July 30, 2019

Management of Industry 4.0 Transformation - 2019 - Bulletin Board


The Internet of Things Needs a Business Model. Here It Is
Harvard Business School Working Knowlege
18 JUL 2019

Jul 2, 2019,
What Your Board Needs To Know About Tech Advancement In Digital Transformation


December 2018

Technological Developments in Industry 4.0 for Business Applications
Google Book Link, 2018 Book

November 2018

What Will Spark The Blockchain Explosion?

Research firm IDC predicts that worldwide spending on blockchain solutions will reach $2.1 billion in 2018—more than double the $945 million spent in 2017—and will reach $9.2 billion in 2021.


Magnetic Sensors Market Estimated To Grow USD 4,680.3 Million by 2026

January - News, Events and Information

Drivers That  Facilitate Transition to Industry 4.0 Production Systems at National Level
Industry 4.0 - IIoT Technology - Industrial Engineering - Productivity Science

Industrial Engineering 4.0 - IE in the Era of Industry 4.0 - Blog Book

Industry 4.0 - A Note for Industrial Engineers for Industrial Engineering 4.0 (IE 4.0)

Autonomous Robots - A Note for Industrial Engineers for Industrial Engineering 4.0 (IE 4.0)

Book Information

Enhancing Knowledge Discovery and Innovation in the Digital Era

Lytras, Miltiadis D., Daniela, Linda, Visvizi, Anna
IGI Global, 19-Jan-2018 - Education - 363 pages

With the dawn of electronic databases, information technologies, and the Internet, organizations, now more than ever, have easy access to all the knowledge they need to conduct their business. However, utilizing and detecting the beneficial information can pose as a challenge.

Enhancing Knowledge Discovery and Innovation in the Digital Era is a vibrant reference source on the latest research on student education, open information, technology enhanced learning (TEL), and student outcomes. Featuring widespread coverage across a range of applicable perspectives and topics, such as engineering education, data mining, and 3D printing, this book is ideally designed for professionals, upper-level students, and academics seeking current research on knowledge management and innovation networks.


Advancing Industry 4.0 with AI and IoT - IBM Watson Presentation

IBM Watson Internet of Things October 2017


The Fourth Industrial Revolution
Klaus Schwab
Penguin UK, 03-Jan-2017 - Business & Economics - 192 pages

The founder and executive chairman of the World Economic Forum on how the impending technological revolution will change our lives

We are on the brink of the Fourth Industrial Revolution. And this one will be unlike any other in human history.

Characterized by new technologies fusing the physical, digital and biological worlds, the Fourth Industrial Revolution will impact all disciplines, economies and industries - and it will do so at an unprecedented rate. World Economic Forum data predicts that by 2025 we will see: commercial use of nanomaterials 200 times stronger than steel and a million times thinner than human hair; the first transplant of a 3D-printed liver; 10% of all cars on US roads being driverless; and much more besides.

In The Fourth Industrial Revolution, Schwab outlines the key technologies driving this revolution, discusses the major impacts on governments, businesses, civil society and individuals, and offers bold ideas for what can be done to shape a better future for all.


Updated 2019 - 31 July 2019
2018 - 2 December 2018,  19 November 2018,  16 September 2018, 27 January 2018, 19 January 2018

Theory M and Theory N on Managers and Management

30 July 2019

Theory M: There are many persons who are looking for managers and want to work under them. They are looking for  persons capable of building an economic, political, or social organization and want to join him as members working under their direction.

Theory N: No body wants a manager. Hence it is difficult to manage people in organizations.

Management education has to promote Theory M. Even managing persons who do not want to be managed is a management problem for the society. It has to do its best to deal with people who break society norms, values and prescriptions and laws.

July 28, 2019

Business Research Methods - Introduction

Business Research Methods: An Introduction Business Research Methods

Learning Objectives

Upon completion of this chapter, you will be able to:
Understand the difference between basic and applied research
Define business research
Understand the roadmap to learn business research methods
Learn how business research methods can be used as a decisionmaking tool by the managers
Understand the business research process
Get a preliminary idea about the use of software for datapreparation and data analysis

 Business researchers systematically collect, compile, analyze, and interpret data to provide quality information based on  which a decision maker will be able to take a decision in an optimum manner.
 Conducting research to deal with any problem is a scientific, systematic, and interlinked exercise, which requires sound experience and knowledge.

Difference Between Basic and Applied Research
 Basic research is generally not related to a specific problem and its findings cannot be immediately applied.
 Applied research directly addresses the problem at hand. Applied research is launched by the firm, agency, or individual facing a specific problem. Applied research is done normally to operationalize the discovery of the basic research in a specific firm or industry.

Defining Business Research
 Business research method is a systematic and scientific procedure of data collection, compilation, analysis,  interpretation, and implication pertaining to any business problem.
 Business research is defined as the systematic and objective process of gathering, recording, and analyzing data for aid in making business decisions (Zikmund, 2007).
 Cooper and Schindler (2009) define business research as a systematic enquiry that provides information to guide managerial decisions.

Roadmap to Learn Business Research Methods 

Business Research Methods: A Decision Making Tool in the Hands of Management
 Decision making is always a crucial part of any organizational functioning.
 In the field of business research, this valuable information is obtained using the following interrelated steps:
1. Problem or opportunity identification
2. Diagnosing the problem or opportunity
3. Executing business research to explore the solutions
4. Implement presented solutions
5. Evaluate the effectiveness of decision making

1. Problem or Opportunity Identification
 Any delay in problem identification and solution implementation;  and the opportunity identification and encashment may become harmful to the organization.

2. Diagnosing the Problem or Opportunity
 Organizations present these problems or opportunity scenarios to business researchers.
 Business researchers actually diagnose the problem or opportunity. State the problem in sentences and words that facilitate business research.
 Diagnosing involves exploring the situation to have a better insight about the situation.

3. Executing Business Research to Explore the Solution
 After the identification and diagnosis of the problem, business researchers systematically conduct research to present a solution.

4. Implement Presented Solution
 Business researchers conduct research in consultation with the  decision makers of the concerned organization. The findings are presented to the decision maker and he or she analyzes these findings in the light of his or her decision range.

5. Evaluate the Effectiveness of Decision Making
 After taking a decision, its effectiveness is examined. This is sometimes referred to as evaluation research.

Use of Software in Data Preparation and Analysis
 Nowadays, standard software is available to  deal with data preparation and analysis and the analysis will be ineffective and inefficient if done without  the use of existing statistical software.
 Three widely used software programs:  MS Excel (2007), Minitab®, and SPSS (17).

Use of Software in Data Preparation and Analysis
 Excel 2007.xlsx
 SPPS 17.sav
 Minitab 15.MPJ 

July 27, 2019

Functionality Management in Product Design

Supply Chain Development for Lean Enterprises

Supply Chain Development for the Lean Enterprise: Interorganizational Cost Management

Robin Cooper
Routledge, 06-Dec-2017 - Business & Economics - 544 pages

Four questions determine whether a company is using interorganizational cost management.

Does your firm set specific cost-reduction objectives for its suppliers?

Does your firm help its customers and/or suppliers find ways to achieve their cost-education objectives?

Does your firm take into account the profitability of its suppliers when negotiating component pricing with them?

Is your firm continuously making its buyer-supplier interfaces more efficient?

If the answer to any of these questions is ""no"", your firm risks introducing products that cost too much or are not competitive. The full potential of the supply network can be realized only when the entire supply chain adopts interorganizational cost management practices.

Competitive pressure has led many firms to try to increase the efficiency of supplier firms through interorganizational cost management systems, a structured approach to coordinating the activities of firms in a supplier network to reduce the total costs in the network.

It is particularly important to lean enterprises for two reasons:

Lean enterprises typically outsource more of the added value of their products than their mass producer counterparts.

Lean enterprises usually compete more aggressively and must manage costs more effectively.
Interorganizational cost management can reduce costs in three ways: through product design, through product manufacture and through cooperative approaches between buyers and suppliers to build smoother interfaces.

However, more than just cost management must cross interorganizational boundaries. Suppliers are also a major source of innovation for lean enterprises. Successful supplier networks encourage every firm in the network to innovate and compete more aggressively.

Read this book to learn to manage the supply chain to forge competitive advantage while reducing costs.


