Operations Management - Essay Example

?Running Head: Operations Management Operations Management [Institute’s Operations Management Question Gillian’s farm is open to public every year from April to October. Demand was very low apart from this period: the circumstances were mostly inappropriate for normal tractor trips and the majority of the animals had to be kept indoor. The period from Friday to Monday was commercially feasible, with more or less exactly twice as many sightseers on Saturdays and Sundays than on Fridays or Mondays. People usually start coming before 4:00 pm, as they would like to see the milking and then leave for home. However, neither Fred was not ready to start earlier and neither were the cows. Nonetheless, generally, people are tolerant and every person gets their turn to observe the bit of high technology. The accessibility of the farm also causes a number of problems. The entire competences of the organisation are not within reach of every client. The once weekly deliveries by Gillian as well causes issues as shops and dealers are not capable to function in a ‘just in time’ manner, limiting the selling methods that can be put to use. The problems Gillian faces while making an effort to boost their productivity is huge. A few of which were recognized as, to increase the amount of dairy farm sightseers during the year 2012 by 50 percent from 14800 paying farm sightseers during the year 2011 to 22200 paying farm sightseers during the year 2012. Successfully implementing appropriate insistent advertising as well as promotional activities such as promoting sales to coach businesses or strengthening home marketing to create a centre of attention additional families as well as to improve business’s profit on ‘farm trips’ resources and additional sales of ice cream to maintain the factory at full capacity. The reason of the lesser than required sightseer statistics appears to be the lack of satisfactory marketing in addition to the restrains created by only being capable of operating on specific days of the week. With respect to the ice cream factory, the capacity constraints created by the restrictions of the ice cream apparatus indicates that the production of ice cream is restricted to 350 litres in more than a 24-hour period. Together with the small viewing space, lack of ice cream flavour variation as well as the insistent advertising drive of rivals the amount of business generated from every client is lesser as compared to the amount that is required. Key to business expansion is repeatedly raising sales by means of boosting the business generated from every client and increase the concentration of the business on client contact. With the intention of examining as well as suggesting alternative preferences, information on the condition of the market as well as the opposition present must initially be collected. The major crisis is evidently the amount of visitors presently being received by the dairy farm and the way this figure could be improved. “Sudden changes of previous trend hardly happen excepting entering strong new players into the region, spoiling the farm's reputation hugely and investing tremendously on the marketing for its farm shop. Moreover, in terms of Holly Farm's managing on its farm visitors, this sudden change of the number of visitors could lead to collapses of its operations. These reasons discussed above clearly show that Gillian's demand forecast is not reliable Hence, they have to forecast in the other way” (Waters, 2002, p. 82). Other then the capacity constraints, the milking parlour has queuing issues. This case indicated that more or less 80 individuals visited the gallery from 4:00 pm to 5:00 pm on a busy day. As a result, a line is made earlier than beginning the milking parlour and is not explained the line for a moment. The queuing issue simply leads to customer discontent and could give rise to severe drop in its entire returns. Abolishment of explanatory audio tape through headphones would be useful. It is understandable that the tape creates a bottleneck of a sequence of procedures within the gallery. By substituting the tape by headphones to one not through headphone but simply televised in the gallery as well as in waiting room, service time for each visitor would be lessened, and the capacity of the gallery could be enhanced. At the same time as visitors wait in a queue, the video of milking parlour will be showed on a TV screen of the waiting room. This step can be expected to make service time lesser at the same time reduces customer dissatisfactions. Question # 2 It is essential to overview the business, its goals, limitations as well as estimates. Objectives Both Gillian as well as Charles requires to recover the productivity of their business Charles does not wish to upset the farming business Gillian thinks that expansion will offer additional revenue Constraints The Giles do not wish to put in further resources on the business. The farm employees as well as their partners are offered additional revenue from the fresh activities; they may have turn out to be reliant on this cash and used to the outline of service. Expansion may be contained by opponent act - additional dairy farms as well as other ice cream producers - and influenced by outer issues such as the financial system, environmental circumstances, and so on). Forecasts The case does not state accurately about the way the estimates were obtained. However, they are evidently supported by a subjective analysis of (1) chronological expansion, projected ahead; (2) plan to develop dairy farm tourists by 50 percent; and (3) pragmatic analysis of outcome of opponent attack on ice cream sellers. A table, given in the case, demonstrates the chronological sales as well as forecast sales of ice cream in every division, revealing the outcome of these controls. It should always be kept in mind that in spite of its reliability, a forecast is tentative. However, one