# Modern Sciences and Arts University MGT 320 MO ‘MEN Project

Spring 2014
1

1st stage (Forecasting):
a) Naïve approach:
F
t-1
= A
t

F
2014
= 143

b) Simple moving average:
Average forecasted value of 9 years = MAN =

bcx

c) Weighted moving average:
(0.10*143) + (0.08*129) + (0.26*100) + (0.25*133) + (0.20*124) +
(0.11*98)
= 119.45

d) Exponential smoothing:
Because Mr. Mohamed Essam finds that it is not too risky although risk
is exist because “Egyptians will not stop eating out home and the
majority of Egyptians outing are to eat outside their homes”. So we will
choose “0.3” as it projects the uncertain situation
Year Sales in
numbers of
meals (000)
F Calculations
2000 85 - -
2001 92 85 Naïve approach
2002 113 87.1 85+ 0.3(92 – 85) = 87.1
2003 109 94.87 87.1 + 0.3(113 – 87.1) = 94.87
2004 111 99.11 94.87 + 0.3(109 – 94.87) = 99.11
2005 123 102.67 99.11 + 0.3(111– 99.11) = 102.67
2006 149 108.77 102.67 + 0.3(123 –102.67) =
108.77
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
2

2007 150 120.8 108.77 + 0.3(149 – 108.77) =
120.8
2008 98 129.6 120.8+ 0.3(150 – 120.8) = 129.6
2009 124 120.12 129.6+ 0.3(98 – 129.6) = 120.12
2010 133 121.3 120.12+ 0.3(124 – 120.12) =
121.3
2011 100 124.8 121.3+ 0.3(133 – 121.3) = 124.8
2012 129 117.36 124.8+ 0.3(100 – 124.8) = 117.36
2013 143 120.8 117.36+ 0.3(129 – 117.36) =
120.8
2014 - 127.46 120.8+ 0.3(143 – 120.8) = 127.46

periods sales F e (a-f) || e
2
2000 85 - - - -
2001 92 85 7 7 49
2002 113 87.1 25.9 25.9 670.8
2003 109 94.87 14.1 14.1 198.8
2004 111 99.11 11.9 11.9 141.6
2005 123 102.67 20.3 20.3 412.1
2006 149 108.77 40.2 40.2 1616.04
2007 150 120.8 29.2 29.2 852.64
2008 98 129.6 -31.6 -31.6 998.56
2009 124 120.12 3.88 3.88 15.05
2010 133 121.3 11.7 11.7 136.9
2011 100 124.8 -24.8 -24.8 615.04
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
3

2012 129 117.36 11.64 11.64 135.5
2013 143 120.8 22.2 22.2 492.8
2014 - 127.46 - ∑||=254.42 ∑

=6214.8

∑||

f) Exponential smoothing because it is considering errors most accurate

g)

Year

X
appearance
times on
T.V.
Y
Sales in
number
of
meals
(000)

XY
(000)

X
2

Y
2

2000 51 85 4335 2601 7225
2001 63 92 5796 3969 8464
2002 44 113 4972 1936 12769
2003 23 109 2507 529 11881
2004 57 111 6327 3249 12321
2005 39 123 4797 1521 15129
2006 66 149 9834 4356 22201
2007 53 150 7950 2809 22500
2008 23 98 2254 529 9604
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
4

2009 49 124 6076 2401 15376
2010 81 133 10773 6561 17689
2011 35 100 3500 1225 10000
2012 62 129 7998 3844 16641
2013 66 143 9438 4356 20449

∑ ∑

∑ ∑ ∑

∑ ∑

∑ ∑ ∑

Year

X
Availability
in
universities
area
Y
Sales in
number of
meals
(000)

XY
In (000)

X
2

Y
2
2000 17 85 1445 289 7225
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
5

∑ ∑ ∑

∑ ∑

∑ ∑ ∑

2001 21 92 1932 441 8464
2002 24 113 2712 576 12769
2003 25 109 2725 625 11881
2004 25 111 2775 624 12321
2005 27 123 3321 729 15129
2006 29 149 4321 841 22201
2007 29 150 4350 841 22500
2008 31 98 3038 961 9604
2009 32 124 3968 1024 15376
2010 33 133 4389 1089 17689
2011 33 100 3300 1089 1000
2012 35 129 4515 1225 16641
2013 35 143 5005 1225 20449

∑ ∑

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
6

The relationship between sales and availability in universities is stronger
than the relationship between sales and advertising appearance times
on TV.

h)
1) The reason behind sales declining before the year 2006:
Before 2006 Mo’men it is not famous enough and there are heavy
competition like MAC or KFC more known than Mo’men and he didn`t
offer any variety. Also Mo’men is Egyptians restaurants and people
prefer more the international restaurants so because of that the sales
are declining before 2006.
2) The reason behind sales declining for the year2008:
The world financial crisis that carried up in the US and went outside to
affect the whole world is expected to have a major impact on the
Egyptian economy. Definitely, the Egyptian stock market was the first
to suffer due to the fall in foreign stock markets or in any place in the
Egyptian market.
And also in 2008 there are a bad reputation to Mo’men because there
are one person have a poisoning from Mo’men sandwich.