July 26, 2019

Supply Chain Management - Coordination

Supply Chain Management Revision Article Series

Supply Chain Management - Coordination - Topics

1. Lack of Supply Chain Coordination and the Bullwhip Effect
2. Other Effects of Lack of Supply Chain Coordination on Supply Chain Performance
3. Obstacles to Coordination in a Supply Chain
4. Managerial Levers to Achieve Coordination
5. Building Strategic Partnerships and Trust Within a Supply Chain
6. Achieving Coordination in Practice

Coordination implies actions by various agents in the supply chain that are aimed at increase in total supply chain profits. It also implies that supply chain agents avoid actions that improve their local profits but hurt total profits. Hence supply chain coordination principles requires each stage of the supply chain to take into account the impact its actions have on other stages.

Lack of Supply Chain Coordination and the Bullwhip Effect

A lack of coordination creates "bullwhip effect" in the supply chain. Due to this effect, fluctuations in sales become larger and larger fluctuations in orders at higher stages in the supply chain. This leads to situations wherein large shortages or large surplus capacities are felt in the supply chain cyclically.

Bullwhip effect reduces the profit of a supply chain by making it more expensive to provide a given level of product availability.

In what way bullwhip effect increases costs for the supply chain?

1. In increases manufacturing cost.
2. It increases inventory cost.
3. It increases replenishment lead times.
4. Increases transportation cost.
5. Increases labor cost in shipping and receiving.
    All items of cost increase because excess capacity has to be installed to take care of unnecessary peaks in demand.
6. It reduces product availability due to some orders not getting filled when demand peaks. So some retail outlets may go out of stock.
7. Leads to problems of relationships - every body claims that they have done right. But still there is problem in the supply chain either as unfilled orders or excess inventory not having the order from down stream side.

The main reasons for coordination problems in supply chain are distributed owners of various stages of production & distribution, and product variety.

The fundamental challenge is for supply chains to achieve coordination in spite of multiple ownership and increased product variety.

Obstacles to Coordination in a Supply Chain

What are Obstacles to Coordination in a Supply Chain?

Incentive obstacles
      If a transport manager's incentive compensation is based on average transport cost, he tries to optimize his incentive objective without considering its effect on other supply chain stages.

      If sales force has incentive for selling to dealers, they push sales to dealers even though there is no sale in the period to customers. This will reduce orders from the dealers in the subsequent periods.

Information processing obstacles

       If each supply stage depends on orders from its previous stage without considering the ultimate sales to the consumer bull whip effect will appear.
Operational obstacles

        Economic batch quantities result in large lot sizes which are released periodically.

Pricing obstacles

        Quantity discounts and sales promotion discounts to dealers create distortions in orders.

Behavioral obstacles

         Each stage of the supply chain thinks locally and it unable to see the effect on the total supply chain and other supply chain stages.

Managerial Levers to Improve Coordination in Supply Chains

Aligning goals and incentives
Improving information accuracy
Improving operational accuracy
Designing pricing strategies to stabilize orders
Building Partnerships and trust
(Source: Chopra and Meindl)

Building Strategic Partnerships and Trust within a Supply Chain

Mutual Trust is a belief that each agent or party is interested in the other's welfare and would not take actions without considering their impact on the other stage.

Cooperation and trust in a supply chain relationship leads to the following benefits:

1. They are more likely to take  the other party's objectives into consideration when making decisions.
2. Sharing of information is natural between  parties that trust each other.
3. Operational improvements are easier to implement.
4. Pricing schemes are easier to design if both parties are aiming for common good.
5. Supply chain productivity increases because inspection can be avoided at many steps.

The key steps to be taken in the design of partnership are:

1. Assessing the mutual benefit of the partnership.
2. Identifying operations roles for each party in the partnership.
3. Creating effective contracts
4. Designing effective conflict resolution mechanism

Achieving Coordination in Practice

1. Quantify the bullwhip effect
2. Get top management commitment for coordination
3. Devote resources to coordination
4. Focus on communication with others stages
5. Try to achieve coordination in the entire supply chain network
6. Use technology to improve connectivity in the supply chain
7. Share the benefits of coordination equitably.

Supply Chain Management - Collaborative Planning, Forecasting and Replenishment (CPFR)


Sunil Chopra and Peter Meindl, Supply Chain Management: Strategy, Planning and Operations, Prentice Hall, 2001.

Supply Chain Management: Chopra and Meindl - Book Information and Review

What Drives Supply Chain Behavior? HBS Working Knowledge article June 2004

Articles for Further Study - Coordination in Supply Chain

Ring, P.S., and A.H. Van de Ven, "Developmental Processes of Cooperative Interorganizational Relationships," Academy of Management Review, 19 (1994).

Kumar, N., "The Power of Trust in Manufacturer-Retailer Relationships," Harvard Business Review (November-Dec 1996), 92-106

Child, John, and David Faulkner, Strategies of Cooperation, Oxford, England, Oxford University Press, 1998.

Mariotti, John L., "The Trust Factor in Supply Chain Management," Supply Chain Management Review (Spring 1999), 70-77.

Bowersox, Donald J., David J. Closs, and Theodore P. Stank, "21st Century Logistics: Making Supply Chain Integration a Reality," Supply Chain Management Review (Fall 1999); 44-49.

Balakrishnan, Anantaram, and Geunes, Joseph, "Collaboration and Coordination in Supply Chain Management and E-Commerce," Production and Operations Management, Spring 2004.

Crum, Colleen, and George E. Palmatier, "Demand Collaboration: What is Holding Us Back?" Supply Chain Management Review (Jan-Feb 2004); 54-61.

Supply Chain Coordination with Revenue-Sharing Contracts: A Missed Opportunity?

Fugate, Brian, Sahin, Funda,and Mentzer, John T., "SUPPLY CHAIN MANAGEMENT COORDINATION MECHANISMS," Journal of Business Logistics, 2006


Qing Zhang, Essentials for Information Coordination in Supply Chain Systems, Asian Social Science, October 2008.
Presentation Slides

Partnerships in the Supply Chain

Links to be given to above two references

Supply Chain Management - Revision Notes of All Chapters based on Chopra and Meindl's Book

Knol Number - 1381

Updated 28 July 2019,  2 May 2019. 11 April 2015, 21 March 2013

July 22, 2019

The Nature and Purpose of Planning - Review Notes

The Nature and Purpose of Planning

Every manager has to select objectives for his enterprise, department, section, unit or group. Based on the objectives he has to set goals for a specific period and make plans that contain ways of reaching the set goals. Planning in general is explained as generating alternatives and selection of the most suitable alternatives from among them for solving a problem. The problem in this context has positive connotation also. How to achieve growth is a problem which has a positive implication only.

Therefore planning is deciding in advance what to do, how to do it, when to do it, and who is to it.

Essential nature of planning can be described by four major aspects:
1. Its contribution to objectives.
2. Its primacy among the manager's tasks.
3. Its pervasiveness
4. The efficiency of plans

1. Its contribution to objectives (Plans must have effectiveness).

Every major plan and its supporting plans should contribute to the accomplishment of the purpose and objectives of the enterprise. It means plans have to be effective.They have to deliver the required output. Organized enterprise exists for the accomplishment of group purpose through deliberate cooperation that is voluntary involvement of people in the enterprise for achieving the objectives and sharing the rewards.

2. Its primacy among the manager's tasks.

Managerial operations of organizing, staffing ( resourcing), leading (executing) and controlling are done to accomplish the objective through plans. Hence planning logically precedes the execution of all the other managerial functions.  Planning is primary task of managers.

3. Its pervasiveness

All managers from the first line supervisor to the chief executive officer of a company are to do planning. At lower levels we may term it as operational planning and at higher levels we may term it as strategic planning. The amount of time spent in planning may vary with the level. CEOs may spend more time planning and organizing and departmental heads may be there to take care of resource acquisition, leading people in their departments and controlling the department performance. But policy making and administering policies can be differentiated. Some managers at higher levels may be more involved in policy making and some other managers are more involved in taking decisions based on the policy.

4. The efficiency of plans

The effectiveness of a plan pertains to the degree to which it achieves the purpose or objectives. The efficiency of the plan refers to the contribution to the objectives, offset by the costs and other factors required to formulate and operate it. More simply stated if sales is taken as an objective, the total sales revenue is the contribution of the plan to the objective and the profit which is the difference between sales revenue and total cost is the efficiency. A plan may enhance the attainment of an objective, say it can get more sales but at an unnecessarily high cost. Hence as a part of planning, efficiency of the plan has to be analysed and improved. Industrial engineering discipline focuses  primarily on  the efficiency of engineering activities and plans and it was extended to other areas like business processes and managerial processes in industrial and commercial concerns. Industrial engineering was also embraced by hospitals in a big way.

