1
\nUCW OPMT 301: OPERATIONS MANAGEMENT<\/p>\n
CASE STUDY #1- Ice House Toys
\n\u2756 Introduction
\nRobin Baker, the Managing Director of a small group
\nof toy shops, suspected that he had a problem. His
\ncompany, formed in 1962, consisted of five
\nprofitable shops and a catalogue sales (mail-order)
\nbusiness which, although profitable, had never been
\nable to capitalize fully on the quality of its products
\nand the loyalty of its customers.
\nIce House Toys, its mail-order operation, was
\nrun from a renovated eighteenth century ice house
\n(originally constructed on a dockside for storing
\nimported blocks of ice) in Bristol, which the
\ncompany acquired in 1981 when such old industrial
\nproperty was cheap and easy to find. The current
\nstate of the property market made relocation
\nunrealistic, and alternative modern warehouse space
\nin the Bristol area was both inconveniently situated
\nand too expensive.
\nThe building consisted of three floors, each
\nof which was divided by the stairwell and lift-shaft
\ninto two working areas of 600 square metres each.
\nOne of the ground floor areas was used to store stock
\nfor the company\u2019s shops, but it had been decided to
\nreallocate this space to the mail-order operation from
\nthe beginning of September 2000.
\nThe other ground floor area was used as the packing
\nroom for the mail-order operation. Of the remaining
\nfour work areas in the building, three (two on the first
\nfloor and one on the second) were mail-order
\nstockrooms, while the fourth contained the office. As
\nis often the case in a historic industrial building,
\nceiling height was restricted, and stock was stacked
\nto use all the available height.
\n\u2756 Sales and purchasing patterns
\nIce House Toys distributed three mail-order
\ncatalogues every year, each of which contained
\napproximately 300 different toys and games, all of
\nwhich were standard products manufactured in the
\nUK, Europe and the Far East. The major catalogue
\nwas the Christmas one, sent to 160 000 customers in
\nthe first week of October. In 1999, this had resulted
\nin a total of 22 600 orders with an average order value
\nof $42. The Winter Sale Catalogue and the Spring
\nCatalogue were each sent to 45 000 regular
\ncustomers, and in 1999 achieved a combined total of
\n6900 orders with an average order value of $23.
\n2
\nThe stock for the Christmas Catalogue was
\nordered before the end of July, and was received in
\ntwo phases. The first, representing approximately
\n75 per cent of total requirements, arrived in the first
\nweek of October, filling the stock areas to capacity.
\nTable 1: Orders received in 1999
\nMonth Week Orders
\nOctober
\n1 0
\n2 360
\n3 800
\n4 1800
\nNovember
\n1 2900
\n2 3300
\n3 3700
\n4 3500
\nDecember
\n1 2800
\n2 2200
\n3 1300
\nThe remainder was ordered after the first 2500
\ncustomer orders had been processed and the sales
\npatterns had been analyzed and was delivered during
\nthe fourth week of November. The feasibility of
\nreceiving deliveries of smaller quantities of stock had
\nbeen considered on several occasions in the past but,
\ntaking loss of discount and advantageous terms of
\npayment into account, the resulting eight per cent
\nreduction in gross profit margins had been
\nconsidered unacceptable. Appendix – A gives a
\ndetailed breakdown of costs.
\nIn 1999, stock with a total resale value of $1.1
\nmillion was ordered. This was based on a project ( help with nursing paper writing from experts with MSN & DNP degrees)ion
\nof 21 000 orders with an average value of $45, plus
\na margin for error which Robin always added to
\nguard against unexpected higher demand for a
\nparticular item or the failure of some suppliers to
\ndeliver an order in full. Any surplus stock at the end
\nof the Christmas Catalogue period could be disposed
\nof through the Winter Sale Catalogue, or through the
\nretail shops. Robin liked to maintain a minimum
\nstock level at any time to cover 10 working days,
\nallowing a buffer for late delivery from a supplier or
\nfor a sudden unexpected demand for a particular
\nitem.
\nThe recorded volume of orders received from
\nthe Christmas Catalogue in 1999 is shown in Table
\n1. This pattern had been found to vary little from year
\nto year. Given the 24th December delivery deadline
\nfor Christmas, all orders had to be dispatched by the
\nend of the third week in December. Any customers
\nwhose orders were received in the fourth week of
\nDecember (there were only 75 orders in 1999) were
\ncontacted by telephone, and most usually agreed to
\ntheir order being dispatched when the warehouse
\nreopened in the first week of January.
\n\u2756 Operations
\nAny order arriving at the warehouse passed through
\nthree stages, in the following sequence: recording,
\nassembly and packing, dispatch. A detailed analysis
\nof each of these stages follows:
\n\u2756 Recording
\nAll orders were entered into the computer on the day
\non which they arrived so that the earliest possible
\nnotice could be given of any stock shortages. There
\nwere facilities in the office for up to seven VDU
\n3
\noperators, who were hired from a local agency and
\nwere paid by the hour. They each worked a seven hour day. Each operator was able to process an
\naverage of 22 orders per hour, which involved
\nentering either an existing customer\u2019s account
\nnumber or a new customer\u2019s name and address into
\nthe computer, followed by the customer\u2019s order and
\npayment details. Picking lists, packing notes and
\naddress labels were then automatically printed out
\ntwo floors below in the Parcels Room, where both
\nthe assembly\/packing and dispatch operations
\nwere situated.
\n\u2756 Assembly and packing
\nThe assembly operation was divided into two stages,
\nboth of which, according to internal and external
\nwork studies, were performed efficiently. For every
\nbatch of 20 orders, the computer produced an
\naggregate picking list, which enabled each of the
\nthree stock collectors to go round the stockrooms
\nand, in an average of 45 minutes, select the stock
\nrequired for their 20 orders. This stock was then
\ngiven to teams of two packers who worked together
\nto allocate it to individual orders, to check that each
\norder was correct, and then carefully to pack each
\norder into a suitable-size box. The completed orders
\nwere then passed on, with packing note attached, to
\nthe dispatch stage of the operation. Each packer
\ncompleted an average of 4.3 parcels per hour, which
\nenabled a single stock collector to provide sufficient
\nstock for six packers. The total space allocated to the
\npacking operation was 330 square metres, which was
\nsufficient for a maximum of 16 packers at any one
\ntime. This department, like the dispatch department,
\nwas staffed entirely by part-timers who worked
\neither four-hour (morning) or five-hour (afternoon)
\nshifts. The warehouse was operated Monday to
\nFriday from 9 a.m. to 6 p.m.
\n\u2756 Dispatch
\nThe workers in the dispatch department were, like
\ntheir colleagues in assembly and packing, employed
\nas and when they were required. Their job was to
\ntake each parcel, attach an address label, which had
\nbeen printed by the computer, and enter the order
\nnumber into the computer to confirm that the order
\nhad been fully processed. The parcels were then
\nstored in a secure area on the loading bay, and were
\ncollected by a parcel carrier at regular intervals six
\ntimes each day. Each person in the dispatch team
\ncould complete 9.5 orders per hour, and required at
\nleast 30 square metres to be able to operate
\neffectively.
\n\u2756 Future plans
\nRobin was determined to expand catalogue sales
\nconsiderably in 2000:
\n\u2018The 1999 ratio of 22 600 orders from 160 000
\ncatalogues sent out was close to the average for the
\nlast 10 seasons. For 2000, however, there are three
\nmajor changes. Firstly, we have made an agreement
\nto share part of our customer database with a
\ncompany that sells upmarket children\u2019s clothes by
\nmail order. Of course, these are clearly identified
\ncustomers who have signed an agreement to allow
\ntheir details to be used in that way. In return, this
\ncompany will provide us access to its database of
\nsimilarly disposed customers, and this will add some
\n30 000 names and addresses to our current list. Our
\n4
\nsecond initiative is to spend a further $18 000 on
\nadvertising. In the past, each $1000 spent on
\nadvertising has finally led to 190 additional orders.
\n\u2018Thirdly, we finally launched our new
\nwebsite, aimed at existing customers only, at the end
\nof November 1999, and expect this to have a
\nsignificant impact in our market this year.
\nUnfortunately, it was late for the season just finished
\nbecause the design had to be reworked to remove a
\nnumber of very irritating bugs that were identified by
\naround a thousand trial customers. Now, however,
\nanyone who accesses this site will be able to obtain
\nmore comprehensive descriptions and photographs
\nof all the products we supply, and it will make
\nordering much simpler for the customer. They will
\nsimply fill their virtual shopping baskets by clicking
\non the products they require. There will be no need
\nto copy out product descriptions and codes: the
\nsystem will do all that for them. We learnt a lot
\nduring the trial, and found that the average order
\nvalue for the Internet customers was around $60.
\nFrom discussions with some other mail-order
\nretailers who have similarly gone online, I would
\nexpect about five per cent of our existing customers
\nto use this service in the 2000 season, and overall
\nusage of this channel is expected to double every year
\nas new customers find our site.
\n\u2018Orders received this way will remove the
\nneed to key in data in the Recording Office. The data entry staff will simply check the details deposited by
\nthe online customers and, if these are correctly and
\nfully completed, will allow the order to pass into the
\nfurther processes as normal. Our trials indicate that
\nthis will allow each operator to completely process
\nand authorize these orders at a rate of about one per
\nminute. That will eventually have a significant
\nimpact on our costs, and will increase our capacity to
\nenter ordersinto the system at the busiest times of the
\nseason.
\n\u2018The only thing that worries me is that this
\nongoing expansion will either lead to us completely
\nrunning out of warehouse space due to the sheer
\nvolume of stock, or to us being forced to pay
\novertime to run the operation during evenings or
\nweekends. This would undermine our tight control of
\ncosts and erode our hard-won profits. Also, at
\npresent, it is our policy to dispatch all orders within
\nthree days of receipt; I am very concerned that this
\nmay become increasingly difficult to achieve as our
\nsales volumes should grow by a forecast annual rate
\nof 15 per cent per year from the 2001 season.\u2019
\nCase Questions
\na) Evaluate the impact on operations of Robin\u2019s
\nsales targets for the 2000 Christmas Catalogue.
\nYou may wish to consider the following:
\ni. What are the main capacity constraints
\nwithin the mail-order operation?
\nii. To what extent can they be resolved by
\nthe planned 2000 increase in the amount
\nof warehouse space allocated to the
\nmail-order operation?
\niii. In what other ways could Robin attempt
\nto influence demand so as to overcome
\ncapacity constraints?
\n5
\niv. What will be the impact on operations of
\nthe website, based on Robin\u2019s forecast of
\ncustomer uptake? What would the effect
\nbe if this channel failed to grow as
\nrapidly as expected?
\nAssume that selecting smaller toys for the
\ncatalogue is not a solution!
\nb) What are the longer-term capacity planning
\nissues? Evaluate the impact of the project ( help with nursing paper writing from experts with MSN & DNP degrees)ed 15
\nper cent growth over five years.
\nc) Is it possible to construct an argument which
\ncould justify the company accepting a 7.5 per
\ncent reduction in gross profit margin through the
\nadoption of an alternative purchasing policy,
\nwhich would significantly reduce stock levels?
\nIgnore any effect of price inflation, and take
\naccount of your answer to Question b), above.
\nd) Is it reasonable for Robin to be horrified at the
\nidea of overtime payments?
\nAppendix \u2013 A 1999 Christmas Catalogue: Cost
\nAnalysis
\nBreakdown of cost for one average parcel (1999
\nfigures)
\nSales 42.00
\nCost of Stock, packaging
\nmaterial, carriage
\n(23.00)
\nGross Profit 19.00
\nShare of fixed costsa
\n(10.08)
\nCatalogue productionb
\n(3.25)
\nVDU operator wages (0.35)
\nStock collector wages (0.12)
\nPacker wages (0.77)
\nDispatcher wages (0.35)
\nNet Profit 4.08
\nNotes
\naTotal fixed cost $288 000 per year, absorbed over 22 600
\norders
\nb160 000 catalogues were printed and mailed at a cost of
\n$0.46 each, resulting in 22 600 orders
\n6
\nGuidelines for Analyzing Case Studies
\nWhile there is no \u201cformula\u201d for analyzing case studies, the following guidelines are recommended;
\n1. Define the goals and objectives for your analysis. What questions are you trying to answer? What issues are
\nyou trying to resolve?
\n2. Rapidly skim through the case study and get a sense for how the case study has been structured.
\n3. Read through the case study with paper and pencil and make notes as you go along
\n4. Structure the information in the case study: this is the key step.
\na. Think of the information given in the case study as \u201craw data\u201d that you have gathered to
\nhelp you answer the questions and resolve the issues in Step 1 above.
\nb. You need to structure this data in order to resolve the issues.
\nHere are some useful dimensions along which you can structure the given information chronologically:
\ni. Evolution of the industry in which the enterprise operates (changes in technology, customer
\nneeds, competitive landscape, etc.)
\nii. Evolution of strategy – business, technology, and market – of the enterprise
\niii. Evolution of technology (including manufacturing), product platforms, and product lines
\nof the enterprise
\niv. The technology, product, and process development process within the enterprise
\nv. Growth (or decline) of the enterprise with respect to of market share, revenues, costs,
\nprofits, etc.
