PERSPECTIVES IN OPERATIONS MANAGEMENT ESSAYS IN HONOR OF ELWOOD S. BUFFA

PERSPECTIVES IN OPERATIONS MANAGEMENT

ESSAYS IN HONOR OF ELWOOD S. BUFFA

Rakesh K. Sarin, Editor Paine Professor of Management

Anderson Graduate School of Management, UCLA Los Angeles, California, U.SA.

Springer-Science+Business Media, LLC

Llbrary of Congress Cataloging-in-Publication Data

Perspeetives in operations management : essays in honor of Elwood S. Buffa / Rakesh K Sarin, editor.

p. em. Includes bibliographieal references. ISBN 978-1-4613-6387-3 ISBN 978-1-4615-3166-1 (eBook) DOI 10.1007/978-1-4615-3166-1 1. Production management. 1. Buffa, Elwood Spencer, 1923-

II. Sarin, Rakesh K TS155.P462 1993 658.5--de20 92-38951

Copyright © 1993 by Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1993 Softcover reprint ofthe hardcover lst edition 1993

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AII rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, meehanieal, photo-copying, record ing, or otherwise, without the prior written permission of the publisher, Springer-Science+Business Media, LLC.

Printed on acid-free paper.

ELWOOD S. BUFFA

Introduction Rakesh K. Sarin

TABLE OF CONTENTS

.................................... xi

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. xiii

Keynote Address Elwood S. Buffa .................................... xv

I. Strategic Issues in Operations Management ............... 1

1. Creating Value Through Operations: The Legacy of Elwood S. Buffa Morris A. Cohen and Paul R. KIeindorfer . . . . . . . . .. 3

2. Modelling in Support of Continuous Improvements Towards Achieving World Class Operations Edward A. Silver ........................... 23

3. Design for Supply Chain Management: Concepts and Examples Hau L. Lee ............................... 45

4. Competing Through Quality: Perspectives and Research Directions Herbert Moskowitz . . . . . . . . . . . . . . . . . . . . . . . . . . 67

5. Service Quality Deployment: Quality Service by Design Ravi S. Behara and Richard B. Chase ............. 87

6. Strategic Role of Information in Services James A. Fitzsimmons ...................... 101

II. Operations Management Interfaces .................... 115

7. The ManufacturinglMarketing Interface: Critical Strategic and Tactical Linkages Warren H. Hausman and David B. Montgomery .... 117

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8. Linking Technology and Business Strategies: A Methodological Approach and an Illustration Arnoldo C. Hax and Manuel No ............... 133

9. Standardization and the Strategic Management of Technology Richard S. Rosenbloom ..................... 157

10. Research in Manufacturing Strategy: A Cross-Functional Perspective Uday S. Karmarkar ........................ 169

11. A Decision Analysis Approach for Coordinating Design, Manufacturing and Marketing in New Product Decisions Rakesh K. Sarin . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

III. Models for Production and Operations Planning ............ 209

12. Multi-Product Co-Production in Manufacturing and SelVices Gabriel R. Bitran, Sriram Dasu, and Stephen M. Gilbert . . . . . . . . . . . . . . . . . . . . . . 211

13. Stockless and Fast Production: Review and Research Agenda L. Joseph Thomas ......................... 229

14. Mathematical Models of Retailer Inventory Systems: A Review Steven Nahmias and Stephen A. Smith ........... 249

15. Recent Advances in Production and Distribution Management A. Federgruen ............................ 279

16. Performance Management Issues in Flexible Manufacturing Systems: An Analytic Perspective Abraham Seidmann ........................ 301

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17. Models for Tightly-Coupled Production Systems Kenneth R. Baker ......................... 321

18. Dynamic Maintenance of a Deteriorating System Under Uncertainty John B. Larsen and James S. Dyer .............. 341

19. The Accuracy of Aggregate LP Production Planning Models Harvey M. Wagner, Vincent A. Vargas, and Narinder N. Kathuria .................... 359

20. Mathematical Models in Integrated-Circuit Manufacturing: A Review Christopher S. Tang and Lieven Demeester ........ 389

21. A Hierarchical Approach to Design, Planning, and Control Problems in Electronic Circuit Card Manufacturing Reza H. Ahmadi .......................... 409

IV. Future Directions ................................. 431

22. What Is Operations Management? A Perspective from the Past, a Projection for the Future Jeffrey G. Miller .......................... 433

23. Educating Managers to Compete: The Role of Operations Management Martin K. Starr ........................... 445

24. The Information/Control/Buffer (I/C/B) Portfolio: An Operations Management Paradigm Leroy B. Schwarz ......................... 459

25. OM: Time for Meta Research Arnold Reisman ........................... 471

26. Refining Operations Management Around Total Quality Management Roger V. Johnson ......................... 483

INTRODUCTION

In the fall of 1992 a conference honoring Elwood S. Buffa was held at the Anderson Graduate School of Management of the University of California, Los Angeles. This book is a collection of the work presented at that conference.

