CHAD'S CREATIVE CONCEPTS

Buyers of standard line furniture were much more price sensitive and imposed more stringent
delivery requirements.
Custom designed furniture, however, continued to dominate sales, accounting for 60% of volume
and 75% of dollar sales.
Currently, the company operates a single manufacturing facility where the equipment is mainly
general purpose in nature for providing flexibility to custom made furniture.
Both custom and standard furniture compete for processing time on the same equipment by the
same craftspeople.
Problems
• Sales of standard line is increasing steadily, so it requires more regular scheduling, but custom
made furniture is given priority because of its higher sales and profit margins.
• Thus, scheduled lots of standard furniture pieces are left sitting around the plant in various stages
of completion.
Reasons for the Problems
• The holding cost of the company is increasing with dollars tied up in inventory, both of raw
materials and work in process.
• The company has to rent expensive public warehouse to accommodate the inventory volume
resulting in further increase of holding cost.
• The increased lead times in both segments has resulted in longer promised delivery times.
Reasons for the Problems
• The holding cost of the company is increasing with dollars tied up in inventory, both of raw
materials and work in process.
• The company has to rent expensive public warehouse to accommodate the inventory volume
resulting in further increase of holding cost.
• The increased lead times in both segments has resulted in longer promised delivery times.
Questions & Answers
What type of decision must Chad Thomas make daily for his company's operations to run
effectively? Over the long run?
The situation that Chad is facing is between the manufacturing and turn over He needs to focus on
decisions on scheduling, inventory, capacity & layout.
• He need to make scheduling decision to make sure there is not many raw materials as work in
progress status. The standard line manufacturing need to be scheduled properly to avoid this
problem.
• The standard product's warehouse is costly. So, he need to reduce inventory by deciding on good
supply-chain and implement it.
As both the manufacturing line are well in demand and well increasing as well. So, he need to
increase capacity to accommodate demand for both product lines.
How did sales and marketing affect operations when they began to sell standard pieces to retail
outlets?
As given in the case, the sales is growing steadily for the standard pieces. This means, the front end
team is working good, but the back-end team, the operation is not effective to produce that much of
pieces to meet the demand and it is being waste in their warehouse or still under work in progress.
We can say that this is happening because the company is more focused on custom line and gives it
higher priority as compared to standard line. The is not the problem of sales and marketing but just a
less effective operation which Chad should work on to resolve
How has the move to producing standard furniture affected the company's financial?
• Finance and accounting of the company have indicated that the profits aren't what they should be.
• Costs associated with the standard line are rising because there is no active sale and the inventory
is increasing in the form of raw material and work in progress which is holding the investments of
the company
• Additional cost is increased because warehouse has to be rented to accommodate the inventory
volume
If this situation will continue, further Investment in product cycle will be low or even nil at one point
of time
What might Thomas have done differently to avoid some of the problems he now faces?
Few recommendations for Chad in order to reduce finance and slow manufacturing process are as
below -
Reallocate warehouse to a cheap and cost saving location.
• Reduce raw materials from stopping under work in progress.
• Change manufacturing schedule to reduce WIP stock of standard line.
Give same manufacturing priority to both custom and standard lines.
Enlarge the business capacity by enabling more facilities
• Recruit more staff or encourage its existing staff for overtime in order to reduce delay in
manufacturing line.

