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Operation Management Project Group 5

OPERATIONS MANAGEMENT PROJECT


Company Name: Your’s Pizza

Group 5:

Debjit Lahiri 170103060


Kashish Saluja 170102077
Kuldeep Singh 170101044
Meola Monteiro 170101124
Sagar Shinde 170103188
Saumya Gupta 170101072

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Operation Management Project Group 5

Table of Contents

Sr. Topics Page


No. Number
1 Executive Summary 3
2 Acknowledgement 2
3 About the Company (Introduction, Store Design & Daily Operations) 5-7
4 Competitive Strategy Information (PART A) 8-9
5 Research Methodology 10-11
6 Problem Areas and Solutions (PART B) 11-17

List of Tables

Sr. Table Name Page


No. Number
1 Raw Material Procurement Vs Actual Demand 15
2 Forecast Table 15

List of Figures

Sr. Figure Name Page


No. Number
1 Process Flow Chart for Pizza order 6
2 Supply Chain for Pizza Dough 7
3 Fish Bone 11
4 LCL – UCL graph 13
5 Pareto Chart 16

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Operation Management Project Group 5

Executive Summary
Objective - To analyze the day to day operations of a local pizza chain outlet - Your's pizza;
identify problem areas and find solutions to it.

Brief description - We have studied the pizza chain extensively to understand its day-to-day
functioning. The study includes a detailed interview with the owner, a 2 day visit to the
store to observe operations and conducting customer feedback. Subsequently, we have
analyzed the data collected and drawn inferences regarding the problem areas.

Your's pizza is a low-cost pizza outlet with minimal dine-in provision. Major part of the
revenue comes from home delivery orders. Customers can order from food ordering apps
like FoodPanda and Zomato or directly call the restaurant. For the former, the delivery is
taken care by the food ordering companies on exchange of a commission and for the latter,
the pizza outlet have themselves arranged for delivery boys by hiring them on contract from
a 3rd party.

About 30% of the total orders come from food ordering app and 20% from dine-in services.
The rest of 50% comes by orders from direct calls - making it the most important source of
revenue.

For procurement of raw material, the outlet has a pre-decided quantity which it orders from
a 3rd party, consisting of ingredients like flour, pizza breads, vegetables etc.

However, no form of demand forecasting is done; procurement is mainly based on the


intuition of the people concerned.

Customer feedback has been fairly positive but there have been instances of late delivery.

Based on our study, we have identified 4 possible problem areas in its Operational
functioning

A. Lack of order intake ability via calls during peak hours


B. Inventory management
C. Late delivery of orders
D. Food quality in home delivery orders

The possible operational solutions and their subsequent positive impact have also been
discussed in later sections of the project.

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Operation Management Project Group 5

Acknowledgement
We are using this opportunity to express our gratitude to everyone who supported us
throughout the course of this Operations management project. We are thankful for their
aspiring guidance, invaluably constructive criticism and friendly advice during the project
work. We are sincerely grateful to them for sharing their truthful and illuminating views on a
number of issues related to the project.

We express our warm thanks to Mr. Ujjawal for sharing valuable information about Your’s
Pizza.

We would also like to thank our project guide Mr. Keshav Kumar Sharma and all the people
who provided us with the facilities being required and conductive conditions for our project.

Thank you,

Group 5

Section E

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Operation Management Project Group 5

About The Company –


The Your’s Pizza will be a moderately priced 35 seat Pizza offering hand-tossed Brooklyn Style
Pizza, Garlic Breads and Pasta’s for takeout, dine-in, and delivery.

Your’s Pizza was established with a thought process of offering low cost pizza’s for the
population around NCR region, specifically targeting people who are looking for Pizza’s at
affordable rates. Currently has three outlets in the NCR region. Regions were decided on the
basis of catering to their target customers majorly comprising of children, teenage as well as
middle age customers.