The scholars who gathered to honor El are the prominent researchers in the field of Operations Management. Their collective work published in this book represents the richness of the field and provides the reader with valuable insights into its important issues and problems.

While any grouping of the articles by these distinguished scholars will be arbitrary, I have organized the book in four sections.

In the first section the articles dealing with the strategic issues in Operations Management are compiled. The articles deal with continuous improvement, quality, services, supply chain management, and creating value through operations.

The articles that explore the interface of Operations Management with other functional areas, e.g. engineering and marketing, are grouped in the second section.

The third section of the book contains articles that attempt to model some important planning problems that arise in the management of production and operations. Some of the papers in this section provide state of the art reviews of selected topic areas.

Finally, the fourth section contains articles that deal with future directions for Operations Management. The authors offer several insights into the future evolution of the field.

The book begins with the keynote address given by El Buffa at the start of the conference on November 2, 1991.

What is missing from the book is the tribute that every participant in the conference made to El and his illustrious career in the opening remarks of their respective speeches. There are some authors represented in this book who were El's students but virtually everyone was influenced by his work. El's book Modern Production Manaa:ement, published in 1961, defmed the field of Operations Management in new ways. Literally thousands of academics and practitioners learned about the field through this classic. For many years it remained the dominant text used in Production and Operations Management courses throughout the country and around the world.

El has published nine books that collectively have gone through 26 separate editions. OM Problems and Models, published in 1963, introduced analytical techniques in the field. His books span a wide range of topic areas in our field--from production planning and control to manufacturing strategy.

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In addition to his professional contributions through his books and numerous research papers, EI has provided exemplary service to UCLA for forty years. During his career, he has held a number of important positions within AGSM and at the University level. Some of his past administrative roles include:

--Associate Dean and Chairman of the Department, --Chairman of the university-level committee that reviews all

appointments and promotions on the campus--somehow then called the Budget Committee,

--Chairman of the UCLA Academic Senate. He was one of the principal architects of the Executive MBA

program and its ftrst director. This program has grown to support a large number of doctoral students, and it provides summer support for dozens of faculty.

More recently, EI founded the Center for Technology Management that has aided several faculty members and doctoral students in their research endeavors. The Center has also created a two-way communication between faculty and practitioners in the industry.

While many have benefttted professionally through reading his books, some of us have been particularly fortunate. These are the people who have had the opportunity to be his colleagues and friends. We who work him especially cherish his open door policy and his kind and helpful nature. We have all learned a great deal about good human values from E~ and he has been a source of inspiration and a role model to us. We hope that this volume will bring his guiding influence to many others as well.

Rakesh K. Sarin UCLA

ACKNOWLEDGMENTS

This book was made possible by generous fmancial support from the Center for Technology Management at UCLA's Anderson Graduate School of Management.

My thanks are due to the contributors to the book who diligently met the deadlines and format requirements and produced truly first-rate contributions. I am also appreciative of all of the participants in the conference who came to UCLA to express their gratitude to El.

Finally, I am thankful to the doctoral students in the Operations and Technology Management area at AGSM who helped in arranging logistics during the conference, and especially to Harriet Katz who coordinated the entire product life cycle of this book and kept it on schedule.

R.K.S.

KEYNOTE ADDRESS

Elwood S. Buffa November 2, 1991

I am deeply honored by the mere presence of the key scholars in our field, let alone the fact that this conference carries my name. I would have been honored simply to attend a conference with such a stellar cast.

I am retiring after nearly forty years at UCLA. I am retiring early -I am in that cohort that faces no mandatory retirement age. I had always said that I would never retire, that they would have to carry me out. But things change. The University offered an incentive to people in my category - for me it meant a twelve percent increase in my pension check, plus a signing bonus that will buy me a rather expensive car. Both my take home and gross pay will actually increase. By retiring instead of dying in office, I guarantee to my wife the same life annuity granted me. But more than all these fiduciary reasons, I felt that it was time to step aside for new and more vigorous leadership and let the fme new young staff show the way to the next plateau, and I have faith that they will do it.

We have created this "thing," called operations management, after more than one identity crisis.

When I came on the scene there was a field referred to as Industrial Management. It was all inclusive, spanning personnel management, elements of fmance and accounting, marketing, distribution, and so on. Much of the present day curriculum was hacked out of that broad defmition of industrial management, creating the first identity crisis.

What was left after this process was a highly descriptive field which came to be known as production management, which gained little respect. Following World War II, with the development of operations research, it was obvious to many of us that aspects of production could be quantified and modeled. We could gain respect by being "scientific," outdoing Frederick Taylor, realizing his dream of Scientific Management. Taylor would have been ecstatic for he did not dream of such powerful analytical methodologies.

