Approaches and Performance Objectives in McDonald's Capacity Management

This case study explores the approaches adopted by McDonald's for capacity management, including JIT and the four D's. It also discusses the performance objectives in their operations, such as quality of products and customer satisfaction. The study includes a numerical calculation and analysis of challenges and solutions.

Data analysis case
study

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Approaches adopted by McDonald’s for its capacity management.......................................1
Implementation of the four D's by McDonald’s.....................................................................2
Five performance objectives mean for the operation in McDonald’s....................................2
Calculating the average number of customer which are arriving till average time................4
CONCLUSION................................................................................................................................5
References:.......................................................................................................................................6

INTRODUCTION
Data analysis can be defined as the examining, interpreting, determining and observing
the data given so that further estimation and prediction can be done to perform some task in an
organization (Chen, He and Paudel, 2018). Business operations can be defined as the
management of functioning of a business in which company performs it's major and minor
operations both for better productivity in an organization. The following discussions are based on
the company, McDonald’s, approaches adopted by the firm to maintain it's capacity
management, implementation of four D's, performance objectives of the company, analysis of
challenges and solutions with conclusion in context of McDonald’s.
MAIN BODY
Approaches adopted by McDonald’s for its capacity management
JIT – Just in time management
It is defined as the methodology which aims at reducing the time of production and
reduction in response time from suppliers to customers. McDonald’s has adopted this approach
for capacity management of inventory as per the capacity and demand of external and internal
stakeholders. McDonald’s has used this approach as they do not keep the inventories at large
scale, they acquire stock whenever needed for the particular stage of production as per the
requirement of that raw material. This approach has benefited the company in decreasing the cost
of production which has resulted in the significant savings for the firm due to decrease in
inventory levels (Heeringa, West and Berglund, 2017).
JIT system used by McDonald’s has some aspects such as it has a feature of reducing
inventory in supply chain, this helped the firm in fulfilling the demands of the customers on an
instant basis because of catering minimal quantities of deliveries in the food production chain at
McDonald’s. It has also applied the pull system using this approach which assist in control of
production and raw materials. Moreover, it has also supported in the involvement of employees
in participation in such approaches and processes.
There are some features of just in time management which has supported the company in
savings their cost of production and inventory or raw materials such as this approach helps in the
flow of production in a smooth and uniform manner without any complications associated with
it. The most important feature is the pull method which assist in coordination in stages of
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production at the company for better control in the usage of excessive stock and to fulfil the
instant demand of the customers (Efendioğlu and Bulkan, 2017).
Implementation of the four D's by McDonald’s
Direct
McDonald’s has applied the direct approach among four D's such as by directing the
overall strategy of operations in the company. They analysed that how they will convert their
expectations into reality, how they will meet demands of the people who are loyal to their
restaurant and many more. They create the vision out of such goals and targets and direct their
operations in such a way so that they fulfil all their formulations of strategies (Polonsky and
Waller, 2018).
Design
McDonald’s has applied the design approach among four D's such as by designing all
processes and tactics that has to be follow and been applied while implementation and execution
of designing process. They usually design all the activities and processes of internal and external
customers and suppliers views so that interpretation of design procedures can be analysed using
such approach.
Deliver
McDonald’s has applied the deliver approach among four D's such as by delivering food
products to their customers in a very potential way. All such activities are done after proper
planning and controlling methods that are adopted by the firm. It also involves the performance
management that how much the customers are satisfied after adopting this approach and what
can be improved further. (Akhmetshin, Vasilev, Mironov and Lvov, 2018).
Develop
McDonald’s has applied the develop approach among four D's such as by continuously
development and improvement of existing processes so that enhancement can be done in the
process and procedures that were applied previously. This is done to furnish and refine it's
existing tactics so that development can be seen not only by the company but also by the
suppliers and customers as well.
Five performance objectives mean for the operation in McDonald’s
Quality of products
