Operation Management

MGMT 541
Case study: Fitness Plus Part A.
3/29/2016

Christopher Sleiman

Case study: Fitness Plus Part A.

1. Main complaints are from two issues: unavailability of equipment (Cardiovascular, Nautilus and
aerobics) and workout activities being overcrowded. Thus the focus of capacity management in
aerobics should be on space and equipment for the workout activities in peak hours. According to
the study it is noted that peak times are between 4-7pm and total number of members visiting
between that time is 240 (80 per hour).
For Fitness Plus another useful capacity measurement technique would be "Utilization" which is
used for equipment, workforce or space. Utilization is the ratio between actual average output of
the equipment and the maximum capacity.
Utilization = (Average output rate / Maximum capacity) x 100%
Nautilus utilization = 20/31 x 100% = 64.5% (35.5% below capacity)
Cardiovascular utilization = 32/38 x 100% = 84.21% (15.79% below capacity)
Free weights utilization = 16/16 x 100% = 100% (Full capacity).
Tennis courts utilization = 8/12 x 100% = 66.66% (33.33% below capacity)
Racquet ball courts utilization = 12/16 x 100% = 75% (25% below capacity)
Aerobics Utilization = 24/35 x 100% = 68.5% (31.5% below capacity)
Based on the above results, fitness plus has enough capacity to manage its existing facility and
to reduce complaints. It has not reached its total capacity and to do so, the club must determine
the type of members using the facilities and to cater to their needs. Also a systematic review of
the equipment condition is important, and the club should know what the most important

equipments are especially in the cardiovascular and nautilus and by that replace the least popular
machines with more wanted machines.
2. There are 3 capacity strategies:
- Level capacity: The capacity is maintained at a constant level all along the planning period and
any fluctuations in demand are ignored. At Fitness Plus there is always a possibility of a large
number of members coming in any time and thus this strategy would not work.
-chase demand: Chase demand is opposite to level capacity as it tries to match the capacity
levels according to the changing demand patterns. This method requires adjustment of capacity
through different means like offering over time in peak and lesser hours in off-peak periods, or
opening up a new facility that will also chase the increase in demand which is expected due to
new businesses down town.
-demand management: The objective of this strategy is to shift the burden of peak period to
off-peak period. Either the demand is changed through various methods or alternate products or
services are offered to fill off-peak capacity.
The most appropriate capacity strategy is the chase demand strategy that will add capacity in the
face of exiting demand especially that there is resurgence of activity in the area where new
offices and were moving back, and also because sports has become something wanted by
everyone and the demand for it is growing.

3. Operating decisions are short term decisions by the company in lieu of long term
strategies as these involve day to day operations and therefore need to be addressed
before any grand scheme issues. Capacity decision is linked to the operating decisions

because it needs to be studied in order to decide whether to expand or not especially in

peak times where lots of customers arrive.
Expanding the facility especially that customers are already complaining and equipment
is being used lesser than its maximum capacity is a choice, but is limited due to lack of
available land.
Opening up a new facility is also a good choice especially that the population is increasing
steadily and the only full range competitor is YMCA. By doing so, It will create sufficient
capacity ahead of customer demands and will cater to the different needs of the customers
that other competitors dont have. Once the new facility is announced it will be difficult
for competitors to expand as it might over burden the market.