But the quantification of the field carried with it the seeds of the next identity crisis for what soon broadened in scope to become the field of operations management we now know. Was there a field separate from the analytical methodology? If we taught a course in operations research, did we need anything else, for most of the examples used in OR courses were from production? Was there really a functional field called operations

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management, such as was recognized in [mance and marketing? If we taught a quantitative operations management course, were we leaving out anything of great importance? Was methodology sufficient?

Though this debate continues, I believe that it is now clear that the confusion between the two has been good for neither management science/operations research nor operations management. Management science/operations research should be providing methodology for management in the general sense, not simply concentrating on production problems. The largest curricular failure of MS/OR in my judgment has been the fact that [mance, marketing, and other areas have ignored it.

Operations management should continue to develop as a functional field, using MS/OR and other methodologies as appropriate to the problems at hand. To restrict ourselves to problems where only modeling methodologies are useful is ultimately suicide, ignoring some of the most important problems in the field.

One of the most effective things we could do would be to get out of our offices and into the field. We must take the emphasis off solving problems that we concoct and on to solving the problems faced by managers. I am not suggesting a lack of rigor, rather being challenged by the real problems. It would help in both the teaching and research functions. Doctoral students especially need to spend some time with real systems in order to formulate their dissertation research appropriately.

Then, there is another bad omen. At this late date, we still do not have a seat at the table where the big important decisions are made by management. Finance does, marketing does, but OM doesn't. Perhaps we haven't shown the strategic significance of our work. The study of operations strategy is relatively new, and it may be that we simply have not made our dent yet. Or is it that we have been doing work that is important to the strategy of the firm, but we haven't communicated appropriately? I think that both factors are important, but I am inclined toward the communication breakdown as the primary source of our problem, recognizing that strategy analysis hasn't been a centerpiece of our work in the past.

But we need to make strategy studies a prime objective. Technology is at the center of operations strategy, and indeed often of the strategy of the [rrm, and we are the ones who study it and understand it. Recognizing the strategic importance of technology, and explicitly integrating it into our work and the connections we have to other fields, and to general management, might be the key to greater acceptance by our colleagues and by practicing managers. I note that both Dick Rosenbloom and Arnoldo Hax will discuss aspects of technology strategy.

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I see an opportunity arising from a new curricular movement in the MBA. At least here at UCLA there is a growing demand for illuminating inter-functional issues. I observe that OM is one of the few courses that treats inter-functional issues already through the materials and cases used. As you know I'm sure, the marketing course is pure marketing and fmance is pure fmance, recognizing that nothing else exists in the firm. Pressing our advantage could be worthwhile. There may be opportunities in both teaching and research. Note that both Warren Hausman and Uday Karmarkar focus on inter-functional issues.

It seems unlikely to me that the present model for MBA education will survive. For students to come back to school for two years to gain the knowledge for a career in management seems to take issues out of the context of the real problems faced by managers. Perhaps the other extreme is on-the­job training as practiced by Japanese industry. Rotating beginning manager talent through a series of organization functions provides a breadth and depth not available through formal classroom work. But, on-the-job training lacks the intellectual depth that can be provided by formal education. The emerging model that may combine the advantages of both may be the Executive MBA, where students continue to work at managerial jobs while taking formal classes. Even the Executive MBA format leaves a great deal to be desired, perhaps because we have largely adapted campus courses to be used in these programs. The challenge for the OM field is to defme a new course format that takes advantage of the greater experience of the Executive MBA student backgrounds. It seems to me that this new course format should emphasize operations strategy.

As I review the titles of the papers to be presented here, virtually every one deals with issues that have strategic significance, and some are centered in strategy studies. The range of topics is in itself impressive. For those in the former category, I hope that you will highlight the strategic significance of your work.

Another indication that we have a problem is that recruiters are not looking for OM types of MBAs. Students interested in operations management have a difficult time fmding good opportunities - recruiters simply do not come here looking for our product, and when they do, the students complain that they offer below par salaries. Companies seem to be filling their OM needs from other sources. I understand that a large fraction of the first graduates from one of the premier programs in the country went into consulting or some other function.

As I look back over the last forty years here at UCLA I am struck by how happy I have been. I have been allowed to do just about whatever I

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wanted: teach, do research, write, engage in administrative activities, take part in faculty self-governance through the Academic Senate, and do some consulting work. The deans and faculty chairmen have been supportive of just about anything I wanted to do as I floated in and out of these various activities. I feel privileged to have spent my working existence in a golden age of university life that we all enjoy. I hope that the golden age continues, but I am not sanguine.

Let me thank you all for coming to take part in my passage. I cannot express adequately how warm it makes me feel. I also want to thank my close colleagues who have been so supportive and effective in building our group: Reza Ahmadi, Bob Andrews, Sriram Dasu, Don Erlenkotter, Gordon Shirley, Chris Tang, Bill Yost.

And most important, I wish to thank Rakesh Sarin whose idea it was to have this conference. He organized it, invited all the speakers, and arranged all the details including our ship-board dinner.

Thank you!