Case 1: Sheena:

Sheena had worked for the same Fortune 500 Company for most 15 years. Although the
company had gone through some tough times, things were starting to turn around. Customer
orders were up, and quality and productivity had improved dramatically from what they had been
only a few years earlier due company wide quality improvement program. So, it comes as a real
shock to Sheena and about 400 of her co-workers when they were suddenly terminated following
the new CEO‟s decision to downsize the company.

After recovering from the initial shock, Sheena tried to find employment elsewhere. Despite her
efforts, after eight months of searching she was no closer to finding a job than the day she
started. Her funds were being depleted and she was getting more discouraged. There was one
bright spot, though: She was able to bring in a little money by mowing lawns for her neighbors.
She got involved quite by chance when she heard one neighbor remark that now that his children
were on their own, nobody was around to cut the grass. Almost jokingly, Sheena asked him how
much he‟d be willing to pay. Soon Sheena was mowing the lawns of five neighbors. Other
neighbors wanted her to work on their lawns, but she didn‟t feel that she could spare any more
time from her job search.

However, as the rejection letters began to pile up, Sheena knew she had to make an important
decision in her life. On a rainy Tuesday morning, she decided to go into business for herself
taking care of neighborhood lawns. She was relieved to give up the stress of job hunting, and she
was excited about the prospects of being her own boss. But she was also fearful of being
completely on her own. Nevertheless, Sheena was determined to make a go of it.

At first, business was a little slow, but once people realized Sheena was available, many asked
her to take care of their lawns. Some people were simply glad to turn - the work over to her;
others switched from professional lawn care services. By the end of her first year in business,
Sheena knew she could earn a living this way. She also performed other services such as
fertilizing lawns, weeding gardens, and trimming shrubbery. Business became so good that
Sheena hired two part-time workers to assist her and, even then, she believed she could expand
further if she wanted to.

Questions
1. In what ways are Sheena‟s customers most likely to judge the quality of her lawn care
services?
2. Sheena is the operations manager of her business. Among her responsibilities are forecasting,
inventory management, scheduling, quality assurance, and maintenance
(a) What kinds of things would likely require forecasts?
(b) What inventory items does Sheena probably have? Name one inventory decision she has to
make periodically.
(c) What scheduling must she do? What things might occur to disrupt schedules and cause
Sheena to reschedule?
(d) How important is quality assurance to Sheena‟s business? Explain.
(e) What kinds of maintenance must be performed?
3. What are some of the trade-offs that Sheena probably considered relative to:
(a) Working for a company instead of for herself?
(b) Expanding the business?
4. The town is considering an ordinance that would prohibit putting grass clippings at the curb
for pickup because local landfills cannot handle the volume. What options might Sheena
consider if the ordinance is passed? Name two advantages and two drawbacks of each option.
Case 2: Prime Bank of Massachusetts
Prime Bank of Massachusetts was started in 1964 with James Rogers as CEO and now Chairman
of the Board. Prime Bank had been growing steadily since its beginning and has developed a
loyal customer following. Today there are 45 bank locations throughout Massachusetts, with
corporate headquarters in Newbury,Massachusetts. The bank offers a wide array of banking
services to commercial and non-commercial customers.

Prime Bank has considered itself to be a conservative, yet innovative organization. Its locations
are open Monday–Friday
9–4 and Saturday 9–12. Most of the facilities are located adjacent to well-established shopping
centers, with multiple
ATM machines and at least three drive-through windows. However, Prime Bank‟s growth has
brought on certain problems. Having the right amount of tellers available in the bank as well as
in the drive-through window has been a challenge. Some commercial customers had recently
expressed frustration due to long waiting time. Also, the parking lot
has often become crowded during peak periods.

While Prime Bank was going through a growth period, the general banking industry had been
experiencing tougher
competition. Competitors were increasingly offering lower interest rates on loans with higher
yields on savings accounts
and certificates of deposit. Also, Prime Bank was experiencing growing pains, and something
needed to be done soon
or they would begin losing customers to competition.

The Board, headed by James Rogers, decided to develop a more aggressive strategy for Prime
Bank. While many of their competitors were competing on cost, the Board decided that Prime
Bank should focus on customer service in order to differentiate itself from the competition. The
Bank had already begun moving in that direction by offering a 24-hour
customer service department to answer customers‟ banking questions. Yet, there were difficulties
with this effort, such as
poor staffing and not enough telephone lines. James Rogers wanted Prime Bank to aggressively
solve all customer service
issues, such as staffing, layout, and facilities. He also wanted greater creativity in adding
improvements in customer service, such as on-line banking, and special services for large
customers. He believed that improving most aspects of the
Bank‟s operation would give them a competitive advantage.

The Board presented their new strategy to Victoria Chen, Vice President of Operations. Victoria
had recently been promoted to the V.P. level and understood the importance of operations
management. She was asked to identify all changes that should be made in the operation function
that would support this new strategy and present them at the next board meeting. Victoria had
been hoping for an opportunity to prove herself since she began with the bank. This was her
chance.

Case Questions:
1. Why is the operations function important in implementing the strategy of an organization?
Explain why the
changes put in place by Victoria Chen and her team could either hurt or help the Bank.

2. Develop a list of changes for the operations function that should be considered by the Bank.
Begin by identifying operations management decisions that would be involved in operating a
bank, e.g. layout of facility, staff, drive-through service. Then identify ways that they can be
improved at Prime Bank in order to support the strategy focused on customer service?
3. Think of the improvements identified in answering question #2. How different would these
improvements be if
the Bank had a strategy of cutting cost rather than supporting customer service?
Case study 3 - Boeing brings its customers on board

Arguably the most innovative new passenger aircraft to enter service over the last few years was
the Boeing 777, a new twin-engined aircraft, in the 300-plus seats category, to compete with
established models from McDonnell and Airbus. The existence of established competitor
products is important. When Boeing developed the 747 „Jumbo‟ jet aircraft, it had no direct
competitors. The company‟s customers either wanted the product or they didn‟t. Not so for the
777; Boeing knew that it must consider its customers‟ requirements. The company had to take a
new course – to understand its customers‟ needs and then to transform that knowledge into an
aircraft that could best meet those needs.

Boeing has always maintained close involvement with its customers, but this project called for a
new depth of listening and understanding. Initially, eight large potential customers (including
British Airways, Japan Airlines and Qantas) were invited to participate in creating the design
concepts. It soon became clear that the customers did have important requirements, the most vital
of which was that the aircraft should be around 25 per cent wider than the 767. In fact Boeing
had originally hoped to lengthen the 767 fuselage to give the extra capacity, so avoiding some of
the costs involved in a completely new fuselage. The customers also wanted much more
flexibility in the configuration of the passenger space. Conventionally, cabin space had been
divided up into sections, separated by fixed galleys and toilets at predetermined positions, fixing
the ratio of passenger capacities of each class. However, the airlines all indicated that they
wanted to be able to configure the cabin to their own requirements. Finally, the airlines insisted
that the new design should be free of the usual level of minor, but irritating, faults which had
bugged the early operations of some of the other aircraft.

Boeing did meet its customers‟ requirements and even improved upon them in some ways. They
achieved this by using design/build teams, and by a particularly powerful computer-aided design
(CAD) system. Customers were closely involved right from the start of the design. They even
came up with some good suggestions. For example, one airline suggested a new layout for the
rear galley which allowed an extra 12 seats to be included in the aircraft.
Based on the above given small case study about the process design of Boeing‟s 777 aircraft,
answer the following questions:
a) What problems do you think might be associated with bringing customers together in
the way that Boeing did?
(b)Why do you think that Boeing‟s customers wanted the flexibility to configure
passenger space?
Case Study 4 - Cadbury Schweppes Production Method
Cadbury Schweppes is a multinational soft drinks (beverages) and confectionery business that is
based in the UK. The business is a public limited company. It is involved in the manufacture,
marketing and distribution of its many branded products. Cadbury Schweppes now employs over
40000 people and its products are available in almost 200 countries. The company‟s products can
be divided into:
• Beverages (carbonated soft drinks and non carbonated soft drinks (waters and fruit juices)
• Confectionery (chocolate products, sugar products, chewing gum)

Much of Cadbury Schweppes‟ manufacturing still takes place in the UK, Australia and North
Africa. However, in the 1990s the company moved some of its production to Russia, Poland,
Argentina and China, countries with emerging economies.

To satisfy most of its shareholders, Cadbury Schweppes‟ has set out a strategy to help achieve its
objective. This strategy consists of:
• Creating strong regional positions through organic growth, acquisitions and disposals
• Developing strong brands through marketing
• Expanding its marketing share through innovation in products and packaging
• Regularly updating its product portfolio
Production
Despite manufacturing its goods in large quantities, Cadbury Schweppes uses batch rather than
flow production methods.

The company must ensure the products are of high quality. Not only are there strict laws about
how foodstuff is made, but also Cadbury Schweppes would not want to damage its reputation by
allowing inferior products to be sold.

Cadbury Schweppes undertakes extensive research and development (R&D) to develop new
products and to find ways of manufacturing existing brands more efficiently. Cadbury
Schweppes uses the services of a specialist R&D business based at Reading for its UK
confectionery business
Read the small case study about Cadbury Schweppes. In the case study it is stated that Cadbury
Schweppes uses batch production methods to make its products and that it is important the
products are of high quality. Based on the information provided
(a) Describe the differences between batch and flow production.
(b) Critically evaluate the reasons why Cadbury Schweppes uses batch production when making
chocolate bars.
Case5: home style cookies

The company

The Lew-Mark Baking Company is located in a small town in western New York State. The
bakery is run by two brothers, Lew and Mark, who formed the company after they purchased an
Archway Cookie franchise. With exclusive rights in New York and New Jersey, it is the largest
Archway franchise. The Company employs fewer than 200 people, mainly blue-collar workers,
and the atmosphere is informal.

The Product

The compnay‟s only product is soft cookies of which it makes over 50 varieties. Larger
companies, such as Nabisco, Sunshine, and Keebler, have traditionally produced biscuit a
cookie, in which most of the water has been baked out, resulting in crisp cookies. Archway
cookies have no additives or preservatives. The high quality of the cookies has enabled the
company to develop a strong market niche for its product.

The Customers

The cookies are sold in convenience stores and supermarkets throughout New York and New
Jersey. Archway markets its cookies as “good food” – no Additives or preservatives-and this
appeals to a health-conscious segment of the market. Many customers are over 45 years of age,
and prefect a cookie that is soft and not too sweet. Parents with young children also buy the
cookies.

The production process

The company has two continuous band ovens that it uses to bake c the cookies. The production
process is called batch processing system. It begins as soon as management gets orders from
distributors. These orders are used to schedule production. At the start of each shift, a list of the
cookiesto be made that day is delivered to the person in charge of mixing. That person checks a
master list, which indicates the ingredients needed for each type of cookie, and enters that
information into the computer. The computer then determines the amount of each in gradient
needed, according to the quanityt of cookies ordered, and relays that information to storage silos
located outside the plant where the main ingredients ( flour, sugar, and cake flour) are stored.
The ingredients are automatically sent to giant mixing machines where the ingredients are
combined with proper amounts of eggs, watee and flavorings‟. After the ingredients have been
mixed, the batter is poured into a cutting machine where it is cut into individual cookies. The
cookies are then dropped onto a continous band ( conveyor belt) and transported through one of
two ovens. Filled cookies, such as apple, date and raspberry, require an additional step for filling
and folding.

The nonfilled cookies are cut on a diagonal rather than straight. The diagonal – cut cookies
require less space than straight-cut cookies, and the result is a higher level of productivity. In
addition, the company recently increased the rate of production.

As the cookies emerge from the ovens, they are fed onto spiral cooling racks 20 feet high and 3
feet wide. As the cookies come off the cooling racks, workers place the cookies into boxes
manually, removing any broken or deformed cookies in the process. The boxes are then
wrapped, sealed, and labeled automatically.

Inventory

Most cookies are loaded immediately onto trucks and shipped to distributors. A small percentage
is stored temporarily in the company‟s warehouse, but they must be shipped shortly because of
their limited shelf life. Other inventory includes individual cookie boxes, shipping boxes, labels,
and cellophane for wrapping. Labels are reordered frequently, in small batches, because FDA
label requirements are subject to change, and the company does not want to get stuck with labels
it can‟t use. The bulk silos are refilled two or three times a week, depending on how quickly
suppliers are used.

Cookies are baked in a sequence that minimizes down time for cleaning. For instance, light
colored cookies (e.g., chocolate chip) are baked before dark colored cookies (e.g. fudge). And
oatmeal cookies are baked before oatmeal raiser cookies. This permits the company to avoid
having to clan the processing equipment every time a difficult type of cookie is produced.
Quality

The bakery prides itself on the quality of its cookies. Cookies are sampled randomly by a quality
control inspector as they come off the line to assure that their taste and consistency are
satisfactory, and that they have been baked to the proper degree. Also, workers on the line are
responsible for removing defective cookies when they spot them. The company has also installed
an X-ray machine on the line that can detect small bits of metal filings that may have gotten into
cookies during the production process. The use of automatic equipment for transporting raw
materials and mixing batter has made it easier to maintain a sterile process.

Scrap

The bakery is run very efficiently and has minimal amounts of scrap. For example, if a batch is
mixed improperly, it is sold for dog food. Broken cookies are used in the oatmeal cookies. These
practices reduce the cost of ingredients and save on waste deposal costs. The company also uses
heat reclamation. The heat that escapes from the two ovens is captured and used to boil the water
that supplies the heat to the building. Also, the use of automation in the mixing process has
resulted in a reduction in waste compared with the manual methods used previously.

New products

Ideas for new products come from customers, employees and observations of competitors‟
products. New ideas are first examined to determine whether the cookies can be made with
existing equipment. If so, a sample run is made to determine the cost and time requirements. If
the results are satisfactory, marketing tests are conducted to see if there is a demand for the
product.

Potential improvements

There are a number of areas of potential improvement at the bakery. One possibility would be to
automate packing the cookies into boxes. Although labor costs are not high, automating the
process might save some money and increase efficiency. So far, the owners have resisted making
this change because they feel an obligation to the community to employ the 30 women who now
do the boxing manually. Another possible improvement would be to use suppliers who are
located closer to the plant. That would reduce delivery lead times and transportation costs, but
the owners are not convinced that local suppliers could proved the same good quality. Other
opportunities have been proposed in recent yars , but the owners rejected them because they
feared that quality of the product might suffer.

1. What are two ways that the company has increased productivity? Why did increasing the
length of the ovens result in a faster output rate?
2. Do you think that the company is making the right decision by not automating the
packing of cookies? Explain your reasoning. What obligation does a company have to its
employees in a situation such as this? What obligations does it have to the community? Is
the size of a town a factor? Would it make a difference if the company was located in a
large city? Is the size of the company a factor? What if it was a much larger company
3. What factors cause Lew-Mark to carry minimal amounts of certain inventories? What
benefits result from the policy?
4. As a consumer, what things do you consider in judging the quality of cookies you buy in
a supermarket?
5. What advantages and what limitation stem from Lew_ Mark‟s not using preservatiotives
in cookies?
6. Briefly describe the company‟s strategy