Fitness case
Short term capacity planning
• It is related to matters of scheduling, labor shifts and balancing resource capacities. The goal is to
handle unforeseen changes in demand in a resourceful and economic way. The time frame is often
only about a few days but might run as long as 6 months.
Long term capacity planning
• It is concerned mainly about strategic problems involving the firm’s key production facilities .Also
long term capacity issues are interconnected with deciding the locations .
Objectives of capacity planning
• To Satisfy the future demand of products devoid of shortage.
• To find the optimal capacity of the company so that the sum of cost of under capacity and over
capacity is kept minimum.
• To make sure that the initial capital investment is kept low to attain a much lower break even
value.
• Investment in capacity of the facility are long standing and can not be overturned without facing
difficulties.
Introduction
• Fitness Plus is a full-service fitness club that has sustained tremendous growth since its opening.
Recently, management became aware of overcrowding and unavailability of equipment in certain
areas and is now trying to determine how to properly evaluate the situation and decide if there is
enough room at the current building to properly service existing members or to open a larger facility
in another location.
• The areas where most bottlenecks occur during peak hours are aerobics, cardiovascular, and
Nautilus areas. Of course, people often do a mixture of both cardio and weight training exercises,
but by constructing a utilization pie chart of Fitness Plus, we realize visually that a huge part of
membership (68% in fact) uses aerobic, cardiovascular, and Nautilus areas of the club, and only a
small part of the membership (18%) uses the racquetball and tennis courts.
DRAW PIE CHART
Case Facts
 Fitness Plus opened its doors in 1995 in a large suburban office park in Greensboro, North
Carolina. It offers fullservice in health and sports club providing range of facilities and services to
support 3 basic activities fitness, recreation and relaxation.  At initial stage fitness plus
membership was small later it has grown gradually.  The ever increasing growth rate in peak hours
brought complaints from members due to the unavailability of equipment. Even the owners were
wondered whether they could use the information to estimate how well existing capacity was being
utilized. • As the area was growing in terms of population and geography management faced great
difficulty as many new offices and business were moving back to it causing resurgence in activity. •
Due to growth potential competition increased, YMCA was offering full range of services at a low
cost. With this initiative two new health and fitness facilities are opened, OASIS and Gold’s GYM. •
Owners had lot of queries in their mind regarding expansion as facilities were constraint. Lack of
financial resources was a point of concern and the current site land capacity expansion of service
might need the reduction of capacity.
What method would you use to measure the capacity of Fitness Plus
• The suitable method to measure capacity of Fitness Plus is by using the input measures because
the club is a flexible flow process and members can choose their own work outs. At current time
with current flow of members, Fitness Plus has large periods of operating near peak capacity in
multiple areas. This caused flow issues including bottleneck in more popular workout areas. We can
assume that members are using more than one area of fitness centre during each visit. Currently,
approximately 80 members per hour enter the club during peak hours but we cannot identify which
areas the member specifically.
Has Fitness Plus reached its capacity?
• From the calculation of capacity cushion in year 2000 and 2005, it shows that Fitness Plus has
reached its capacity by increasing of demand Weekly • Operation Hours – 101 hours • Peak Demand
– 3 hours daily from 4.00 pm to 7.00 pm • Aerobics : 35 members per hour • Cardiovascular : 29
pieces of equipment ( we assume equipment will be limited to 30 minutes per member) • Nautilus :
24 pieces of equipment ( we assume equipment will be limited to 30 minutes per member) • Current
capacity measured as inputs for nautilus, cardiovascular, and aerobics fitness Current demand is 88
members per hour (35+ 29 +24 = 88) Projected demand is 141 members per hour (35+58+48 = 141)
Capacity cushion is the amount reserve capacity a process uses to handle sudden increases in
demand or temporary losses of production capacity. It measures the amount by which the average
utilization falls below 100%. Large cushions appropriate when demand varies and uncertain where in
this case, demand on some days of the week is predictable higher than on other days. • In 2000 –
Average is 15 members per hour Utilization = Average Output Rate/ Maximum Capacity x 100 15/88
x 100 = 17% • Capacity cushion in 2000 = 100% - 17% = 83% • In 2005 – Average is 25 members per
hour Utilization = 25/88 x 100 = 28% • Capacity cushion in 2005 = 100%-28% = 72% • To get an 83%
capacity cushion like in 2000, with an average flow of 25 members per hour of year 2005, the
capacity would have to be increased to 141 members per hour. Special consideration should focus
on the cardiovascular area where demand is over capacity at peak times. Because of the limited
amount of land at the current facility, expansion from 88 to 141 members per hour is probably not
feasible.
Which capacity strategy would be appropriate for fitness plus ?
Short run capacity because the problem is mainly of overcrowding of people with Nautilus ,
cardiovascular and aerobics equipments  Add or share equipment  Adjust the schedule of
members by concerning gym trainer  Utilising other facilities
How would you link the capacity decision being made by fitness plus to other types of operating
decisions ?
By using short term capacity planning fitness plus will solve the problem of overcrowding and
unavailability of equipment but they may face problem in peak month January regarding to there
capacity so they should also follow long term capacity planning

Chapter 8 Case: Copper Kettle Catering

Copper Kettle Catering (CKC) was once a small lunch delivery service for offices, which was started in
1972 by Wayne and Janet Williams. CKC has now grown into a full-service catering company that
now serves a wide range of customers, from lunches to large catered events.
Purpose
Analysis
1. Are the operations of Cooper Kettle Catering conducive to the application of lean concepts
and practices? Explain.
Operations of CKC are not conducive to the application of lean concepts and practices. The basic
idea of the lean system is to maximize the value added by each activity by removing waste and
delays from them. Flexibility in the activities is one among the several elements of the lean system.
Operations at CKC are not flexible in nature. Customer’s demands are, at Copper Kettle Catering,
only two categories. Those are delivering only, and deliver and serve. Both need prior order. Based
on the order in which services are provided, instant orders cannot be served. The operational
activities are designed in such a way to serve the orders on the basis of advance booking. Food
preparation facilities are designed to support operations to meet the pre-determined demand. Lay
out of the unit, labor structure, and storage facilities are all meant for orders received in advance. It
can be seen from the facilities and operations of Copper Kettle Catering that it cannot accommodate
instant demand. It has no flexibility to adopt changes in demand, in order to capture more market.
2. What, if any, are the major barriers to implementing a lean system at Coper Kettle
Catering?
Some of the major barriers that CKC may face when trying to implement a lean system are:
- CKC would need to hire more employees to accommodate customers that require such
things.
- If they hire more people, costs will go up, which will affect food prices.
- The locations of competitors would give them a distinct advantage over CKC.
- Higher output may lead to reduced food quality.
3. What would you recommend that Wayne and Janet Williams do to take advantage of lean
concepts in operating OKC?
In order for Wayne and Janet to take advantage of Lean concepts in the operation of their business,
they should begin cross training of their employees, so that at any given time, any employee of CKC
is ready and able to accomplish anything that is thrown at them.