Koontz and O'Donnell specially observed that efficiency aspect has to be applied not only in money terms to various resources used in production and service activities but also to the individual and group satisfaction of human resources.

Types of Plans


Objectives are the ends toward which the activity of an organization is aimed.


Goals represent the rate at which objectives of an organization are achieved. Goals quantify the objective with a time frame. For example, if a country has the objective of switching to unconventional sources of energy, the goals could specified as so many gigawatts of energy by end of year 2012.


Values represent stable long lasting belief about what is important. They are evaluative standards that help us define what is right or wrong, good or bad, in the world. Some organizations declare their values and make them known to all. They are also subject to the planning process.

Grand strategies

According to R.N. Anthony strategies result from the processes  of deciding "on objectives of the organization", "on changes in these objectives", "on the resources used to attain these objectives", and "on policies that are to govern the acquisition, use, and disposition of these resources." The main meaning and usefulness of grand strategies are to describe a type of planning program of a broad nature which gives over-all direction to the other and more detailed programs of an enterprise. The emphasis in grand strategies is on the pattern of basic objectives of the organization and goals and the major policies and plans for achieving them.

The purpose of grand strategy of an enterprise is to determine and communicate, through a system of major objectives and policies, a picture of what kind of enterprise is envisioned. A framework is given in the grand strategy which is a useful plan to guide company thinking.

Koontz and O'Donnell give the opinion that strategy is not a new type of plan actually. It is a program. But the concept of strategy is practically very useful and its importance in guiding detailed planning justify its separation as a different type of plan.

Competitive strategies

Competition exists where two or more persons strive for the same goals under conditions in which not all can gain from them. Competitive strategy is a plan made in the light of the plans of a competitor. The plans are made either with an estimate of plans of competitor or plan is a reaction to the strategic move of competitor either announced or executed.  To estimate the competitor's plans, a manager has to put himself in his competitor's place and develop a set of plans for his competitor, using the knowledge he has regarding the objectives and the circumstances in which the competitor is operating. No doubt some industrial espionage will be tried to get an understanding of competitor's plans.


Policies are general statements which guide or channel thinking in decision making of subordinates. Policies delimit an area within which a decision is to be made and assure that the decision will be consistent with and contribute to objectives. Policies tend to predecide issues, and avoid repeated analysis. Polices are based on analysis and once pronounced avoid repeated analysis.


Procedures are plans and they establish a method of handling activities. They specify a chronological sequence of required actions.


A rule is the simplest type of plan. A rule requires that a specific and definite action be taken or not taken with respect to a situation.


A program is a complex of policies, procedures, rules, task assignments assembled to carry out a given course of action. A program is supported by necessary capital and operating budgets.


A budget is a plan. It is a statement of expected results expressed in numerical terms.


Objectives are referred to some authors with different terms. Purposes, missions, goals or targets are the terms used to refer to objectives. Mission is usually used in military enterprises and occasionally in churches and government. "Goals" and "targets' often carry the notation of specific quantitative end. Sometimes the end can be qualitative also. Koontz and O'Donnel used the chapter on objectives to discuss all the various types of terms used in relation to objectives.

Social objectives

It is interesting to note that the discussion of objectives is started with the section social objectives.The objectives of a private enterprise have to be in harmony with the ends for which a society is organized. Whenever the actions and objectives of a private enterprise are thought be against the objectives of the society, legal action is initiated to regulate it or suppress it.

United States has a statement of nation purpose set forth in the Declaration of Independence. The preamble of the Constitution of USA states:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

All subordinate enterprises in USA, be it a school, church, hospital, government agency or business firm should have objectives which are harmonious with and supportive to national objectives.

Enterprise Objectives

The plural form is used to stress the fact that enterprises have mutliple objectives. Drucker asserted that there are eight areas in which objectives of performance and results have to set by all enterprises. They are: Market Standing, Innovation, Productivity, Physical and Financial Resources, Profitability, Manager Performance and Development, Worker Performance and Development, and Public Responsibility.

For each area or function that company identifies as necessary for survival there has to be objective.

Principles to be followed in setting objectives:

1. Objectives have to be practically achievable. The organization must be able to do some thing to achieve each objective that it has set.
2. The objectives have to support the enterprise purpose, its contribution to the customer.
3. If long range objectives and short range objectives are specified, there must be integral relationship between them.
4. At various points of time prioritization among objectives may be required.
5. Objectives have to be specific and actionable and verifiable
6. Objectives have to planned. There are the result of planning process or activity.
7. Objectives have to be communicated to those charged with building plans to meet them. 

These different types of plans once again described in details in later articles which are summaries chapters written on them.

It is important to remember that planning is rational approach to goal achievement.

Another interesting question is what should be the planning period.

Koontz and O'Donnell advise us to use commitment principle to answer that. The principle says logical planning encompasses a future period of time necessary to fulfill, through a series of actions, the commitments involved in decisions made today.

They clarify saying that long range planning is not really planning for future decisions, but visualising the future impact of today's decisions and satisfying ourselves that impact contribute to the achievement of our objectives. A plan is actually a decision. Certain commitments of resources can only be recovered over  a long period of time and such decisions require long range planning. Certain commitments are recovered quickly and can be reversed quickly also and short range planning is sufficient for them.

Whenever a long term plan exists, short range plans must be in alignment with them. Therefore, all managers must be informed of the long range plans adequately.

Related topics

The Nature and Purpose of Planning
The Nature of Organizing
Resourcing - A Function of Management
Leading - Introduction
Planning and Execution - Theory and Practice
The System and Process of Controlling

Strategy in Various Functional Management Areas

Marketing Strategy - Differentiating and Positioning the Market Offering
Supply Chain Strategy: Achieving Strategic Fit and Scope

Updated on 23 July 2019

2 May 2019, 27 Jan 2016, 16 Jan 2014, 22 July 2014, 12 Dec 2011

July 21, 2019

Operations Management - Processes and Supply Chains - Karjewski et al. 12th Ed. Content


Preface xv


Disney 1
Role of Operations in an Organization 3
Historical Evolution and Perspectives 4
A Process View 5
How Processes Work 5
Nested Processes 5
Service and Manufacturing Processes 6
A Supply Chain View 7
Core Processes 7
Support Processes 7
Supply Chain Processes 8
Operations Strategy 9
Corporate Strategy 9
Market Analysis 11
Competitive Priorities and Capabilities 12
Managerial Practice 1.1 Zara 13
Order Winners and Qualifiers 14
Using Competitive Priorities: An Airline Example 15
Identifying Gaps between Competitive Priorities
and Capabilities 15
Addressing the Trends and Challenges in Operations
Management 17
Productivity Improvement 17
Global Competition 18
Ethical, Workforce Diversity, and Environmental
Issues 20
The Internet of Things 21
Developing Skills for Your Career 22
Adding Value with Process Innovation 23
Learning Goals in Review 24
MyLab Operations Management Resources 24
Key Equations 25
Key Terms 25
Solved Problems 25
Discussion Questions 26
Problems 27
Active Model Exercise 29
Video Case Using Operations to Create Value at Crayola 29
Case Chad’s Creative Concepts 30
SUPPLEMENT A Decision Making 31
Break-Even Analysis 31
Evaluating Services or Products 32
Evaluating Processes 34
Preference Matrix 35
Decision Theory 36
Decision Making under Certainty 37
Decision Making under Uncertainty 37
Decision Making under Risk 39
Decision Trees 39
Learning Goals in Review 41
MyLab Operations Management Resources 41
Key Equations 42
Key Terms 42
Solved Problems 42
Problems 44

PART 1 Managing Processes 49


CVS Pharmacy 49
Process Structure in Services 53
Customer-Contact Matrix 53
Service Process Structuring 54
Process Structure in Manufacturing 55
Product-Process Matrix 55
Manufacturing Process Structuring 55
Production and Inventory Strategies 57
Layout 57
Process Strategy Decisions 58
Customer Involvement 58
Resource Flexibility 58
Capital Intensity 59
Strategic Fit 61
Decision Patterns for Service Processes 61
Decision Patterns for Manufacturing Processes 61
Gaining Focus 62
Managerial Practice 2.1 Plants-within-a-Plant at Ford
Camacari 63
Strategies for Change 64
Process Reengineering 64
Process Improvement 64
Process Analysis 65
Defining, Measuring, and Analyzing the Process 66
Flowcharts 66
Work Measurement Techniques 68
Process Charts 70
Data Analysis Tools 72
Redesigning and Managing Process Improvements 77
Questioning and Brainstorming 77
Benchmarking 78
Implementing 78
Learning Goals in Review 80
MyLab Operations Management Resources 80
Key Terms 81
Solved Problems 81
Discussion Questions 84
Problems 85
Active Model Exercise 92
Video Case Process Analysis at Starwood 93
Case Custom Molds, Inc. 94
Case José’s Authentic Mexican Restaurant 96


