ASSIGNMENT 1

CHAPTER 1
OPERATIONS & SUPPLY CHAIN STRATEGY

EXERCISE :

Question 2

Choose two restaurants with substantially different operations strategies. For each restaurant,
discuss its competitive priorities—what is most important to it. Allocate 100 points across each
of the four competitive priorities (e.g., the most important might get 40 points, the next most
important might get 25, and so on). For each restaurant, list four or five operational decisions/
investments that the restaurant manager must make. These decisions should fit within one of
the eight categories in Table 1.3. Compare decisions for the two restaurants-how do they differ?

The competitive priorities of two chosen restaurants, comparing between Pizza Hut and
Kentucky Fried Chicken:

PIZZA HUT RANKING KENTUCKY FRIED CHICKEN RANKING

Pricing : Average at RM 15 per 10
person for personal meal
Quality: superior quality with table 40
services
Time/ delivery: delivery speed 30
means try to make it fast by
having a standard time to serve.
Flexibility: volume flexibility 20
means products are offered are
made based on orders.
Pricing: Average at RM10 per 10
person by meal because of
lower cost operation.
Quality: consistent quality with 30
self services at the counter
Time/ Delivery: on time delivery 40
at counter.
Flexibility: variety means 20
numerous choices of food are
offered immediately on time
ready stock.
How do they differ:

PIZZA HUT KENTUCKY FRIED CHICKEN

Pricing: Average at RM 15 per person for Pricing: Average at RM10 per person by meal
personal meal because of lower cost operation.
Quality: superior quality with table services Quality: consistent quality with self services at
the counter
Time/ delivery: delivery speed means try to Time/ Delivery: on time delivery at counter.
make it fast by having a standard time to
serve.
Flexibility: volume flexibility means products Flexibility: variety means numerous choices of
are offered are made based on orders. food are offered immediately on time ready
stock.
OPERATIONAL DECISION
Sources: Relationship with suppliers for raw Sources: Has very own poultry fam – AYAMAS
materials in providing products & services to supply poultry produce.
offered at Pizza Hut Restaurant chains
Facilities: Standard interior design, and table Facilities: easy to clean, customer convenience
settings. and simple
INFRA STRUCTURAL DECISION
Workforce: specialized and highly skilled Workforce: trained to be multitasked
employees
Production planning: based on customer Production planning: have a standard amount
order every day
CASE STUDY

NATURAL DESIGNS INC

1. What types of decision must Jim McMaster make on a daily basis for natural design to
run smoothly? What kind of decision must he make on long term basis?

The long term decision making (structural) can be done in long term basis because it
needs a detail planning and need a huge amount of capital. The areas that need to
improve are:

• Facilities- Adding more facilities to help the production process run smoothly.

• Technology- use new machine or new technology to increase the production and
the quality as well.

• Sourcing: making a relationship with lots of suppliers to ensure that there is

enough raw materials to customize the bird feeders.

Jim McMaster should focus on the short term decision (Infrastructural) first. The areas
that need to improve include:

• Workforces- hired more specialists to build customized bird feeders in order to

make sure that the workers can meet the demand of customer.

• Production planning- produced quantities ordered by customer and make sure all
the demand by customer can be met and can be delivered on time.
2. Describe the operation strategy for Natural Designs. Has this strategy changed as a
result of the custom bird feeder operation? If yes, how?

Operation Strategies of Natural Designs Inc.

Before customization process After customization process

Cost: low cost operations (by having Cost: become high to customize the
nature talks and garages in producing bird product. Need to add as customer ask onto
feeders) bird feeders)

Time delivery: on time delivery (ready Time delivery: product development speed
stock)

Flexibility: produced 10 products and Flexibility: customization takes a lot of time

standardized. to build.

In our opinion, operational strategies of Natural Design had been changed as a result of
the custom bird feeders operation. As shown in the above comparison table, we can see
that after customization of services, Natural Design had increased their cost in order to
fulfill the need requested by customers. In terms of delivery, they changed to product
development speed whereas for flexibility they changed from standardized production to
customized and have a time line to meet. The customization seems increasing the cost
of the company and the effort of the workers.
3. What might have been done differently to facilitate the offering of custom bird feeders?

From our own point of view, there are several strategies had been done in order to
facilitate the offering of custom bird feeders. Natural Design have offered online ordering
system in order to increase the flexibility to the customer. By doing this, it changed a lot
of decision in Natural Design business operation. Never the less, it brings some new
changes to the production operation in order to produce the bird feeders as what
customers want. This took more time than before.

Second strategies that might have been done by Natural Design such as, increasing the
no. of employees assigned to produce bird feeders according to the customers orders.
Natural Design should increase and hire more workers in order to finish production of
customer orders on time (within 1 week). This directly impacted the Natural Design’s
operation. Unlike previously, they just construct their product in garage and with the
standard amount per production, but presently they would able to produce as per
customers orders.
 4. How should McMaster analyze the alternative expansion option? Which would you
recommend: a second facility or a move to a single larger facility?

Mc Master should analyze the expansion option based on the structural decision and
infrastructural decision. This is the basic need for a corporation.

Second facility Move to single larger company

Capacity: short term planning in order to Capacity: long term planning because the
cater the demand from customer. number of customer increases from time to
time.

Facilities: involved with additional of new Facilities: new facilities are required at this
facilities. new company to increase the production.

Technology: not involved with new Technology: need a new technology to

make sure that the production is effective
technology
and normally its need a big place to put the
machine.

Work-force: need additional of worker Workforce: need additional of extra

workers

Production/planning: increase the number Production/planning: Increases the

of production since the demand is numbers of production since the business
increasing. have become globally by operate online.

Cost: less amount of capital Cost: huge amount of capital

From our point of view, Mc Master should choose the second option that is to move to a larger
facility. As its benefits greatly outweigh the costs, and thus would be the more profitable
decision.