ASSIGNMENT 1CHAPTER 1

OPERATIONS & SUPPLY CHAIN STRATEGY

EXERCISE :

Question 2

Choose two restaurants with substantially different operations strategies. For each restaurant, discuss its competitive priorities—what is most important to it. Allocate 100 points across each of the four competitive priorities (e.g., the most important might get 40 points, the next most important might get 25, and so on). For each restaurant, list four or five operational decisions/ investments that the restaurant manager must make. These decisions should fit within one of the eight categories in Table 1.3. Compare decisions for the two restaurants-how do they differ?

The competitive priorities of two chosen restaurants, comparing between Pizza Hut and Kentucky Fried Chicken:

PIZZA HUT RANKING KENTUCKY FRIED CHICKEN RANKINGPricing : Average at RM 15 per person for personal meal

10 Pricing: Average at RM10 per person by meal because of lower cost operation.

10

Quality: superior quality with table services

40 Quality: consistent quality with self services at the counter

30

Time/ delivery: delivery speed means try to make it fast by having a standard time to serve.

30 Time/ Delivery: on time delivery at counter.

40

Flexibility: volume flexibility means products are offered are made based on orders.

20 Flexibility: variety means numerous choices of food are offered immediately on time ready stock.

20

How do they differ:

PIZZA HUT KENTUCKY FRIED CHICKENPricing: Average at RM 15 per person for personal meal

Pricing: Average at RM10 per person by meal because of lower cost operation.

Quality: superior quality with table services Quality: consistent quality with self services at the counter

Time/ delivery: delivery speed means try to make it fast by having a standard time to serve.

Time/ Delivery: on time delivery at counter.

Flexibility: volume flexibility means products are offered are made based on orders.

Flexibility: variety means numerous choices of food are offered immediately on time ready stock.

OPERATIONAL DECISIONSources: Relationship with suppliers for raw materials in providing products & services offered at Pizza Hut Restaurant chains

Sources: Has very own poultry fam – AYAMAS to supply poultry produce.

Facilities: Standard interior design, and table settings.

Facilities: easy to clean, customer convenience and simple

INFRA STRUCTURAL DECISIONWorkforce: specialized and highly skilled Workforce: trained to be multitasked

employeesProduction planning: based on customer order

Production planning: have a standard amount every day

CASE STUDY

NATURAL DESIGNS INC

1. What types of decision must Jim McMaster make on a daily basis for natural design to

run smoothly? What kind of decision must he make on long term basis?

The long term decision making (structural) can be done in long term basis because it

needs a detail planning and need a huge amount of capital. The areas that need to

improve are:

Facilities- Adding more facilities to help the production process run smoothly.

Technology- use new machine or new technology to increase the production and

the quality as well.

Sourcing: making a relationship with lots of suppliers to ensure that there is

enough raw materials to customize the bird feeders.

Jim McMaster should focus on the short term decision (Infrastructural) first. The areas

that need to improve include:

Workforces- hired more specialists to build customized bird feeders in order to

make sure that the workers can meet the demand of customer.

Production planning- produced quantities ordered by customer and make sure all

the demand by customer can be met and can be delivered on time.

2. Describe the operation strategy for Natural Designs. Has this strategy changed as a

result of the custom bird feeder operation? If yes, how?

Operation Strategies of Natural Designs Inc.

Before customization process After customization process

Cost: low cost operations (by having

nature talks and garages in producing bird

feeders)

Cost: become high to customize the

product. Need to add as customer ask onto

bird feeders)

Time delivery: on time delivery (ready

stock)

Time delivery: product development speed

Flexibility: produced 10 products and

standardized.

Flexibility: customization takes a lot of time

to build.

In our opinion, operational strategies of Natural Design had been changed as a result of

the custom bird feeders operation. As shown in the above comparison table, we can see

that after customization of services, Natural Design had increased their cost in order to

fulfill the need requested by customers. In terms of delivery, they changed to product

development speed whereas for flexibility they changed from standardized production to

customized and have a time line to meet. The customization seems increasing the cost

of the company and the effort of the workers.

3. What might have been done differently to facilitate the offering of custom bird feeders?

From our own point of view, there are several strategies had been done in order to

facilitate the offering of custom bird feeders. Natural Design have offered online ordering

system in order to increase the flexibility to the customer. By doing this, it changed a lot

of decision in Natural Design business operation. Never the less, it brings some new

changes to the production operation in order to produce the bird feeders as what

customers want. This took more time than before.

Second strategies that might have been done by Natural Design such as, increasing the

no. of employees assigned to produce bird feeders according to the customers orders.

Natural Design should increase and hire more workers in order to finish production of

customer orders on time (within 1 week). This directly impacted the Natural Design’s

operation. Unlike previously, they just construct their product in garage and with the

standard amount per production, but presently they would able to produce as per

customers orders.

4. How should McMaster analyze the alternative expansion option? Which would you

recommend: a second facility or a move to a single larger facility?

Mc Master should analyze the expansion option based on the structural decision and

infrastructural decision. This is the basic need for a corporation.

Second facility Move to single larger company

Capacity: short term planning in order to cater the demand from customer.

Capacity: long term planning because the number of customer increases from time to time.

Facilities: involved with additional of new facilities.

Facilities: new facilities are required at this new company to increase the production.

Technology: not involved with new

technology

Technology: need a new technology to make sure that the production is effective and normally its need a big place to put the machine.

Work-force: need additional of worker Workforce: need additional of extra workers

Production/planning: increase the number of production since the demand is increasing.

Production/planning: Increases the numbers of production since the business have become globally by operate online.

Cost: less amount of capital Cost: huge amount of capital

From our point of view, Mc Master should choose the second option that is to move to a larger

facility. As its benefits greatly outweigh the costs, and thus would be the more profitable

decision.