Operation Management for Michigan Dinning
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Transcript of Operation Management for Michigan Dinning
Hill Dining CenterTeam: Mojo-Jojo
Jessie ChenBrian Green
Daniel GuslitsKarina PuskoriusRomina Reversi
Jake Schmidt
M A R K E T P L A C EAT HILL DINING CENTER
What’s on the Menu
Homestyles Buffet Dish Room Inventory
Management
Background Analyses & Recommendations Q & A
M A R K E T P L A C EAT HILL DINING CENTER
• Run by Michigan Housing
• 300 Student Employees
• Daily Customers Served:– Breakfast ~500– Lunch ~1,500– Dinner ~1,500
• Projected Demand of 5,000
HDC – Market Place
M A R K E T P L A C EAT HILL DINING CENTER
Homestyles Buffet
M A R K E T P L A C EAT HILL DINING CENTER
• Analyzing– Main Line– Express– Process Time
Process Time Analysis
• – Waiting Time– Queue Length– Optimal
Servers– Optimal Setup
Express M A I N
Queue Length
12:0012:03
12:0612:09
12:1212:15
12:1812:21
12:2412:27
12:3012:33
12:3612:39
12:4212:45
12:4812:51
12:5412:57
1:001:03
1:061:09
1:121:15
1:181:21
1:241:27
1:300
5
10
15
20
25
30
35
40
Line, 3-21Line, 3-26Line, 3-28
Leng
th o
f Que
ue (n
umbe
r of c
usto
mer
s):08 :18 :08 :18
:08 :18 :08 :18
Wait Time
12:0012:03
12:0612:09
12:1212:15
12:1812:21
12:2412:27
12:3012:33
12:3612:39
12:4212:45
12:4812:51
12:5412:57
1:001:03
1:061:09
1:121:15
1:181:21
1:241:27
1:300
2
4
6
8
10
12
Wait Time, 3-21Wait Time, 3-26Wait Time, 3-28
Aver
age
Wai
t Tim
e (m
inut
es)
Max: 9.55 min
Max: 4.29 min
Max: 4.02 min
M A R K E T P L A C EAT HILL DINING CENTER
express 2 3 4 50.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
21-Mar
Proc
ess T
ime
per C
usto
mer
(min
utes
)
2 3 40.00
0.05
0.10
0.15
0.20
0.25
26-Mar
Proc
ess T
ime
per C
usto
mer
(min
utes
)
1 2 3 4 50.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
28-Mar
Proc
ess T
ime
per C
usto
mer
(min
utes
)
Process Time by # of Servers
Servers:08 :18 :08 :18
12:0012:03
12:0612:09
12:1212:15
12:1812:21
12:2412:27
12:3012:33
12:3612:39
12:4212:45
12:4812:51
12:5412:57
1:001:03
1:061:09
1:121:15
1:181:21
1:241:27
1:300
1
2
3
4
5
6
Servers, 3-21
Servers, 3-26Servers, 3-28
Num
ber o
f Ser
vers
M A R K E T P L A C EAT HILL DINING CENTER
• Monetary– Assumption: Time valued @ $10/Hr– Average Total Wait Time Per Lunch Period: 120 minutes – Average Value lost per day (Lunch): $20.00– Value Lost per year for Lunch: ~$4,480
• Non-Monetary– Emotional pain of being in line and hungry
Current Issues
M A R K E T P L A C EAT HILL DINING CENTER
Use a max of 4 servers
Maintain 4 servers for rush, :08 to :18
Only pre-served food on express
Assembly-line serving during peak (specialization)
Recommendations
+ Maximizes flow rate and reduces wait time+ Pools demand in a single queue+ Increase retention of upperclassmen to meal plans
M A R K E T P L A C EAT HILL DINING CENTER