\nvi. Organizational structure of the enterprise
\nvii. Key decisions made at different stages in the life of enterprise, and the drivers for these
\ndecisions
\nviii. The interconnections and relationships between all the above factors
\nix. Make extensive use of figures, tables, trees, etc. to shape your thinking during the
\nstructuring process.
\nx. Perform any necessary analysis, for example, revenues or costs associated with different
\ndesign options
\n5. Draw conclusions, answer questions, resolve issues, and make recommendations using the structured
\ninformation in Step 4.
\n6. Use the case questions to structure your paper. In order words don\u2019t quote the questions and provide
\nanswers, rather formulate titles and subtitles with the case questions in an essay format.
\nKey issues
\n\u2022 Capacity analysis
\n\u2022 Bottleneck management
\n\u2022 Effect of Internet process on capacity
\n\u2022 Inventory management\/purchasing policies
\nPaper submission Format
\nThe Case study paper should be presented in the format below;
\nFormat – The written presentation will be
\n7
\n(1) Double-spaced typed, and not longer than 8 pages
\n(2) Use citations (APA format) and a reference of sources used.
\n(3) Pages should be numbered.
\n(4) A title page that includes the student\u2019s name.
\n(5) An abstract (less than 250 words) providing a brief summary of the paper outlining the purpose,
\nmethod\/process, findings and conclusion \/recommendations.
\nSUBMISSION INSTRUCTIONS
\nStrictly comply with APA. Use the template provided to submit the assignment. All papers are to be submitted
\nthrough TurnitIn.com on the course site on or before Tuesday August 09, 2022, by Mid-night. Turnitin is the
\nleading academic plagiarism detector, utilized by teachers and students to avoid plagiarism and to ensure
\nacademic integrity. Therefore, ensure all references and citation are properly made and in accordance with APA
\nstylish of writing. Save your file as OPMT 301_Case_Assignment-1_DeoJ (Doe=last name and J= first
\ninitial). The case analysis is worth 10% of overall class marks
\nRubrics for evaluating Case Study
\nActivity\/Competencies Demonstrated % of Final
\nGrade
\n1. Critical Analysis and Research (75%)
\na. Depth of background summary \/10
\nb. Assessment the impact of Robins operation \/25
\nc. Determined the longer-term capacity planning with
\nthe project ( help with nursing paper writing from experts with MSN & DNP degrees)ed 15% growth
\n\/15
\nd. Argument for improvement \/15
\ne. Analysis of Robin\u2019s response to overtime payment \/10
\n2. Communication (15%)
\na. Uses language clearly and effectively \/10
\nb. Information organized intelligently and holistically \/5
\n3. Organization and Writing (10%)
\na. APA Referencing and formatting (title, headings, and references) \/5
\nb. Spelling and grammar \/5
\nTotal \/100<\/p>\n","protected":false},"excerpt":{"rendered":"
1 UCW OPMT 301: OPERATIONS MANAGEMENT CASE STUDY #1- Ice House Toys \u2756 Introduction Robin Baker, the Managing Director of a small group of toy\u2026<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7545,2809,7548,7546,7544,7543,7549,7547],"tags":[7678,8989,8988,7387,633,8991,630,8987,8994,8467,15,8990,7656,7571,8993,66,8992],"class_list":["post-101973","post","type-post","status-publish","format-standard","hentry","category-best-dissertation-services-uk","category-cheap-dissertation-writing-services-uk","category-dissertation-writing-services-cost","category-dissertation-writing-services-uk-reviews","category-master-dissertation-writing-services","category-phd-thesis-writing-services-uk","category-thesis-writing-writing-help-australia","category-top-dissertation-writing-services","tag-best-custom-paper-writing-service","tag-best-online-paper-writing-service","tag-best-paper-writing-service","tag-best-research-paper-writing-services","tag-cheap-research-paper-writing-service","tag-cheapest-paper-writing-service","tag-college-paper-writing-service","tag-free-paper-writing-service","tag-free-term-paper-writing-service","tag-paper-writing-service","tag-paper-writing-service-reddit","tag-professional-paper-writing-service","tag-someone-to-write-my-paper","tag-websites-that-write-papers-for-you","tag-what-is-the-best-paper-writing-service","tag-write-my-paper","tag-write-my-paper-for-me-free"],"_links":{"self":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/101973","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/comments?post=101973"}],"version-history":[{"count":0,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/101973\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/media?parent=101973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/categories?post=101973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/tags?post=101973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}