OPERATIONS MANAGEMENT
Introduction:
The purpose of this assessment is to examine and demonstrate your understanding of organisational capacity management, customer demand, and supply chain management within a specific organisation – in this case Simon’s Meals.
Your Task:
1.
The assessment is divided into two sections, each with a different focus.
• Section 1: Capacity Management and Demand Forecasting
• Section 2: Supply Chain Management and Production & Resource Planning.
2. Read the CASE STUDY.
3. Expectations:
• You are expected to read, analyse and discuss the case study information
provided and answer the questions. Make sure you clearly label your
answers to avoid any confusion, for the marker.
• Your comments/report should show evidence of research and the
integration of theory relating to the different areas of focus.
• The final report submitted must be entirely your own work (APA
referenced where appropriate).
4. Report Format:
The assignment should be presented in a report format. The report document must meet the following guidelines:
• Have cover sheet, title page, table of contents and reference list.
• Be electronically typed onto A4 paper
• The font should be clear and legible. Use Arial or Calibri (or
something similar) and use either size 11 or 12 font.
• Have single line spacing, and pages numbered consecutively.
• Each Part of the report (A, B, C, etc) should start on a new page.
• Use a professional layout and be free of spelling and grammatical mistakes
• Appropriate images are welcome – but use them sparingly.
• All images, figures, tables and charts must be labelled and referred to in-

text.
• The report should present as ONE document (i.e. one voice) not as a separate parts.
The Background:
As part of your studies you have to undertake the Industry Professional Practice, a 15 credit module that requires you to research an issue, and make recommendations for change in a “real organisation”. You have approached Simon’s Meals Ltd to ask them if they would allow you to do this project with them.
Simon’s Meals produce ready to heat and eat packaged ready meals that are sold refrigerated through a range of outlets in the Waikato. Simon’s started as a small cafe in Chartwell run by Simon, and his partner Linda. Simon’s family is originally from France and he grew up with a love of European food. Linda’s mother is Maori, and her father immigrated as a child to New Zealand from India, so she was brought up with a fusion of Indian and Maori food. Together they have developed a range of meals using good quality local and seasonal produce that has attracted a lot of enthusiastic customers.
About three years ago they diversified their business by using the cafe’s facilities to produce a range of packaged meals that they sold from the cafe. The business grew slowly for the first 12 months, but then a very favourable article reviewing their cafe in the Waikato Times, in which the reviewer wrote that they had taken home a couple of meals because they had enjoyed the cafe food so much drew in many more customers and accelerated their growth. 2 years ago they decided to concentrate on the ready meals. They borrowed money from the Bank, sold the cafe, and in, January 2017, opened a small factory producing the meals which they sold through a range of quality outlets, including Nosh and Farro. Since then the business has grown fast, with production increasing by 35% over the period July 2017 to July 2018 and recently they were approached by Progressive Enterprises Ltd to investigate whether they would be interested in selling their meals through their Countdown branded supermarkets in New Zealand.
The unique selling point for Simon’s is that they sell a small but constantly changing range of meals as different seasonal ingredients become available in New Zealand. They source their ingredients direct from the farmers, who range from large grower’s to small Maori cooperatives. They also ensure that all their meals sell for one price, $5.00.
The business has grown steadily over the last 12 months, with production increasing by 35% over the period July 2017 to July 2018.
In recent months this business has experienced a range of problems, and the management team have suggested that you may want to investigate them as part of your project.
1. An increasing number of consumer complaints resulting in retailers returning meals because of poor quality issues.
2. A significant decrease in the overall profit margin experienced by Simon’s.
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3. Production problems including breakdowns of machinery installed in 2017 when the factory was new, and internal quality problems resulting in wastage as poor quality meals are sold off to pig farmers, or destroyed.
4. An increase in staff turnover in the factory.
You have undertaken some early investigations and you have found that:-
1. The factory was set up with machinery with a design capacity of up to 100 meals per hour.
2. Experts who were employed to help design and build the factory advised that its effective capacity should be 80% of design capacity.
3. When the business started to expand in 2017 the factory was operating one 9 hour shift, 6 days per week. The factory actually produced meals for 8 of the 9 hours it operated. In July 2017 for the 8 hours the factory actually produced meals it ran at 70% utilisation.
4. The monthly sales data for the last year are shown in Table 1 on the next page.
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TABLE 1: Simon’s Meals Monthly Sales from July 2017 to June 2018
Products Jul 17 Aug17 Sep17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18
Beef
Casserole
6,656
8,006