usually has to plan on the strength of such statistics. Either during this phase or later, one can also observes that the ice cream forecast is written in terms of money, while production is in litres. Where the similar item is sold on some different costs, and the mix alters, this could be deceptive. Analysis of demand for the farm trips The second question asks to analyze a number of capacities and this is only feasible in the context of information on demand. The statistics on farm sightseers is given in numbers. The primary task is to underline the ‘pattern of the demand for the service’ (Williams & Rathwell, 2001, p. 103). Demand pattern for each week The case states that ‘twice as many visitors arrive on Saturdays as well as on Sundays than on Fridays and Mondays’. Maximum demand (during the month of August 2011) = 3400 visitors Per week demand for August 2011 = (3400 / 4) = 850 As a result, demand on Saturday or Sunday will be one third of 850 = 283 This aforementioned demand pattern is only the average; the actuality is that a few Saturdays and Sundays are more demanding as well as eventful - relying on the climatic conditions, substitute attractions and so on. Demand pattern for each day The pattern of turnout is more than 283 individuals on the ‘peak day’. This is simply ‘indicative for discussion purposes’. Forecast for the year 2012 It can be inferred that if the business carries on to be sponsored in the similar manner, the demand pattern will remain unaffected; however, if it is sponsored more, it will increase by 50 percent. This would give boost to peak daily demand of 283 individuals, 283 * 1.5 = 424 individuals. Analysis for capacity Parking Space 40 cars * 4 individuals (per car) = 160 individuals 6 coaches * 40 individuals (per coach) = 240 individuals Maximum number of individuals = 400 It should also be taken into consideration that (1) this is ‘mix dependent’ - for both cars as well as coaches; (2) every influx on farm is in the afternoon, hence just a single utilization of every space for each day - distinct to the majority of car parks. Thirdly, there will be a difficulty on days with maximum influx (that is, Saturdays and Sundays) as well as during the season of maximum influx (that is, June, July and August). Facility of viewing milking parlour There is a fixed viewing period of only 10 minutes, including 5 minutes for the illustrative audio recording. Capacity on busy days = 2.5 hours * 80 individuals per hour = 200 individuals (maximum capacity) This capacity is already surpassed during the months of June, July and August as well as on Saturdays and Sundays. Note that this is the capacity on a busy day; however, the ‘normal capacity’ is based on 10- minute groups of 12 individuals; 2.5 hours * 60 minutes = 150 minutes 150 / 10 = 15 groups (having 12 individuals per group) can avail the facility to view milking process for 10 minutes o a normal day. Therefore, normal capacity = 15 groups * 12 individuals per group = 180 individuals. Apparently, the figure of 200 takes place merely when clients are under stress to move across the gallery. This is recognized as the ‘coping zone’, where operations focus only on the core facility. Output for Ice Cream Now, it is produced 4 days a week on a ‘Level Capacity’ basis: Output for a day = 350 litres Output for a year = 350 litres * 48 operational weeks per year * 4 working days per week = 67200 litres Output for a month = 67200 / 12 = 5600 Sales (in terms of litres) during the year 2011 = (? 75000 / ? 2) + (? 27000 / ? 2) = 37500 + 13500 = 51000 litres Therefore, during 2011 sales was 95 percent of total capacity. 50 percent extra visitors in 2012 = 14800 * 50 % = 7400 individuals Though it is not a main issue, as retail sales, in accordance with the forecast, are likely to drop. The actual issue is that seasonality has been increased, in view of the fact that the farm is visited just 7 months of the year. Restraints of ice cream production are: (1) quick freezer capacity - “key process-max 350 litres/24 hours”; (2) storage capacity that is effective at 7000 litres only instead of its full capacity (10000 litres); (3) Employees are available only for 4 days per week; and (4) Capacity planning alternatives together with ‘level, chase and mixed plans’. Potential target market Endorsement for coach visitors Positive aspects of endorsing coach visitors include: (1) Scheduling of arrival time that go well with service; (2) Definite arrival even in the unfavourable weather conditions; (3) Can be scheduled just for Friday and / or Monday. Fourthly, it requires lesser space in parking lot; (5) It is a relatively simple target market; (6) Could have specifically planned service package; and (7) Endorsement or promotional activities are the duty of coach companies. Negative aspects of endorsing coach visitors are: ‘Lumps’ of demand may overload service at various times/points. Entrance fees might have to be discounted. Functions of educational institutions Positive aspects include the following: Peak periods of July / August as well as weekends can be avoided Timing can be adjusted to avoid overlapping by functions Educational institutions could present a number of the supervision (involvement of the customer) Supervision could also be offered for coach visitors Majority of chances for promotion of service as they tell their families and / or friends Approved departure earlier than the start of milking facility Negative aspects of educational institution visits include; (1) Comparatively lesser sale of ice cream as students do not often buy stuff; (2) Service package for other visitors can be affected; and (3) There is a strong possibility that the students are satisfied by one visit only, and not bring back their family. Individuals who come by their own conveyance (car) This is the most convenient market segment to target. There are not any problems except the space for car parking and lesser control on time of their