Fall 2021 MGT314 Operations Management Report: Crown Butter Analysis

This report, prepared for the MGT314 Operations Management and Supply Chain course at North South University, details the business plan for Crown Butter, a new butter product in Bangladesh. It covers the company's vision, mission, and strategic objectives, including competitive analysis, demand forecasting, and capacity planning. The report analyzes various operational aspects such as product quality, pricing strategies, and marketing plans. It also discusses inventory management, quality control, and supply chain management. Additionally, the report outlines the methodologies used, limitations encountered, and provides an executive summary of the business. The report emphasizes the importance of adapting to the market, with plans to expand the product line and control raw materials. The report also addresses operational inefficiencies, environmental management, and customer relationships. Secondary research was used due to the pandemic. It provides insights into the company's future strategies, market competitiveness, and overall operational management.

Course Name: Operations Management and Supply Chain
Course Code: MGT314
Semester: Fall 2021
Section:
Group:
Prepared for
Department of Management
School of Business and Economic

Acknowledgment
This report is the outcome of one month of intense hard work encompassing all members' time
and effort. We'd want to take this opportunity to thank everyone who made it possible for us to
finish the report.
First and foremost, we would like to express our gratitude to Md. Mofassel Hossain, Lecturer,
Department of Management, North South University, for providing us with the chance to work
on this project. Throughout the semester, he provided us with relevant examples and expertise,
which really aided us in our work on this project. We couldn't have gotten better advice.
We'd also want to thank and recognize all of our group members who have been with us since
the beginning of the project. We have all contributed our time and effort to completing this
report as quickly as possible. It was a pleasure to collaborate with such intelligent and skilled
individuals. Without their assistance, it would not have been feasible to finish the whole report.

Executive Summary
This report includes the company's Mission, Vision, Objectives, and Competitive Analysis.
Aside from that, the report includes detailed information on Crown Butter's many managerial
and operational sectors. It goes through the company's goods as well as line balancing for those
items. Butter is the company's principal product for the time being. However, as the firm
expands, new product lines will be added. It also discusses their strategic capacity planning,
which includes their equipment and land requirements. This report details the company's
operational flaws, inefficiencies in manufacturing things, employee care, facilities supplied to
workers, and working hours. Furthermore, whatever layout we're utilizing, if it's efficient enough
for the firm, and so on. The report also discusses quality management and inventory management
systems. There is also a thorough review of the company's layout. This report also offers
information about the inventory. Some inventory management tactics have been employed to
manage those stocks in order to lower the company's holding costs. This report also addresses
the company's environmental management. The corporation will not employ any technology or
inventory that would harm the environment; rather, it will be a long-term economic strategy.
This report also discusses the company's whole supply chain management process, as well as its
customers and suppliers. Along with recognition and references, this report acknowledges some
of the company's history and introduces the study's limits and methods.

Overview of the Business
Business Profile
Our business name is Crown Butter. As the name suggests, we’ll sell butter in the Bangladeshi
market. we have unique method of packaging brand and permanent level to promote our product
to meet standard. Our butter sold in the convenience stores, restaurants, and groceries. We’ll use
apt healthy preservatives to ensure the butter can be stored for a considerable amount of time
with or without refrigerator. We’ll start with the fresh butter, and if successful, we’ll plan to
extend our business to other variety of butter in future.
Vision
The company's vision is to be one of the market leaders in Bangladesh in the dairy sector. We'll
be committed to safely creating the greatest quality butters for consumers, delivering it to them
in the best possible condition, and providing them with exceptional service, ensuring that we
contribute as much as we can to the nation and its people.
Mission
To deliver the highest quality products and outstanding customer service in order to win your
confidence and establish a long-term business relationship.
Strategies
We'll concentrate on one major line of business, butter, and gradually expand the number of
products. We also intend to become our own suppliers, with the goal of gaining control over our
raw resources. We'll start by arranging for Milk from Northern part of Bangladesh to be
delivered at a wholesale price. To reduce pricing and production costs, we plan to collect cows
which produce the high quality fresh milk. To extract the highest market benefits, we'll strive to
achieve the lowest total overall costs in comparison to our industry competitors.
Objective and scope of the work
Objective
The objective of this report is to implement what we have learned throughout the course.
Through this report we have developed a product and built strategies surrounding this product.
To implement these strategies, we need to examine the market and analyze the competitiveness
of the product. After that we did our capacity planning and to do that, we did demand
forecasting. We also planned to implement the 3R’s and strategized the process selection and
quality management and inspection along this.

