The Paramount Diner

Operations Management

1.Introduction

This essay focuses on the Theory of Swift, Even Flow and how it affects performance
productivity. The five principles of production variability and how it impacts productivity will
be discussed. The microeconomic theory will be analyzed to determine how labour affects
productivity. Finally, the theory of swift, even flow will be used to analyze the implications
for managers and how it can affect productivity growth.

1.1.The Theory of Swift, Even Flow

The theory of Swift Even Flow states that the efficient performance for any production
system “rises with the speed by which materials flow through the process, and it falls with
increases in the variability associated with the flow” (Schmenner and Swink, 1998, p.102).
This theory combines five principles of production which are variability, bottlenecks,
scientific methods, quality, and factory focus (Conway et al., 1998; Gryna and Juran, 2001;
Pesch and Schroeder, 1996).

The principle of variability is focused on the advantages that a decrease in process variability
can utilize throughout the process (Conway et al., 1988, Kannan and Palocsay, 1999).
Variability in a process may result due to inefficient process procedures or substandard
products (Conway et al., 1998; Kannan and Palocsay, 1999). Therefore, it has been stated
that product variance is very important to a manufacturing company’s ability to effectively
carry out mass production (Liu et al., 2006). Thus, variability may be defined as a reduction
in consistency which could be as a result of uncertainty such as unstable demand for
manufactured goods, or planned variation such as the quantity of products on a line, ‘out of
control’ machinery breakdown (Spearman and Hopp, 2008, p. 308)

The bottlenecks or constraint principle is focused on eliminating or managing bottlenecks to

improve an operation’s productivity. A bottleneck may be defined as “anything that limits a
system from achieving a higher performance versus its goal” (Goldratt, 1990, p.4). Some of
the bottlenecks identified as limiting operations performance are machinery breakdowns,
inadequate materials, substandard products, employees nonchalance, etc. (Blackstone Jr
and Cox Iii, 2002). Additionally, Watson et al. (2007) stated that “within each system at least
one constraint exist that limits the ability of the system to achieve higher level of
performance relative to its goal”. Hence, the application of the limitation should lead to the
highest production from that process.
The third principle is the scientific methods which are applied to eliminate non-value-added
actions and procedures from the operation process and is replaced with procedures that
add value to the operation with less exertion (Box, 1994). In theory, scientific methods are
irrelevant when applied to non-value -added actions in the operation process. The scientific
methods use statistical data to aid in the recognition of non-value-added work and the
effect of bottlenecks in operations (Schmenner and Swink, 1998).

The quality principle recognizes that the flow process can be negatively impacted by
substandard procedures and this will lead to rework, machine downtime, disrupted flow of
materials and so on. Good quality is crucial to the Swift, Even flow of materials as it helps to
reduce variability and to prevent bottlenecks in the production line (Spearman and Hopp,
2008)

The principle of factory focus asserts that concentrating on a restricted quantity of products
and processes tends leads to maximum productivity and reduces variability. When similar
products are grouped together, it becomes easier to identify the production flow of
materials and remove non-value-added work and bottlenecks (Pesch and Schroeder, 2009).
Considering the principles that support the Theory of Swift, Even Flow, factory fitness can be
viewed in two perspectives: production swiftness -output speed, production cycle and
delivery period of production process and production evenness -quality variability of a
process at the pre, during and post processing stages (Onofrei et al., 2020).

The Theory of Swift, Even Flow therefore gives a detailed explanation that combines the
various identified principles of scientific methods, quality and factory focus and illustrates
their operating process. It is constant as well, with the empirical laws of variability and
bottlenecks. The Theory of Swift, Even Flow does not invalidate the Microeconomic theory
except for this factory-specific fact, it provides a complicated clarification and therefore
strengthens that theory (Onofrei et al., 2020). The Theory of Swift, Even Flow provides a
wide range of criteria to microeconomic theory’s consequences for the factory. These
criteria do not argue against the microeconomic theory rather, they respond to instances
where microeconomic theory is limited when applied to factory productivity.
Microeconomic theory argues that if capital is replaced with labour, labour productivity
measured in units per man-hour would increase (Flaschel et al., 2016).

