XLRI BM 2011-13 GROUP 4B

ORM-II Project Report
“Appetite Restaurant”, JK Residency
     

   

Group 4 – Section B Name Vrajesh Shah Manik Raina Chinmay Kamat Ankit Jain Ajay Rajan   Roll Number B11121 B11090 B11075 B11069 B11065

 

This  project  report  has  been  submitted  for  the  fulfillment  of  Operations  Management  –  II  course  under  the  guidance  of  Prof.  Trishit  Bandyopadhyay.  We  thank  Mr.  Amiya  Paul,  Captain,  F&B  (Services),  Appetite  Restaurant  for  helping  us  out  with  details  about  operations  of  Appetite.    Contact Person: Mr Amiya Paul                                                               Mobile Number:  +91 9204550981 

ORM Project Report – “Appetite” Restaurant, JK Residency 

Executive Summary
This project report is based on our study of Operations Management at JK Residency’s Appetite Restaurant in Jamshedpur. Started in November 2010, JK Residency can be classified as a 3 Star Business Hotel located ten minutes from Tatanagar railway station. We explored different concepts in Operations Management such as forecasting, aggregate planning, inventory control, scheduling, materials requirement planning, quality control in discussions with the captains at Appetite. The report contains our findings of our study. We have tried to analyse the operations both from a theoretical and an on-ground perspective. The operational processes at Appetite are quite different from those of a manufacturing firm primarily because it is a services business. The report begins with an introduction to the hotel industry in India and an introduction to JK Residency as a hotel. We have also looked at the Organizational Structure of JK Residency – particularly the F&B Services section which controls the Appetite restaurant. Appetite currently uses qualitative methods for forecasting. We have explored the possibility of using quantitative methods. The sales and occupancy forecasts have been studied using regression analysis to arrive at FITS (Forecast adjusted for trend and seasonality). The study of aggregate planning consists of how the restaurant follows a subcontracting strategy to meet the fluctuations in demand rather than a hiring/layoff policy. The scheduling methods have been examined for both personnel scheduling and job sequencing. First hour basis method and linear programming techniques have been tried to ensure optimum workforce allotment. Job sequencing of orders in the kitchen has been studied through FCFS and Johnson’s Flow Model. Being a well-known name in the city, we have observed that the restaurant has considerable bargaining power and good relationships with its suppliers and that allows it to have control its inventory to its advantage. The restaurant used both P-systems and Q-systems for inventory control for different food raw materials. Materials Requirement Planning is done so as to ensure that there is no short-fall at any point in time. Quality standards are an area for alarm, though. Our study reveals that the restaurant could do much better if quality and maintenance standards are followed in a more standardized form. We recommend looking at quality issues through the ISO lens. Maintenance and supply chain management have been studied using frameworks for the services industry. “What happens inside the hotel and the kitchen? How is your order served?” We have tried to answer all these questions by studying the Kitchen Order Taking (KOT) process. Recommendations have been given by us at every stage in the report wherever an improvement was deemed necessary.

Acknowledgements
We extend our sincere thanks to Prof. Trishit Bandyopadhay, instructor of our Operations Management – II course for providing us with this opportunity to study the detailed operations of JK Residency. We are also thankful to Mr. Amiya Paul (Mobile: +91 9204550981), one of the captains at Appetite for listening to us patiently and providing us with detailed information during our numerous visits to the restaurant. We also acknowledge the efforts of Mr. Sunil Kumar, another captain at Appetite for helping us during one of our visits.

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Hotel Industry in India 2. Logistics and Supply Chain Management 13.ORM Project Report – “Appetite” Restaurant. JK Residency: Organizational Chart 4. Inventory Management 8. Scheduling 7. Recommendations 3 4 5 6 8 10 14 17 18 20 22 23 24 27 2   . Forecasting 5. Aggregate Planning 6. Theory of Constraints 12. JK Residency: An Introduction 3. What happens inside the hotel? The KOT Process 14. Materials Requirement Planning 9. Maintenance Management and Reliability 11. Quality Management 10. JK Residency  Table of Contents Page Topic Number 1.

The Department of Tourism has recognized the potential of tourism in the India and resolved to strengthen India’s reputation as a prime tourist location.ORM Project Report – “Appetite” Restaurant. Heritage Hotels – Architecturally distinctive properties such as forts and palaces are featured in this category. Mid-Market Segment – This segment consists of 3 Star and 4 Star hotels which offer the essential services of the luxury hotels without the high costs. The Hotel Industry comprises a major part of the Tourism industry and contributes directly to the employment of around 1.2 Functional Classification Based on the purpose they serve hotels are also classified functionally as follows – Hotels in India Business Hotels Residential  Hotels Resorts Motels.cci. 1. Budget Segment – This segment consists of 1 Star and 2 Star hotels. Fotels etc                                                                1  Tourism and Hotel Industry in India ‐ http://www. These hotels offer a wide variety of services and facilities. Hotel Industry in India It is boom time for India’s Tourism and Hospitality sector. The emergence of India as a global financial market has attracted a new breed of business travellers as well over the past few years. JK Residency  1. contributing up to 2.1 Structure of the Industry1 Hotels in India 5 Star Deluxe 5 Star 4 Star 3 Star 2 Star 1 Star Heritage Hotels Premium and Luxury Segment – This consists of the 5 Star Deluxe and 5 Star hotels which cater to the needs of business travellers and upmarket foreign leisure travellers.5% to the country’s GDP. Tourism is the third highest foreign exchange revenue source.in/pdf/surveys_reports/tourism‐hotel‐industry.5 million people and indirectly facilitates tourism and commerce.pdf  3   . 1. These provide inexpensive accommodation to price-conscious travellers.