Scope of the work
As we have developed a product and strategies the business plan surrounding it, we had a lot of
scopes to implement what we have learnt throughout this course. We did extensive research
about the viability of the product and the market competitiveness we might face. We did our
operational planning to make this product work and to implement it practically. There is a lot of
scopes to go more in depth about these strategies to do this project practically.
Methodology
For the prior research of our business we could not able to do the primary research because of the
health risk issue of Covid 19. For that reason, we had to do secondary research for data
collection. We use sources like YouTube videos, online articles, company reports, websites,
local newspaper and so on for collecting the information and ideas.
Limitation
We have to go through some hindrance to do the research since we could not able to do primary
research due to the pandemic situation. We could not able to go out to collect information. If we
could visit some factories that would be helpful to observe their operational management of how
they are producing the product or could able to talk to the managers or experts to understand how
they are controlling the situations and the production it could be a lot easier for us to apply those
strategies in our business. Also, since it is a new product in Bangladesh it would be difficult to
deciding right marketing strategy for the butter. Since we don’t have sufficient data in the
market.
Operational Plan
Strategies and competitiveness
Strategies
To achieve our goals, we have a well laid out strategy. The product that we are going to market
to our customers is a very fresh dairy. That is only available in premium restaurant. As of now it
not available in all the convenient stores. So, we must proceed forward with a very effective and
unique strategy. Currently in the dairy market of the country butter is an available dairy item, but
the exception happens when we come up with fresh milk butter. So, for our product we are
planning to get competitive advantage through our fresh and healthy, quality of the product and
the unique taste. Currently the butter in the markets are getting good attention from the customer,
hence it’s easy to understand that customers are liking what they are getting.
Quality of the product
Currently the butter available in the market are up to the quality but we will provide even better
quality to the customer with the help of our quality approved raw materials and other ingredients.
We will make sure that we collect the best available resource for out butter from the market.

Moreover, on top of that we will also not use of any sort of preservative and make sure the
product the reaches the customer in its quality lifetime.
Competitiveness
There are already few well-known companies running in the market they also have a god share in
the market. It is very important to keep in mind that they are selling well in the market and are
also getting sold out. So, we need to be very competitive with our strategy to succeed in the
market.
Pricing
We will make butter affordable by every people in the market out there as well maintain the
quality of the product. Selling them for a lower price does not mean that we will compromise
with quality of product. We will study the market to understand to the current price structure and
make it competitive in the market.
Quality
Crown butter will be best for the customers in the market. We will use the best milk possible to
collect and all other fresh ingredients. We will not provide people with traditional butter rather
we will provide them with more fresh and hygiene quality butter.
Advertising and promotion
Here we are considering advertising to the medium by which we will connect with our customers
and pass on information to them. Here we will promote our product efficiently and effectively.
We will do mass marketing so that everyone out there knows about our product.
Demand forecasting
Demand forecasting is a crucial part to run any organization. It helps to predict the future
demand of the product in the market beforehand and also helps to predict the level of demand
and degree of accuracy. By demand forecasting, it’s easier to match supply to demand. Forecast
accuracy increases by forecasting a larger group of items and decreases by increasing of time
horizon. For Crown butter, we will focus on short-range demand forecasting. We will try to
follow some elements of good forecasting for our organization Crown butter.
Timely: We will try to be on time for responding to the information contains in a forecast. And
arrange all the necessary changes that need to be done.
Accuracy: As this helps to decrease the future operational cost thus, we will narrate down the
degree of accuracy.
Reliability: Although a forecast is an assumption but keeping its consistency is part of a good
forecast. For making this reliable we will take help from our organization’s executive, sales, and
customers through some surveys.