QVC 97
Costs of Quality 99
Prevention Costs 99
Appraisal Costs 100
Internal Failure Costs 100
External Failure Costs 100
Ethical Failure Costs 100
Total Quality Management and Six Sigma 101
Total Quality Management 101
Managerial Practice 3.1 Improving Quality Through
Employee Involvement at Santa Cruz Guitar Company 103
Six Sigma 104
Acceptance Sampling 105
Statistical Process Control 106
Variation of Outputs 106
Control Charts 108
Control Charts for Variables 110
Control Charts for Attributes 114
Process Capability 117
Defining Process Capability 117
Using Continuous Improvement to Determine
the Capability of a Process 118
International Quality Documentation Standards and
Awards 119
The ISO 9001:2008 Documentation Standards 120
Malcolm Baldrige Performance Excellence
Program 120
Systems Approach To Total Quality Management 120
Learning Goals in Review 121
MyLab Operations Management Resources 121
Key Equations 122
Key Terms 123
Solved Problems 123
Discussion Questions 126
Problems 126
Active Model Exercise 134
Video Case Quality at Axon 134
Experiential Learning 3.1 Statistical Process Control with a Coin Catapult 136

Tesla Motors 137
Planning Long-Term Capacity 139
Measures of Capacity and Utilization 140
Economies of Scale 140
Diseconomies of Scale 141
Capacity Timing and Sizing Strategies 141
Sizing Capacity Cushions 141
Timing and Sizing Expansion 142
Linking Capacity and Other Decisions 143
A Systematic Approach to Long-Term Capacity
Decisions 143
Step 1: Estimate Capacity Requirements 143
Step 2: Identify Gaps 145
Step 3: Develop Alternatives 145
Step 4: Evaluate the Alternatives 146
Tools for Capacity Planning 147
Managerial Practice 4.1 Capacity Planning at PacifiCorp 147
Waiting-Line Models 148
Simulation 149
Decision Trees 149
Learning Goals in Review 149
MyLab Operations Management Resources 149
Key Equations 150
Key Terms 150
Solved Problems 150
Discussion Questions 152
Problems 152
Video Case Gate Turnaround at Southwest Airlines 158
Case Fitness Plus, Part A 159
SUPPLEMENT B Waiting Lines 161
Structure of Waiting-Line Problems 162
Customer Population 162
The Service System 163
Priority Rule 164
Probability Distributions 165
Arrival Distribution 165
Service Time Distribution 165
Using Waiting-Line Models to Analyze Operations 166
Single-Server Model 167
Multiple-Server Model 169
Little’s Law 170
Finite-Source Model 171
Waiting Lines and Simulation 172
SimQuick 172
Decision Areas for Management 173
Learning Goals in Review 174
MyLab Operations Management Resources 174
Key Equations 174
Key Terms 175
Solved Problem 175
Problems 176

Microsoft Corporation 179
The Theory of Constraints 182
Key Principles of the TOC 182
Managing Bottlenecks in Service Processes 183
Managing Bottlenecks in Manufacturing Processes 185
Identifying Bottlenecks 185
Relieving Bottlenecks 187
Drum-Buffer-Rope Systems 187
Applying the Theory of Constraints to Product
Mix Decisions 188
Managing Constraints in Line Processes 190
Line Balancing 190
Rebalancing the Assembly Line 195
Managerial Practice 5.1 Assembly Line Balancing
at Chrysler 195
Managerial Considerations 195
Learning Goals in Review 196
MyLab Operations Management Resources 196
Key Equations 196
Key Terms 197
Solved Problems 197
Discussion Questions 199
Problems 199
Experiential Learning 5.1 Min-Yo Garment Company 206
Video Case Constraint Management at Southwest Airlines 210


ALDI 211
Continuous Improvement Using A Lean Systems
Approach 213
Strategic Characteristics of Lean Systems 215
Supply Chain Considerations in Lean Systems 215
Process Considerations in Lean Systems 216
Managerial Practice 6.1 Alcoa 218
Toyota Production System 221
Designing Lean System Layouts 222
One Worker, Multiple Machines 222
Group Technology 223
The Kanban System 224
General Operating Rules 225
Determining the Number of Containers 225
Other Kanban Signals 226
Value Stream Mapping 227
Current State Map 227
Future State Map 230
Operational Benefits and Implementation Issues 232
Organizational Considerations 232
Process Considerations 233
Inventory and Scheduling 233
Learning Goals in Review 234
MyLab Operations Management Resources 234
Key Equations 234
Key Terms 234
Solved Problems 234
Discussion Questions 237
Problems 237
Video Case Lean Systems at Autoliv 241
Case Copper Kettle Catering 242

Burj Khalifa 243
Defining and Organizing Projects 247
Defining the Scope and Objectives of a Project 247
Selecting the Project Manager and Team 247
Recognizing Organizational Structure 247
Constructing Project Networks 248
Defining the Work Breakdown Structure 248
Diagramming the Network 249
Developing the Project Schedule 251
Critical Path 251
Project Schedule 252
Activity Slack 254
Analyzing Cost–Time Trade-Offs 255
Cost to Crash 255
Minimizing Costs 256
Assessing and Analyzing Risks 259
Risk-Management Plans 259
Managerial Practice 7.1 San Francisco—Oakland Bay
Bridge 260
Statistical Analysis 261
Analyzing Probabilities 263
Near-Critical Paths 264
Monitoring and Controlling Projects 265
Monitoring Project Status 265
Monitoring Project Resources 265
Controlling Projects 266
Learning Goals in Review 266
MyLab Operations Management Resources 266
Key Equations 267
Key Terms 267
Solved Problems 268
Discussion Questions 272
Problems 272
Active Model Exercise 279
Video Case Project Management at Choice Hotels
International 280
Case The Pert Mustang 281

PART 2 Managing Customer Demand 283


Kimberly-Clark 283
Managing Demand 286
Demand Patterns 286
Demand Management Options 286
Key Decisions on Making Forecasts 288
Deciding What to Forecast 288
Choosing the Type of Forecasting Technique 289
Forecast Error 289
Cumulative Sum of Forecast Errors 289
Dispersion of Forecast Errors 290
Mean Absolute Percent Error 291
Computer Support 292
Judgment Methods 292
Causal Methods: Linear Regression 293
Time-Series Methods 295
Naïve Forecast 295
Horizontal Patterns: Estimating the Average 295
Trend Patterns: Using Regression 298
Seasonal Patterns: Using Seasonal Factors 300
Criteria for Selecting Time-Series Methods 302
Insights into Effective Demand Forecasting 303
Big Data 304
Managerial Practice 8.1 Big Data and Health Care
Forecasting 305
A Typical Forecasting Process 305
Using Multiple Forecasting Methods 306
Adding Collaboration to the Process 307
Forecasting as a Nested Process 308
Learning Goals in Review 308
MyLab Operations Management Resources 308
Key Equations 309
Key Terms 310
Solved Problems 310
Discussion Questions 314
Problems 315
Video Case Forecasting and Supply Chain Management at
Deckers Outdoor Corporation 323
Case Yankee Fork and Hoe Company 324
Experiential Learning 8.1 Forecasting a Vital Energy Statistic 326


