2 Requirements for RSP 263

8.4.3 Inventory Ownership in RSP 264

8.4.4 Issues in RSP Implementation 265

8.4.5 Steps in RSP Implementation 265

8.4.6 Advantages and Disadvantages of RSP 266

8.4.7 Successes and Failures 267

8.5 Distributor Integration 268

8.5.1 Types of Distributor Integration 268

8.5.2 Issues in Distributor Integration 269

Summary 270


CASE: AUDIO DUPLICATION SERVICES, INC. (ADS) 271

CASE: THE SMITH GROUP 272CASE: MARUTI UDYOG LIMITED 273

CHAPTER 9 PROCUREMENT AND OUTSOURCING STRATEGIES 277CASE: ZARA 277

9.1 introduction 291

9.2 Outsourcing Benefits and Risks 292

9.3 A Framework for Buy/Make Decisions 294

9.4 Procurement Strategies 296

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9.4.1 Supplier Footprint 298

9.5 E-Procurement 300

Summary 304


CASE: SOLECTRON: FROM CONTRACT MANUFACTURER TO GLOBAL SUPPLY

CHAIN INTEGRATOR 305

CHAPTER 10 GLOBAL LOGISTICS AND RISK MANAGEMENT 321CASE: WAL-MART CHANGES TACTICS TO MEET INTERNATIONAL TASTES 321


10.1.1 Global Market Forces 325

10.1.2 Technological Forces 326

10.1.3 Global Cost Forces 326

10.1.4 Political and Economic Forces 327

10.2 Risk Management 327

10.2.1 Many Sources of Risks 328

10.2.2 Managing the Unknown-Un/mown 330

10.2.3 Managing Global Risks 333

10.2.4 Requirements for Global Strategy Implementation 334

10.3 Issues in International Supply Chain Management 335

10.3.1 International versus Regional Products 335

10.3.2 Local Autonomy versus Central Control 33610.3.3 Miscellaneous Dangers 337

10.4 Regional Differences in Logistics 338

10.4.1 Cultural Differences 338

10.4.2 Infrastructure 338

10.4.3 Performance Expectation and Evaluation 339

10.4.4 Information System Availability 340

10.4.5 Human Resources 340

Summary 340


CHAPTER 11 COORDINATED PRODUCT AND SUPPLY CHAIN DESIGN 343CASE: HEWLETT-PACKARD: DESKJET PRINTER SUPPLY CHAIN 343

11.1 A General Framework 351

11.2 Design for Logistics 354

11.2.1 Overview 354

11.2.2 Economic Packaging and Transportation 355

11.2.3 Concurrent and Parallel Processing 356

11.2.4 Standardization 357

11.2.5 Selecting a Standardization Strategy 361

11.2.6 Important Considerations 361

11.2.7 The Push-Pull Boundary 362

11.2.8 Case Analysis 363

11.3 Supplier Integration into New Product Development 365

11.3.1 The Spectrum of Supplier Integration 365

11.3.2 Keys to Effective Supplier Integration 366

11.3.3 A "Bookshelf" of Technologies and Suppliers 367

11.4 Mass Customization 367

11.4.1 What Is Mass Customization? 367

11.4.2 Making Mass Customization Work 36811.4.3 Mass Customization and Supply Chain Management 369

Summary 369


CASE: HEWLETT-PACKARD COMPANY: NETWORK PRINTER DESIGN FOR

UNIVERSALITY 370

CHAPTER 12 CUSTOMER VALUE 377CASE: MADE TO MEASURE 377

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12.2 The Dimensions of Customer Value 382