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This is one of the major objective that is adopted by the company which is quality of
products. Company has applied the approach of just in time management so they can think of
that they should improve the quality of the products because this approach is mainly for the
reducing cost of production. Therefore, quality of products is one of the primary objective of
McDonald’s.
Customer satisfaction
This is one of the performance objective of the company that has been adopted by them.
They are aiming to reduce the waiting time for the customers, reducing the delivery time and can
five nest out of services at restaurants. Overall, their target is to improve the customer experience
through out from entering into the restaurants to the after selling services as well along with the
feedback from them (Jogaratnam, 2017).
Costs
This is another performance objective adopted by the company that is costs. They are
always develop and implement the tactics to reduce the cost of operations and production to it's
minimum level so that they can get savings and can invest those in some good return areas for
better growth and development strategies.
Food quality
This is also the performance objective adopted by the company that is food quality. They
always look into the food items that are being sold to the customers are of best quality,
measurement of quality is taken, they takes care of hygiene that is being carried out and
moreover, inspection of raw materials quality is also being performed by the company to fulfil
this objective of food quality.
Modern technology
This is one of the performance objective of the company that is adopted by them.
Company has adopted the updated technology for more ease of operations and work by the staff
members and so that customers could get improved service delivery such as digitising of the
operations in the company has benefited the staff to serve more and more customers on a daily
basis in an effective manner (Chou, Horng, Liu and Gan, 2018).
At the Dorchester McDonald’s branch, cars arrive at the Drive-Thru at a rate of 25 per hour
and only one drive - thru till is open. The average time it takes for an order and collection is 5
minutes. Assuming that the inter arrival time and the service time are both exponentially
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distributed. Calculate the average number of customers arriving at the till and the average time
they must wait before exiting McDonald’s Drive-Thru. You are encouraged to use calculations to
prove any challenges if there is any and suggest any solutions, based on the calculations.
Calculating the average number of customer which are arriving till average time
Average number of units in the system= u/(1-u)
= [5/ (1-5)]
= [5/-4]
= [-1.25]
= 1.25
Working Note:
u=ra/rs
=25/5
= 5
Average waiting time in the system= ts/(1-u)
= [5/ (1-1.25)]
= [5/-0.25]
= [-20]
= 20
Service rate= ts*12
= 5*12
= 60 Minutes
= 60 minutes per order
From the above calculation it can be said that there are around 20 persons for the delivery
of the product on a per hour estimation and the time can be reduced by using improved and
advanced technology so that they can grow their customer base within a short time period. Apart
from that it can use different platforms like online that are available and exploited my major
firms so that it can prove beneficial in increasing and improving the sales and profitability of the
company which can further help it to sustain and survive in the market for a longer time period
that is highly competitive and dynamic in nature.
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CONCLUSION
It is concluded that studying about data analysis in operations management is very
essential to learn and gain the knowledge about the company management and functions. It is
important to examine the approaches adopted by McDonald’s for its capacity management, it is
necessary to determine the implementation of the four D's by McDonald’s, it is significant to
observe the performance objectives mean for the operation in McDonald’s and the case
numerical with challenges faced and solutions to cope up with. Therefore, this report covers all
such areas to identify learning’s from case study based on data analysis and operations
management.
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References:
Books and Journals
Akhmetshin, E.M., Vasilev, V.L., Mironov, D.S. and Lvov, V.V., 2018. Innovation process and
control function in management.
Chen, Y.H., He, Q. and Paudel, K.P., 2018. Quality competition and reputation of restaurants:
the effects of capacity constraints. Economic research-Ekonomska istraživanja. 31(1).
pp.102-118.
Chou, S.F., Horng, J.S., Liu, C.H. and Gan, B., 2018. Explicating restaurant performance: The
nature and foundations of sustainable service and organizational
environment. International Journal of Hospitality Management, 72, pp.56-66.
Efendioğlu, D. and Bulkan, S., 2017. Capacity management in hotel industry for turkey.
In Handbook of Research on Holistic Optimization Techniques in the Hospitality,
Tourism, and Travel Industry (pp. 286-304). IGI Global.
Heeringa, S.G., West, B.T. and Berglund, P.A., 2017. Applied survey data analysis. CRC press.
Jogaratnam, G., 2017. How organizational culture influences market orientation and business
performance in the restaurant industry. Journal of Hospitality and Tourism
Management, 31, pp.211-219.
Polonsky, M.J. and Waller, D.S., 2018. Designing and managing a research project: A business
student's guide. Sage publications.
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