Ford’s Smart Inventory Management System (SIMS) 327
Inventory Trade-offs 329
Pressures for Small Inventories 330
Pressures for Large Inventories 330
Managerial Practice 9.1 Inventory Management at Netflix 331
Types of Inventory 332
Accounting Inventories 332
Operational Inventories 333
Inventory Reduction Tactics 335
Cycle Inventory 335
Safety Stock Inventory 335
Anticipation Inventory 336
Pipeline Inventory 336
ABC Analysis 336
Economic Order Quantity 337
Calculating the EOQ 338
Managerial Insights from the EOQ 341
Continuous Review System 342
Selecting the Reorder Point when Demand and Lead
Time Are Constant 342
Selecting the Reorder Point when Demand Is
Variable and Lead Time Is Constant 343
Selecting the Reorder Point when Both Demand
and Lead Time Are Variable 347
Systems Based on the Q System 348
Calculating Total Q System Costs 348
Advantages of the Q System 349
Periodic Review System 349
Selecting the Time Between Reviews 350
Selecting the Target Inventory Level when Demand
Is Variable and Lead Time Is Constant 351
Selecting the Target Inventory Level when Demand
and Lead Time Are Variable 352
Systems Based on the P System 352
Calculating Total P System Costs 353
Advantages of the P System 353
Learning Goals in Review 353
MyLab Operations Management Resources 353
Key Equations 354
Key Terms 355
Solved Problems 356
Discussion Questions 360
Problems 361
Active Model Exercise 366
Video Case Inventory Management at Crayola 367
Experiential Learning 9.1 Swift Electronic Supply, Inc. 368
Case Parts Emporium 369
SUPPLEMENT C Special Inventory
Models 371
Noninstantaneous Replenishment 371
Quantity Discounts 374
One-Period Decisions 376
Learning Goals in Review 379
MyLab Operations Management Resources 379
Key Equations 379
Key Term 379
Solved Problems 380
Problems 382


Cooper Tire and Rubber Company 385
Levels in Operations Planning and Scheduling 388
Level 1: Sales and Operations Planning 388
Level 2: Resource Planning 390
Level 3: Scheduling 390
S&OP Supply Options 391
S&OP Strategies 392
Chase Strategy 392
Level Strategy 392
Constraints and Costs 392
Sales and Operations Planning as a Process 392
Spreadsheets for Sales and Operations Planning 395
Spreadsheets for a Manufacturer 395
Spreadsheeets for a Service Provider 396
Scheduling 398
Job and Facility Scheduling 399
Workforce Scheduling 400
Managerial Practice 10.1 Scheduling Major League Baseball
Umpires 401
Sequencing Jobs at a Workstation 404
Software Support 406
Learning Goals in Review 406
MyLab Operations Management Resources 406
Key Terms 407
Solved Problems 407
Discussion Questions 411
Problems 411
Active Model Exercise 418
Video Case Sales and Operations Planning at Starwood 418
Case Memorial Hospital 419
SUPPLEMENT D Linear Programming 421
Characteristics of Linear Programming Models 421
Formulating a Linear Programming Model 422
Graphic Analysis 424
Plot the Constraints 424
Identify the Feasible Region 426
Plot the Objective Function Line 427
Find the Visual Solution 428
Find the Algebraic Solution 429
Slack and Surplus Variables 429
Sensitivity Analysis 430
Computer Analysis 431
Simplex Method 431
Computer Output 431
The Transportation Method 433
Transportation Method for Sales and Operations
Planning 433
Learning Goals in Review 437
MyLab Operations Management Resources 437
Key Terms 438
Solved Problems 438
Discussion Questions 440
Problems 440


Philips 449
Material Requirements Planning 451
Dependent Demand 451
Master Production Scheduling 453
Developing a Master Production Schedule 454
Available-to-Promise Quantities 455
Freezing the MPS 456
Reconciling the MPS with Sales and Operations Plans 456
MRP Explosion 456
Bill of Materials 457
Inventory Record 458
Planning Factors 460
Outputs from MRP 463
MRP and the Environment 467
MRP, Core Processes, and Supply Chain
Linkages 467
Enterprise Resource Planning 468
How ERP Systems Are Designed 468
Managerial Practice 11.1 ERP Implementation
at Valle del Lili Foundation 469
Resource Planning for Service Providers 470
Dependent Demand for Services 470
Bill of Resources 471
Learning Goals in Review 474
MyLab Operations Management Resources 474
Key Terms 475
Solved Problems 475
Discussion Questions 480
Problems 481
Active Model Exercise 493
Case Flashy Flashers, Inc. 493

PART 3 Managing Supply Chains 497


Amazon.com 497
Creating an Effective Supply Chain 499
Supply Chains for Services and Manufacturing 501
Services 501
Manufacturing 502
Measuring Supply Chain Performance 503
Inventory Measures 503
Financial Measures 505
Strategic Options for Supply Chain Design 506
Efficient Supply Chains 507
Responsive Supply Chains 507
Designs for Efficient and Responsive Supply
Chains 509
Mass Customization 510
Competitive Advantages 510
Supply Chain Design for Mass
Customization 511
Outsourcing Processes 511
Managerial Practice 12.1 Outsourcing in the Food Delivery
Business 512
Vertical Integration 514
Make-or-Buy Decisions 514
Learning Goals in Review 515
MyLab Operations Management Resources 515
Key Equations 516
Key Terms 516
Solved Problem 516
Discussion Questions 517
Problems 517
Video Case Supply Chain Design at Crayola 520
Experiential Learning 12.1 Sonic Distributors 521
Case Brunswick Distribution, Inc. 522


Airbus SAS 525
Factors Affecting Location Decisions 528
Dominant Factors in Manufacturing 528
Dominant Factors in Services 530
Load–Distance Method 531
Distance Measures 532
Calculating a Load–Distance Score 532
Center of Gravity 533
Break-Even Analysis 535
Transportation Method 537
Setting Up the Initial Tableau 537
Dummy Plants or Warehouses 537
Finding a Solution 538
Geographical Information Systems 539
Using GIS 539
Managerial Practice 13.1 Using GIS to Find Locations
for Fast-Food Restaurants 540
The GIS Method for Locating Multiple Facilities 540
Inventory Placement 541
A Systematic Location Selection Process 542
Learning Goals in Review 543
MyLab Operations Management Resources 543
Key Equations 544
Key Terms 544
Solved Problems 544
Discussion Questions 547
Problems 547
Active Model Exercise 554
Video Case Continental Tire: Pursuing a Winning Plant
Decision 554
Case R.U. Reddie for Location 555


Coral Princess 557
Supply Chain Disruptions 560
Causes of Supply Chain Disruptions 560
Supply Chain Dynamics 562
Integrated Supply Chains 562
Additive Manufacturing 563
Supply Chain Implications of AM 564
Enablers of Adopting AM 565
New Service or Product Development Process 566
Design 566
Analysis 567
Development 567
Full Launch 567
Supplier Relationship Process 567
Sourcing 567
Design Collaboration 571
Negotiation 571
Managerial Practice 14.1 The Consequences of Power in an
Automotive Supply Chain 572
Buying 573
Information Exchange 574
Order Fulfillment Process 575
Customer Demand Planning 575
Supply Planning 576
Production 576
Logistics 576
Customer Relationship Process 578
Marketing 578
Order Placement 579
Customer Service 579
Supply Chain Risk Management 580
Operational Risks 580
Financial Risks 581
Security Risks 582
Performance Measures 584
Learning Goals in Review 585
MyLab Operations Management Resources 585
Key Equations 585
Key Terms 586
Solved Problems 586
Discussion Questions 588
Problems 588
Video Case Sourcing Strategy at Starwood 593
Case Wolf Motors 594


FedEx 595
The Three Elements of Supply Chain Sustainability 597
Reverse Logistics 599
Supply Chain Design for Reverse Logistics 599
Financial Implications 600
Energy Efficiency 601
Transportation Distance 601
Freight Density 603
Transportation Mode 605
Disaster Relief Supply Chains 606
Organizing for Disaster Relief 606
Managing Disaster Relief Operations 607
Managerial Practice 15.1 Using Drones in Disaster Relief 608
Supply Chain Ethics 609
Buyer–Supplier Relationships 609
Facility Location 610
Inventory Management 610
Managing Sustainable Supply Chains 611
Learning Goals in Review 611
MyLab Operations Management Resources 611
Key Equation 612
Key Terms 612
Solved Problems 612
Discussion Questions 614
Problems 614
Video Case Supply Chain Sustainability at Clif Bar & Company 616

Selected References 619
Glossary 627
Name Index 639
Subject Index 643
MyLab Operations Management
SUPPLEMENT E Simulation E-1
SUPPLEMENT F Financial Analysis F-1
SUPPLEMENT G Acceptance Sampling Plans G-1
SUPPLEMENT H Measuring Output Rates H-1
SUPPLEMENT I Learning Curve Analysis I-1
SUPPLEMENT J Operations Scheduling J-1