12.2.1 Conformance to Requirements 382

12.2.2 Product Selection 384

12.2.3 Price and Brand 387

12.2.4 Value-Added Services 388

12.2.5 Relationships and Experiences 389

12.2.6 Dimensions and Achieving Excellence 39112.3 Customer Value Measures 392

12.4 Information Technology and Customer Value 395

Summary 397


CHAPTER 13 SMART PRICING 399CASE: STARBUCKS ECONOMICS: SOLVING THE MYSTERY OF THE ELUSIVE

"SHORT" CAPPUCCINO 399


13.2 Price and Demand 401

13.3 Markdowns 402

13.4 Price Differentiation 403

13.5 Revenue Management 405

13.6 Smart Pricing 40813.6.1 Differential Pricing 408

13.6.2 Dynamic Pricing 410

13.7 Impact of the Internet 411

13.8 Caveats 412

Summary 413


CASE: THE GREAT REBATE RUNAROUND 414

CHAPTER 14 INFORMATION TECHNOLOGY AND BUSINESS PROCESSES 419CASE: SUPPLY CHAIN WHIRL 419


14.2 The Importance of Business Processes 422

14.3 Goals of Supply Chain IT 428

CASE: 7-ELEVEN STOCKS UP ON TECH SAVVY 432

14.4 Supply Chain Management System Components 435

14.4.1 Decision-Support Systems 436

14.4.2 IT for Supply Chain Excellence 439

14.5 Sales and Operations Planning 442

CASE: S&OP "EVOLUTION" AT ADTRAN 442

14. 6 Integrating Supply Chain Information Technology 445

14.6.1 Implementation of ERP and DSS 446

14.6.2 "Best of Breed " versus Single-Vendor ERP Solutions 447

Summary 448


CHAPTER 15 TECHNOLOGY STANDARDS 451CASE: PACORINI STAYS ON TOP OF GLOBAL LOGISTICS MARKET WITH IBM SOA

SOLUTION 451

15.1 Introduction 45215.2 IT Standards 453

15.3 Information Technology Infrastructure 455

15.3.1 Interface Devices 455

15.3.2 System Architecture 455

15.3.3 Electronic Commerce 457

15.4 Service-Oriented Architecture (SOA) 460

15.4.1 Technology Base: IBM and Microsoft 460

15.4.2 ERP Vendor Platform: SAP and Oracle 462

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15.4.3 Conclusion 463

15.5 Radio Frequency Identification (RFID) 464

15.5.1 Introduction 464

15.5.2 RFID Applications 465

15.5.3. RFID and Point-of-Sale Data 468

15.5.4 Business Benefits 469

15.5.5 Supply Chain Efficiency 471

Summary 471Discussion Questions 472

CHAPTER 16 LOCAL ISSUES IN SUPPLY CHAIN MANAGEMENT 473CASE: AMAZING STORY OF MUMBAI DABBAWALAHS 473


16.2 Supply Chain Issues during Natural Disasters and Other Calamities 479

16.3 Supply Chain Issues for SMEs 480

16.4 Organized Retail in India 481

16.5 Reverse Logistics 482

Summary 482


APPENDIX A COMPUTERIZED BEER GAME 485

A.1 Introduction 485A.2 The Traditional Beer Game 485

A.2.1 The Difficulties with the Traditional Beer Game 486

A.3 The Scenarios 487

A.4 Playing a Round 488

A.4.1 1ntroducing the Game 488

A.4.2 Understanding the Screen 489

A.4.3 Playing the Game 490

A.4.4 Other Features 492

A.5 Options and Settings 493

A.5.1 File Commands 493

A.5.2 Options Commands 493

A.5.3 The Play Commands 496

A.5.4 The Graphs Commands 497

A.5.5 The Reports Commands 498

APPENDIX B THE RISK POOL GAME 500B.1 Introduction 500

B.2 The Scenarios 500

B.3 Playing Several Rounds 501

B.3.1 1ntroducing the Game 501

B.3.2 Understanding the Screen 502

B.3.3 Playing the Game 503

B.3.4 Other Features 503

B.4 Options and Settings 503

B.4.1 File Commands 504

B.4.2 Play Commands 504

B.4.3 The Reports Commands 506

APPENDIX C EXCEL SPREADSHEET 508C.1 introduction 508

C.2 The Spreadsheet 508

APPENDIX D THE BIDDING GAME 509D.1 introduction 509

D.2 The Scenario 509

D.3 instructions for Excel Version of the Game 510

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BOBILOGRAPHY 511INDEX 521

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Letter to Candidates ii

Introduction iv

About the APICS CPIM Examinations ivQuestion Format ivTaking the Test v

Interpreting Test Scores vi

Studying for the APICS CPIM Exam viAPICS CPIM References vi

Use of References Across APICS Exam Modules vii

Terminology viii

Additional Resources for APICS CPIM Candidates ixAPICS CPIM Instructor-Led Review Courses ix

Independent Study Courses ix

Educational Programs ix

APICS Certified Fellow in Production and Inventory Management x

APICS CPIM Certification Maintenance: Continuing Professional Development xThe Importance of Certification Maintenance x

APICS Code of Ethics x

Basics of Supply Chain Management 1

Master Planning of Resources 11

Detailed Scheduling and Planning 18

Execution and Control of Operations 28

Strategic Management of Resources 37

Answers to Sample Questions 46

APICS CPIM Exam Content ManualCPIM Subcommittee - 2013

Stock #09051-2013

Table of Contents

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Copyright ivPreface ixCHAPTER 1 Introduction to Materials Management 1

Introduction 1

Operating Environment 1

The Supply Chain Concept 4

What Is Materials Management? 9

Summary 13

Key Terms 13

Questions 13

Problems 14

CHAPTER 2 Production Planning System 16Introduction 16

Manufacturing Planning and Control System 17Sales and Operations Planning 20

Manufacturing Resource Planning 22

Enterprise Resource Planning 23

Making the Production Plan 24

Summary 33

Key Terms 33

Questions 33

Problems 34

Case Study:Meridian Water Pumps 39

CHAPTER 3 Master Scheduling 41Introduction 41

Relationship to Production Plan 42

Developing a Master Production Schedule 44Production Planning, Master Scheduling, and Sales 49

Summary 54

Key Terms 55

Questions 55

Problems 56

Case Study: Acme Water Pumps 61

CHAPTER 4 Material Requirements Planning 62Introduction 62

Bills of Material 64

Material Requirements Planning Process 70

Using the Material Requirements Plan 81

Summary 84

Key Terms 84

Questions 84

Problems 85

Case Study: Apix Polybob Company 95

CHAPTER 5 Capacity Management 98Introduction 98

Definition of Capacity 98

Capacity Planning 99

Introduction to Materials ManagementJ. R. Tony Arnold, Stephen N. Chapman and Lloyd M. Clive

ISBN: 9780131376700

Table of Contents

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Capacity Requirements Planning 100

