Operations Management - Methods Employed by Supermarkets in Designing Layout - Assignment Example

Operations Management Question 3 A a. If orders for pizza arrived every 10 minutes and Vic works on a six-hour shift, the followingcalculation shows how much time the process of making a pizza is as well as the maximum pizza’s Vic can sell in his shift; i. Time to prepare pizza 6+1+8+1+2+2+0.20 (preparation process) = 20 minutes and 20 seconds to fill a customer order ii. Number of pizza orders in 6-hour shift 1 hour = 60 minutes 6 hours = 6X60 = 360 minutes Orders per Hour = 60/10 = 6 orders Orders in Six hours = 360/10 =36 orders iii. Pizzas prepared in 6 hours Time to prepare one pizza = 20 m 20 sec Time per shift = 360 minutes Number of pizzas in 360 minutes = (360x60)/[(20x60)+20) (converting time into seconds) = 21600/1220 = 17.705 = 17 full size pizzas b. Utilization of Single Worker Capacity of the oven = 3 pizzas Time taken to bake 3 pizza = 8 minutes Pizzas by single worker = 1 Time taken to bake 3 pizzas each at a time = 3x8 = 24 Utilization of a single worker = 8/24 or 1/3 = 33.33% c. If Vic employed one more worker to work for 6 hour shift as well, the combined workforce would be employing twice the working time. In this case if the two employees worked together, their output is calculated as; i. Utilization No. of hours per shift = 6 No. of workers = 2 Total time for pizza to prepare = 20 m 20 sec Capacity of oven = 3 pizzas Output of two workers = 1x2 =2 pizzas Number of orders per hour = 6 If each employee was engaged in the entire process doing the same thing as the other, the time taken to bake one pizza prepared by one employee would be the same as the time it takes to prepare two pizzas since the workers use the same amount of time to roll, to load, to bake, to cut & box, and collect & deliver. Utilization of the two employees is; = Number of pizzas/Capacity of oven = 2/3 or 16/24 = 66.67% d. Profit Analysis Price per Pizza = $20 Cost of ingredients = $5 Cost of Labor = $20 per hour Total number of pizza in 6 hours (2 employees) = 17x2 (the 0.7 portion cannot be doubled because labor doubled as the procedure timing is constant) = 34 pizzas full size Total revenue for pizzas = 34x20 = $680 Cost of ingredients = 5x34 = $170 Cost of Labor = 6x20 = $120 Profit = $680 - $(170+120) = $(680-290) = $390 e. Boxing While the pizzas bake, the employees can assemble the boxes. Thus the baking process and the box assembly should be in the same position. Since it only takes 20 seconds to prepare one, in an 8 minute timeframe, 24 boxes can be assembled. However, for a shift with two employees, 34 boxes are needed. Question 3 B Methods Employed By Supermarkets in Designing Layout In the market world today, almost all supermarkets are similar in terms of designing their layouts which have the ability to promote sales and reflect the store`s objective in highlighting various food value and broadcast some secrets that impulse consumers` shopping. Sufficient and well calculated allocation of space can lead to an increase in sales which relate to profits. The principle behind a store layout is always to make good use of available space and increase sales. The layout in supermarkets are divided into different sections: house hold products, freshly baked foods, dairy section, meat section, frozen goods, refrigerated foods, packaged items, locker, offices, back-up areas, staff facilities, the service counter and many more depending on the size of the supermarket. Shoppers will want to observe a flow of arrangement of the displayed items as they walk through the aisles because most shoppers intend to use less time in locating their listed items. In connection to this, the store`s layout is designed with the motive of enticing customers to pick more than what they had planned. This target is made possible by a layout that forces shoppers to move around the store and view other items before acquiring what they intended. The idea behind the stores layout is to allow shoppers to walk around and select items they may wish to use but had no intentions of purchasing them. This behavior is relied upon and encouraged by the layouts of the supermarket. All aspects of supermarket`s layout from the displays near the counter, the bakery and dairy case at the back, the sweets at the cashier and all signs are designed for shopper`s stimulation. The layout of a supermarket is characterized by certain essential aspects as follows: The consumers are known to always purchase daily food items like milk, bread, meat, cereals and other staples. These items are situated at the rear of a supermarket with a deep layout display thus making the consumers walk down the aisles and pass many tempting goods with special offers and some seasonal items before getting to the essential items. This is an impulsive purchase target that exposes less commonly acquired goods to the maximum and the more sort after items being located at a distant. Shelf positioning is also a critical aspect in stores layout. It is known that most buyers have a tendency of looking to the right when they enter a supermarket. This aspect is behind the reason why items on offer are placed on the right side of the entrance rather than the left. In that case the right side of the store near the entrance is usually set aside for promotional items and special offers. Shelf positioning has a great deal in improving the stores layout as shelves are read from left to right hence putting emphasize on items displayed on the right side. In this case, the supermarket places expensive items on the right and cheap items on low shelves making them difficult to see. Manufacturers of big brands tend to pay more to the stores so that there items are placed on adult eye level because it is easier to purchase something you can easily see while walking than items that need searching (Samantara, 2004). Magazines, newspapers, books, DVDs and CDs are kept close to the entrance to encourage customers into browsing the shelves and making impulse purchases before progressing to the rest of the store. Themed aisles are emphasized and implemented on different occasions such as Easter, Christmas, Valentine ’s day, Mother`s day and so on so as to prompt buyers into