Chapters, Sections and Learning Goals

Chapter 15. Supply Chain Sustainability

FedEx - Comment on FedEx's supply chain sustainability activities

The three Elements of Supply Chain Sustainability

Reverse Logistics

Energy Efficiency

Disaster Relief Supply Chains

Supply Chain Ethics

Managing Sustainable Supply Chains

Table of Contents
1. Using Operations to Create Value

Supplement A: Decision Making


2. Process Strategy and Analysis

3. Quality and Performance

4. Capacity Planning

Supplement B: Waiting Lines

5. Constraint Management

6. Lean Systems

7. Project Management


8. Forecasting

9. Inventory management

Supplement C: Special Inventory Models

10. Operations Planning and Scheduling

Supplement D: Linear Programming

11. Resource Planning


12. Supply Chain Design

13. Supply Chain Logistic Networks

14. Supply Chain Integration

15. Supply Chain Sustainability

Appendix: Normal Distribution


Supplement E: Simulation

Supplement F: Financial Analysis

Supplement G: Acceptance Sampling Plans

Supplement H: Measuring Output Rates

Supplement I: Learning Curve Analysis

Supplement J: Operations Scheduling

Supplement K: Layout


Review of Evolution of Basic Management Theory and Functional Management Subjects

Review of Management

1. Evolution of Management Thought and Theory
2. Evolution of Scientific Management
3. Principles and Laws of Management - Taylor (1903 & 1911) and Gillette & Dana (1909)
4. Science and Philosophy of Management - A. Hamilton Church (1914) & Oliver Sheldon (1924)
5. Principles of Management - Henri Fayol (1916), Koontz & O'Donnell
6. Evolution of Production Management 
7. Evolution of Productivity Management
8. Evolution of Marketing Management
9. Evolution of Human Resource Management
10. Evolution of Organizational Behavior
11. Evolution of Accounting
12. Evolution of Financial Management
13. Evolution of Supply Management and Supply Chain Management
14. Evolution of Business Logistics Management
15. Industrial Management - Evolution of The Subject

Review of selected research papers in various management areas

July 20, 2019

Advertising - An Essay in 1909

Adapted based on the essay in

Economic Advertising Magazine


Vol 1., No. 9,   May, 1909

Straight Talks


As a matter of fact, the true advertising expert, like the true scientist, realizes that his knowledge of the profession is limited by his experience and his knowledge of human nature. We may carry the analogy further. The scientist knows much, but he is well aware of the fact that he is only a student of universal law himself. The true advertising expert  he knows that general publicity — and by general publicity we mean all sorts and conditions of advertising — is the mightiest selling lever of our rushing business age, he refuses to talk in mysterious terms about it. 

Advertising has been called "Printed Salesmanship," but that definition is far from being comprehensive enough. Because some of the best commercial literature produced is not printed salesmanship at all. 

The primary object of all good advertising literature is not so much to actually sell goods as to create a demand for certain lines of goods or products. There are times when it is necessary to make one's advertising take the place of real live salesmen, as in the mail order business. But, as a general rule, the merchant or manufacturer invests money in newspaper and periodical space for the purpose of creating a demand for his goods. Therefore, the accepted definition will not do. Indeed, there can be no very exact definition of advertising in general, because the business is just as wide and varied as the commerce of the world. Speaking broadly, all modern publicity is an essential factor, some say the essential factor, in our present system of distribution. It creates a demand for certain brands of goods, but it does not actually sell goods, because it is not generally designed and executed for that purpose. In judging an ad. the question should be: "Will it create a demand for the goods?" unless the copy is planned and executed for mail order purposes. 

There is value in the concept  of  of "Printed Salesmanship" — copy that DOES sell goods. The production of that sort of copy should be the constant aim of every man in the advertising business. 
The ability to produce such copy places the adman in the van of his profession, and his services at a premium. 

Joseph of early biblical fame was perhaps the first genius in the advertising business. After being sold into captivity by his brethren, he so shrewdly advertised his own ability to do things that, in a few short years, he was prime minister to Pharaoh— the real uncrowned king of all Egypt. You can take our word for it, without consulting the clergy, that if Joseph had not talked big— made a strong bluff— he would have passed away as an insignificant and unknown slave. Future generations would never have heard his name. However great he might have been, he would have remained unknown if he had not asserted positively that he could do things. He looked honest. His assertions were believed. And he made good. The same law holds good right down through the ages.

The origin of the advertising business, as it is known today, lay in the necessity of man having to make his wants known. Gradually it dawned on the born leader of men that he would have to demonstrate his capabilities as a leader. The chance to demonstrate his superiority may have happened, but in the majority of cases the kings, warriors, counsellors, and legislators of the early world asserted their inherent greatness by words or bearing. Somehow they advertised. The 
people believed in them — licensed them to get busy and they made good. 

What we often call American bluff is really not bluff at all. It's oftener confidence. Our cousins south of the line know things, and they know that they know them. Hence they state their ability to accomplish things in the most matter-of-fact way. They advertise. And incidentally we may mention that advertising has not only built up the huge business concerns of the United States — it has also built up the country. 

We have endeavored to bring out two very important points, viz., self-confidence largely makes the man, and advertising creates great business institutions and nations. He who has attained greatness must have advertised in one form or another — he must have caused some people to believe implicitly in his ability to accomplish things. Without advertising no great man comes to his own — without publicity no great event can happen. This is in no way idealistic, it is merely sound commercial sense. 

A separate Essay

Advertising Media 

While Copy is the First Essential in all Judicious Advertising Campaigns the Choice of Media is all

If the best advertising copy frequently appears in the worst media,  all the genius and exactness one can put into advertising matter may be absolutely futile as far as selling the goods is concerned. The choice of media is by all odds the most important part of an advertising campaign.  Good copy is the fundamental essential, but its significance is worse than commonplace if it is not read.

Industry has been likened to war — active, relentless, and unceasing. The manufacturers and big merchants of the world are the generals in the game. These master spirits have somehow gained a knowledge of the rules governing success.

The manufacturer surveys a certain territory, sometimes a whole country, as a big buyer for his product. He is convinced that it is superior to the product of most of his competitors. He knew exactly how to perfect his product, but he is not very certain of the best possible means of marketing it. If the young manufacturer captures a big market, he must fight huge aggregations of capital with ingenuity. He cannot, as a general rule, place an effective field force on the road right at the outset. He knows, or sincerely believes, that his product is just what the people want, and his problem is to get it into the hands of the people at the minimum expense. If he could only line up the dealers — secure their active co-operation, success would be assured.

This is where the trade paper floats into our consideration as the good angel of distribution, and shrewd men are agreed in believing that it should be all that. The dealers are the outworks which the manufacturer must capture before he proceeds to land the central and important party of all commerce — His Majesty — The Consumer.

The proper trade or class publication is the most effective of all advertising media for the very simple reason that there can be no waste circulation. Space in a trade journal which fulfils its mission is worth a high price. Before placing good copy in any medium the advertising man should know its circulation in round figures. No evasion on this point should be considered for a second of time. The publisher has a certain commodity for sale — that commodity is white space. Its value to the buyer is determined by a journal's circulation and its class of readers. A trade paper should cover the trade — that is 75% of the trade all the time. An excellently conducted class publication may attain that circulation. It seldom exceeds it. We should know the circulation — actual, all told, paid-up circulation of any trade paper before handing over any business to it. We should know its circulation in the different provinces or states, cities, towns, and townships. The declaration of a trade paper's circulation should certainly be
an informing document.

And then the wary advertising man will find out exactly what subscribers think of the paper — how much or how little importance the merchants of the country attach to it. All these points decide the value of a trade journal as an advertising medium. Of course the trade paper which fulfils its mission
is the best and cheapest advertising medium in the world.

The daily and weekly newspapers, when carefully selected, are always effective media. Their selling power is potential to say the least. But — they must be carefully selected.

In marketing a product the general advertisers seem to gauge the value of a campaign by results, regardless of the cost. Because there is a direct relationship between cost and results, we desire to emphasize one or two points which are too often overlooked. If a manufacturer can sell a million dollars' worth of goods at a 15% cost, is there any good solid reason why he should spend 20 or 25% to do that million dollars' worth of business? No, there is positively no reason why a manufacturer should throw away $50,000 annually. Many continental advertisers do that very thing. We do not need to look far for evidence of this fact. Most of us have noticed a product advertised in big city dailies and also advertised in the dailies or weeklies of towns and villages within an easy radius of the city at the same time.

