18 PRODUCTION AND OPERATIONS MANAGEMENT

INTRODUCTION TO PRODUCTION AND

OPERATION MANAGEMENT

CASELET 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.
 INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT 19

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.
[Source: Production/Operations Management by William [Link], Irwin/McGraw-Hill]
 INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT 19

CASELET 2

WEGMANS FOOD MARKETS

Wegmans Food Markets, Inc., is one of the premier grocery chains in the
United States. Headquartered in Rochester, NY, Wegmans operates over 70
stores. The company employs over 23,000 people, and has annual sales of over
USD. 2.0 billion.
Wegmans has a strong reputation for offering its customers high product
quality and excellent
service. Through a combination of market research, trial and error, and listening
to its customers, Wegmans has evolved into a very successful organization. In
fact, Wegmans is so good at what it does that grocery chains all over the country
send representatives to Wegmans for a firsthand look at operations.
SUPERSTORES

Many of the company’s stores are giant 100,000 square foot superstores, double
or triple the size of average supermarkets. A superstore typically employs from
500 to 600 people.
Individual stores differ somewhat in terms of actual size and some special
features. Aside from the features normally found in supermarkets, they
generally have a large bakery Section (each store bakes its own bread, rolls,
cakes, pies, and pastries), and extra large produce sections. They also offer
film processing a complete pharmacy, a card shop and video rentals. In-store
floral shops range in size up to 800 square feet of space, and offer a wide
variety of fresh-cut flowers, flower arrangements, varies and plants. In-store card
shops covers over 1000 square feet of floor of floor space. The bulk foods
department provides customers with the opportunity to select what quantities
they desire from a vast array of foodstuffs and some nonfood items.
Each store is a little different. Among the special features in some stores are
a dry cleaning department, a wokery, and a salad bar. Some feature a Market
Cafe that has different food stations, each devoted to preparing and serving a
certain type of food. For example, one station has pizza and other Italian
specialties, and another oriental food. There are also being a sandwich bar, a salad
bar and a dessert station. Customers often wander among stations as they
decide what to order. In several affluent locations, customers can stop in on their
way home from work and choose from a selection of freshly prepared dinner
entrees. Some stores have a coffee shop section with tables and chairs where
shoppers can enjoy regular or specialty coffees and variety of tempting pastries.
20 PRODUCTION AND OPERATIONS MANAGEMENT

PRODUCE DEPARTMENT

The company prides itself on fresh produce. Produce is replenished as often as

12 times a day. The larger stores have produce sections that are four to five
times the size of a produce section of an average supermarket. Wegmans offers
locally grown produce a season. Wegmans uses a ’farm to market’ system
whereby some local growers deliver their produce directly to individual stores,
bypassing the main warehouse. That reduces the company’s inventory holding
costs and gets the produce into the stores as quickly as possible. Growers may
use specially designed containers that go right onto the store floor instead of
large bins. This avoids the bruising that often occurs when fruits and vegetables
are transferred from bins to display shelves and the need to devote labor to
transfer the produce to shelves.

MEAT DEPARTMENT

In addition to large display cases of both fresh and frozen meat products, many
stores have a full-service butcher shop that offers a variety of fresh meat
products and where butchers are available to provide customized cuts of meat
for customers.

ORDERING

Each department handles its own ordering. Although sales records are available
from records of items scanned at the checkouts, they are not used directly for
replenishing stock. Other factors, such as pricing, special promotions, local
circumstances must all be taken into account. However, for seasonal periods, such
as holidays, managers often check scanner records to learn what past demand
was during a comparable period.

The superstores typically receive one truckload of goods per day from the
main warehouse. During peak periods, a store may receive two truckloads from
the main warehouse. The short lead-time greatly reduce the length of the time
an item might be out of stock, unless the main warehouse is also out of stock.

The company exercises strict control over suppliers, insisting on product

quality and on-time deliveries.
INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT 21

EMPLOYEES

The company recognises the value of good employees. It typically invests an

average of Rs.7000 to train each new employee. In addition to learning about
stores operations, new employees learn the importance of good customer service
and how to provide it. The employees are helpful, cheerfully answering
customer questions or handling complaints. Employees are motivated through a
combination of compensation, profit sharing, and benefits.

QUALITY

Quality and Customer satisfaction are utmost in the minds of Wegmans

management and its employees. Private label food items as well as name
brands are regularly evaluated in test kitchens, along with the potential new
products. Managers are responsible for checking and maintaining products and
service quality in their departments. Moreover, employees are encouraged to report
problems to their managers.

If a customer is dissatisfied with an item and returns it, or even a portion of

the item, the customer is offered a choice of a replacement or a refund. If the
item is a Wegmans brand food item, it is then sent to the test kitchen to
determine the cause of the problem. If the cause can be determined, corrective
action is taken.

Questions
1. How do customers judge the quality of a supermarket?
2. Indicate how and why each of these factors is important to the
successful operation of a supermarket:
(a) Customer satisfaction.
(b) Forecasting.
(c) Capacity planning.
(d) Location
(e) Inventory management.
(f)Layout of the store.
(g) Scheduling.

[Source: Production/Operations Management by William [Link], Irwin/McGraw-Hill]