Capacity Available 102

Capacity Required (Load) 105

Scheduling Orders 107

Making the Plan 109

Summary 109

Key Terms 110

Questions 111Problems 111

Case Study:Wescott Products 114

CHAPTER 6 Production Activity Control 117Introduction 117

Data Requirements 120

Order Preparation 121

Scheduling 122

Load Leveling 127

Scheduling Bottlenecks 128

Theory of Constraints and Drum-Buffer-Rope 130

Implementation 132

Control 133

Production Reporting 138Product Tracking 139

Summary 139

Key Terms 139

Questions 140

Problems 141

Case Study: Johnston Products 145

CHAPTER 7 Purchasing 147Introduction 147

Establishing Specifications 150

Functional Specification Description 152

Selecting Suppliers 154

Price Determination 157

Impact of Material Requirements Planning on Purchasing 159

Environmentally Responsible Purchasing 161

Expansion of Purchasing into Supply Chain Management 162

Some Organizational Implications of Supply Chain Management 163

Summary 164

Key Terms 164

Questions 165

Problems 165

Case Study: Lets Party! 166

CHAPTER 8 Forecasting 167Introduction 167

Demand Management 167

Demand Forecasting 168

Characteristics of Demand 168

Principles of Forecasting 170Collection and Preparation of Data 171

Forecasting Techniques 172

Some Important Intrinsic Techniques 173

Seasonality 176

Tracking the Forecast 179

Summary 185

Key Terms 186

Questions 186

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Problems 186

Case Study: Northcutt Bikes: the Forecasting Problem 193

CHAPTER 9 Inventory Fundamentals 196Introduction 196

Aggregate Inventory Management 196

Item Inventory Management 196

Inventory and the Flow of Material 197Supply and Demand Patterns 198

Functions of Inventories 198

Objectives of Inventory Management 199

Inventory Costs 201

Financial Statements and Inventory 203

ABC Inventory Control 207

Summary 210

Key Terms 211

Questions 211

Problems 212

Case Study: Randy Smith, Inventory Control Manager 216

CHAPTER 10 Order Quantities 218

Introduction 218Economic-Order Quantity (EOQ) 219

Variations of the EOQ Model 223

Quantity Discounts 224

Order Quantities for Families of Product When Costs are Not Known 225

Period-Order Quantity (POQ) 226

Summary 229

Key Terms 229

Questions 229

Problems 230

Case Study: Carls Computers 234

CHAPTER 11 Independent Demand Ordering Systems 237Introduction 237

Order Point System 237Determining Safety Stock 239

Determining Service Levels 245

Different Forecast and Lead-Time Intervals 247

Determining When the Order Point Is Reached 247

Periodic Review System 249

Distribution Inventory 251

Summary 254

Key Terms 254

Questions 255

Problems 255

CHAPTER 12 Physical Inventory and Warehouse Management 262Introduction 262

Warehousing Management 262

Physical Control and Security 267

Inventory Record Accuracy 268

Technology Applications 273

Summary 274

Key Terms 274

Questions 275

Problems 275

Case Study: CostMart Warehouse 278

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CHAPTER 13 Physical Distribution 282Introduction 282

Physical Distribution System 285

Interfaces 287

Transportation 288

Legal Types of Carriage 290

Transportation Cost Elements 291Warehousing 296

Packaging 301

Materials Handling 302

Multi-Warehouse Systems 303

Summary 305

Key Terms 306

Questions 306

Problems 308

Case Study:Metal Specialties, Inc. 309

CHAPTER 14 Products and Processes 310Introduction 310

Need for New Products 310

Product Development Principles 311Product Specification and Design 313

Process Design 315

Factors Influencing Process Design 316

Processing Equipment 317

Process Systems 318

Selecting the Process 320

Continuous Process Improvement (CPI) 322

Key Terms 332

Questions 333

Problems 334

Case Study: Cheryl Franklin, Production Manager 337

CHAPTER 15 Lean Production 339

Introduction 339Lean Production 339

Waste 341

The Lean Production Environment 343

Manufacturing Planning and Control in a Lean Production Environment: JIT Production 350

Which to Choose: MRP (ERP), Kanban, or Theory of Constraints? 359

Summary 361

Key Terms 361

Questions 362

Problems 363

Case Study:Murphy Manufacturing 364

CHAPTER 16 Total Quality Management 367Introduction 367

What Is Quality? 367

Total Quality Management (TQM) 369

Quality Cost Concepts 372

Variation as a Way of Life 373

Process Capability 375

Process Control 379

Sample Inspection 382

ISO 9000:2008 383

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Benchmarking 385

Six Sigma 386

Quality Function Deployment 387

JIT, TQM, and MRP 389

Summary 390

Key Terms 390

Questions 390

Problems 391Case Study: Accent Oak Furniture Company 393

Readings 397Index 401

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Contributors ixIntroduction to the Sixth Edition xi

Section 1 Key Concepts: What Leaders Need to Know About QualityChapter 1 Attaining Superior Results through Quality 3

Chapter 2 Quality's Impact on Society and the National Culture 41

Chapter 3 The Universal Methods to Manage for Quality 69

Chapter 4 Quality Planning: Designing Innovative Products and Services 83

Chapter 5 Quality Improvement: Creating Breakthroughs in Performance 137

Chapter 6 Quality Control: Assuring Repeatable and Compliant Processes 195

Chapter 7 Strategic Planning and Deployment: Moving from Good to Great 227

Chapter 8 Business Process Management: Creating an Adaptable Organization 255

Chapter 9 The Juran Transformation Model and Roadmap 279Chapter 10 A Look Ahead: Eco-Quality for Environmental Sustainability 313

Section II Methods and Tools: What to Use to Attain Performance ExcellenceChapter 11 Lean Techniques: Improving Process Efficiency 327

Chapter 12 Six Sigma: Improving Process Effectiveness 355

Chapter 13 Root Cause Analysis to Maintain Performance 387

Chapter 14 Continuous Innovation Using Design for Six Sigma 407

Chapter 15 Benchmarking: Defining Best Practices for Market Leadership 439

Chapter 16 Using International Standards to Ensure Organization Compliance 467

Chapter 17 Using National Awards for Excellence to Drive and Monitor Performance 491

Chapter 18 Core Tools to Design, Control, and Improve Performance 541

Chapter 19 Accurate and Reliable Measurement Systems and Advanced Tools 583

Section III Applications: Most Important Methods in Your IndustryChapter 20 Product-Based Organizations: Delivering Quali ty While Being Lean and Green 675

Chapter 21 Service-Based Organizations: Customer Service at Its Best 703

Chapter 22 Self-Service Based Organizations: Assuring Quality in a Nanosecond 713

Chapter 23 Health Care-Based Organizations: Improving Qual ity of Care and Performance 757

Chapter 24 Continuous Process-Based Organizations: Quality Is a Continuous Operation 789

Chapter 25 Defense-Based Organizations: Assuring No Doubt About Performance 833

Section IV Key Functions: Your Role in Performance ExcellenceChapter 26 Empowering the Workforce to Tackle the "Useful Many" Processes 847

Chapter 27 The Quality Office: Leading the Way Forward 867Chapter 28 Research & Development: More Innovation, Scarce Resources 891

Chapter 29 Software and Systems Development: From Waterfall to AGILE 951

Chapter 30 Supply Chain: Better, Faster, Friendlier Suppliers 979

Chapter 31 Role of the Board of Directors: Effective and Efficient Governance 1003