The Swift, Even Flow theory argues that substituting capital for labour does not necessarily
imply greater productivity, but only if that substitution results in faster, more consistent
flows. Continuous flow systems are always more resource intensive and more productive
than other methods (De Santis et al., 2020). However, this theory argues that the
continuous flow method high efficiency is not achieved because of huge resource allocation,
but the constant, less variable nature of the flow.

In the same context, microeconomic theory supports the inclusion of labour savings in the
justification of new equity equipment. The theory states that replacing capital with labour
leads to increased efficiency. On the contrary, the Swift Even Flow theory, dismisses labour
savings as a justification in support of what the new capital equipment does for the flows in
the process. Are the flows faster and more consistent? Post audits revealed that the new
capital equipment did not have a significant impact on the swift and even flow of the
process (David, 2018).

The theory of Swift, Even Flow argues for the rejection of various performance procedures,
procedures such as the use of machinery, the efficiency of labour and standard working
hours compared to individual hours are not measures of any flow or fluctuation. The
hypothesis argues that they should be discarded as procedures in favor of procedures of
output time and variability (Devaraj et al., 2013).

1.2 Implications for Operation Managers

There are several factors of any operation for which the Swift Even Flow theory would
forecast productivity growth (Schmenner, 2011). Firstly, the Theory supports the creation of
cells and of compact layouts. Flows are highlighted by cells and the speed at which a
product is made is increased. Variability is decreased when similar products are grouped
together. The Theory also supports reducing in process inventories as they can slow down
the swift flow of products thereby increasing the rate of production. The Theory offers no
consequences for inventories or raw materials of finished products. Additionally, the theory
supports policies which increase the flow speed or reduces variability or both. The theory
also favors the efficiency of the supply chain of a company. Maximum productivity is
achieved if the connection links are smooth and the flow of products to the end user is fast
(Kaipia, 2019).

The Swift, Even Flow theory also argues that various performance measures should be
abandoned. It stated that use of machinery or efficiency of labour should not be used to
measure flow or variability. Thus, the theory suggests that the rate of production and
variability should be the appropriate measures used. There is substantial evidence which
has shown that the use of machine or efficiency of labour does not increase productivity
(Broedner et al, 2019).

2a) Process Analysis

Orders/food preparation Drinks/pay Eat

Chefs = 4 Staff = 2 Seating capacity = 80/44 x 100= 35.2

Operation time per customer = 40
seconds
Capacity = 1/operation time = 1x
60x 60/40 = 90 customers
The restaurant will serve 90
customers per sec at Operation 1.
Average time for serving per
customer = 45 seconds
Average payment time = 1 min per
party
2.6 customers per customer =
60/2.6 = 23.07 seconds per
customer.
The average eating time is 19 mins.
Capacity= 1/cycle of operation
= 1 x 60 x 35/19 =2100/ 19 = 111
customers per hour.
The restaurant will serve 111 customers
per sec at operation 3

Capacity = 1/cycle of operation = 1

x 60 x 60 x 2/68.07 = 106
customers per hour.

The restaurant will serve 106

customers per sec at Operation 2.

Process 1 is 90 customers per hour.

Process 2 is 106 customers per hour.

 Process 3 111 customers per hour.

The bottleneck is at Operation 1, which is the time it takes to get the customer’s order and
process it.

The process capacity is 90 customers per hour.

2b) In contrast to standard dining in restaurants, the Paramount seating policy is unique.
Customers are not allowed to seat until they have placed their orders and made payments.
The management implemented this unusual seating policy due to the limited seats available
and the high influx of customers, so every customer can have a table to enjoy their meal.
Customers who have picked up their orders pick a table to eat while other customers wait in
line for their orders to be served. By the time the customers on the waiting line gets their
orders, those at the table would have finished their breakfast and exited the restaurant. This
policy tends to increase the utilization of the Paramount’s tables.