3) The reason behind sales declining For year 2011:.
The Revaluation in Egypt is has caused a lot of damage to Egypt's
economy and people's ability to supply and demand, causing a lot of
damages to all the Egyptian market in restaurants and shops.

2
nd
Stage (Capacity):
Actual output = 2000,000

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
7

a) Designed capacity = 1000 u\h *(12 *365) = 4,380,000
b) Effective capacity = 1000*(329*8) =2,632,000
c) Efficiency ratio = actual output /designed capacity*100
= 2000, 000/4,380,000 * 100 =46%
d) Utilization ratio =actual output /effective capacity*100
= 2000, 000/2632000= 0.759*100 =76%
e) The indicator will use the effective capacity because the effective
capacity is more accurate than designed capacity.
f) Effective capacity= 2,632,000
Exponential Smoothing= 127.46

machine
Ty1 Ty2 Ty3
Cans production 2400 1200 1200
Pouring coke liquids 5880.4 4410.3 16171
Finishing cans 16507.5 13206 13206
Total 247879 18816.3 30.577 297272

 Design capacity =(8*365)= 2920

 Estimated number of machine =
Total processing time /design
Capacity =
Ty1= 297272/247879 = 1.199 =1.2
Ty2= 297272/8816= 15.799=15.8
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
8

Ty3= 297272/30577= 9.7

 Ty1= 1.2*885,000=1062000
Ty2= 15.8*1000, 000=15800000
Ty3= 9.7*850000= 8245000

 So, it can produce Ty3 or Ty1 but can't produce Ty because it's
cost more than budget.

3
rd
stage (productivity)

Outputs: 2,632,000
Inputs: -
-labor cost=No. of workers *No. of works hour * Wages
=128*4*4=2048 LE
-Material cost=4000 LE
-overhead cost= 20,000 LE + 0.1*(Labor Cost)
=20,000 LE +0.1(2048) =20204.8
(a) Labor productivity =Outputs\labor cost
=2,632,000048=1285.15

(b)Machines productivity=2,632,000000*40=16.45

(c)Multi-factor productivity =outputs\ (Labor cost +material cost

=2,632,000\(2048+4000+20204.8+16.45)=100.20 units\LE

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
9

So, each 1 LE spent as investment in total inputs can generate 100.20
of outputs.

4th Stage (Product & Services design):

A. The first package design is good enough and very clear and it is very
good an idea that 2 sandwich and frieze and Pepsi with only 25 Egyptian
pound it is very cheap. And the design has all the details about the meal
considering components of the meal, the price, and the restaurant
number for delivery.

B. Mo’men is the first restaurant to prepare sandwich in centimeters he
is the first mover and it could be an advantage for the restaurant.

C. The logo is an important branding element, so it should be evaluated
with the same carefulness as the brand name itself.
Mo'men Logo is very appropriate for a fast food restaurant; the colors
and font type are attractive and memorable. Mo'men's logo is unique,
simple and appropriate as it conveying a sense of style, the spirit of the
business, and the type of customers it wants to attract.

5th Stage (Location Analysis):
1) Center of gravity location method:

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
10

Area / Zone “X” “Y” Annual
Demand (000)
D1: Haram 21 67 400
D2: Giza 25 34 300
D3: Dokki & Mohandeseen 33 61 350
D4: Zamalek 52 22 150
D5: Nasr City 87 88 600
D6: Heliopolis 79 81 400
D7: Shoubra 41 93 400
Total 338 446 2600

Calculations:
 If the quantity is constant :

̅

=

̅

 If the quantity change:

̅

̅

 So ,The coordinates is (52, 71)

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
11

D1 = (21-52) + (67-71) = 35
D2 = (25-52) + (34-71) = 64
D3 = (33-52) + (61-71) = 29
D4 = (25-52) + (22-71) = 49
D5 = (87-52) + (88-71) = 52
D6 = (79-52) + (81-71) = 37
D7 = (41-52) + (93-71) = 11 (best distance as it is the nearest destination to
the Centre of gravity)