Most the information regarding the project has been obtained in discussions with Mr. Saikat Chatterjee – GM of F&B (Service). it can be classified as a 3 Star Business Hotel as defined above. Oriental. we will focus on these two departments and try to apply all the concepts of Operations Management on the activities undertaken by these departments. Amiya Paul and Mr. The restaurant is well equipped with capacity of 120 seats and offers Continental. The hotel also offers a roof top. accommodation. dining and entertainment services2. JK Residency  2.2399 to Rs. The salient features of the hotel can be noted down as –        37 fully furnished state-of-the-art rooms High speed Wi-Fi connectivity Comfortable.Sunil Kumar – both captains in the F&B (Service) department with the consent of Mr. JK also contains a conference hall with a capacity of 60 people called “Concurrence”.jkresidency. As is the case with any premium hotel.5999 per night Checkout time of 12:00 noon JK Residency also contains a fully functional hotel named “Appetite” with the tagline “feed your desire”. The departments as identified in the interaction with the managers at JK Residency are as follows – Main Departments Front Office Food and Beverage (Service) Food and Beverage (Production) Housekeeping Supporting Departments Maintenance Rooms Division Finance and Accounts Safety and Security Food and Beverage (Service) and Food and Beverage (Production) are the two main departments that are responsible for the functioning of “Appetite” – JK Residency’s multicuisine restaurant. leisure activities and comprehensive business facilities 140 kms from the Birsa Munda Airport Tariffs ranging from Rs.ORM Project Report – “Appetite” Restaurant. The setting is called “Steelscapes” and hosts about 200 people.co.html  4   . modern and pleasurable ambience Exciting mix of fine dining.                                                              2  http://www. JK Residency: An Introduction JK Residency is a lavish hotel that offers travellers a heightened level of luxury. parties and banquets. Indian and Tandoor cuisines. Appetite is open not only to the incumbents of the hotel but also to outside patrons. beautifully decorated terrace for open air gatherings. tasks are divided into departments which work independently of one another and need to be integrated to ensure smooth functioning of the hotels. Over the course of our project.in/default. Started in November 2010. Chinese.

Amiya Pa and Mr. Th are five captains wo s C here e orking in the F&B Services de B epartment.ORM Project Report t – “Appetite e” Restauran nt.1 Main Departme ents Main Depts. JK Reside ency  3. F&B Services  (GM) Front O Office Hou usekeeping F&B  Production  (Head) Captains Executive Chef Senior  Stewards Sous Chef Stewards Chef de P Partie Cook Trainee  Stewards The F&B Services d B department is headed by Mr. Sunil Kumar are the lead M aul S ding captains working towards the daily operations of th restaurant he t. D Maint tenance  Man nager Rooms  Division  (head) Finance e  (head) Safe ety and  Se ecurity Electrician n Carpentary Plumbers 5   . JK Res ncy: O nizatio siden Organ onal Chart 3. Saikat Chaterjee. Mr. 3.2 Supp porting Dep partments Supp porting  Dept.

They use a Historical Analogy method to forecast demand where they rely on past history to develop forward looking estimates without the use of any statistical model. 4. Forecasting Forecasting is the basis of corporate long-run planning.ORM Project Report – “Appetite” Restaurant. Dependent Demand: Demand for vegetables.9723 9 10 11 12 13 14 15 16 17 Linear (Sales (In Rs Lakhs)) 6   .824x + 1. As can be expected. Being a relatively simple operation. They do not make use of a mathematical model to forecast demand. We have therefore applied other forecasting methods to improve the accuracy of the forecast. Forecasts also provide the basis for budgetary planning and cost control. capacity planning as well as decisions involving production planning. Operations personnel use forecasts to make periodic decisions involving process decisions involving process selection. Active Demand Management: JK residency has actively tried to influence independent demand through the following initiatives: a. It can then convert the independent demand into component dependent demand for raw materials such as grain. Sales (In Rs Lakhs) 20 15 10 5 0 1 2 3 4 5 6 7 8 Sales (In Rs Lakhs) y = 0. The company was not able to provide us with exact sales data.1 Forecasting Methodology JK residency’s Appetite restaurant needs to first forecast the independent demand in terms of number of guests arriving per day/week/month. Offering discounts on its new banquet hall. Running promotions around Jamshedpur in the form of food festivals b. The two basic sources of demand that JK Residency’s restaurant appetite faces are 1. but they obliged us with approximate sales data. Passive Demand Management: Here the company simply accepts what happens and does not try to manage demand. the firm can manage it using: 1. vegetables and fruits. this can lead to significant errors in the forecast. meat. meat.3838 R² = 0. This is not done at JK residency. JK residency uses Qualitative Techniques that are subjective or judgemental and are based on estimates and past opinions. Steelscape 2. With respect to independent demand. JK Residency  4. scheduling and inventory. Offering students of XLRI a discount c. Independent Demand: Customers arriving at the restaurant 2. spices etc.

585288523 1.091288 1.977958 0.338288 1.009074809 0.977958324 0. Month Apr-12 May-12 Jun-12 Trend 16.2158 17.091287885 1.916590284 0.91659 0.7 15 41.824X + 1.2857143 170.852932 0.909112 0.852932 0. “Operations and Supply Management”.2 13.2380952 134.974545 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Using a linear regression technique3.91659 0.61904762 92.1428571 164.068128 1.924791 0. of FITS: Forecast adjusted for trend and seasonality.3 13.53379 17. JK Residency  Month Sales (In Average Daily Rs Number of Lakhs) customers Ratio of Actual to Trend 3.80952381 61.1 11.2 5.966711 1.909111571 0.5238095 157.952381 120.040469157 1.8198 156.037398205 0.3838 Note: This model cannot be used to forecast indefinitely into the future.977958 FITS 14.8 8 8.002502 1.944801773 0. The equation for the trend line was found to be Y=.924790623 0.61904762 48.038934 0.1 5. This is because the restaurant has a seating capacity limit of 150.04761905 72.85 No.9 10.66666667 45.86324 14.9047619 69.5714286 1.160754 1.94259 0.8 4 4.3 14.2773 187.8 14. Thus 300 would be the theoretical upper cap on the forecast.959673 0.876105816 0.040469 1.85714286 95.002501819 1.                                                              3  Chapter 15.23809524 105. Chase Shankar et al  7   .966710695 1.0398 17.2380952 175 178.1 7.23809524 47.8 6. including lunch and dinner they can serve a maximum of 300 (assuming no waiting lines).009075 0. Therefore.5 3. we have found the projected demand for the next three months and multiplied it by the seasonal factors to obtain a forecast that was adjusted for trend and seasonality.974544888 Seasonal Factor(Average of same month in both years) 1.8638 Seasonal Factor 0.06812799 1.ORM Project Report – “Appetite” Restaurant.852932129 0.47005 Average Daily Customers 159.25338083 1.