Questions and Answers

Question 1: How should quality be defined at this restaurant?
The quality is the important and big issue in the restaurant business. Restaurant’s quality should
consist of making customers feel happy. Make sure the restaurant meet the customer standards.
The customers should be reception greeted by cheerful faces and seated in a friendly manner. The
environment in a good restaurant is very important of the dinning knowledge. Making confident that
the restaurants interior decoration promotes the Mexican style theme. The environment allows for
people to get an actual taste for Mexican meal and Mexican background music. The staffs and
administration in the good restaurant should be well behave and more friendly so that the customer
will be happy and good dinning experience. Also it is very important to make a good relationship
with the valuable customers. The food in the restaurant should be better condition and fresh.
Prepared the good food to meet customer needs and delivered to customers on time to the table.
Food hygiene and spotlessness is another essential characteristic of quality in the restaurant.

Question 2: What are the restaurant’s costs of poor quality?

The key of a successful restaurant business is always keep high standard environment and serve
fresh good quality foods. Also make happy and satisfied customer that will want to come back and
will tell others of their good dinning experience. Time maintains is very important in a good
successful business. Customer will not come back if the preparation time and the release time for
the meals do not improve at Jose’s Authentic Mexican Restaurant. Restaurant will be lost their
customers if the stay time to be seated does not reduce. Another important is the quality of food
and customers always want fresh and tasty food. If the food is not good then the total flavour of the
meal will not be what the external customer needs. The result of these entire problems in Jose’s
Authentic Mexican Restaurant will lose business. When the customers are not happy with the food
and management then the whole restaurant suffers and possibly having to shut down. Karetski and
other waiters do not get their tips because the poor quality of food. The customer will not give tips
well if they have a bad dinning experience and they will not tell others. So the restaurant will be lose
their customer and business will be down.
Question 3: Use some of the tools for improving quality to assess the situation at Jose’s.
There are lots of roads that Jose’s Authentic Mexican Restaurant could be improve their overall
Jose’s dinning experience for their valuable customers. Some of the equipment for recovering
quality to assess the situation at Jose’s Authentic Mexican Restaurant below:
The Quality of Food
The Restaurant’s Seating Capacity
Take- Way System
The Preparation time Reduce
The Quality of Food:
The quality of food is the biggest problem at Jose’s Authentic Mexican Restaurant. The quality of
food is very important for the cook at Jose’s. He is not happy and stressful for the food supplier. The
manager at Jose’s needs to try to improve the quality of their food and also needs to contact the
supplier according to this problem. The manager at Jose’s could have someone that check the food
which has been coming in from the supplier and make sure they are getting fresh and the best
quality possible. If the cook and the manager find out that the quality of the food continues to
coming in at Jose’s in poor situation then Jose’s would be need to get a new supplier who can supply
the best quality and fresh food. More quality food is more success in their restaurant business.
The Restaurant’s Seating Capacity:
Jose’s Authentic Mexican Restaurant is a small 58-seat restaurant. The customer wait time will be
improve and reduce if Jose’s could providing more seating. One of the better ideas for improving the
restaurant is to develop on its current size and add a relaxing waiting area so that the customer does
not have to wait outside. If Jose’s continues to be a success and grow in a larger restaurant then the
customer waiting line will be slowly generate big. So Jose’s would need to be hiring extra employee
like cook and waiters that the customer waiting time will be improve and reduce.

Take- Way System:

Take -Way system is the external customers can order their food and pick up the order at the
restaurant. So Jose’s could be starting offering take -way to the customer that the customer still get
taste Jose’s Mexican food without waiting on the queue long time and without the whole dinning
experience. Customer relationship is important in a successful business. Jose’s manager could be
walk through the restaurant and talk to the customer in order to listen feedback. Also more surveys
could be help for recovering better quality to consider the condition at Jose’s Authentic Mexican
Restaurant.

The Preparation time Reduce:

Time maintains is big deal at Jose’s Authentic Mexican Restaurant. The customers are not happy
because the cook takes more time for meals on the dinning table. The cook takes more time for meal
because the poor quality of food. When the good quality food coming to Jose’s then the preparation
time for the food will be reduce and the cook should be able to hit the twelve minute target. The
customer will be more satisfy and happy if Jose’s is able to manage to the twelve minutes
preparation time for the food instead of twenty minutes.

If Jose’s Authentic Mexican Restaurant able to make these changes then the customer will be
happier and leave better tips for waiters. Karetski and other waiters also will be happier for these
changes. When the customer will be enjoy the overall Jose’s dinning experience and tell others then
Jose’s will be more success restaurant business in New England. More customers will come in and
get taste of the Mexican food.