Customer Arrival Rates

Time Slot No. of clients No. of clients Net No. of Adjust to
balking hourly clients nearest whole
Arriving hourly
from Exhibit 7 arriving No.
from Exhibit 6
hourly

7:30am -8:30am

8:30am-9:30am
42 + 92 = 134 21 + 30 = 51 134- 51 = 83 80
9:30am -10.30am
47 + 61 = 108 27 + 18 = 45 108- 45 = 63 60
10:30am-
11:30am
11:30am- 26 + 50 = 76 5 + 21 = 26 76 – 26 = 50 50
12:30pm
12:20pm -1:30pm 46 + 22 = 68 11 + 7 = 18 68 – 18 = 50 50
Worker Utilization Avg. No. of customers waiting in queue

P = y/u = 80/90 Lq =p2/ (1 – p)

P = 0.88 Lq = 0.88/ (1-0.88) = 0.93 / 0.12

Lq = 7.75 x 1.5 = 11.62

Apprx 12mins

On a normal day each customer will wait

for 12 mins in the queue.

Lq = (7.75 + 35) x 1.5 = 42.75 x 1.5

Lq = 64. 12 mins

On Saturday, customer will wait for

64.12 mins in the queue.

Worker Utilization Queue length while carryout order is

prepared

P = y/u = 80/81 Wq = p/ u(1-p) = 0.98/81(1-0.98)

= 0.98 Wq = 0.98/1.62=1.58

W = 1/u(1-p) =1/81(1-0.98) =50

3a) Variability has posed a serious challenge in the service industry and does have an
impact on the profits of the business. Operations management theory has stated that to
deal with this challenge, variability must be eliminated. Variability is considered as the
enemy of quality. In regard to service, it would not be wise to eliminate variability as it
enables customers rate the quality of their experience largely by the extent of variability
introduced. Another reason why it would be difficult to eliminate is that while
manufacturers have absolute control over the price and quality of what they produce, the
service sector do not have that control. Customers are very important to the production
process in the service sector, and this tends to have an impact on the profitability of the
company (Frei, 2006).

To effectively manage variability introduced by customers at the paramount, the different

types of variability will be analyzed. Customers can present viability to the Paramount in five
ways, and it is important to identify that which will be detrimental to the business and
manage it before it escalates.

Arrival Variability: Customers do not require services at the same time and may need to be
attended to at a time that is inconvenient to the service provider (Frei, 2006). Customers at
the Paramount come in at different times of the day to place orders and want service at
different times and on different days. The restaurant is usually packed full on weekends and
this leads to long waiting lines. Due to the long line, the service customers expect from the
Paramount is not met. The best way to address this arrival variability is to ask customers to
book appointments. The customers can ring the Paramount diner and place orders for
pickup. If the customers would like to dine-in, they can call to make reservations for seating.
 
Request Variability: The biggest issues that a service provider must contend with is
customers deviating from what is offered by the service provider (Frei, 2006). This type of
variability does have an effect on the Paramount’s services. Customers may ask for orders
that are not included in the menu. This form of variability would pose a challenge for
Paramount because the time spent preparing a substitute order for the customer would
have been spent attending to other customers. The Paramount diner can solve this by
instilling the policy of no substitutions for orders. That is the menu is strictly adhered to and
customers are not allowed to come in and place orders that do not match what is on the
menu. For instance, a menu list has a meal as fish and chips and salad as a side order,
instead a customer may request for a side order of toast which is not part of the menu.

Capability Variability: Customers tend to have their own unique capabilities and the
business must work with the customer to meet their needs (Frei, 2006). The Paramount
caters to a large number of clients and with this regular interaction, they are able to
decipher a customer’s capability. At the Paramount diner, a customer may complain about
the food that was ordered and the policy of the diner is “if people wait, we have to be nice.
If they have a complaint? Recook It … standing in line”. Also, the seating policy can be
termed as capability variability. The diner have to make sure customers have a place to sit
after collecting their orders. To effectively manage variability in these areas, communication
between customer and service provider must be efficient and the order prepared to suit the
customer’s needs.

Effort Variability: The effort customers put into their role in service interface is referred to
as effort variability (Frei, 2006). Paramount has been facing this challenge due to the long
wait lines. Some customers come into the Paramount and when they see the long lines, they
turn back because they feel it is not really important to place that order, so make no effort
to join the line. If this continues, it is likely to affect the patronage of customers coming to
eat at the Paramount. To effectively manage this, the Paramount diner should encourage
more carryout orders and also hire more employees to attend to customers.