8,195
8,790

9,060
9,145
9,300

9,499
9,626
9,854
9,926
9,786
Chicken &
Roast
Potatoes 6,105
7,148

7,255
7,350

7,500
7,533
7,680

7,750
7,874
7,982
8,001
7,911
Pork &
Kumara 2,200
1,690
1,730
1,770
1,800
1,798
1,860
1,888
1,891
1,950
2,000
1,905
Cottage Pie
1,000
726
745
768
780
775
806
825
837
876
891
855
Curry &
Rice
259
272
287
295
300
310
330
335
341
357
364
346
Fish &
Chips
396
403
418
421
434
450
465
481
496
527
541
505
Vegetarian
Meal 369
387
396
404
411
420
422
434
465
482
501
475
Lasagna
409
415
428
436
444
450
465
487
496
515
524
510
Total
17,394
19,04
7 19,454
20,23
4 20,72
9 20,881
21,32
8 21,699
22,026
22,543
22,748
22,293
Assumptions:
1. There are 4 weeks in each calendar month
2. Calculate production based upon sales (make no allowance for wastage).
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Table 2: Individual Product Contributions to the Simon’s Meals Annual Turnover
Products
Cost per Item Sales Quantity
(meals)
Annual Turnover

($)
Beef Casserole
$ 5.00
107,843
$ 539, 215. 00
Chicken & Roast Potatoes $ 6.50
90,089
$ 585, 578. 50
Pork & Kumara
$ 7.00
22,482
$ 157, 374. 00
Cottage Pie
$ 8.00
9,884
$ 79, 072. 00
Curry & Rice
$ 10.00
3,796
$ 37, 960. 00
Fish & Chips
$ 9.00
5,537
$ 49, 833. 00
Vegetarian Meal
$ 12.00
5,166
$ 61, 992. 00
Lasagna
$ 6.00
5,579
$ 33, 474. 00
TOTAL
250, 376
$ 1, 544, 499. 50

