CH3 Design of Goods and Services

Technical
Requirements Variation Packaging Production
Rate
Customer
Requirements

Flavor

Packaging
Appearance

Number of
Products

In the matrix of the relationship between customer needs and technical needs in cookie product
factories. For factory needs include product variations, product packaging, and the production
rate while for customer needs include cookie flavors, cookie packaging, and number of products
in the market. From the QFD table, the assessment is done by the writer perspective. For the
customer’s flavor requirement does have a very strong relation with the matrix of the factory’s
cookie variation because the variation of the cookie also involve in term of the cookie’s flavor.
While for the packaging had a strong relation with the flavor because of the visual effect of the
package that could make customers said “this cookie looks delicious”. Production rate had
nothing to do with flavor because both of the are irrelevant. The second requirement of the
customer is the appearance of the product’s packaging, because the packaging of a product is the
first and foremost factor in attracting customer to buy the product, because of it, the packaging

MGMT8045 – Operations Management

appearance had a strong relation with the product packaging. While the variant requirement had
a weak relation with the packaging appearance because it only had a little visual effect because
of the color. The production rate had no relation with the packaging appearance. In the
requirement of number of products in the market does have a very strong relation with the
production rate of the factory because if the factory couldn’t produce the minimum numbers of
products, the customers will be unsatisfied. While the other technical requirement such as
variation and packaging didn’t have any relation with the number of products in the market.

CH4 Forecasting
1. The potential benefits of using forecasting approach are such as problem about whether
the product is understocked or overstocked by planning the production per batch size,
based on order and the amount in inventory. Another benefit of the forecasting method is
this method will help in reducing the cost of raw material in the future.
2. For the case of product 1, the method used is moving average with the specification of
simple moving average (SMA). The column in the yellow colored showed that there is an
unusual order from the customer.
Week Product 1 Difference
1 50 -
2 54 4
3 57 3
4 60 3
5 64 4
6 67 3
7 90 13
8 76 -14
9 79 3
10 82 3

MGMT8045 – Operations Management

 From
11 the table
85 on the left,3 first step of using SMA is to find the average movement of the
product, by subtract
12 the87
current week2 number of product with the previous week. After that, find the
average of the
13moving product
92 by summing
5 all the difference and divide is week the number of weeks
subtract by 1.14
In mathematic
96 formula is4as below
15 𝑜𝑓 𝑡ℎ𝑒
𝑡𝑜𝑡𝑎𝑙 100
𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 4
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑒𝑘𝑠 − 1
16 103 3
Using the formula above, the average production of product 1 is 3.54. the prediction
17 106 3
of the next 4 weeks production is in green colored cells.
18 110 4

MGMT8045 – Operations Management

 For the second product, the approach that was used is a naïve method of forecasting
where the number of the next batch of product 2 is following the previous numbers. The
results are in the blue colored cell in the table.
Week Product 2
1 40
2 38
3 41
4 46
5 42
6 41
7 41
8 47
9 42
10 43
11 42
12 49
13 43
14 44
15 44
16 44
17 44
18 44

MGMT8045 – Operations Management

CH5 Strategic Capacity for Products and Services
1.

A. Volume per month required to break even

The formula of the problem above is as

below

𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 (𝑣𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ) = 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡

(𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 − 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡)
𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 (𝑣𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ) = $9,200
($0.90 − $0.70)
𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 (𝑣𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ) = 9,200
0.2
𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 (𝑣𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ) = 46,000 𝑉𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑀𝑜𝑛𝑡ℎ

B. profit would be realized on a monthly Volume of 61,000 units? 87,000 units?

To solve find the profit, the following formula were

used For 61,000 units

𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = (𝑉𝑜𝑙𝑢𝑚𝑒 × (𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 − 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡)) − 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = (𝑉𝑜𝑙𝑢𝑚𝑒 × ($0.90 − $0.70)) − $9,200
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = $12,200 − $9,200
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = $3,000

For 87,000 units

𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = (𝑉𝑜𝑙𝑢𝑚𝑒 × (𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 − 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡)) − 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = (87,000 × ($0.90 − $0.70)) − $9,200
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = $17,400 − $9,200
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = $8,200

MGMT8045 – Operations Management

C. Volume Needed to obtain profits $16,000 per month

To find the Volume, the formula from B will be used and change to the following

𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = (𝑉𝑜𝑙𝑢𝑚𝑒 × (𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 − 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡)) − 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝑃𝑟𝑜𝑓𝑖𝑡𝑠 + 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝑉𝑜𝑙𝑢𝑚𝑒 =
(𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 − 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡)
$16,000 + $9,200
𝑉𝑜𝑙𝑢𝑚𝑒 =
($ 0.90 − $ 0.70)
25,200
𝑉𝑜𝑙𝑢𝑚𝑒 =
0.2
𝑉𝑜𝑙𝑢𝑚𝑒 = 126,000 𝑢𝑛𝑖𝑡𝑠
D. Volume needed to obtain provide a revenue of $23,000 per

month To find the Volume of a revenue, the following formula is

used

𝑉𝑜𝑙𝑢𝑚𝑒 = 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝑆𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡
𝑉𝑜𝑙𝑢𝑚𝑒 = $23,000
$0.90
𝑉𝑜𝑙𝑢𝑚𝑒 = 25,555.56 ≈ 25,556 𝑢𝑛𝑖𝑡𝑠

MGMT8045 – Operations Management

E. plot the total cost and total revenue lines.

Revenue and Cost Line Plot

20000
18000
16000
14000
12000
CASH

10000
8000
6000
4000
2000
0
0 5000 10000 15000 20000 25000
VOLUME

Revenue Cost

MGMT8045 – Operations Management