Subject Preference Variability: This refers to customers perceptions of the kind of service
received from a service provider. Was the service good or poor? At the Paramount diner,
customers are treated very respectfully and made to feel comfortable despite being in a
long waiting line for more than an hour. The management offers a drink to customers who
are at the back of the line as it would take them a longer time to get attended to. To
manage this challenge, the Paramount diner can put extra seats outside and place a gazebo
so that those at the back that have a long wait can sit down.
b) From the analysis of customers and the types of variability prevalent in service sector, it
can be concluded that the Paramount has the ability to accommodate the different
variability presented by customers. The first and most important variable that Paramount
needs to address is arrival variability. The long wait lines due to customers arriving at
different times have been a challenge for the Paramount. The second variability that needs
to be addressed is the capability variability. Different customers patronize the Paramount,
and the diner has to satisfy the needs of the customers. Due to the uncommon seating
pattern, this may pose a problem for customers. The third one is effort variability. Most
times customers balk or renege because of the long lines.
To address these issues so customers experience can be enhanced, the diner has to consider
these options to accommodate the customers. Firstly, automated machines where
customers can place orders should be introduced. Self- service checkouts can be installed
which will enable customers to pay for their orders after placing it. Customers that would
want to dine in should be asked to call to make reservations and lastly carryout orders
should be increased. If some of these options are implemented, the Paramount can
accommodate variability.

4a) Michael Conlon was faced with the challenge of retaining his customers and reducing
the wait time for customers in the queue. He studied the operation process and realized
that certain measures have to be put in place to deter customers from balking and reneging.
Conlon realized that due to the long queues, most customers preferred to place carryout
orders which was being delivered by delivery services. The dine-in can seat just 44
customers and the clientele had expanded so much that wait times were getting too long
and sometimes customers fainted while waiting for their orders to come through. Also, as
customers waited in lines, they had to make way to allow workers in the restaurant perform
their chores and this was an uncomfortable experience for the customers. Based on these
observations, Conlon recognized the need to delve into carryout orders as it would reduce
the number of dine-in customers coming into the Paramount and also increase the revenue
income of the company.

b) Conlon had realized that his restaurant was facing a challenge. The queues were getting
longer due to carryout orders which were picked up by delivery services. If orders were to
be picked up by the delivery service, the chef would have to attend to all the orders brought
by just one person before they could attend to other customers waiting in line and this was
slowing down the line. He recognized that he had to key into the idea of encouraging
carryout orders as this would reduce the number of dine-in customers coming into the
restaurant and at the same time increase revenue for the company,

c)By encouraging more carryout orders, the restaurant customer experience will be
impacted positively. Due to limited seats in the restaurant, customers have to get in a
queue, place orders and make payment for their orders before being seated. This has
resulted in customers waiting in lines for an hour or more and most customers had started
reneging when they see the long queues. Introducing carryout orders will reduce the
number of customers dining -in and this will avail customers the opportunity to sit
anywhere, and they will not be asked to wait in lines.

5) Management Decision
It will be beneficial to the owner Michael Conlon if he doubled down on the carryout orders
by partnering with the delivery services. To cope effectively with an increase in carryout
orders and attending to customers waiting in long queues, a new strategy should be
implemented. Firstly, Conlon should introduce a new collection point which will attend to
take-outs only and recruit more chefs. Customers that have come to pick up carryout orders
will join a queue to pick up at the take-out point, while the dine in customers would join
another queue and pick up orders from the dine in collection point. This will effectively
reduce the long queues and customers will be attended to quickly.

Another option Conlon could implement is to renovate the building to create more seating
space for customers who would like to dine in and hire more staff to attend to customers’
orders. This would reduce customers wait time and also increase revenue income for the
Paramount diner.

Factors for carryout orders

The factor which would tempt Michael Conlon to increase carryout orders is the increase in
revenue income for the restaurant. Due to limited number of seats in the restaurant as the
diner possesses only 44 seats, the restaurant is restricted to serving a limited number of
customers. With an increase in carryout orders, an unlimited number of customers will have
their orders delivered to their doorsteps, thereby reducing the influx of dine in customers in
the restaurant.

The factor that would lead to a decrease in carryout orders is an increase in the waiting time
of customers waiting to place orders in the queue, which would lead to an increase in the
average turnover duration to serve customers and this will lead to longer queues, which will
deter customers from coming to the restaurant because of the long wait time.
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