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SECTION 1: CAPACITY MANAGEMENT and DEMAND FORECASTING
PART A: Matching Supply and Demand [15 MARKS]
Explain the relationship between customer demand and organisational capacity. (300 – 500 words)
Your explanation should include:
• Definitions of customer demand and organisational capacity management,
• A discussion of the difficulties of matching capacity and demand
• Strategies that organisations can use to match capacity with demand over the different time horizons
• Describe the impact of constraints and bottlenecks on the process
• And any other factors that you may feel are relevant to your explaination.
NOTE: Your explanation should show evidence of research and APA formatting.
PART B: Supply and Demand in Simon’s Meals [27 MARKS]
QUESTION 1: Capacity Management (Supply) [12 marks]
1.1 Simon’s Meals has experienced an increase in demand for their products over the last twelve months. If this trend continues over the next 12-24 months, what intermediate-
range capacity planning options do you suggest they could adopt/implement to handle this increase in capacity? Justify your answer. (4 marks)
1.2 Complete the following calculations. Make sure you show all your calculations either in-text or in your appendix.
a) The Simon’s Meals factory was operating at 80% efficiency in July 2017. Calculate AND explain the factory’s effective capacity, and its utilisation in that month.
NOTE: Your answer should include an explanation of the terms effective capacity and utilisation. (4 marks)
b) Calculate the efficiency of the factory in June 2018, AND explain why the increase in
production over this period may have contributed to the problems the factory is now experiencing. (4 marks) NOTE: Your answer should include an explanation of the term efficiency.
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QUESTION 2: Forecasting Demand [15 marks]
2.1 Using the information provided in Table 1 in the case study draw a line graph illustrating the actual sales, 3SMA and 3WMA for the months October 2017 to June
2018.
NOTE: Use a different colour for each graph line (i.e. Actual Sales, 3SMA and
3WMA). Remembedr to clearly label the graph (title, axes, lines, etc) (5 marks)
To complete this task you will need to:
• Calculate the 3-month simple moving average (SMA) for the months October 2017 to June 2018.
• Calculate the 3-month weighted moving average (WMA) for the months October 2017 to June 2018, using the weightings of 0.5, 0.3, and 0.2
• Include your calculations in the appendix of your document. Templates have been provided on the Assessment Three Moodle tab for both SMA and WMA (optional).
2.2 Forecasting Error:
a) Explain the purpose of forecasting error. (1 mark)
b) Calculate the forecasting error for the months of October 2017 to June
2018 using the Mean Absolute Deviation (MAD) for both the SMA and WMA you calculated in 2.1 above.
Present your findings in a table AND include your calculations in the appendix
(clearly labelled). (2 marks)
2.3 Methods of Forecasting Demand:
Explain the role or purpose of Demand Forecasting AND based on your calculations in
2.1 and 2.2, identify AND explain which forecasting method (SMA or WMA) is most appropriate to use for forecasting sales/production for Simon’s Meals. Justify your
answer based on your findings and the literature. (3 marks)
2.4 Demand vs Capacity
Even with good forecasting and facilities built to accommodate that forecast, there may be a poor match which may mean demand exceeds capacity or capacity exceeds demand.
Briefly discuss what options Simon’s Meal would have if or when demand exceeds
capacity and/or when capacity exceeds demand. (4 marks)
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SECTION 2: SUPPLY CHAIN MANAGEMENT and PRODUCTION and RESOURCE PLANNING.
The business has been approached by Progressive Enterprises Ltd to investigate whether
Simon’s Meals is interested in selling their products through Progressive’s Countdown
branded supermarkets in New Zealand. In order to accept this new opportunity Simon’s meals will have to expand the factory considerably and bring in new operations management
systems.
PART C: Inventory Management [12 MARKS]
1.1
ABC Analysis:
Not all inventory items are of an equal value to an organisation.
Using the information provided in Table 1 and Table 2 classify the Simon’s Meals products based on their annual dollar value, using the ABC analysis model.
THEN
Based on your calculations above, explain what products would you, as the
Operations manager at Simon’s Meals, monitor/manage more closely, AND explain why. Your explanation should highlight the main objectives and benefits of using a
classification such has ABC analysis. (3 marks)
1.2 Economic Order Quantity (EOQ) Model:
a) State the primary aim or objective of the EOQ model AND outline at least TWO
(2) assumptions that the model is based on. (3 marks)
Simon’s Meal sells a gluten-free product for which the annual demand is 5,000 boxes. At the moment, it is paying $10.00 for each box; the holding costs are $3.00 per box per year; and the ordering costs are $25 dollars.
The formula for EOQ =
b) Determine the economic order quantity (EOQ) that Simon’s Meals should
order. (NB: Show your calculations and clearly indicate your final answer).
AND THEN
Using the answer for a) above, determine the expected number of orders Simon’s Meals will place each year AND calculate the overall yearly ordering costs.
(3 marks)
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c) A new supplier (Supplier B) has offered to sell the same items for $7.50 per
box but the ordering cost will be $35.00.
Should Simon’s Meals stick with the current supplier (Supplier A), or take
advantage of the new supplier (Supplier B)? Explain AND justify your answer.
(3 marks)
PART D: Integrated Supply Chain Management
[10 MARKS]
Explain how an integrated approach to supply chain and inventory management could
benefit Simon’s Meals. (250 – 350 words)
Your answer should provide evidence of your understanding of what a supply chain is, the benefits of having an integrated supply chain, AND the possibility of Simon’s Meals implementing specific, but relevant, supply chain processes/tools. Support your comments
with examples and literature.
PART E: Material Resource Planning [10 MARKS]
Explain how Simon’s Meals could benefit from the implementation of a Material Resource
Planning (MRP) system. (250 – 350 words)
Your answer should demonstrate your understanding of what an MRP system is, its key components, and the organisation could benefit in terms of the overall productivity and
profitability of the Simon’s Meals. Support your comments with examples and literature.
Section 3: FORMAT, GRAMMAR & APA REFERENCING
Report Format: [ 12 Marks]
The assignment should be presented in a report format. Guidelines on the report format are provided on page 2 of this document.
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• Supplier Decisions [3]
Part D
Integrated Supply Chain Management
• Definition of Supply Chain, SCM
• Evidence of understanding of what an Integrated Supply Chain is and the benefits associated with the model.
• Application / reference to Simon’s Meals
• Identification and discussion of appropriate processes and tools that would help Simon’s Meals
• Integration of literature and examples provided to support comments
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Part E
Material Resource Planning
• Definition of MRP
• Key components of MRP
• Benefits of MRP – productivity and profitability
• Evidence of understanding of MRP
• Integration of literature and examples provided to support comments
• Application / reference to Simon’s Meals 10
SECTION 3: FORMAT, GRAMMAR & APA REFERENCING
• Formatting - correct use of appropriate formatting
• Editing and Proofreading - Uses correct New Zealand grammar, punctuation and spelling;
• APA referencing: Acknowledgement of sources; the reference list is complete and correct
• Presentation: is clear, legible and professional
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TOTAL MARKS
90
POTENTIAL PENALTIES WHICH CAN BE AWARDED OVERALL
Late penalty (10% per 24 hours)
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