Store locations are as follows:

1. Your's Pizza
Raj Nagar
RK/C6, Pintu Tyagi Marg, Raj Nagar, Ghaziabad
2. Your's Pizza
Rohini
D-14/160, Near Ayodhya Chowk, Rohini Sector-3, Rohini, New Delh
3. Your's Pizza
Indirapuram
One mall, Shakti Khand- 3, Indirapuram, Ghaziabad

For Operations Management project purpose we have done our study at Your’s Pizza outlet
in Raj Nagar, Ghaziabad.

Why Your’s Pizza?

Your’s Pizza is a growing brand in the NCR region and expanding its customer base at a higher
rate than few other small pizza restaurants in the same region. Looking at the other side of
the story Your’s Pizza is comparatively new in the business with respect to big players such as
Dominos or Pizza Hut who are also catering to the pizza lovers in the same market. When the
business is in its initial stage or on the stage expansion few operational related glitches are
bound to occur. We decided to take up this outlet for study since it will allow us to observe
these issues closely and conduct research to deliver suitable solution or suggestion through
our study. Having a sound operational plan allows management to focus on building sales
rather than profit.

Your’s Pizza is popular among the IMTian’s and many students on the campus prefer Your’s
Pizza over other players such as Dominos and Pizza Hut. Additionally the location which is
near to the institute made our multiple store visits feasible.

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Operation Management Project Group 5

Store Design/Layout

Daily Operations & Production

Your’s Pizza is opened 7 days a week for lunch and dinner necessitating multiple shifts. Schedules are
written by the manager for two weeks. The schedules are written in a manner that allows
management to increase or decrease hourly labour according to sales volume in order to maintain a
consistent labour cost control.

Your’s Pizza offer only Vegetarian Pizza’s but no Non-Veg options are available as of now. Only veg
menu has not helped them to compete the giants like Dominos & Pizza Hut who offer non-veg pizzas
and more variants, but looking at the issue from other side only veg menu has helped them to keep
the prices low and have a competitive edge.

Process Flow Chart for Pizza Order

1. Receive Order –
Dine-In Orders - Order for the pizza is received on the counter at the outlet which follow the
process as shown in the flow chart above.
On-Call order- On call order are taken by the person who is dedicated for this job. Currently
two people are employed for this job.

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Operation Management Project Group 5

Online Orders – Online orders are taken from different apps such as FoodPanda, Zomato etc.

2. Pizza Making Process –


This step is actually an amalgamation of multiple steps which leads to a complete pizza
ready to pack or serve. It consumes maximum time and thus is a critical process.

3. Serving/Delivery –
For dine in orders pizzas are served to the customer directly on the table whereas the on-call
orders are delivered through the delivery staff they have employed to cater to defined area
around each outlet.

Raw Material Ordering and Stocking

Pizza dough is the most essential ingredient which is well managed by Your’s Pizza by centralizing the
operations process to meet with the daily supply and demand needs. Pizza dough is prepared at a
strategic central location from where it is distributed to the different retail outlets. No demand
forecasting is done on daily basis but the quantity is defined and fixed with the experience they have
from few years of operation.

Important raw materials other than dough for daily operations are listed as follows:

Vegetables & Others –

1. Veggies - Onion, Capsicum, Sweet Corn, Black Olives, Green Olives, Paneer, Paprika,
Jalapeno, Tomato, Mushroom, Baby corn, Pineapple
2. Spices – Mexican Spices, Indian Masala, Bell Pepper, Afghani Spices
3. Sauces - BBQ Sauce, Pizza Spread, Spicy Sauce, Tomato Sauce
4. Cheese – Parmesan cheese, Mozzarella cheese, Cheddar cheese

Aforementioned ingredients are ordered and stored in the cold storage facility available with them.
Quantity is fixed the same way they decided for dough. Quantity is fixed and is purchased from the
qualified suppliers who have the responsibility of supplying these ingredients on weekly basis.