buying specific items for the occasions. All information, communication signage and promotional materials are orchestrated within a space designed for the concept. Customers do not approve of queuing at the counters but they have to and so the supermarkets layout is also designed in a way that it tempts the buyers with advertising leaflets, holiday offers, savings plan, tourism offers, mobile cards and other similar items. It may be difficult selling to a customer checking out but a bored customer waiting in line will easily pick up this items. In conclusion, these are some of the layout methods of a supermarket that defines the store`s format based on different customer preferences and in order to make good use of all available resources of planning to increase sales and earn profits. Question 4 A There are multiple implications of quality within the manufacturing and service industries. While many are the times customers complain of products not being of good quality, they also complain that quality products are costly. In the business context, the seller and the buyer are connected by the needs of the customer to acquire products and services and the need for the business owner to make profits. In this case, based on tastes and preferences, customers either opt to consider price and compromise on quality or to opt for quality and compromise on the price (Chen, 2009). Based on the above point, it is observed that one of the most notable implications of quality is the cost of sustaining quality. To the management, the strategy to use quality as a competitive advantage for a business involves the employment of quality management strategies among them automated machines, increase expert input, and quality control checks. These activities are costly and are transferred to the customer. To the customer, one implication of quality in products is increased prices which at times do not range within a customer’s financial abilities. Based on the effect to the customer, quality assurance, which requires products to sell at higher prices reduces the demand from price-sensitive customers. On the other hand, in order for a company to be profitable, the management’s strategy to improve on quality is also coupled with market positioning of the product such that they target customers with the ability to buy products at higher prices (John, & Dilip, 2007). In order for companies to thrive within a competitive marketplace, management is faced with the challenge of competitors, customer buying behavior, inflation, and customer purchasing power. Since cost of quality leads to implications such as low demand for products or decreases sales, compromising on quality to meet other organizational objectives such as saturating a market with new products or alternatives, increasing revenues, and/or expanding market presence is a common strategy (Open Air, 2015). Examples regarding how businesses can compromise on quality for other objectives include circumstances where a business such as toy seller makes multiple units of short-term durability to target price-sensitive customers during holidays or national celebrations. Additionally, for companies that make candy for special events such as October 31st’s Halloween festivals can compromise on quality based on the use of the products as well as the short period allowed before the products are rendered irrelevant (Mehdi, Bockenholt, & Laroche, 2007). In other cases, quality can be compromised based on the financial power of the target market. For instance, Western companies that target developing countries such as African states, these companies can compromise on quality in order to produce products that match the customers’ purchasing power. Question 4B Graph 1: Weight at Different Times of the Day a. Based on the original data, graph 1 shows how the weights of different units change over the course of the day. As observed, the standard weight for a unit is 800gms with no margin of error. Based on this assumption, it is observed that during morning hours from 9:00 am until 12:30pm, the weights of all units are above the standard of 800 grams. On the other hand, it is observed that all units have less than the standard unit weight during the final hours, 4 and 5pm. Provided that all three units do not consistency as shown in graph 1 above, it is conclusive that the automated process is not under control. b. In order for the automated process to be regarded as controlled and adhering to the standard weight of 800 grams, the graph below, graph 2, shows the expected weights for all units within the same timeframes. Graph 2: Standard weight distribution throughout the process In order to ensure that the weight variations do not cost the company or lead to possible lawsuits, three strategies can be employed. Firstly, the management should acquire a new and digital calibrator to ensure that weight is scaled to the exact standard. Secondly, management can replace the calibration unit such that the current, which appears defective is removed. Thirdly, since the variations show high levels of inconsistency between morning hours and afternoon hours, automated sensors should be deployed to raise and alarm every time the calibrator incurs an error (Shih-Chieh, Ju, & Rebecca, 2007). The sensors can also be deployed to ensure that the process is stopped anytime such errors are experienced. References Chen, J. (2009). Task factors and compromise effect in consumer choice. ANZMAC. John, G., & Dilip, S. (2007). Extremeness Seeking: When and Why Consumers Mehdi, M., Bockenholt, U. & Laroche, M. (2007). Compromise and attraction effects under prevention and promotion motivations. Journal of Consumer Research, Vol. 34, pp. 234-247. Open Air. (2015). Calculating utilization in a service company. Assessed online on June 4, 2015 from http://www.openair.com/home/OpenAirWhitePaper-CalculatingUtilization.pdf Prefer the Extreme. Working Paper, 1-40. Samantara, R. (2004). Conflict management strategies and organizational effectiveness. Indian Journal of Industrial Relations, Vol. 39, No. 3; pp. 298-323 Shih-Chieh, C., Ju, H., & Rebecca, J. (2007). The Impact of a Product’s Country-of origin on Compromise and Attraction Effects. Marketing Letters, Vol. 18, pp. 279-291. Read More