 Depending on center of gravity, the best location for the
warehouse is Shoubra

2) Cost – profit volume analysis:
D
1
(33,61)
D
2
(25,34)
D
4
(52,22)
D
5
(87,88)
D
6
(79,81)
D
7
(41,93)
(52,71)
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100
D
3
(33,61)
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
12

Location Fixed cost Variable cost
A: October 300,000 13
B: El Sheikh Zayed 120,000 32
C: El Tagamo’a 170,000 24
D: El Shrouq 200,000 35

Step 1: To get 1
st
point for each alternative of TC, when Q = 0
TC = FC + (Q*VC/U)
T.C October= 300,000+ (0*13) = 300,000 LE (0, 300000)
T.C El Sheikh Zayed= 120,000+ (0*32) = 120,000 LE (0, 120000)
T.C El Tagamo’= 170,000+ (0*24) = 170,000 LE (0, 170000)
T.C El Shorouq= 200,000+ (0*35) = 200,000 LE (0, 200000)

Step 2: Graph

Step 3: By assuming that:
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
13

 T.C October= T.C El sheikh Zayed
300000+ (13q) =120000+ (32q)
300000-120000=32q-13q
19q=180000
q=9473
T.C A= 300000+ (13*9473) =423149 ∴A and B (9473,
423149)

 T.C El sheikh=T.C El Tagamo’
120000+32q=170000+24q
32q-24q=170000-120000
8q=50000
q=6250
T.C B= 120000+ (32*6250) =320000 ∴ B and C (6250,
320000)

 T.C October=T.C EL Shrouq
300000+13q=200000+35q
35q – 13q = 300000-200000
100000=22q
q=4545
T.C A= 300000+ (4545*13) =359085 ∴ A and D (4545,
359085)

Step 4: Ranges of output:
From 0 to 4,545: alternative “B” is optimal
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
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From 4,545 to 6,250: alternative “B” is optimal
From 6,250 to 9,473: alternative “C” is optimal
From 9473 to 11818: alternative “C” is optimal
More than 11,818: alternative “A” is optimal

3) Factor rating:
All factors are equally weighted so 1/7 = 0.14

Weight 10
th
of
ElTagamoa ElShorouq 10
th
of
El
Tagamoa
El Shrouq
0.14 90 50 50 0.14*90 =
12.6
0.14*50 =
7
0.14*50 =
7
0.14 70 60 70 0.14*70 =
9.8
0.14*60 =
8.4
0.14*70 =
9.8
0.14 30 80 70 0.14*30 =
4.2
0.14*80 =
11.2
0.14*70 =
9.8
0.14 50 60 50 0.14*50 = 7 0.14*60 =
8.4
0.14*50 =
7
0.14 40 70 80 0.14*40 =
5.6
0.14*70 =
9.8
0.14*80 =
11.2
0.14 50 50 40 0.14*50 = 7 0.14*50 =
7
0.14*40 =
5.6
0.14 60 70 80 0.14*60 =
8.4
0.14*70 =
9.8
0.14*80 =
11.2
54.6 61.6 61.6

Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
15

Using factor rating analysis, having equal weights, we found that
the best location is El Tagamoa and El Shrouq, because both have the
highest score which is 61.6. So the manger have two alternative to
choose the best location.

6
th
Stage (Inventory Management):
 Given:
The average working days per year is 360
D =127.46*1000=127,460 (the exponential smoothing forecast for the
year 2014) “as one Pepsi for each meal is a must”
S = 5,000 L.E.
H= 0.2 L.E.
 Required:
1. You have to compute the economic ordered quantity of Pepsi
cans?

2. Determine the ROP in units of Coke cans.
ROP= d × LT

=

3. If you know that the MO ‘men was ordering monthly an order of
388,000 cans, compute the cost savings that the company will
realize if it implements the new optimal inventory decisions.
Modern Sciences and Arts University MGT 320 MO ‘MEN Project
Spring 2014
16

, When Q= 388,000 cans
=(

) (

) = 40,442.5 ≈ 40,443 L.E

, When Q=

= cans
=(

) (

) = 15,966 L.E

The cost saving from using this new decision = 40,443-15,966 =
24,477 L.E
4. Compute the cycle time using EOQ & using original order size.

 By using EOQ:

 By using original order size:

5. Compute the number of orders using both EOQ & using original
order size.

 By using EOQ

 By using original order size: