Approaches of Capacity Management in McDonald's

This case study examines the approaches of capacity management used by McDonald's to reconcile capacity and demand. It discusses the concepts of level capacity, demand management, and chase demand. The study also analyzes the implementation of the four Ds (Design, Direct, Develop, Deliver) by McDonald's and evaluates the five performance objectives in operation management. Additionally, it calculates the average number of customers arriving at the till and the average wait time in McDonald's Drive-Thru.

Case Study

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
What approaches does Mc Donald seem to take for its capacity management to reconcile
capacity and demand?..................................................................................................................3
QUESTION 2...................................................................................................................................4
Analyse the implementation of four Ds by the McDonald Restaurant?......................................4
QUESTION 3...................................................................................................................................5
Evaluate what the five performance objectives mean for the operation in McDonalds?............5
QUESTION 4...................................................................................................................................7
Calculate the average number of customers arriving at the till and the average time they must
wait before exiting McDonald’s Drive-Thru...............................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Operation management is defined as business practice that develop highest level of
efficiency possible in the context of business. It is related with the converting stocks and labour
into goods and services to increase profitability of business entity. Operations management
teams require to take balance costs with revenues to attempt the greatest net operating profit
possible (Annarelli and Nonino, 2016). This report based on the McDonald corporation which
was established in 1940s. It is best known fast food chain that operates across 101 countries and
have provide services about 70 million customers a day. In this report consist of different
approaches of capacity management to reconcile capacity and demand. Along with implement of
four D's by the MacDonald restaurant to conduct operation management and analysis
performance objectives in company. Moreover, calculate of average arriving customers in
restaurant and provide challenges based on the computation.
QUESTION 1
What approaches does Mc Donald seem to take for its capacity management to reconcile
capacity and demand?
Capacity management is defined the act of assuring a business increase its expected
activities and production output at all times underneath all situations. The capacity of business
mainly analysis on company can achieve, manufacture and selling out in specified period of
time. There are following approaches of capacity management that followed by the MacDonald
such as:
 Level capacity: This approach consist of maintaining stable manpower level and results
rates over the planning horizon. It supports to MacDonald to manage inventory levels
from the production of finished goods greater than expected in condition of low demand
variability. It is a maximum level of production output provide by the company. In
context of MacDonald, inventories of finished products as well as raw materials are
keeping in reserve items require when run out of stock. In recent years management has
realised big stocks are expensive so they are decided to change methodologies in stock
and production management (Osei-Kyei, Chan and Ameyaw, 2017).
 Demand management: It is a planning methodology which is applied by an organisation
to forecasting, planning and managing the demand of products as well as services.

MacDonald applied some strategies in order to control of flow of food production to
manage demand effectively. For this apply JIT methodology that use for acquired goods
and raw materials for the production stage.
 Chase demand: This approach is used by the business entity to chasing demand from
market. Production activities set to match demand and carry out any left over items. With
the implementation of JIT system to manage inventory and deduct the cost of production.
It consist of matching the demand by recruiting and firing the staff members as per the
controlling strategy. For this requires to apply JIT system in appropriate manner and
using stocks to control the changes in demand level (Rakthin, Calantone and Wang,
2016).
QUESTION 2
Analyse the implementation of four Ds by the McDonald Restaurant?
There are implemented of Four D's by the MacDonald restaurant that are mentioned
below:
 Design: Product design is related with the improvement of product idea and formulation,
testing and devising of the item. In the context of MacDonald developing every product
as per the its menu. All the items are categorised into different segments like number of
sandwiches, salad and chicken on the menu card. The taste and flavour of food product is
essential part of the product and does not stop due to increase price and decrease quantity
into meals (Ruparathna, Hewage and Sadiq, 2017).
 Direct: It is a main strategy of operation management in which focus on the operational
functions along with strategic purpose. Along with understand that how to translate
strategy works in MacDonald are prerequisites for the design of operations procedure. At
the end it is accomplished by a part of joined up image of an entity and how operations fit
as per the vision of company (Walters and Helman, 2020).
 Develop: MacDonald regularly develop products on temporary basis in which customer
experience new at every visit and attract them to visit again. Manager of MacDonald
continuously develop their existing products and continue ability maintain to revisit
operational activity to more optimise and refine its procedure. The food chain develop