Appendix I. The Non-Pareto Principle, Mea Culpa 1021

Appendix II. Sample Competency Matrices and Job Profiles 1025

Glossary of Acronyms 1037

Juran's Quality HandbookJoseph M. Juran and Joseph A. Defeo

ISBN: 9780070618480

Table of Contents

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Glossary of Terms 1047

Name Index 1061

Subject Index 1067

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Foreword viiIntroduction to the 2nd Edition ixPreface xiCHAPTER 1 The Birth of Lean Production 1

Craft Production 1

Mass Production 1

The Growing Dysfunction 5

The Birth of Lean Production 6

The Historic Bargain 7

A Vitrue of Necessity 9

Completing the Lean Revolution at Toyota 10

Summary 11

CHAPTER 2 The Lean Production System 13

Why Lean Production? 13Systems and Systems Thinking 15

Basic Image of Lean Production 18

Customer Focus 19

Muda 20

Summary 25

CHAPTER 3 Stability 29Standards in the Lean System 29

The 5S System 32

Total Productive Maintenance 39

Summary 46

CHAPTER 4 Standardized Work 49

Methods Engineering versus Lean Thinking 49What Do We Have to Manage? 50

Why Standardized Work? 51

The Elements of Standardized Work 53

Charts Used to Define Standardized Work 55

Manpower Reduction 59

Overall Efficiency versus Individual Efficiency 60

Standardized Work and Kaizen 60

Common Layouts 63

Summary 63

CHAPTER 5 Just-In-Time 67Why JIT? 67

Basic Principles of JIT 69

The JIT System 73Kanban 74

The Six Kanban Rules 79

Expanded Role of Conveyance 80

Production Leveling 83

The Types of Pull Systems 86

Value Stream Mapping 87

Summary 91

Lean Production SimplifiedPascal Dennis

ISBN: 9781563273568

Table of Contents

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CHAPTER 6 Jidoka 95Development of the Jidoka Concept 95

Why Jidoka? 96

Poka-yoke 98

Inspection System and Zone Control 98

Using Poke-yokes 100

Implementing Jidoka 104

Summary 106

CHAPTER 7 InvovlementThe Wind That Fills the Sail 107Why Involvement? 107

The Terrible Waste of Humanity 109

Activities Supporting Involvement 109

Kaizen Circle Activity 110

Practical Kaizen Training 113

Key Factors for PKT Success 114

Suggestion Programs 115

Summary 119

CHAPTER 8 Hoshin Planning 121What is Planning? 121

Why Plan? 123Problems with Planning 123

Hoshin Planning 124

Hoshin Planning System 127

The Four Phases of Hoshin Planning 137

Summary 142

CHAPTER 9 The Culture of Lean Production 145What Is Lean Culture? 146

How Does Lean Culture Feel? 155

Summary 156

Appendix IGlossary 159Appendix IIBibliography 163

Index 167

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Preface xxiAcknowledgments xxxiCHAPTER 1 Manufacturing Planning and Control 1

The MPC System Defined 2

Typical MPC Support Activities 2

An MPC System Framework 3

MPC System Activities 4

Matching the MPC System with the Needs of the Firm 7

An MPC Classification Schema 8

Evolution of the MPC System 9

The Changing Competitive World 10

Reacting to the Changes 11

Concluding Principles 11

APICS/CPIM Certification Questions 12

CHAPTER 2 Enterprise Resource Planning (ERP) 15What Is ERP? 16

Consistent Numbers 16

Software Imperatives 17

Routine Decision Making 18

Choosing ERP Software 18

How ERP Connects the Functional Units 19

Finance 20

Manufacturing and Logistics 21

Sales and Marketing 21

Human Resources 21

Customized Software 22

Data Integration 22How Manufacturing Planning and Control (MPC) Fits within ERP 23

Simplified Example 23

Supply Chain Planning with mySAP SCM 24

Supply Chain Execution with mySAP SCM 25

Supply Chain Collaboration with mySAP SCM 26

Supply Chain Coordination with mySAP SCM 27

Performance Metrics to Evaluate Integrated System Effectiveness 27

The "Functional Silo" Approach 28

Integrated Supply Chain Metrics 29

Calculating the Cash-to-Cash Time 32

What Is the Experience with ERP? 34

Eli Lilly and Company-Operational Standards for Manufacturing Excellence 34


APICS/CPIM Certification Questions38

CHAPTER 3 Demand Management 45Demand Management in MPC Systems 46

Demand Management and the MPC Environment 48

The Make-to-Stock (MTS) Environment 49

The Assemble-to-Order (ATO) Environment 50

The Make (Engineer )-to-Order (MTO) Environment 52

Communicating with Other MPC Modules and Customers 53

Manufacturing Planning and Control for Supply Chain ManagementF. Robert Jacobs, William L. Berry, D. Clay Whybark and Thomas E. Vollmann

ISBN: 9780071750318Table of Contents

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Sales and Operations Planning 53

Master Production Scheduling 54

Dealing with Customers on a Day-to-Day Basis 55

Information Use in Demand Management 56

Make-to-Knowledge 57

Data Capture and Monitoring 58

Customer Relationship Management 58

Outbound Product Flow 59Managing Demand 59

Organizing for Demand Management 60

Monitoring the Demand Management Systems 61

Balancing Supply and Demand 62

Collaborative Planning, Forecasting, and Replenishment (CPFR) 62

Nine-Step CPFR Process Model. 63

Steps 1 and 2 of the CPFR Model 64

Steps 3 through 9 in the CPFR Model 68



CHAPTER 4 Forecasting 75Providing Appropriate Forecast Information 75

Forecastingfor Strategic Business Planning 77Forecasting for Sales and Operations Planning 77

Forecasting for Master Production Scheduling and Control 78

Regression Analysis and Cyclic Decomposition Techniques 79

Example 80

Decomposition of a Time Series 83

Additive Seasonal Variation 84

Multiplicative Seasonal Variation 84

Seasonal Factor (or Index) 85

Example 85

Example 86

Decomposition Using Least Squares Regression 87

Error Range 90

Short - Term Forecasting Techniques 91

Moving-Average Forecasting 92

Exponential Smoothing Forecasting 94Evaluating Forecasts 96

Using the Forecasts 99

Considerations for Aggregating Forecasts 99

Pyramid Forecasting 101

Incorporating External Information 103



Case Study: Forecasting at Ross Products 111

CHAPTER 5 Sales and Operations Planning 115Sales and Operations Planning in the Firm 115