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Operation Management Project Group 5

Part A: Competitive Strategy Analysis


1. Competitive strategy of the selected business description
Your’s pizza’s competitive strategy is mainly two things
1. Location
2. Price
3. Home delivery service

All the 3 outlets are located near institutions and residential complexes. The number
of home deliveries orders it receives from these locations are enormous and due to
its low price compared to other outlets, it can compete effectively with bigger pizza
chains like Domino’s and Pizza hut. Most of the customers ask for a home delivery
for comfort and convenience

Customer segments
They are mainly aiming for students and families in the location of their store

2. Role of operations in achieving competitive strategy


Your’s pizza plays very well in the price segment when compared to other pizza
joints. However, in order to maintain the low cost of the pizzas, they have to be very
cost efficient in a lot of other aspects.
Production: The production happens right behind the order taking zone. This ensures
least time between receiving the order and preparing the order.
Worker training: Training is conducted for the workers during induction and on need
basis. They are trained to work efficiently in order to save maximum time and
produce quality food. Both
Maintenance: As dine-in isn’t their main business, they do not have a fancy outlet. It
is basic and does not require much of maintenance.

3. Various strategic, planning and operational decisions taken under operations


function

Long term decision strategy (Up to 5 years)

1. Location
They are planning on opening one more location in Noida near a huge residential
complex.
2. Seating and order capacity
The recently renovated one part of the Raj Nagar outlet and added one more table.
However, they have a lot of work to do on those ground as the store still has a huge wall in
between and the ambience isn’t very welcoming.

Short term decision strategy (3-6 months)

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Operation Management Project Group 5

1. Product changes
Adding pasta and more side dishes to the menu. The demand for pasta has risen but the
dish we have is not up to the mark. Thus, we need to work on the recipes and add new
varieties.
2. Reducing waiting time for customers in terms of placing the order and inventory
management planning

Research Methodology –
A point-wise look into our research technique is as follows -

a) Our research methodology included an in-depth meeting with the owner regarding
the current operations of the pizza chains and the challenges being faced. A detailed
discussion was conducted based on a previously documented questionnaire and it
gave us key understandings about the different issues faced in the day -to-day
functioning of the joint.

The questions and the subsequent answers from the owners have been shared
below.

1. Who are your competitors? What is your differentiation strategy?


“Big brand like Dominos and Pizza Hut are our main competitors. Other small
competitors are also there like Pizza Grill but we are performing better than them.”
2. What is the quantity that is produced per day? Is it basis customer requirement or
do you have a fixed quantity per day?
“Quantity is based on the number of orders we receive per day. “
3. How is procurement of raw material done? Do you have a single supplier?
“Procurement of raw material is done through 3rd party. We have fixed number of
quantity decided before-hand. The 3rd party delivers the pre-decided quantity which
includes pizza breads, cheese, vegetables, flour etc.”
4. Do you have any left-over inventory?
“About 2-3 days a week, some items are left over. Since they are perishable, we have
to throw them away”
5. How many employees do you have?
“3 cooks and 2 people to take orders (both online and offline) in each outlet.”
6. What kind of training is given to the employees? How often are they trained? Is
there a training schedule or is it on need basis?
“New cooks are given on-job training by the older cooks for a week or so, after which
they themselves develop expertise.”
7. How do you take orders from the customers?
“About 20% of our customers come for dine-in. Rest are online orders – about 30% is
done by FoodPanda and other food-ordering app and rest (50%) by direct call.”
8. What is your order winner?
“Low cost tasty pizza.”

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Operation Management Project Group 5

9. What is your order qualifier?


“Home delivery of pizzas. All pizza joints are more into home delivery rather than fine
dining. So this was a feature we needed to add in order to be in par with other
competitors.”
10. What is the quality management system in place?
“No specific quality management process is at place. When the customer complains
about something we provide suitable compensation and ensure similar mistakes do
not repeat in future.
From our side we try to ensure unhygienic or old item is not used in the pizza making
and we trust that on the discretion of our experienced cooks. We also keep the
cooking area very clean.”
11. How do you deliver products to your customers?
“For orders coming from few food-ordering apps, the company has their own delivery
boys and would take the order from us at a stipulated time, so that they can deliver
within their promised 60 minutes.