products at global level and featuring a typically Dutch kroket and many others
(Seetharaman and et.al, 2016).
 Deliver: After designing the product require to deliver product to right customer at right
time. The delivery of products and services from distributors to end customer must be
planned and controlled. For this follow JIT system in which follow a particular procedure
effectively. It is a good way of measurement of performance of workers and quality
control at the time of designing and procedure run to seamlessly by alerting procedure.
The firm has also implemented of modern technology to improve service delivery like
digitalising of their operations has modify the MacDonald staff members to serve more
customers on daily basis (Yamin and Alharthi, 2019).
QUESTION 3
Evaluate what the five performance objectives mean for the operation in McDonalds?
Performance objective are set up business management to guiding principles and
motivate for the vision and mission of the business entity. It helps to achieve set objectives of
MacDonald that based on the specific objectives and activities present by the entities (Wang,
Alamo, Puig and Cembrano, 2018). There are mentioned five performance objective of
MacDonald such as:
 Quality: This is important factor in relation to business organization as quality matters a
lot for organization where it needs to provide the products and services with better quality
that attracts the number of customers. Such as McDonald is focusing on quality of food
and it follows all regulations for maintaining high quality of products that supports to
increase business profitability. The organization is spending money on providing training
and learning programmes to its employees which can help to accept the challenges and
improve the business performance by maintaining higher quality standards (Oakley,
Onggo and Worthington, 2020).
 Speed: This can be explained as method of measuring the financial wealth of an
organization that can help to operate a business by increasing productivity. To know the
productivity and profitability of organization it is required to know the speed and conduct
proper analysis in order to operate the business regularly. Speed is the time taken by

customers where products and services in relation to an organization delivered.
McDonald is operating their business by maintaining right speed of product production
and delivery of product as well as services which helps to increase the business
performance and profitability. Such as, MacDonald is providing their services on time
and use specific strategies and process. Average calculation time is 5 minute per
customer in order to reduce waiting time of clients and enhance delivery in speed
(Lozano and Escrich, 2017).
 Dependability: It refers as client receive their products and services on time or being on
time. According to this objective most of the activities based on the other performance
activities. For this company set a criteria that follow by the each member in strict manner
and achieve all the objectives in effective manner. The external dependability create by
the products and services in the market. In internal manner dependability carry out
welfares in the operational activities and it helps to saves time as well as money (Kasaei,
2018).
 Flexibility: The other objective of MacDonald is flexibility in product designing and
delivering. There are no setting a particular procedure that follow by the each staff
member. The firm provide flexibility to design products that use attract customers
effectively and influence customers to revisit again in restaurants.
 Cost: It is most essential part of the business entity that acquire by the organisation to
become competitive in the market and MacDonald realizes well. Most of the business
entities sore cash on staff remuneration, buy of equipment, machinery and tools for the
provision of services. It helps deduct profitability and MacDonald have knowledge about
the operating cost. The company effectively able to sale out food in lowest prices as
compare of their competitors. Along with company provide different discounts and
coupons to customer in order to attract them for restaurant. The large number of
customers helps to reduce operating cost because of economic of scale. For more
reduction requires to company plans to use equipment that based on the energy saving
(Pfaffel, Faulstich and Sheng, 2019).

QUESTION 4
Calculate the average number of customers arriving at the till and the average time they must
wait before exiting McDonald’s Drive-Thru.
Let average number of units in the systems= u/ ( 1 – u )
= [ 5 / ( 1 – 5 ) ]
= [ 5 / -4 ]
= [ -1.25 ]
= 1.25
Working notes :
u = ra / rs
= 25 / 5
= 5
Average waiting time = ts / ( 1 – u )
= [ 5 / ( 1 – 1.25 ) ]
= [ 5 / -0.25 ]
= [ -20 ]
= 20
Service rate = ts * 12
= 5* 12
= 60 minutes
= 60 minutes per order
As per the calculation it is analysing that waiting time is presenting improvement in case
of delivery the product in brief time period. It is essential to increase customer base and meet
with the requirement of customers. With proper utilisation of technology support in deliver in
right time in order to reduce cost of delivery.
CONCLUSION
As per the above report it has been concluded that Operational management is consisting
of business practices of business activities and measure highest efficiency. It is related with the
converting stocks into finished goods and goods and services. There are setting five performative

objective that achieve by the organisation in particular period of time. Along with design to
deliver in operation management to analysis the performance of business.

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