Sales and Operations Planning Fundamentals 116

Sales and Operations Planning and Management 117

Operations Planning and MPC Systems 119Payoffs 121

The Sales and Operations Planning Process 122

The Monthly Sales and Operations Planning Process 122

Sales and Operations Planning Displays 125

The Basic Trade-Offs 129

Economic Evaluation of Alternative Plans 133

The New Management Obligations 136

Top Management Role 136

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Functional Roles 137

Integrating Strategic Planning 141

Controlling the Operations Plan 142


References 143


Case Study: Delta Manufacturing Company's Integrated Sales and Operations Planning

Process 148

CHAPTER 6 Advanced Sales and Operations Planning 161Mathematical Programming Approaches 161

Linear Programming (LP) 162

Mixed Integer Programming 163

Company Example: Lawn King Inc. 166

Company Background 166

Deciding on a Planning Model 167

The Linear Programming Model 168

Developing the Planning Parameters 169

Solving the Linear Programming Model and Understanding the Results 173

Sales and Operations Planning Issues 175

Using Microsoft Excel Solver 176

Concluding Principles 179APICS/CPIM Certification Questions 180

CHAPTER 7 Master Production Scheduling 183The Master Production Scheduling (MPS) Activity 183

The MPS Is a Statement of Future Output 184

The Business Environment for the MPS 185

Linkages to Other Company Activities 187

Master Production Scheduling Techniques 189

The Time-Phased Record 189

Rolling through Time 190

Order Promising and Available-to-Promise (ATP) 192

Planning in an Assemble-to-Order Environment 196

Managing Using a Two-Level MPS 199

Master Production Schedule Stability 202

Freezing and Time Fencing 203

Managing the MPS 204

The Overstated MPS 204



Case Study: Customer Order Promising at Kirk Motors Ltd. . 209

Case Study: Hill-Rorn's Use of Planning Bills of Materials 211

CHAPTER 8 Material Requirements Planning 215Material Requirements Planning in Manufacturing

Planning and Control 215

Record Processing 217

The Basic MRP Record 217

Linking the MRP Records 227

Technical Issues 229Processing Frequency 230

Bucketless Systems 231

Lot Sizing 231

Safety Stock and Safety Lead Time 232

Low-Level Coding 233

Pegging 234

Firm Planned Orders 234

Service Parts 235

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Planning Horizon 235

Scheduled Receipts versus Planned Order Releases 235

Using the MRP System 236

The MRP Planner 236

Exception Codes 238

Bottom-up Replanning 239

An MRP System Output 241

System Dynamics 241Transactions during a Period 243

Rescheduling 244

Complex Transaction Processing 244

Procedural Inadequacies 246



CHAPTER 9 Advanced MRP 253Determining Manufacturing Order Quantities 253

Economic Order Quantities (EOQ) 255

Periodic Order Quantities (POQ) 256

Part Period Balancing (PPB) 257

Wagner- Whitin Algorithm 258

Simulation Experiments 259Buffering Concepts 260

Categories of Uncertainty 260

Safety Stock and Safety Lead Time 262

Safety Stock and Safety Lead Time Performance Comparisons 263

Scrap Allowances 265

Other Buffering Mechanisms 266

Nervousness 266

Sources of MRP System Nervousness 267

Reducing MRP System Nervousness 267



CHAPTER 10 Capacity Planning and Management 275The Role of Capacity Planning in MPC Systems 276

Hierarchy of Capacity Planning Decisions 276

Links to Other MPC System Modules 277

Capacity Planning and Control Techniques 279

Capacity Planning Using Overall Factors (CPOF) 279

Capacity Bills 281

Resource Profiles 283

Capacity Requirements Planning (CRP) 286

Scheduling Capacity and Materials Simultaneously 288

Finite Capacity Scheduling 289

Finite Scheduling with Product Structures: Using APS Systems 291

Management and Capacity Planning/Utilization 295

Capacity Monitoring with Input/Output Control 295

Managing Bottleneck Capacity 298

Capacity Planning in the MPC System 299

Choosing the Measure of Capacity 300Choice of a Specific Technique 302

Using the Capacity Plan 303



Case Study: Capacity Planning at Montell USA Inc 311

Case Study: Capacity Planning at Applicon 313

Case Study: Capacity Planning with APS at a Consumer Products Company 315

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CHAPTER 11 Production Activity Control 317A Framework for Production Activity Control 317

MPC System Linkages 318

The Linkages between MRP and PAC 319

Just-in- Time Effect on PAC 319

The Company Environment 320

Production Activity Control Techniques 321

Basic Shop-Floor Control Concepts 321Lead- Time Management 324

Gantt Charts 325

Priority Sequencing Rules 325

Theory of Constraints (TOC) Systems 327

Vendor Scheduling and Follow-up 339

The Internet and Vendor Scheduling 340



Case Study: Theory of Constraints (TOC) Scheduling at TOSOH 344

CHAPTER 12 Advanced Scheduling 349Basic Scheduling Research 349

The One-Machine Case 350

The Two-Machine Case 351Dispatching Approaches 352

Sequencing Rules 352

Advanced Procedures 355

Due Date-Setting Procedures 355

Dynamic Due Dates 358

Labor-Limited Systems 360

Group Scheduling and Transfer Batches 362



CHAPTER 13 Just-in-Time 367JIT in Manufacturing Planning and Control 367

Major Elements ofJust-in- Time 368

JIT's Impact on Manufacturing Planning and Control 370The Hidden Factory 371

JIT Building Blocks in MPC 372

A JIT Example 374

Leveling the Production 376

Pull System Introduction 379

Product Design 380

Process Design 382

Bill of Materials Implications 384

JIT Applications 385

Single-Card Kanban 385

Toyota 386

Nonrepetitive JIT 389

A Service-Enhanced View of Manufacturing 389

Flexible Systems 390

Simplified Systems and Routine Execution 390Joint-Firm JlT 391

The Basics 391

Tightly Coupled JIT Supply 392

Less Tightly Coupled JIT Supply 393

JIT Coordination through Hubs 393

Lessons 394

JIT Software 394

The MRP-JIT Separation 395

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JIT Planning and Execution 395