arrival. Question # 3 Following are the factors that should be considered by Gillian when deciding to increase the number of flavours from four to ten: Product proliferation = raise in diversity and decline in volume per flavour It might boost retail sales, but there will not be any effect on shop sales Difficulty in the process of stock rotation as a result of restricted freezer capacity Additional inventory, that is, bigger range of raw materials as well as finished merchandise Potential lost capacity as a result of additional set-ups (one should also note that visitors do not like to observe set-ups) More intricate regulation, synchronization, packaging control, and forecasting Bigger rates as a result of all or some of the aforementioned factors Impact on quality control in addition to bigger possibility of blunders Prioritize when stocks are low - deciding whether to opt for to retail selling or farm shop Requirement for increasing freezer capacity within the shop Necessity for market data such as inclinations, estimates, and so on Staying away from potential of line production in the future Evidence of competitive advantage - deciding whether to trial markets all outlets, or just shops. Potential additional sales as well as input Support delicatessen trade - competitive advantage Potentially, more revisiting clients to taste new flavours Managing capacity and demand In view of the fact that Gillian is reluctant to raise capital investment, and the service cannot be stored, she should modify process competence on ‘bottleneck’, and make additional attempt to handle demand preferably to ‘level’ it, such as: (1) Reservation system; (2) Promoting Fridays and Mondays. Thirdly, such as offering other facilities, for instance, film/video of milking process, tea shop eatery, animal care for other animals along with cows, informational discussions and so on; (4) Special prices as well as discounting schemes. In addition, it include attractions for clients who are waiting in queue, for example, baby animals and / or aviary; (6) Special packages in summer; and (7) Promoting trips in early morning offering different attractions. Additional information that is helpful in managing capacity and demand in a better way is: “Records of sales to paying farm visitors and to farm shop only” (Monks, 1996, p. 91) Record of demand for coach and car visits Result of climate patterns on all sorts of sales Client’s acceptance for standing in a line Demand as well as suitable price for other serving sizes of ice cream There is also a possibility of a number of capacity constraints while increasing flavours. Dangers of neglecting modifications in the ‘demand mix’ as well as the unsuitable utilization of averaged records should as well be taken into account. One can discover alternatives for flexing capacity, handling demand in addition to target marketing to get an improved steadiness between capacity and demand in an extremely seasonal business. The function of inventory in the manufacture as well as supply of ice cream can also be checked, with a number of ‘seasonalities’ linked. In addition, majority of the raw materials would be discarded before they are used. In view of the fact that the periods that are required raw materials to be done to use are longer than maximum storage times authorized. This line extension would as well give rise to higher cost because of recurrent changing items as well as lesser quantity of production as compared to maximum production in the majority of items. For instance, when the changed item from before one is formed, the production line should be cautiously “cleaned up beforehand in order to avoid producing different colour or flavouring ice creams from their original specifications. In fact, it takes one hour to clean the ice cream making machine between flavours. This careful clean up tends to cause higher cost and lower productivity. Furthermore, smaller amount of production will lead to higher fixed cost per production unit and, as a result; will result in higher total cost” (Heizer, 2007, p. 193). Even though it is apparent that Holly Farm has a key capacity constraint on its production line, Gillian has been uncertain to deal with this setback, as a result, has discarded the expansion policy regardless of the current sustainable development drift of its yearly income. With the intention of proceeding with the development plan, she must attempt to solve the setback. For example, she should discuss with her workers for the increase in working days during a week from 4 days to 5 or even 6 days during the eventful period. Whereas Holly Farm fumbled regarding the probability of creating the different volumes of packages of ice cream for dealing with special orders for the local cuisine trade, they should stop attempting to do this. “While it may be true that quantities of raw materials the farm uses are so small that the farm hardly has any other better ways to control them properly than one, an ad hoc basis. Their way to deal with stocks is obviously unsuitable because companies are to have raw material stocks in order mainly to have a buffer for productions, response to unexpected larger or smaller demands and take advantage of price discounts on large order. In fact, they have had several experiences unwanted stocks and short stocks of materials and flavour. The former led to unnecessary cash outs, the later caused disruption, rescheduling of productions and re-timing of maintenance periods” (Heizer & Render, 2010, p. 204). References Heizer, J. 2007. Operations Management. Ninth Edition. Prentice Hall. Heizer, J. and Render, B. 2010. Principles of Operations Management. Eighth Edition. Prentice Hall. Monks, J. 1996. Schaum's Outline of Operations Management. McGraw-Hill. Waters, D. 2002 Operations Management: Producing Goods and Services. Second edition. Prentice Hall. Williams, T. and Rathwell, G. 2001. Enterprise Integration and Communications Systems. OUP. Read More