Since demand is dynamic. Aggregate Planning Aggregate planning is a process to help give better customer service. shorten lead times and give the management a handle on the business. Appetite employs a subcontracting strategy instead of frequent layoff and hiring or a level strategy to accommodate demand fluctuations.ORM Project Report – “Appetite” Restaurant. Some industries face cyclical demand fluctuations and with services. Let’s look at the aggregate planning for two quarters: Months Days Full-time employees Full-time days Peak Demand (days) Subcontracted employees FTE subcontracted employees Total FTE days October 26 30 780 6 4 24 November 26 33 858 9 5 45 December 27 34 918 13 5 65 January 26 34 884 11 4 44 February 25 35 875 10 5 50 March 27 35 945 7 3 21 804 903 983 928 925 966 1000 950 900 850 800 750 Full‐time days Total FTE days Monthly requirement for Full-time Employees (in FTE days) 8   . cycles are more often measured in hours than months. JK Residency  5. Appetite has a very strong demand during lunch and dinner and hence they have added a breakfast menu (though it caters only to the guests who are staying at the hotel) to increase demand during the morning hours. it is important to monitor the expected needs for the future.

These can be represented in a matrix form which provides the framework for the firm to identify its position and the necessary actions to manage yield. Also. The two strategic levers that can be used to accomplish this goal are pricing and duration control. Handling variability: The restaurant should employ coordinated policies on overbooking and no-show or cancellation and well-designed service processes that are reliable and consistent. “Operations and Supply Management”. JK Residency  5.1 Yield Management Systems4 Some interesting issues that can be addressed hereby are:  Pricing: The capacity is insufficient during peak demand and hence offering deals to customers who arrive during nonpeak periods may enhance revenue generation. it utilizes idle capacity for complementary services like banquet halls and gatherings. Managing service processes: The restaurant utilizes its strategy of scheduling additional personnel to meet peak demand to its advantage. Chase Shankar et al    9   .ORM Project Report – “Appetite” Restaurant. Appetite does not make use of this strategy currently. However.   The essence of yield management is the ability to manage demand. PRICE FIXED Movies Stadium/Arenas Convention Centres VARIABLE Hotels Airlines Rental cars Cruise lines care PREDICTABLE DURATION Restaurants Golf courses UNPREDICTABLE Internet providers Continuing Service hospitals                                                              4  Chapter 16.

We assign a nu ch w n umber of workers equal to the requiremen of that peri e nt iod. In th section.ORM Project Report t – “Appetite e” Restauran nt. 11 pm 4 4 4 12 am m 4 0 4 1 am 4 0 4 2 am 4 0 4 3 am 4 0 4 4 am 4 0 4 5 am 4 0 4 6 am 4 0 4 7 am 6 6 6 8 am 6 0 6 9 am 6 0 6 10 am 6 0 6 11 am 12 6 12 12 pm 12 0 12 Require ement Assigne ed On-Dut ty Requirem ment Assigned d On-Duty y 1 pm 12 0 12 2 pm 12 0 12 3 pm 16 10 16 4 pm 16 0 16 5 pm 16 0 16 6 pm 16 0 16 7 pm 34 24 34 8 pm 34 0 34 9 pm 34 0 34 10 pm 34 0 34 Using th first hour p he principle. daily or hourly pe ersonnel schedules. JK Reside ency  6. we notice that the schedule for arrival of workers ch e e o hanges as follows: Nu umber of Wo orkers 4 6 6 10 24 W Working Tim me 11PM-7AM M 7AM-3PM 11AM-7PM M 3PM-11PM M 7PM-11PM M Remarks Ful 8 hour shif ll ft Ful 8 hour shif ll ft Ful 8 hour shif ll ft Ful 8 hour shif ll ft Half shift (4 hour f rs) 10   . k ency. we study his w personne schedulin practices of the hote and present simple analytical a el ng el approaches for these f schedule and check their efficie es. For each subsequent period. a) “Firs hour” prin st nciple We assu ume that eac worker works on an eight-hour shift continuously. Th hese two categories are broadl classified asly Scheduling Person nnel Job  Se equencing 6. S Sched duling g Service industries l like hotels and restaura ants require two catego ories of sch heduling. assi the exact number h t ign of additi ional worker to meet the requiremen rs e nt.1 Pers sonnel Sched duling This rev volves aroun setting we nd eekly.