The advertising man should make it his business to know more than the figures about any medium. He should know the class of a paper's readers. If a city daily is read by the farmers of a community, it is obviously a waste of money to advertise in their local papers. The urban and rural population
attach more significance to an ad. appearing in the city dailies or weeklies at any rate. This does not say that we should ignore the value of space in country and small city papers. It only means that the advertising man should be careful not to duplicate his copy. The newspapers are the most effective
advertising media we have.

The choice of media is governed by the nature of the campaign. Sometimes a big advertiser will cover the country by provinces or states, and in such cases the work of the advertising man is simplified. Most newspapers give a sworn statement regarding their circulation. But the class of readers is generally more important than the number. As an illustration — it would be poor business policy to advertise automobiles in a workingman's paper. And it would be as foolish to advertise
stoves, as heating apparatus, in a paper read by the upper middle class. The newspapers are about the easiest advertising mediums to select. Their standing is very readily understood and explained. And, with the exception of small, insignificant publications, the dailies must fulfil their mission or they cannot live.

The selection of weekly periodicals and monthly magazines calls for more careful consideration. The ordinary man can very readily find out the exact value of a trade journal or newspaper to his client, but it isn't quite so easy to determine the value of a magazine or weekly with extraordinary circulation. Canada is blessed with a few publications of this kind, but, if circulation statements are correct, magazine publishers are certainly philanthropic.

It is different with similar publications in the United States and England. Magazines are potential selling forces, or factors in the selling game. The advertising pages of McClure's magazine are called " the market place of the world." And there's considerable truth in the same. The price of space in
the popular monthlies and weeklies, on both sides of the Atlantic, is enormous, ranging from $150 per page per insertion, up to $2,000 and more. Apparently no firm, however wealthy, can afford to advertise in the popular monthlies or weeklies without serious consideration. The price is ruinous, and in nearly every case far ahead of proportionate returns. The magazines, which the people buy voluntarily, are by all odds the best advertising media of this class. Where enormous circulation is the result of unusual activity in the circulation department, the price of space is easily 50% too high. The
advertising man must discriminate between good, bad, and indifferent circulation. Munsey's magazine may be termed good circulation, because there is no mad endeavor on the part of
the publisher to boost the circulation. The people buy it because they want it. They are not cozened or flattered or forced into subscribing for the magazine by the adroit ingenuity of clever canvassers. We could name quite a number of so-called popular magazines, on the other hand, which are not popular
at all. For the simple reason that 50% of their subscribers do not want, and certainly do not read them.

The writer spent three months in the U.S. investigating this matter. He found that over 50% of the people he called on were subscribers to a popular magazine (so-called) which they never read.

It is an easily demonstrated fact that only the least intelligent class of a community are trapped in this way. They are not readers. In the majority of cases they could not buy the articles or products advertised at any rate. To price space in this kind of a magazine on a circulation basis is something
akin to fraud. And yet, there are more than one or two well-known periodicals doing that very thing.

The advertising man of the future will want to know more than mere circulation figures about some magazines. He will want to know how the circulation is secured. It is a notorious fact that many people are simple enough to buy things they do not want — books they do not read — magazines they never open. Even sensible men, men in a position requiring the exercise of brains and ingenuity, will often subscribe for a magazine because of the personality of the canvasser, or out of pure good nature — not because they are interested in the publication at all. Is it any wonder advertising experts bewail the fact that their ads. are not read? They wearily admit that their ads. do bring results, but when an excellent piece of copy appears issue after issue in a magazine with several hundred thousand of a circulation, and barely pays for itself, we are safe in asserting that there's a nigger in the wood-pile.

Circulation figures should be only considered as the basic fact of a circulation statement. The class of readers should be known. The political stand of a newspaper should be compared with the trend of political opinion locally. Because we're buying the probable attention of readers — not mere claims.

 T. J. S.,    T. Johson Sterward, Editor

The copy of the magazine is available in Archive.org

July 18, 2019

Business Ethics - Study Materials - Notes

Business Ethics 

Business Ethics – Introduction
Moral Standards and Moral Judgments – Approaches

Business System - Free Markets - Ethics
Ethics in the Market Place and Distribution System

Ethics in the Factory
Ethics in the Supply Chain

Ethics - Supply Chain

Code of ethics - SCMA

The ethical supply chain
New research from APICS, Supply Chain Management Review and Loyola University Chicago finds that operating a responsible supply chain is an increasing priority. But gaps remain between practice and the goal.
By Judd Aschendbrand, Jennifer Proctor and Bob Trebilcock · November 14, 2018

July 17, 2019

1912 - Review of Industrial Management by ASME Committee

Total 63 paragraphs are there in the report.

60 Your committee hoped to present statistics on the extent to which labor-saving management is in use. This could not be realized. Many industrial managers whom we have addressed have not honored us with their confidence in this direction. In fact, it seems as if a secretive stage is now with us. There are two reasons for withholding such information. The first is identical with the one that has developed 66 trade secrets and secretiveness in regard to machines, tools and processes, the desire to keep things of value away from competitors. The second is a belief that in the minds of some persons a reflection is cast upon the ability of the executives of an industrial establishment if outside experts are employed. Frequently a system of management is referred to as the development of some one
in the organization, although it was installed by a management expert, employed for the purpose.

63 These results indicate certain advantages to both employer and employe. But it is charged that the movement has not yet entirely justified itself from the economic viewpoint, for it has not reduced the cost of product to the consumer. The implication is that its possibilities will not be realized until employers, employees and the public are alike benefited. With this view we are in most hearty accord. Laborsaving machinery has brought the comforts that we all enjoy today. Labor-saving management promises to extend those comforts. Where properly administered it is conserving labor and is thus contributing to the good of society at large, and although the benefit to the consumer may not yet be generally felt, it has already developed to a certain extent and will continue to develop as the natural result of increased production.

J. M. Dodge, Chairman
L. P. Alford, Secretary
D. M. Bates
H. A. Evans
Wilfred Lewis
W. L. Lyall
W. B. Tardy
H. R. Towne
Sub-Committee on

July 16, 2019

Value Engineering - Introduction

                                         Narayana Rao K.V.S.S. on Cover Page of Business Today 
October 22 - November 6, 1997

Product Industrial Engineering

We can use the term 'Product Industrial Engineering' to described the efficiency improvement carried out by industrial engineers in the product designs.

Product Design Efficiency Engineering - Component of Industrial Engineering
(Functions and Focus Areas of Industrial Engineering)

Value Analysis and Value Engineering - Miles Way (L.D. Miles)

Value engineering has for its purpose the efficient identification and elimination of unnecessary cost. First article on the topic was written by L.D. Miles in 1949. Link available in this article.

Value Engineering - Introduction - Video Presentation


What is Value Engineering?

Value engineering has for its purpose the efficient identification of unnecessary cost, i.e., cost which provides neither quality nor use nor life nor appearance nor customer features. It focuses the attention of engineering, manufacturing, and purchasing on one objective – equivalent performance for lower cost. It results in the orderly utilization of low cost alternative materials, low cost alternative processes including new processes, and abilities of specialized suppliers to procure items at lower costs.

Lawrence D. Miles is the pioneer of this technique. He wrote the book - Techniques of Value Analysis and Engineering - in 1961. His designation at that time was Manager, Value Service, General Electric Company. He published the first article on value analysis in 1949 in American Machinist.

Functional design is not tampered:
Inherent in the philosophy of value engineering is the full retention for the customer of the usefulness and esteem features of the product. Miles argued emphatically right at the beginning of his book, “Techniques of Value Analysis and Engineering” that identifying and removing unnecessary cost, and thus improving the value, must be done without reducing in the slightest degree quality, safety, life, reliability, dependability, and the features and attractiveness that the customer wants.

What is Value?

Miles described  four types of value.

1. Use value: The properties and qualities which accomplish a use, work, or service.
2. Esteem value: The properties, features, or attractiveness which cause us to want to own it.
3. Cost value: The sum of labor, material, and various other costs required to produce it.
4. Exchange value: Its properties or qualities which enable us to exchange it for something else we want.