Managerial Implications 396

Information System Implications 396

Manufacturing Planning and Control 396

Scorekeeping 397

Pros and Cons 398



CHAPTER 14 Distribution Requirements Planning 403Distribution Requirements Planning in the Supply Chain 403

DRP and the MPC System Linkages 404

DRP and the Marketplace 406

DRP and Demand Management 407

DRP and Master Production Scheduling 409

DRP Techniques 409

The Basic DRP Record 410

Time-Phased Order Point (TPOP) 412

Linking Several Warehouse Records 413

Managing Day- to- Day Variations from Plan 416

Safety Stock in DRP 419

Management Issues with DRP 422Data Integrity and Completeness 422

Organizational Support 423

Problem Solving 425



Case Study: Abbott Laboratories 433

CHAPTER 15 Management of Supply Chain Logistics 441A Framework for Supply Chain Logistics 441

The Breadth of Supply Chain Logistics 442

The Total Cost Concept 443

Design, Operation, and Control Decisions 444

Supply Chain Logistical Elements 445

Transportation 445

Warehouses 447

Inventory 448

Warehouse Replenishment Systems 451

ROP/EOQ Systems 451

Base Stock Systems 452

Distribution Requirements Planning 454

Warehouse Location Analysis 454

Simulation 455

Heuristic Procedures 456

Programming Procedures 456

Vehicle Scheduling Analysis 458

Traveling Salesman Problem 458

Solution Methodologies 459

Customer Service Measurement 461

Make-to-Stock Companies 461Make-to-Order Companies 462



CHAPTER 16 Order Point Inventory Control Methods 469Basic Concepts 470

Independent- versus Dependent-Demand Items 470

Functions of Inventory 471

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Management Issues 472

Routine Inventory Decisions 472

Determining Inventory System Performance 473

Implementing Changes in Managing Inventory 474

Inventory-Related Costs 474

Order Preparation Costs 475

Inventory Carrying Costs 475

Shortage and Customer Service Costs 476Incremental Inventory Costs 476

An Example Cost Trade-Off 477

Economic Order Quantity Model. 478

Determining the EOQ 479

Order Timing Decisions 481

Using Safety Stock for Uncertainty 481

The Introduction of Safety Stock 482

Continuous Distributions 485

Probability of Stocking Out Criterion 485

Customer Service Criterion 487

Time Period Correction Factor 489

Forecast Error Distribution 490

Multi-Item Management 491



CHAPTER 17 Strategy and MPC System Design 497MPC Design Options 497

Master Production Scheduling Options 498

Detailed Material Planning Options 500

Shop- Floor System Options 501

Choosing the Options 503

Market Requirements 504

The Manufacturing Task 505

Manufacturing Process Design 505

MPC System Design 506

The Choices in Practice 511

Moog Inc., Space Products Division 512

Kawasaki U.S.A. 514Applicon 516

Integrating MRP and JIT 519

The Need to Integrate 519

Physical Changes That Support Integration 520

Some Techniques for Integrating MRP and JIT 520

Extending MPC Integration to Customers and Suppliers 521



APPENDIX A Answers to APICS/CPIM Certification Questions 525

APPENDIX B Areas of the Standard Normal Distribution 529

INDEX 531

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List of cases, figures, and tables 8Foreword John Elkington, SustainAbility 11Foreword Herman B. "Dutch" Leonard, Harvard Business School 13Preface 15

Introduction: Improving social and financial performance in global

corporations

19

Why it's important? 21

Managing corporate sustainability 23

The Corporate Sustainability Model 25

Background to this book 26

Making sustainability work 29

And finally 32

CHAPTER 1 A new framework for implementing corporate sustainability 33What is sustainability? 36

Identify your stakeholders 41

Be accountable 43

Corporate Sustainability Model 45

Summary 57

CHAPTER 2 Leadership and strategy for corporate sustainability 58Board commitment to sustainability 59

CEO commitment to sustainability 60

Leadership and global climate change 62

Developing a corporate sustainability strategy 64

Thinking globally 67

The role of corporate mission statement 71

Voluntary standards and codes of conduct 73

Working with government regulations 79Social investors and sustainability indices 81

Summary 84

CHAPTER 3 Organizing for Sustainability 85The challenge for global corporations 85

Involve the whole organization 90

Information flow and a seat of the table 93

Outsourcing 95

Philanthropy and collaboration wit NGOs 97

Summary 102

CHAPTER 4 Costing, capital investments, and the integration of social risk 103The capital investment decision process 103

Capital budgeting in medium and small enterprises 107

Costs in the decision-making process 108

Costing systems 110

Risk assessment 113

Summary 123

CHAPTER 5 Performance evaluation and reward systems 125Performance evaluation systems 126

Making Sustainability WorkMarc J. Epstein

ISBN: 9781576754863

Table of Contents

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Incentives and rewards 132

Strategic performance measurement systems 137

Shareholder value analysis 140

Summary 142

CHAPTER 6 The foundations for measuring social, environmental, and economic

impacts

143

The concept of value 145Methodologies for measuring social and environmental impacts 148

Methodologies for measuring social and environmental risks 156

Summary 162

CHAPTER 7 Implementing a social, environmental, and economic impact

measurement system

163

Mapping the actions that drive performance 164

Sustainability performance metrics 166

Engage with your stakeholders 178

Measuring reputation 180

Measuring risk 183

Measuring social and environmental impacts 190

Summary 196

CHAPTER 8 Improving corporate processes, products, and projects for corporate

sustainability

198

Organizational learning: the new battleground? 199

Improving sustainability performance 203

Reducing social and environmental impact 208

Involve the supply chain 213

Internal reporting 217

Summary 222

CHAPTER 9 External sustainability reporting and verification 223Global Reporting Initiative 224