c) Scheduling: An Innovative Approach An improvement in the number of personnel needed can be made by breaking down 8-hour shifts to two 4-hour shifts during certain periods of the day. JK Residency  b) Linear Programming Based Solution 11PM-3AM Chef + Staff Needed 4 3AM7AM 4 7AM-11AM 6 11AM-3PM 12 3PM-7PM 16 7PM-11PM 34 Let the number of workers starting work at 11PM. X3. X3=12. X2. X4=0. 7AM. Assuming eight hour shifts. Then our objective is to: Minimize: X1+X2+X3+X4+X5+X6 Subject to: 1. 3. The hotel has four basic shifts as follows: Name of the Shift Morning with break Lunch and Dinner Shift Evening Night Number of people (Chefs + Services) 6 12 16 4 Timings 7AM-11AM 11AM-3PM 3PM-11PM 11PM-7AM 7PM-11PM 7PM.ORM Project Report – “Appetite” Restaurant. X4. we get the following results – X1=4. X1+X2 >= 4 X2+X3 >= 6 X3+X4 >= 12 X4+X5 >= 16 X5+X6 >= 34 X6+X1>=4 X1. 2. 3PM and 7PM be X1. 6. 4. X5=34. 3AM.X2.11PM 11   .X5. 5. X5 and X6 respectively. X6=0 Number of workers starting at 11PM Number of workers starting at 3AM Number of workers starting at 7AM Number of workers starting at 11AM Number of workers starting at 3PM Number of workers starting at 7PM 4 0 12 0 34 0 Both the analytical methods suggested require 50 personnel to meet the manpower requirement. 11AM.X6>=0 Solving the problem using Microsoft Excel’s Solver. X2=0.X3.X4. 7.

On consultation with the captains. The hotel is aware of this and hence has improvised with two 4-hour shifts. This has reduced the total manpower requirement to 38. main course and dessert. The only constraint is that food should be served to the guests in the order of starters. Different lines would include – starters. Hence. One cannot jumble up the order and present dessert before starters and so on. jobs correspond to the orders that are given from the different tables. workers work for 8 hours. change uniforms and probably get necessary information from workers in the previous shift. JK Residency  In all four shifts. Machines correspond to the different lines within a particular cuisine. main course and desserts. Assume that the orders have arrived in the same chronological order and belong to same cuisine – Indian. The only disadvantage of four hour shifts is that when the workers have to start working. Both the analytical methods suggested require 50 personnel to meet the manpower requirement. main course and desserts. all the orders are taken and processed on a FCFS basis. we have generated three orders that are likely to be found on any given day along with the preparation time. Traditional FCFS scheduling Currently. Two shifts work continuously while two shifts are staggered. Table Number 1 2 3 Starters 20 mins 15 mins 18 mins Main Course 45 mins 30 mins 50 mins Desserts 10 mins 12 mins 7 mins Johnson’s Method On inspecting closely. we realize that every order has to flow through a common sequence of starters. This time lost is similar to the “setup costs” in manufacturing. this problem can be modelled on Johnson’s Flow Shop with three 12   . they have to log in.2 Job Sequencing In the context of the restaurant.ORM Project Report – “Appetite” Restaurant. still meeting all the desired constraints! 6. As a result there is a lot of non-value added time if the shifts are staggered.

Combining the above data into two “pseudo machines” Table Number 1 2 3 Pseudo1 65 mins 45 mins 68 mins Pseudo2 55 mins 42 mins 57 mins Applying Johsnon’s Rule.ORM Project Report – “Appetite” Restaurant. JK Residency  machines. main course. Logically. All orders might not have all three components – starters. max(desserts)=12. 13   . and hence a waiting window would be needed to be adopted. we get that the correct sequence of orders is T3. min(main course) = 30. dessert All order might not belong to the same cuisine Time saving benefits would be worth the complexity of process    Although we still feel that Johnson’s method may be employed in case of highly standardized and stable environments and during peak hours to save on the overall delivery time and increase guest satisfaction. T1 and then T2. a waiting window of about 5-10 minutes can be applied during peak hours to collect all orders and then apply Johnson’s rule to determine order. Time taken with normal FCFS scheduling Time taken with Johnson’s method 152 mins 145 mins Thus we propose that the kitchen department should use Johnson’s method whenever possible. Some practical difficulties that the kitchen might encounter are as follows:   Higher number of calculations and scheduling overheads Orders might not arrive at the same time. Ideally. Thus the condition is satisfied and we can apply Johnson’s Method. In the data we have gathered. this condition is also sound as it can be safely assumed that a main course takes more time for preparation than starters or desserts. To be eligible to be scheduled using Johnson’s flow shop the condition is that – min(main course) > max(starters) or min(main course) > max(desserts). max(starters)=20.

buffer stock is additional units above and beyond the minimum number required to maintain production levels. Balancing the various tasks of inventory management involves paying attention to three key aspects of any inventory. JK Residency  7. Fixed-order quantity models (Economic Order Quantity or Q-model): In this model. this means understanding how long it takes for a supplier to process an order and execute a delivery. This requires continuous monitoring of the inventory. Competent inventory management also seeks to control the costs associated with the inventory. an order to replenish the resource takes time. opportunity cost of capital etc. The first aspect has to do with time. Essentially.ORM Project Report – “Appetite” Restaurant. Fixed-time period models (Fixed Order Interval or P-models): In this model the quantity ordered is variable. or dwindling to levels that could put the operation of the company into jeopardy. the quantity ordered is fixed. and ordered after a fixed time period (“time triggered”). Calculating what is known as buffer stock is a key to effective inventory management. a restaurant has the ability to meet unexpected higher customer demand. Inventory management also demands that a solid understanding of how long it will take for those materials to transfer out of the inventory. insurance. “Operations and Supply Management”. 2. Chase Shankar et al  14   . Reordering may take place anytime (“event triggered”). breakage. 3. both from the perspective of the total value of the goods included and the tax burden generated by the cumulative value of the inventory. The costs resulting from this stockout are called shortage costs. counting only takes 5                                                               Chapter 17. Here. The various costs involved that affects the size of inventory order are: 1. Holding/Carrying costs which include the costs for storage facilities. There are two types of multi-period inventory systems: 1.1 Inventory Systems5 Appetite follows a multi-period inventory system as opposed to a single period inventory system. This involves periodic purchases where the inventory is kept in stock to be used as and when the need arises. In terms of materials acquired for inclusion in the total inventory. Shortage costs which occurs when an item is depleted. be established. handling. By holding buffer stock. Knowing these two important lead times makes it possible to know when to place an order and how many units must be ordered to keep production running smoothly. This process usually involves controlling the transfer in of units in order to prevent the inventory from becoming too high. Inventory Management Inventory management is the process of efficiently overseeing the constant flow of units into and out of an existing inventory. The quantity and the timing of the order are dictated by logic inherent in the system. and ordered each time the inventory level drops to the reorder level. 7. depreciation. Ordering Costs which include managerial and clerical costs to prepare the purchase or production order. The size of inventory is comparatively smaller as compared to fixed-time period model. 2. depending on the demand for the items considered.

