NZDB632 - Peter Case Study - Capacity Management - Dough as a Business - Capacity Calculation - Operation Management Assignment Help

Assignment Task:

The Background:

You have almost completed your Tertiary studies majoring in Operations and Production Management. You see an advertisement for a position at Dough Limited. Whilst studying you had worked part-time at Dough (which at the time was a new commercial bakery established in 2015) next to the bypass in Whangarei. So you know a bit about the issues it has faced since opening.

Dough produces good quality sliced bread. The business owners realised that if they compromised the production capacity they could use some of the machinery currently used in the “Chorleywood bread process” (to quickly produce traditional supermarket sliced bread), to produce better quality bread.

There has been a number of operational problems they face. Back in January 2016 Dough employed a new Sales Director, Amanda. She persuaded the business owners to change the direction of the business to sell good quality sliced bread directly to dairies and other stores. This was to compete directly with supermarkets and retailers such as petrol stations. The dough has borrowed to invest in the trucks and new delivery staff to distribute this bread to the retail outlets. More and more customers are placing orders with Dough resulting in a 40% growth in sales volume over the 12 months to the end of April 2017. As production has grown so have the issues around the production. What management has also found is:

1. An increasing number of customer complaints as consumers return bread to the retail outlets because of poor quality issues.

2. A significant decrease in the overall profit margin experienced by Dough. Operating profit as a percentage of revenue had dropped even though production has increased linearly over the last 12 months (by the same number of loaves/month)

3. Production problems including breakdowns of machinery installed in 2015 when the factory was new, and internal quality problems resulting in wastage as poor quality bread is sold off to pig farmers, or destroyed. The factory was set up with machinery with a design capacity of up to 1400 loaves of bread per hour. Experts who were employed to help design and build the factory advised that its effective capacity should be 75% of design capacity but this was exceeded on a regular basis.

4. Increasing staff turnover in the factory.

5. When the business started to expand in February 2017 the factory was operating two 8 hour shifts, 6 days per week. With baking commencing 2 hours after the start of the first shift to enable preparation and for the ovens to heat up and ending 2 hours before the end of the second shift to allow staff to clean up ready for the first shift the following day. For the 12 hours, the factory actually baked bread it ran at 60% utilisation.

You apply for the job and to your surprise you get it. On your first day, you meet the Managing Director Peter Pan. He is really stressed and explains that he has a big shareholders hui (meeting) in 3 weeks. At this hui, he needs to inform the shareholders about the issues with production and what are the recommended strategies for addressing those issues. He said that one of the major shareholders used to lecture in operational management and ‘knew his stuff’. So it needed to be a decent report written and “...guess what ...it’s your job to write it...” Peter has also been a student in operations management (failing three times) gave you some direction as to what he thought was needed answering in the report. The business report would be widely circulated around those that knew a lot and those that knew nothing around the issues. So it needed to be thorough. And it needed to explain why this theory material was relevant to the Dough business. These are the questions he gave you to help write your report around:

Part A: NZDB632:
 
Question:
1. What is capacity management?

2. Why is it important to Dough as a business?

3. What is a capacity calculation and how could it help Dough?

4. There needed to be a clear direction given as to what would best inform a capacity calculation. So there had to be an explanation of what the relevance of these following terms was to Dough... “getting it right”: 
• Design 
• Effectiveness 
• Utilisation 
• Efficiency 

Peter then gave you some direction as to what was needed next: Strategy to address the issues at Dough. So this was adding to the report what are the available strategies around capacity management that could assist Dough. There needed to be:

5. An explanation of each possible strategy (influencing the demand, level, chase, sub-contract and casual labour) 
 
6. A recommendation of which of these strategies (or possibly more than one) would be best to help solve Dough’s issues-making sure full argument was given to the recommendation.

Part B: NZDB632:

Peter looked at your first draft and was happy with that but he said he wanted more. One of the other Directors was a really practical woman and she would need to be shown how you applied theory and techniques to the practices in the business. Here he gave you direction again:
 
Question:
1. For Dough, why might forecasting techniques such as: 
• Weighted moving average 
• Regression 
• Exponential smoothing
Be a useful/not useful technique/s to use and why. 

2. How errors such as: 
• MAD 
• MSE 
• MFE 
• MAPE
have an impact upon forecasting that is completed by Dough going forward. You need to cover at least one of them although if you see that more than one is applicable to Dough then discuss them. 

3. When it comes to production planning what would a Master Production Schedule (MPS) do to help address Dough’s issues? You discuss at least one of: 
• MRP 
• EDD 
• Johnson’s rule 
• Services scheduling 

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