Dish Room
M A R K E T P L A C EAT HILL DINING CENTER
Process Flow Diagram
Pull dishes off traysConveyor
Load Dishwasher
Dishwasher CycleUnload Dishwasher
Bring Dishes out to Dining Room
Dolley
M A R K E T P L A C EAT HILL DINING CENTER
Dish Room Analysis
Process Flow Rate
Pull dishes off tray (2 People) 18 plates/min
Load Dishwasher (1 Person) 40 plates/min
Dishwasher 40 plates/min
Unload dishwasher (1 Person) 43 plates/min
M A R K E T P L A C EAT HILL DINING CENTER
• Average of 6 student workers during peak times
• 4 student workers during non peak times
• Workers paid average of $9.20/hour
• Peak time labor costs: $331.20/day
Labor Costs
M A R K E T P L A C EAT HILL DINING CENTER
Process Recommendations
• Allocate worker from clean dirty side– 18 dishes/min 30 dishes/min
• Implement silverware drop • Implement trash removal – Speeds up first process step
• Non peak time labor 4 workers 3 workers– Savings of $11,776/school year
M A R K E T P L A C EAT HILL DINING CENTER
Dishwasher Breakdowns
M A R K E T P L A C EAT HILL DINING CENTER
• $.75/person for paper products • Dinner average breakdown cost: $2,250/school
year– No maintenance fees due to contracts
• Dishwasher operation cost: $1,211.40/semester• Cost of an additional dishwasher purchase:
$80,000– Additional labor and operation costs
Breakdown Costs
M A R K E T P L A C EAT HILL DINING CENTER
Mojo Procurement
Inventory Analysis
Inventory Analysis
M A R K E T P L A C EAT HILL DINING CENTER
Inventory Order Process Cycle
Inventory Analysis
Projections from historical data
Orders placed online through
Sysco before 4 pm
Trucks deliver next day at 11:00
am
M A R K E T P L A C EAT HILL DINING CENTER
Inventory Arrives Dairy Room
Produce Room
Freezers
Dry-Storage Room
Inventory Movement
M A R K E T P L A C EAT HILL DINING CENTER
Cheese Please
Pizza Cheese!•1,344 portions of pizza consumed per day•Largest order at Mojo
M A R K E T P L A C EAT HILL DINING CENTER
Key Data
Demand
•13.5 cases/ week
Cost
• $41.45/case
M A R K E T P L A C EAT HILL DINING CENTER
Key Data
Purchasing Manager
• 1 hour/week• 4 orders/week• $19.25/hour $4.81/order
Stock Keeper• 1 hour/week• 4 orders/week• $16.30/hour $4.08/order
Setup Cost
• $21.11/order
M A R K E T P L A C EAT HILL DINING CENTER
Key Data
Opportunity Cost
• i=10% annually• $0.07/week
Spoilage Cost • 5-week spoilage period• 41.45/5=$8.29/week
Holding Cost
• $8.36/Week
M A R K E T P L A C EAT HILL DINING CENTER
• Haphazard ordering system• Ordering decisions are not clearly defined
Current Ordering System
Beginning Balance Amount Ordered Demand
Week 1 11 15
3/12 4
3/14 3
3/15 2
3/16 3
Week 2 8 12
3/19 5
3/20 3
3/21 6
3/23 6
Week 3 16 14
3/26 3
3/27 4
3/28 4
3/29 8
Total Cost
• $683.02
M A R K E T P L A C EAT HILL DINING CENTER
• Options
Optimal Method?