may be required. These contracts are renewed annually with the term of contract which includes the price rate of each item if refreshed. for which different plates etc.2 Inventory Control at Appetite Inventory of Utensils: Appetite has a capacity of 125 people. To service full capacity. Inventory of Grocery: Grocery is maintained by undergoing an agreement with private contractors. Here the size of inventory is comparatively larger as compared to fixedorder quantity period model. to protect against stockout during the review period. they maintain an inventory of 375 cutlery . This is because the same customer may eat snacks. Lot for Lot Ordering: This model involves ordering exactly what is required in each period and is used. This allows flexibility in ordering whenever there are perishable and non-perishable goods involved. The inventory system followed in Appetite is a mixture of the Fixed-order quantity models (Qmodel). in case there is variation in the demand every period. The main caveat to the agreement is the price of the items described in the contract being fixed even if price fluctuates in the market. This can be seen in the following table: 15   .3 plates/spoons/glasses for each customer. JK Residency  place at the review period. Fixed Time Period models (P model) and Lot for Lot. main course and desserts. 3.ORM Project Report – “Appetite” Restaurant. The following exhibit shows the fixed order quantity model followed for Rice/Wheat in JK Residency. 7.

varies acc. 0 10 5 Q model 1 40 20 Reorder on the 4th day to meet demand Lot for lot ordering to meet the varying demand 15 kg. JK Residency  Item Quantity ordered (kg.) 40 40 -Safety Stock (kg.ORM Project Report – “Appetite” Restaurant. varies acc. 16   . 0 Inventory of Beverages: Beverages are procured through a local distributor. to day of the week Varies 1 Lot for Lot 0 1 kg. normally. the inventory system followed is Fixed-order quantity models (Q-model) because the level of beverages is constantly monitored and after the quantity falls below a certain level. of days stock lasts 5 5 1 Type of order system Q model Q model P model Lead Time (days) 1 1 0 Reorder Level (kg.) 20 20 13 No. Here. to day of the week 50 Varies 2 Lot for Lot 0 2 kg.) 100 100 13 Expected usage per day (kg.) 20 20 -Comments Rice Wheat Chicken Reorder on the 4th day to meet demand Reorder on the 4th day to meet demand Perishable items Must be consumed the same day Perishable items Must be consumed the same day Lot for lot ordering to meet the varying demand Mutton 8 8 1 P model 0 -- -- Perishable Vegetables Non Perishable Vegetables Paneer 10 kg usually. an order is made.

If the restaurant cannot properly schedule its receipt of chicken according to the forecasted demand it will lose a lot of revenue on these items besides the bad reputation.13kgs/day Mutton.8kgs/day However. Material Resource Planning A MRP6 is a very simple and logical approach to determine the number of parts and components needed to produce each end item. “Operations and Supply Management”. The lead time is 1 day so the order has to be done 1 day before. Chase Shankar et al  17   . Since these two items are perishables they need to be consumed the same day they arrive.g. JK Residency  8. on special occasion days i. MRP is based on dependent demand which is caused by demand for the final goods that the customer wants. Let us assume one week from now (day 7) the managers are expecting a special occasion day. It also provides the schedule specifying when each of these materials should be ordered. For e. From the talk we had with the managers at JK we came to the conclusion that following is the daily demand for the two types of food:   Chicken.e. talking of JK Residency the number of items (including soup &starters) which had chicken as there base would easily be more than twenty five.ORM Project Report – “Appetite” Restaurant. Item Chicken (LT= 1 day) Gross Requirement Scheduled Receipts Net Requirement Planned order receipts Planned order releases Gross Requirement Scheduled Receipts Net Requirement Planned order receipts Planned order releases Day 1 13 13 0 0 13 8 8 0 0 8 Day 2 13 0 13 13 13 8 0 8 8 8 Day 3 13 0 13 13 13 8 0 8 8 8 Day 4 13 0 13 13 13 8 0 8 8 8 Day 5 13 0 13 13 13 8 0 8 8 8 Day 6 13 0 13 13 39 8 0 8 8 24 Day 7 39 0 39 39 Mutton (LT = 1day 24 0 24 24                                                              6  Chapter 18. chicken and mutton.1 Performing MRP Calculations We tried to collect the data about two food items i. Although MRP systems have been installed almost universally in manufacturing firm its requirement in an industry like the restaurant/ dinning industry cannot be underestimated. 8.e days when both the banquets hall are booked and the restaurant is full too the managers plan for three times as much chicken and mutton. A restaurant menu essentially serves a wide range of dishes but the basic raw material for most of these dishes comes from a very limited pool.