For direct orders, we receive through our two allotted phones lines which are handled
by two employees. We have 10 delivery boys on standby who are hired on contract
from a 3rd party organization.”
12. What are the biggest problems you face in your business?
“With our growing reputation we are unable to take the volume of direct call orders
which come to us within the adequate time.”
13. Do you have a feedback system from your customers?
“No, but we encourage customers to give feedbacks on Zomato.
14. Do you wish to improve your dining experience?
“No. Online and direct call orders are our main sources of revenue. However, we will
be working a little on our interiors as that mode still gives us 20% of the revenue”

b) We further conducted a two day visit to the Rajnagar outlet and observed key
parameters like order receipt timings, number of customers for dine-in, order
handling techniques, outlet hygiene conditions etc.

c) A customer feedback was also taken. The data was collected by three avenues –
1. By talking to the customers during our visit
2. By checking the online reviews of the pizza outlet on various online food and
restaurant reviewing websites like Zomato and TripAdvisor
3. Customers who regularly order from yours pizza

d) Other information relating to number of calls for home delivery per hour and
average time taken by a rider to reach the destination were shared by the staff.

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Operation Management Project Group 5

Part B: Problem Areas and Solutions

Based on our analysis, we have analysed certain operational issues, which can be illustrated
by the following fish-bone diagram -

Out of these issues, we have identified 4 major problem areas for which we have looked
into in details and have delved into the possible solutions and their subsequent positive
impact.

a) Lack of order intake capability from direct calls – As mentioned by the owner, the
reputation of Your’s Pizza is growing and thus due to this reason, they are receiving
more orders than they can handle. Further, many people are unfamiliar with the
food ordering app, while some want more clarifications on the ingredients of the
different pizza types mentioned in the food ordering apps. Hence, they prefer calling
directly instead of ordering from the app, increasing the volume of direct call orders
– which currently constitutes nearly 50% of their orders.

In our survey in the pizza outlet, we got the data for number of calls for order they
receive per hour. They are shown below -

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Operation Management Project Group 5

No. of Calls (8pm to 9pm)


100

90 86

80 77 77 76
74
70 69
70 67 67 67
62 61
60 58
56
51
49
50 45
44
42
40
40 35
33 32
31
29 29
30 25
21
20 18 17

10

0
1 2 3 4 5 6 7 8 9 1011121314 1516 1718 1920 2122 2324 2526 2728 2930

As we can see here, over the period of 30 days, the maximum intake of calls on a
peak time of 8pm to 9pm has been 86 on the 12th day. However, there have been
many days, where the no. of call intake has been lesser than the maximum potential.
This is due to the reason that there are only 2 phones dedicated for receiving orders
and only two employees assigned to them. As a result, during peak hours, many a
times, customers find the call waiting and give up on ordering. Further when one of
the employees becomes busy in some other work, the situation gets worse, with
many potential customers swayed away with non-answer of calls.
So, in order to maximise revenue, we need to ensure that the pizza outlet is able to
take in maximum calls.

Note – We are assuming 86 calls per hour is our maximum potential and that is the
number we want to achieve in every peak hours of the week.

Solution - One of the ways they can attend more calls, if they reduce the time taken
for receiving the order from a customer on call. If the time spent on each customer is
reduced, we can attend more customers in an hour. We observed a sample number

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Operation Management Project Group 5

of call received over 2 days and noted the time taken for each calls and subsequently
identified the problem area.

As you can see, we have identified the time for calling and ordering process as a problem
area. The time taken for some sample number of calls have been plotted.

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Operation Management Project Group 5

Time for each call


200

180

160

140

120

100

80

60

40
5

69

105
1

9
13
17
21
25
29
33
37
41
45
49
53
57
61
65

73
77
81
85
89
93
97
101

109
113
117
121
Total Time LCL UCL Average

Using c-chart, we can derive the Upper Control Limit (UCL), Lower Control Limit
(LCL) and the mean. The time values for taking the order on call which are below
the Lower control limit is not an issue, since we are trying to reduce the time and
that is basically a positive thing to have. However, it is the time values above the
Upper Control Limit that we need to eliminate.