1 •Current Method (“eyeballing it”)
2 •Fixed-Order Quantity
3 •Fixed-Time Period
M A R K E T P L A C EAT HILL DINING CENTER
Economic Order Quantity
Q opt=9 cases/order
M A R K E T P L A C EAT HILL DINING CENTER
Fixed-Order Quantity
Fixed Order Quantity
• 9 Cases
Lead Time
• 1 day
Service Level
• 98%
Reorder Point
• 3 cases
Safety Stock
• 1 case
Total Cost
• $653.98
M A R K E T P L A C EAT HILL DINING CENTER
Safety Stock
• 5 cases
Fixed-Time Period
Review Period
• 1 week
Target Stock Level
• 20 cases
Total Cost
• $670.41
M A R K E T P L A C EAT HILL DINING CENTER
Cost Comparison
Current
• $683.02
Fixed-Order Quantity
• $653.98
Fixed-Time Period
• $670.41
M A R K E T P L A C EAT HILL DINING CENTER
• Short spoilage period high holding cost• Short lead time low safety stock
Intuitions
M A R K E T P L A C EAT HILL DINING CENTER
Savings:• 683-654=$29/weekCost:• Minimal
Cost & Benefit Analysis
$29/week 8 months $928/ school year
M A R K E T P L A C EAT HILL DINING CENTER
Recommendation
Use fix-order quantity for items with short lead time and short spoilage period
Other such items include milk, fruits, breads and eggs
M A R K E T P L A C EAT HILL DINING CENTER
• Homestyles Buffet:– Use 4 servers during peak period– Assembly line style serving
• Dish Room:– Implement silverware drop & trash removal– 3 workers during non-peak hours
• Inventory Management:– Fixed-order quantity for items with short lead time
& short spoilage periods
Summary
M A R K E T P L A C EAT HILL DINING CENTER
Questions?
Thank You!
M A R K E T P L A C EAT HILL DINING CENTER
APPENDIX I
M A R K E T P L A C EAT HILL DINING CENTER
• Average demand = 13.5 cases/ week• Cost per unit=$41.45/case• Setup cost=$ 21.11 /order– $16.30 for 1 hr of stockkeepers time, $19.25/4 for 15 mins of
purchasing manager's time • Holding cost=$8.36/week– We assume i=10% annuallyi=0.18% weekly – Spoilage cost: 41.45/5=$8.29/week.– Utility cost is fixed cost and therefore not considered.– Therefore, the total holding
cost=41.45*0.18%+8.29=$8.36/week.
APPENDIX II
M A R K E T P L A C EAT HILL DINING CENTER
• Labor cost savings in dish room – 8 hours of non-peak time/day– Average wage of $9.20/hr– 5 days/week– 4 weeks/month– 8 months/school year
• Savings = 8*$9.20*5*4*8 = $11,776/school year
APPENDIX III
M A R K E T P L A C EAT HILL DINING CENTER
• Savings:– $ 675.58-$645.61=$27/week– Saves $755/semester
• Costs:– Increase Monitoring of Inventory (+.5 Hrs/wk)– Extra Costs of $128/Semester
• Net Savings:– $755 - $128 = $627/ Semester
APPENDIX IV
M A R K E T P L A C EAT HILL DINING CENTER
Fixed-Time Period
Avg. pipeline inv. Avg. cycle inv. Avg. total inv.
(cases) (cases) (cases)1.93 6.75 13.25
Avg. weekly inv. cost
Avg. weekly setup cost
Total weekly cost
($/ wk) ($ / wk) ($/ wk)110.83 84.45 670.41
M A R K E T P L A C EAT HILL DINING CENTER
F-O Inventory Data
Avg. pipeline inv. Avg. cycle inv. Avg. total inv.
(cases) (cases) (cases)
1.929 4.5 7.5
Average Inventory Data
M A R K E T P L A C EAT HILL DINING CENTER
Fixed-Order Quantity
Avg. weekly inv. cost
Avg. weekly setup cost Total weekly cost
($ / wk) ($ / wk) ($ / wk)
62.73 31.67 653.98
Average Inventory Costs
M A R K E T P L A C EAT HILL DINING CENTER
Current Method
Avg. pipeline inv. Avg. cycle inv. Avg. total inv.
(cases) (cases) (cases)
1.929 2 5
Avg. weekly inv. cost
Avg. weekly setup cost Total weekly cost
($ / wk) ($ / wk) ($ / wk)52.19 71.25 683.02
Average Inventory Costs
Average Inventory Data