ORM Project Report – “Appetite” Restaurant. the quality processes that it follows are not standardized but ad-hoc. grains and meat products Testing of raw materials at the source Long Term contract with suppliers. JK Residency  9. almost all measures adopted by Appetite are qualitative (subjective) in nature. then it should seriously think towards getting relevant ISO Certifications for international quality and assurance. Involvement of The quality process should be followed throughout the organizations – right from the cleaners to the executive chef. To involve all people. subject to frequent quality scrutiny which allows the restaurant to reduce uncertainty by fixing monthly price contracts Comments and complaint box to act on the feedback provided by customers Regular cleaning of the kitchen to ensure hygienic preparation.1 ISO Certifications -9000 and 22000 We believe that if JK Residency has to establish itself as a prominent business hotel. It would be much better if all the workers work towards measureable objectives documented in writing. 9. Some of the quality measures that JK Residency’s Appetite undertakes are as follows:         Tasting of food by the executive chef before being served to the guests Internal linkage between the executive chef and store manager of the procurement department to ensure quality delivery of raw materials like vegetables. There is no awareness for standardization. Customer A feedback form given to customers with the bill amount. The need of standards and quality has been ignored conveniently till date. Chefs wearing protective caps to avoid hair falling into food. production of food and service are based on subjective parameters. 3. Quality measurement in all areas including – procurement. Currently. gloves and so on. We suggest that the restaurant look closely at the two fundamental operational goals – careful design of product and service and consistency in producing the design. 4. Appetite lacks total quality management. Even though the hotel has a three star reputation. Automated Inventory Software Collection of written standard recipes As you can see above. we look at the various practices followed by JK and suggest changes based on the ISO model. Behaviour of people is based on norms. First. No effort is made to quantify quality standards. Mr. Leadership modern restaurant. Saikat Chaterjee can make the staff aware of the implications of quality for a 2. Process Process approaches are used distinctively for procurement of raw material. feedback from customer is evaluated once every month and menu changes happen yearly. Responses should be evaluated on a daily/weekly basis.org/iso/qmp  18   . Quality Management Quality Management in JK Residency is one area which requires a lot of work.                                                              7  http://www. Principles of the Comments/Suggestions ISO 9000 model7 1. Changes made should be notified publicly to Focus the patrons. the restaurant can frame a People quality policy and make guidelines for workers at all level with regard to quality.iso.

 JK Residency  Approach ordering and inventory control. But there is no written documentation. (Input. A&R.wikipedia. Measure. oxygen. thus making the success dependent on particular individual’s capabilities. Critical control points need to be identified to measure critical factors such as food. repeatable and measurable. So either party is not affected by abrupt market variations and it helps maintain long term relationships.org/wiki/ISO_22000  10  http://www.To plan. b) System management .org/wiki/HACCP  19   . Appetite protects both itself and suppliers from risk by negotiating price contracts for the entire month in advance.wikipedia. Owner. temperature. Output. Trigger. Improve) Processes should be predictable.com/iso‐22000. Appetite should also strive to integrate its systems with the suppliers.iso. The feasibility of this happening is not known. The software is also used to identify the amount billed per person. operate. operated and updated within the framework of a structured management system and incorporated into the overall management activities of the organization. Continual improvement can be targeted towards preparation time and consistency of service. d) HACCP Principles11 . A standardized way to serve guests should be employed. Factual Approach to Decision Making 8. These processes should be documented using text or even videos and explained to new employees. The delivery times and service levels of different food products should be standardized and maintained at all costs. Appetite scores quite high in this regard. All the decisions about procurement are made after analysing the daily demand data obtained through the tracking/billing software. This provides maximum benefit for the organization and interested parties. Appetite should implement this standard to differentiate itself from the other players in the industry.org/iso/catalogue_detail?csnumber=35466  11  http://en. the best-selling items on the menu and this information is used for pricing purposes.The most effective food safety systems are established. so that key actions can be taken to reduce or eliminate the risk of the hazards being realized. implement.htm   http://en.To effectively communicate food safety issues to their suppliers. water activity and pH. System Approach to Management 6.                                                              8 9  http://www.ORM Project Report – “Appetite” Restaurant. time. 5. All expertise is transferred over word of mouth. This can be done by evaluating the employees frequently with respect to the measurable deliverables. Appetite should also force it suppliers to adopt these principles as they are likely to affect raw food as well. moisture.praxiom. The four broad areas covered under the ISO 220009 standards: a) Interactive communication10 . Key Steps. customers and relevant interested parties in the food chain. are safe for the consumer c) Prerequisite programmes . Continual Improvement 7.HACCP is used in the food industry to identify potential food safety hazards. There is absolutely no process used for “serving” the guests. acidity. maintain and update a food safety management system aimed at providing products that. Mutually beneficial supplier relationships Another derivative of the ISO 9000 standards which applies specifically for the food industry is the ISO 22000 Standard8. according to their intended use.

Cost of Repair: The cost of repair is quite high for JK residen t f q ncy. Those that are under warranty r’s t pose lesser risk because the r e b restaurant do not bear the repair co oes t osts. man of which are now any h no l longer cover by the m red manufacturer warranty. n The deci Manager will selec a policy th minimize the sum of preventiv maintenan costs plu repair.ORM Project Report t – “Appetite e” Restauran nt. Factor Cost a. Wait for machines and equipment to breakdown and then rep them. We can analyse this decision using the fo n ollowing fram mework Fac ctor Costs s Bre eak Down n  Distribution n Do owntime   Costs Quality  Q related  r costs Appetite rest taurant’s dec cision using this framewo t ork. th follow a policy gea hey ared highly towards preventive ma aintenance. ts s There ar 2 alternativ when it comes to ma re ves c aintenance. “Moder rn Production/ / Operations  Management t”. as most of their t equi ipment is sta andard equip pment such as fridges. With hi igher levels of preventiv maintenan we shoul expect ve nce ld fewer ac ctual breakdo owns and the erefore positi impacts on other cost ive o ts.                                                              12  Chapte er 12. They are: T 1. JK Reside ency  10. At JK r residency. rs ct hat es ve nce us downtim and quality related co me osts. Main ance M ageme & ntena Mana ent Reliabili ity The ma aintenance f function12 acts as a su a upporting fu unction to th quality c he control role to keep equipme operating effectively to maintain quality sta ent g y n andards as well as to ma w aintain qua antitative and cost standards of output. ision concern ning the appropriate leve of preventi maintena el ive ance rests on the balance of costs. Buffa Sarin et al  20   . Have routine preventive maintenance e e e pair 2. Let us now analyse A ts 1. ov a vens etc.