As forecast affects the decision and activities throughout the organization so, we will try to keep
it up by taking help from our executive, sales, and customer, these are under qualitative forecast
or judgmental forecast. We have discussed this earlier in reliability briefly but will be discussed
it here thoroughly.
Customer feedback: We will take some surveys through social media to forecast the demand.
Salesforce’s feedback: As sales team sell product directly to customers. So, it will be beneficial
for us to get the data from the sales team to make an accurate forecast to meet the demand.
Executive’s feedback: As it will be easier to collect data from upper-level team or executives.
They will be helpful to make accurate forecasts.
On the basis of demand and to avoid error, we will follow time series and naïve forecasts to
match the future supply with demand. As we haven’t launched our product to the market, we will
apply the time series and naïve forecast after few years of launching the product to the market.
In forecasting process, in the first month we are planning to sell 30,000,00 (million) containers of
butter. Even though the amount is really high but we are planning to giving away lot of free
samples and doing a lot of discounted promotions on our products hence we are expecting Such a
higher sale. From next month we will concise our production and decrease for the first month
will be 15% and it will continue for next 6 months. In second year, we will increase the sale 10-
15% and we will continue as we are expecting higher sales from then.
Strategic capacity planning:
The ceiling or maximum level of output that a firm or one of its operating units can manage is
referred to as capacity. Capacity planning is the process of determining the capacity necessary to
fulfill the organization's projected and changing demand for its products or services. And when it
comes to capacity planning, management must consider a slew of constraints across the board.
The manufacturing procedure When it comes to arranging the event, there are several factors to
consider. capacity, which comprises, equipment, space, and the skills of employee.
Design capacity: The highest production rate capacity of an activity for which the facility was
constructed is known as design capacity.

Figure: Factory Layout

Figure: production and factory Layout

Facility Layout Pre heating and pasteurization of skim milk Fat Separation
Half hour half hour
Cream pasteurization
1 hour
Cream ripening and souring
1 hour
Temperature Treatment
Half hour
Packaging
Half hour
Figure: Production process

Effective Capacity: There is no such thing as a flawless system. As a result, there may be some
unwelcome disruptions in the operation. And effective capacity is defined as design capacity less
maintenance time, scrap, and other expenses.
Actual Production: In most cases, actual output is lower than effective capacity for the full
procedure, we'll need 8 workstations set up. These are listed farther down.
1. Facility storage
2. Milk Reception 20
3. Pre heating and pasteurization of skim milk 50
4. Fat Separation 50
5. Cream pasteurization 30
6. Cream ripening and souring 45
7. Temperature Treatment 05
8. Packaging 50
Facility storage: We have our facility storage of milk and butter for the process which can
produce the maximum capacity of the butter.
Milk Reception: The milk reception line receives milk and other liquid milk products for
processing in a milk processing facility. Here we used 20 workers here to work on this process
where around 9000 liters of milk reception for Pre heating and pasteurization of skim milk par
month.
Pre heating and pasteurization of skim milk: Here we used 50 workers for Pre heating and
pasteurization of skim milk so that milk easily goes on fat separation unit.
Fat Separation: Here we used 50 workers for fat separation so that Skim milk is made by
removing the fat from milk in the form of cream and leaving just the serum.
Cream pasteurization: Here we used 30 workers here to work on this process where around
9000 liters of milk is pasteurized for Cream ripening and souring par month.
Cream ripening and souring: Here in this process the cream ripening and souring is made from
the pasteurized cream where 45 workers will work.
Temperature Treatment: Here we used 05 workers for temperature treatment so that the
temperature of the butter remains correct.
Packaging: The last process will be packaging where 50 workers will work here.
These will be the process and 250 workers will work in different workstations together.
Equipment: We'll build our capacity to be able to produce 7500000 kg of butter each month.
Space: Our plant will have 6 square feet for every person in the factory we will need(250x8)
=2000 square feet for labor space.

Employee: The complete system will be served by 250 employees.
Efficiency: Efficiency = (Actual output/effective capacity) *100% Our Butter production
efficiency, according to this formula, is about 97 percent. Our manufacturing facility has an
effective monthly capacity of 7500000 kg of butter. However, it generates around 58,12,500 kg
of butter each month.
Productivity Analysis:
The productivity analysis is given below.
 Total production= 340909 kg per day
 Total number of machines= 9
 Total average machine hour= 8 hours/day
 Total machine hour= 8.25 per cycle
 Number of workers= 250
 Total labor hours= 2062.5hours
Partial Productivity:
Productivity Calculation Rate
Machine Hours Productivity= Output/Machine hours
= 340909/8.25
=41332.32 kg per machine hour
Labor Hours Productivity= Output/labor hours
= 340909/2062.5.5
=165.29 kg per labor hour
Multifactor Productivity:
Multifactor Productivity Calculation Rate
Total kg of butter produced
340909 / (8.25+2062.5)
=164.67 kg per hour.