Let everyone know how you're doing 226

External disclosure of sustainability measures 232

Verifying sustainability performance and reporting 236

Internal sustainability audits 237

External sustainability audits 240

Summary 247

CHAPTER 10 The benefits of sustainability for corporations and society 249Making sustainability work 250

Use the Corporate Sustainability Model to improve performance 255

Create opportunities for innovation 257

A last word 260

Endnotes 262Bibliography 270

Index 282

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Preface xviCHAPTER 1 OVERVIEW 1

1.0 Introduction 1

1.1 Understanding Project Management 2

1.2 Defining Project Success 7

1.3 The Project Manager-Line Manager Interface 8

1.4 Defining the Project Managers Role 12

1.5 Defining the Functional Managers Role 14

1.6 Defining the Functional Employees Role 17

1.7 Defining the Executives Role 17

1.8 Working with Executives 18

1.9 The Project Manager as the Planning Agent 19

1.10 Project Champions 20

1.11 The Downside of Project Management 21

1.12 Project-Driven versus Non-Project-Driven Organizations 22

1.13 Marketing in the Project-Driven Organization 24

1.14 Classification of Projects 26

1.15 Location of the Project Manager 27

1.16 Differing Views of Project Management 29

1.17 Concurrent Engineering: A Project Management Approach 30

1.18 Studying Tips for the PMI Project Management Certification Exam 30

Problems 33

Case Study

Williams Machine Tool Company 35

CHAPTER 2 PROJECT MANAGEMENT GROWTH: CONCEPTS AND DEFINITIONS 37

2.0 Introduction 37

2.1 General Systems Management 38

2.2 Project Management: 1945-1960 38



2.5 Resistance to Change 50

2.6 Systems, Programs, and Projects: A Definition 54

2.7 Product versus Project Management: A Definition 57

2.8 Maturity and Excellence: A Definition 58

2.9 Informal Project Management: A Definition 59

2.10 The Many Faces of Success 60

2.11 The Many Faces of Failure 63

2.12 The Stage-Gate Process 66

2.13 Project Life Cycles 68

2.14 Gate Review Meetings (Project Closure) 74

2.15 Project Management Methodologies: A Definition 74

Project ManagementHarold Kerzner

ISBN: 9780470278703

Table of Contents

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2.16 Organizational Change Management and Corporate Cultures 76

2.17 Project Management Intellectual Property 81

2.18 Systems Thinking 82


Problems 88

CHAPTER 3 ORGANIZATIONAL STRUCTURES 91

3.0 Introduction 91

3.1 Organizational Work Flow 94

3.2 Traditional (Classical) Organization 95

3.3 Developing Work Integration Positions 98

3.4 Line-Staff Organization (Project Coordinator) 102

3.5 Pure Product (Projectized) Organization 103

3.6 Matrix Organizational Form 106

3.7 Modification of Matrix Structures 113

3.8 The Strong, Weak, Balanced Matrix 117

3.9 Center for Project Management Expertise 117

3.10 Matrix Layering 1183.11 Selecting the Organizational Form 119

3.12 Structuring the Small Company 125

3.13 Strategic Business Unit (SBU) Project Management 128

3.14 Transitional Management 129


Problems 133

Case Study

Jones and Shephard Accountants, Inc 138

CHAPTER 4 ORGANIZING AND STAFFING THE PROJECT OFFICE AND TEAM 1414.0 Introduction 141

4.1 The Staffing Environment 142

4.2 Selecting the Project Manager: An Executive Decision 144

4.3 Skill Requirements for Project and Program Managers 148

4.4 Special Cases in Project Manager Selection 154

4.5 Selecting the Wrong Project Manager 154

4.6 Next Generation Project Managers 158

4.7 Duties and Job Descriptions 159

4.8 The Organizational Staffing Process 163

4.9 The Project Office 169

4.10 The Functional Team 174

4.11 The Project Organizational Chart 1754.12 Special Problems 178

4.13 Selecting the Project Management Implementation Team 180


Problems 185

CHAPTER 5 MANAGEMENT FUNCTIONS 191

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5.1 Controlling 193

5.2 Directing 193

5.3 Project Authority 198

5.4 Interpersonal Influences 206

5.5 Barriers to Project Team Development 209

5.6 Suggestions for Handling the Newly Formed Team 212

5.7 Team Building as an Ongoing Process 216

5.8 Dysfunctions of a Team 217

5.9 Leadership in a Project Environment 220

5.10 Life-Cycle Leadership 221

5.11 Organizational Impact 225

5.12 Employee-Manager Problems 227

5.13 Management Pitfalls 230

5.14 Communications 233

5.15 Project Review Meetings 242

5.16 Project Management Bottlenecks 243

5.17 Communication Traps 244

5.18 Proverbs and Laws 245

5.19 Human Behavior Education 248

5.20 Management Policies and Procedures 249


Problems 254

Case Studies

The Trophy Project 264

Leadership Effectiveness (A) 266

Leadership Effectiveness (B) 271

Motivational Questionnaire 277

CHAPTER 6 MANAGEMENT OF YOUR TIME AND STRESS 285


6.1 Understanding Time Management 286

6.2 Time Robbers 286

6.3 Time Management Forms 288

6.4 Effective Time Management 289

6.5 Stress and Burnout 290


Problems 293

Case StudyThe Reluctant Workers 294

CHAPTER 7 CONFLICTS 295


7.1 Objectives 296

7.2 The Conflict Environment 297

7.3 Conflict Resolution 300

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7.4 Understanding Superior, Subordinate, and Functional Conflicts 301