. If equipment has been maintained in good condition. Therefore quality related costs also dictate a preventive maintenance schedule at the restaurant. Quality related costs can also modify the conclusions of the economic balance between repair and PM costs. In the case of Appetite restaurant downtime forces the restaurant to stop serving certain items which not only affects profit. during which time the machine is idle anyway. KITCHEN AREA Oven Maintenance Fridge Cleaners 1 1 Preventive Maintenance Preventive Maintenance 3-4 PM 3-4 PM 21   . High food quality has implications for the restaurants competitiveness of the restaurants and can also positively impact profits. Quality-related Costs a. Sometimes this cost is very large and can cause shutdown of the entire production process. Downtime costs can modify the conclusions of an economic analysis and should be included in the analysis. because of which preventive maintenance costs are kept very low.PM here is especially desirable because in happens in between major shifts. fewer defects occur and experience has shown that productivity is improved. Breakdown Probability Distribution a. 2. Cost of preventive maintenance: The primary preventive maintenance that JK residency does is a thorough cleaning cycle(details of which are provided below) and regular oiling to keep the machines functioning smoothly. There was no information available regarding this feature as there were not enough breakdowns to form a distribution 3. 4. Downtime Costs a. JK Residency  b. As such there is very little replacement of parts etc. 9. SERVICE AREA Electrician Number of Employees 2 Carpentry 1 Plumber Floor Cleaners 1 2 Type of Maintenance Preventive and Repair Maintenance Preventive and Repair Maintenance Repair Maintenance Preventive Maintenance Timing Available as required 24X7 8 AM to 5 PM 8 AM to 5 PM 5 times a day 2. but has longer term implications in terms of the restaurant’s reputation.ORM Project Report – “Appetite” Restaurant. quality control is better.1 Maintenance Schedule 1.

Step 1: Identify the system constraints One of the problems that the restaurant faces is the absence or leave of an employee (cook/captain/waiter) whose job is critical to running the operations at times of high demand. is either left vacant or is transferred to some other employee whose workload is less. Theory of Constraints The Theory of Constraints13 assumes that there always is a manageable system which is limited in achieving more of its goals by a very small number of constraints. so that the services get affected to the minimum. The TOC process seeks to identify the constraint and restructure the rest of the organization around it.wikipedia. the constraints have been broken.com/pdfs/toctpwp. but do not let inertia become the system constraint We identify a problem that Appetite faces and apply the five steps of the Theory of Constraints to solve these problems. but do not let inertia become the system constraint Now if this constraint is overcome.                                                              13 14  http://www. as a result of these steps. JK Residency  11. and there is always at least one constraint. Step 4: Elevate the system constraints If the absence of the employee becomes more frequent or the restaurant is unable to keep customers satisfied during peak hours. These problems put a strain on the restaurant’s ability to serve the customers in the shortest possible time. go back to Step 1. Step 5: If.org/wiki/Theory_of_constraints  22   . the constraint has been broken. go back to Step 1. through the use of five focusing steps14:      Identify the constraint Decide how to exploit the constraint Subordinate all other processes to that decision Elevate the constraints If. then more cooks/waiters should be recruited. Step 2: Decide how to exploit the system constraints In case of absence of an employee.ORM Project Report – “Appetite” Restaurant.goldratt.pdf   http://en. another employee specializing in the same role can be assigned the job. who is now assigned to the more critical job. Appetite should look towards uncovering other factors/constraints which are affecting its ability to provide top class service to its customers. Step 3: Subordinate everything else to that decision The job which was being taken care of by the employee. in the previous steps.

procuring raw materials through the value chain is important mainly because of two reasons. Appetite has fixed prices of items on its menu on a cost-plus based pricing scheme. Sea food and Dry fruits are procured from other cities through intermediaries.    Assured & continuous flow of raw material is required as inventory cannot be maintained due to the perishable nature of raw materials. To avoid this. it is the restaurant that is at a disadvantage. it has a monthly contract of buying chicken and mutton from its suppliers at a fixed price. However. Procurement of materials is usually done from fixed vendors to maintain the quality of raw material and to avoid violation of input quality specifications. prices of the inputs may change on a day-to-day basis. major part of the logistics and supply chain consist of its suppliers of raw materials. The store that houses the inventory of raw materials for the restaurant is located within the same building which makes it easy to acquire them on a day-to-day basis (or as planned)  Raw Material Vegetables and other vegetarian items Non-vegetarian items Contract Period Monthly Contract selection Lowest bid Price-fixing At the start of each month At the start of each month At the beginning of the year with interim reviews At the beginning of the year Monthly Lowest bid Lowest bid with suppliers allowed to review on an interim basis if price fluctuations are more Lowest bid Grocery Yearly Beverages Yearly 23   . it enters into contracts which last for a fixed time period and prices of the goods remain constant for that time-period. the supplier bears the cost and if the prices go down. Most of the raw materials are locally procured.ORM Project Report – “Appetite” Restaurant. This keeps the restaurant shielded from frequent price fluctuations. For a restaurant. If the prices go up during this period. Logistics and Supply Chain Management For any organization. For example.cost and quality. JK Residency  12.