Average 99.01 seconds

Std. Deviation 32.01

LCL 90.38 seconds

UCL 107.63 seconds

To solve this problem, we can follow a hiring policy and assign 3 people with phones
each, the waiting time for a customer reduces significantly, according to our
calculations, as illustrated below -

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Operation Management Project Group 5

VS

P0 0.235 Probability that no customers in system P0 0.294


L 1.58 Average number in the system L 1.19
W 64 sec Average time in the system W 50 sec
Lq 0.45 Average number in the queue Lq 0.06
Wq 18 sec Average time in the queue Wq 2.5 sec

Thus, we can see, the waiting time gets reduced by 86%

Inventory Management –

Based on the outlet records, the company procures raw materials for approximately 450
pizzas per day i.e. around 3150 pizzas per week.

However, when we look at the sales record, we can have different perspective. A
comparative table between the two is given below

Week No. of pizzas for which Actual Demand


Procurement of raw
material is done/ week
1 3150 2998
2 3150 3216
3 3150 2867
4 3150 2612

The difference between procurement and actual demand is because there is no proper
forecasting and the procurement is done based on intuition.

Solution -

This can be avoided if we adapt a demand forecasting method. For a simplistic model, we
can go for a weighted moving average method to forecast the demand. In this case the,
procurement for week 5 could be deduced by –

Week Weight Demand


1 15 2998
2 20 3216
3 25 2857
4 40 2612

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Operation Management Project Group 5

So forecast for week 5 = (0.15)*(2998)+(0.2*3216)+(25*2857)+(40*2612) = 2784.45

Hence, for the subsequent week, we can order slightly less raw materials i.e. for
approximately 2784 pizzas. This will minimize the cost.

An EOQ model cannot be used at this stage, since the pizza outlet is growing in reputation
with time, and at this point we would be unable to know the demand by certainty and
neither is it constant with time.

Issues Identified from Customer Feedback -

We conducted a primary research to know people rate their pizza experience with Your’s Pizza.
Responses from 167 customers helped us to point a very important issue with Your’s Pizza that is
related to the delay in the delivery. This issue was pointed by majority of the customer who did liked
and preferred Your’s Pizza over others but were not satisfied due to the delayed delivery concern.

Delivery Time & Customer Satisfaction

10%
34% 17%

39%

Fast Medium Slow Very Slow

Also, based on their feedback, we have been able to identify the major issues in food delivery
from Your’s Pizza and this has been illustrated in the Pareto Chart below –

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Operation Management Project Group 5

a. Late delivery

One the reason for this is lack of delivery staff during peak hours which delays the delivery
time. Your’s Pizza works on a simple principle of reducing fixed cost as much as possible. Since
this pizza is a low cost option for many cutting down on the cost is the only alternative
organization used to improve their bottom line.

Solution –

They can employ delivery personnel on hourly basis but they are not required to be on the
company’s normal pay scale. This will reduce the liability to a greater extent. These
employees can only be called during peak hours which will reduce company’s cost and also
increases their efficiency during peak hours. This method will help to deliver more pizzas in
less time and increase sales.

b. Food Quality in Home Delivery –

According to customer reviews, there has been instances when the food is less hot or the
quality is bad.

Solution –

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Operation Management Project Group 5

This can be solved with the solving the late delivery process. Once that is solved, it is likely
that the pizza will remain hot when the food is delivered.

Other competitors such as Dominos and Pizza Hut have installed delivery boxes on the bike
which are used for the delivery. These boxes helps them to maintaining the pizzas hot
during the time pizza is getting delivered.

These boxes will have minimal investments must be installed instead of delivery bags which
are used currently for home delivery.

Thank You!

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