7.5 The Management of Conflicts 303

7.6 Conflict Resolution Modes 304


Problems 308

Case Studies

Facilities Scheduling at Mayer Manufacturing 311

Telestar International 312

Handling Conflict in Project Management 313

CHAPTER 8 SPECIAL TOPICS 319


8.1 Performance Measurement 320

8.2 Financial Compensation and Rewards 327

8.3 Critical issues with rewarding project teams 333

8.4 Effective Project Management in the Small Business Organization 336

8.5 Mega Projects 3388.6 Morality, Ethics, and the Corporate Culture 339

8.7 Professional Responsibilities 342

8.8 Internal Partnerships 345

8.9 External Partnerships 346

8.10 Training and Education 348

8.11 Integrated Product/Project Teams 350

8.12 Virtual Project Teams 352

8.13 Breakthrough Projects 354


Problems 361

CHAPTER 9 THE VARIABLES FOR SUCCESS 365


9.1 Predicting Project Success 366

9.2 Project Management Effectiveness 370

9.3 Expectations 371

9.4 Lessons Learned 372

9.5 Understanding Best Practices 373


Problems 381

CHAPTER 10 WORKING WITH EXECUTIVES 38310.0 Introduction 383

10.1 The Project Sponsor 384

10.2 Handling Disagreements with the Sponsor 393

10.3 The Collective Belief 394

10.4 The Exit Champion 395

10.5 The In-House Representatives 396


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Problems 398

Case Study

Corwin Corporation 401

CHAPTER 11 PLANNING 41111.0 Introduction 411

11.1 Validating the Assumptions 414

11.2 General Planning 415

11.3 Life-Cycle Phases 418

11.4 Proposal Preparation 421

11.5 Kickoff Meetings 421

11.6 Understanding Participants Roles 424

11.7 Project Planning 424

11.8 The Statement of Work 426

11.9 Project Specifications 431

11.10 Milestone Schedules 433

11.11 Work Breakdown Structure 43411.12 WBS Decomposition Problems 440

11.13 Role of the Executive in Project Selection 444

11.14 Role of the Executive in Planning 449

11.15 The Planning Cycle 449

11.16 Work Planning Authorization 450

11.17 Why Do Plans Fail? 451

11.18 Stopping Projects 452

11.19 Handling Project Phaseouts and Transfers 453

11.20 Detailed Schedules and Charts 454

11.21 Master Production Scheduling 457

11.22 Project Plan 459

11.23 Total Project Planning 46411.24 The Project Charter 468

11.25 Management Control 469

11.26 The Project Manager-Line Manager Interface 472

11.27 Fast-Tracking 474

11.28 Configuration Management 475

11.29 Enter price project Management Methodologies 476

11.30 Project Audits 479


Problems 483

CHAPTER 12 NETWORK SCHEDULING TECHNIQUES 49312.0 Introduction 493

12.1 Network Fundamentals 495

12.2 Graphical Evaluation and Review Technique (GERT) 500

12.3 Dependencies 501

12.4 Slack Time 502

12.5 Network Replanning 508

12.6 Estimating Activity Time 512

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12.7 Estimating Total Project Time 513

12.8 Total PERT/CPM Planning 514

12.9 Crash Times 516

12.10 PERT/CPM Problem Areas 519

12.11 Alternative PERT/CPM Models 522

12.12 Precedence Networks 523

12.13 Lag 526

12.14 Scheduling Problems 528

12.15 The Myths of Schedule Compression 528

12.16 Understanding Project Management Software 530

12.17 Software Features Offered 530

12.18 Software Classification 532

12.19 Implementation Problems 533

12.20 Critical Chain 534


Problems 539

Case StudyCrosby Manufacturing Corporation 552

CHAPTER 13 PROJECT GRAPHICS 555


13.1 Customer Reporting 556

13.2 Bar (Gantt) Chart 557

13.3 Other Conventional Presentation Techniques 564

13.4 Logic Diagrams/Networks 567


Problems 569

CHAPTER 14 PRICING AND ESTIMATING 571


14.1 Global Pricing Strategies 572

14.2 Types of Estimates 573

14.3 Pricing Process 576

14.4 Organizational Input Requirements 578

14.5 Labor Distributions 580

14.6 Overhead Rates 584

14.7 Materials/Support Costs 586

14.8 Pricing Out the Work 589

14.9 Smoothing Out Department Man-Hours 590

14.10 The Pricing Review Procedure 59214.11 Systems Pricing 594

14.12 Developing the Supporting/Backup Costs 595

14.13 The Low-Bidder Dilemma 599

14.14 Special Problems 599

14.15 Estimating Pitfalls 600

14.16 Estimating High-Risk Projects 601

14.17 Project Risks 602

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CHAPTER 17 RISK MANAGEMENT 741


17.1 Definition of Risk 743

17.2 Tolerance for Risk 745

17.3 Definition of Risk Management 746

17.4 Certainty, Risk, and Uncertainty 747

17.5 Risk Management Process 753

17.6 Plan Risk Management 753

17.7 Risk Identification 755

17.8 Risk Analysis 761

17.9 Qualitative Risk Analysis 766

17.10 Quantitative Risk Analysis 771

17.11 Probability Distributions and The Monte Carlo Process 772

17.12 Plan Risk Response 782

17.13 Monitoring and Control Risks 788

17.14 Some Implementation Considerations 788

17.15 The Use of Lessons Learned 790

17.16 Dependencies between Risks 793

17.17 The Impact of Risk Handling Measures 79817.18 Risk and Concurrent Engineering 801


Problems 808

Case Studies

Teloxy Engineering (A) 815

Teloxy Engineering (B) 815

CHAPTER 18 LEARNING CURVES 817


18.1 General Theory 81818.2 The Learning Curve Concept 818

18.3 Graphic Representation 820

18.4 Key Words Associated with Learning Curves 822

18.5 The Cumulative Average Curve 822

18.6 Sources of Experience 824

18.7 Developing Slope Measures 827

18.8 Unit Costs and Use of Midpoints 828

18.9 Selection of Learning Curves 829

18.10 Follow-on Orders 830

18.11 Manufacturing Breaks 830

18.12 Learning Curve Limitations 832

18.13 Prices and Experience 83218.14 Competitive Weapon 835


Problems 836

CHAPTER 19 CONTRACT MANAGEMENT 839


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19.1 Procurement 840

19.2 Plan Procurement 842

19.3 Conducting the Procurements 845

19.4 Conduct Procurements Request Seller Responses 847

19.5 Conduct Procurements

129507309-Key-Apics-Cpim-References-2013-130101

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