of peop ple Food order & Qty red Waiter’s na ame Requireme nt/Advantage To schedule orders acco e ording to the time To bill the o order to a tab ble Calculate th total numb of people Data used t estimate for future he ber e. r Wh hite KOT Yell low KOT Re ed KOT • Goes to o kitchen • Goes to o billing cler rk • Remain ns with stew ward 24   . we get a total of 3 pag – one goes to the ges kitchen. To further smoo e ns s othen the operatio and remo any confu ons ove usion the rest taurant uses a system of colour codes The colour codes: s. the che and the bi er ngst ef illing clerk. JK Reside ency  13. per The vari ious steps inv volved in the process are e e: Step1: O Order Takin ng The proc cess begins w the stew with ward taking d down the ord on his Ki der itchen Order Ticket (KO Each r OT). se The KOT is an order filling form where the s r m steward fills in the follow details: wing Sr No.ORM Project Report t – “Appetite e” Restauran nt. steward is assigned some tables and he is r s responsible for serving th guests se f he eated on thos tables. The process has been so efficient T and fool proof that the JK Resi l idency mana agement has used this data to make estimates about the s d e a average demand per person for various foo items and the averag money sp r r od ge pent/ worth of order placed p table. Hence. Appe etite: Wha hap at ppens insi th s ide he hot T KO pr ss tel? The OT roces The KO Process: KOT or the kitchen ord ticketing process is an in house p OT e der g a process deve eloped by the JK R Residency m managers to manage info m ormation flow right from taking the food order from the w m custome to placing the prepared items on hi table. the other go to the bil oes lling and the third remain with the steward. to f To serve the guests e To know the steward res e sponsible for the table r Step 2: Copies & Colour Codes s He uses 2 carbon papers to mak three cop ke pies. 1 2 3 4 5 Details fille ed Date & Tim me Table Num mber No. The process invo er d is olves real tim synchroni me ization of the orde data amon the stewards.

 JK Residency  Step 3: Synchronization with Kitchen The white KOT reaches the kitchen where they are transferred to the barker. The barker also ensures the starters in the KOT are prepared first followed by the main course and then the desserts. a special software used by the Hotel Industry. 25   . Roles of a barker can be summarized as: 1) Divide the order amongst according to the various cuisines. 2) Order the cook to prepare the food according to the schedule. This data Is then analyzed to find the trends in demand.ORM Project Report – “Appetite” Restaurant. Step 5: Data entry The data is entered in a computer which uses the IDS software. The barker schedules the various orders coming from different tables on a First Come First Serve(FCFS) basis and ticks off items on his KOT as they leave kitchen to ensure no duplicity in preparation takes place. The work amongst the chefs have be divided according to the cuisine and there are two barkers – 1) Indian cuisine barker 2) Chinese cuisine barker Each barker looks for the food relevant to his cuisine and orders the cook to prepare accordingly. 3) Put the prepared food in a hot case and check the KOT for the steward responsible for taking that food and synchronizing with the steward. value and quantity of food sold. 4) Tick off food taken out from the KOT Step 4: Synchronization with the billing All the yellow KOTs of a table go to the billing clerk who prepares the bill per table. The barker is a person responsible for conveying the information about the orders placed by the guests to the chef. This takes off any scheduling responsibilities from the head of the cook who can singly focus on preparing good food. patterns in demand variation both daily and seasonal etc.

b billing and on remains with the stewa ne w ward Synchr ronization with kitchen h •Barker takes the kitche copy of th KOT en he n •Schedules the KOTs on a FCFS basis e od me hef e • Shouts the relevant foo item's nam for the ch to prepare r • Shouts the relevant ste e ewards name found from the KOT for the steward to e d take away the food Synchr ronization with billing h •The billing copy of the KOT comes to the billin clerk g e s ng • If multiple KOTs have been generated from a table all are summed up e e t •Cumulative bill for a ta able is prepar red Dat entry ta •IDS softwa is used by the hotel are y •All data fro KOT is m om manually ent tered • Data analy yzed to look for trends an forecast fo future nd or 26   .ORM Project Report t – “Appetite e” Restauran nt. JK Reside ency  an arized in the f following diagram: The KOT process ca be summa Arr rival of cus stomer •The custom is allocat a table mer ted •The stewar responsibl for that tab attends to the custom rd le ble o mer Orde Taking er •Steward ta akes the order on the KOT r T •Simultaneo ously three c carbon copies on different coloured pa s apers are ma ade •Copies go to kitchen.

Total Quality Management philosophy should be practiced. 27   . To ensure more utilization of hotel resources in non-peak times such as afternoon. Scheduling: The scheduling of workers and staff is done on an improvised “shift” basis without using any traditional scheduling methods. Quality: A lot of improvements are possible in this area. we suggest that Appetite uses either the Fixed Hour Method or Linear Programming. Use of IT systems and procedures: We suggest implementing a FIT system on the billing system that already exists to extract trends in customer demand and preferences. almost all of the demand of the restaurant is concentrated in the 7PM-11PM time slot. The number of working staff needed is also heavily skewed towards this time slot. the forecasting mechanisms are not in place and even though orders and billing data is captured in the system. A CRM system can also be used to engage with the customer. Another way to manage demand is by table reservations and policies on over-booking and cancellations.ORM Project Report – “Appetite” Restaurant. IT systems have not been completely exploited by the organization. revenue) can be done using regression analysis with adjustments for trend and seasonality. We would like to consolidate and summarize the recommendations as follows: Forecasting: We suggest that better forecasting of independent demand (number of guests. A formal MRP system can also be institutionalized. Currently. better demand management is necessary. Demand Management: We suggest that better demand management be done by offering schemes to patrons such as “happy hours”. As of now. The principles of ISO 9000 and ISO 22000 which have been blissfully ignored should be followed to add credibility to the hotel’s reputation. it is not actively used for forecasting future demand. JK Residency  14. Once the demand matures and patrons arrive at hotel regularly. This works well for the restaurant since the demand pattern is skewed towards the 7PM-11PM slot. Recommendations Specific recommendations pertaining to each topic have been given at the end of each section in the report.

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