Even though Miles did not describe it that way, I feel value analysis or engineering is concerned with cost value without in anyway decreasing the use value, esteem value and exchange value

Value Analysis Techniques

Miles provided 13 ideas as value analysis techniques.
  1. Avoid generalities
  2. Get all available costs
  3. Use information from the best source
  4. Blast create and refine
  5. Use real creativity
  6. Identify and overcome roadblocks
  7. Use industry experts to extend specialized knowledge
  8. Get a dollar sign on key tolerances
  9. Utilize vendors’ available functional products
  10. Utilize and pay for vendors’ skills and knowledge
  11. Utilize specialty processes
  12. Utilize applicable standards
  13. Use the criterion, “would I spend my money this way?”
Value Analysis Techniques - Video Presentations

Play List - All 13 Value Analysis Techniques
https://www.youtube.com/watch?v=BHH-QZ29EOo&list=PL6W3qaSriFEgzI80uqu4ygW5jJsDCCyJf ________________

The list can be reorganized in this way to show their role in value engineering

At the start of the value engineering exercise some people will object to the project with some general statements.
    1. Avoid generalities  - Don't accept general statements. Try to find out the real objection and confirm whether it is a valid objection.
      Information Phase

      During information phase get information relevant to the product under evaluation
        2. Get all available costs
        3. Use information from the best source
        4. Get a dollar sign on key tolerances - Part of analysis, but it can be treated as information phase as routine information collection activity.

        Searching for low cost alternative materials, standard products and processes. 
        To reduce product through design changes, low cost alternative materials, components and production processes are to be identified.
          5. Utilize vendors’ available functional products
            6. Utilize specialty processes
              7. Utilize applicable standards

              After searching and identifying low cost alternatives which may be of use in redesign, redesign will start.
                8. Use the criterion, “would I spend my money this way?”  - This idea refers to certain components that are having high costs. This gives rise to the feeling money is being wasted and forces the VE team to look for alternatives in more focused manner.
                  9. Blast,  create and refine - Blasting the current design by identifying a possible low cost alternative. Create is technically showing that the new alternative is a feasible. Refine is commercial design of the new alternative to go into the product

                  10. Use industry experts to extend specialized knowledge - The value engineering team has to approach industry experts to use new materials and new processes appropriately. 

                  11. Utilize and pay for vendors’ skills and knowledge - Vendors who can offer new process capabilities must be supported for developing the solution needed by the VE team.
                    12. Use real creativity - Creativity is required to identify the solution to the value engineering problem. A value engineer knows the function that he has to provide and he must be able to pick the relevant material, component or process from the collection of the information that he has gathered.

                    During presentation of the solution, a value engineer is likely to face objections. He must be prepared for these objections and answer them so that objection is answered adequately and the questioner is satisfied that the new solution is a suitable redesign.
                      13. Identify and overcome roadblocks

                      More detailed description of techniques

                      The Right Way to use the Techniques
                      Choose appropriate techniques to value engineer the specific product.

                      Arrange the techniques in best order for the particular job.

                      Use each technique imaginatively and effectively.

                      Use the techniques iteratively until useful information is developed to the extent that direction for decision and action is available.

                      To use the techniques an analyst requires special knowledge.

                      Value engineer is not a functional designer. He will have access to functional designers as needed in his value work. Hence his knowledge is not specialized to particular areas like mechanical engineering, electrical engineering, automobile engineering, or aerospace engineering. Knowledge required for high-grade value work is extremely broad.
                      The specialized knowledge required in value improvement work consists of information on materials, processes, functional products, sources of functional knowledge, approaches to function performance, and practical ideas for economical function performance.
                      It is important that the value engineer’s library of special knowledge contains a comprehensive volume of trade knowledge backed by efficient means for a quick recall of needed information. Value engineer also needs well-organized references to a maximum number of persons of special skills that may be consulted in connection with each problem.
                      Value engineers need develop a database having the association between properties of materials and costs apart from material and its cost. Similarly a database that shows the relationship between the properties of products produced by various processes and the cost of each process, including the material used is also valuable.

                      This topic will be discussed in more detail in a separate article 'Knowledge Required for Value Engineering'.

                      Job Plan for Value Engineering
                      Phase 1. Orientation: Understand the customers’ needs and wants. Understand the functions performed by the product and the contribution of each part and each feature of the part and the complete product to the functions to be performed by the product.

                      Value engineer has to make sure that he does not diminish the contribution of the product to the customers' needs and wants.
                      Phase 2. Information: Collection of information on quantities, vendors, drawings, materials, manufacturing methods, and costs.
                      Techniques to be used:
                      Get all available costs
                      Get a dollar sign on key tolerances

                      Phase 3. Speculation: Using all the techniques of value analysis to come out with alternative low cost materials and methods to produce components and the product. Creativity is to be employed here. Value engineer has to involve experts from various disciplines to help with ideas.
                      Techniques to be used:

                      Blast, create and refine

                      For each function to be performed by a product or a component, find alternative products, materials or processes that serve the function to a great extent but at a less cost. These alternative ideas do not satisfy the specified or required function completely but they do to a significant extent. Identify they function they perform and the cost involved,

                      During the blast activity use these techniques.
                      • Utilize vendors’ available functional products
                      • Utilize and pay for vendors’ skills and knowledge

                      • Utilize specialty processes
                      • Utilize applicable standards
                      • Use the criterion, “would I spend my money this way?”

                      All the five techniques have the potential to suggest lower cost alternatives


                      In create phase, the technique of "Use real creativity" needs to be employed to come out with ways by which the low cost alternatives identified during the blast stage can be modified to accomplish the specified function to a much greater extent with pertinent increase in cost. During this stage also the improvement in function and the increase in cost are to be clearly identified.


                      In this step, much more creativity is used and also the techniques "Use industry experts to extend specialized knowledge" and  "Utilize and pay for vendors’ skills and knowledge" are used to refine the ideas developed during the create step to come out with a refined alternative that fully accomplishes the specified function at a lower cost. During refine step, some more functionality is added as well as some additional cost.

                      Phase 4. Analysis:  Technical and cost analysis of the alternative proposed.

                      The techniques to keep in mind and use during this stage are:

                      Avoid generalities

                      Use information from the best source

                      Identify and overcome roadblocks

                      Phase 5. Program planning: Approach the specialists to further refine the selected alternatives. Inform the specialists the accepted suggestions and give mandate to them to take steps to implement the suggestions.
                      Phase 6. Program execution: Pursue regularly the specialists and vendors to get their inputs on various tasks assigned to them. The output of this phase is a detailed design, successful trail  pilot  run of a manufacturing process or  a confirmed estimate from a vendor for supplying a component, material or sub assembly.
                      Phase 7. Status summary and conclusion. The results of the value engineering study are to be presented to decision makers. The reports needs to have a summary sheet as well as the full supporting documentation.  The value engineering project is concluded when the product is manufactured and distributed at the lowered cost as per the value engineering study.

                      Special Knowledge Required

                      In practically all fields, the operator used special tools and special or field specific knowledge. Value analysis and engineering is no exception.

                      Reach of knowlege: For value analysis, the knowledge required is extremely broad.
                      Nature of knowledge: Information on materials, processes,  and functional products.
                      Form and Constitution of Knowledge Fund: Handbooks, catalogues, charts, price lists, product and process descriptions, tables etc.
                      Listing of specialized Competence: Value analysis requires consulting specialists and specialized sources. So a list of consultants as well as special publication is required for various materials, processes and components.

                      Qualifications and Training for Value Analysts and Engineers

                      Qualifications: Logic, creativity, ability to make rapid searches, recall, ability to quickly sort out useful information,  synthesis of solutions, selection of promising alternatives.

                      Knowledge: Understanding of the properties of materials, and of manufacturing processes, their potentialities, and their limitations.

                      Traits required: Imagination, initiative, self-organization, cooperative attitude,
                      Attitude: belief in the importance of value

                      Training: Three weeks class room followed by six months of practical work.
                      Another round of three weeks class room followed six months of practical work
                      Another round of three weeks.

                      For further study:

                      First article by L.D. Miles in 1949  http://minds.wisconsin.edu/handle/1793/3948 download the file 35.5 pdf from this page.

                      Lawrence D. Miles, Techniques of Value Analysis and Engineering, McGraw-Hill Book Company, New York 1961.

                      Note on Value Engineering

                      Especially gives Juran's and Clawson's comments on value engineering

                      Value Engineering - NPC, Chennai (77 page Document. Available online)
                      History of Value Engineering

                      1.17 minutes


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                      Originally posted at  Knol Number 4

                      Industrial Engineering Knowledge Revision Plan - One Year Plan

                      January - February - March - April - May - June

                      July - August - September - October - November - December

                      Value Engineering is a Subject in the following IE Programmes

                      EM 627  University of New Haven

                      IE 6220 Wayne State University

                      Updated  17 July 2019,  8 June 2019, 31 May 2019, 10 April 2019, 9 August 2018,   17 July 2017,   27 June 2015
                      First Published on blog  15 December 2011