McDonald's Case Study: Capacity Management and Operational Performance

McDonald's Case Study
Assessment
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Contents
Introduction......................................................................................................................................3
Section B..........................................................................................................................................3
Approaches used by McDonald's to reconcile capacity and demand under capacity
management.................................................................................................................................3
Analysis of implementation of the four Ds by the McDonald's restaurant..................................5
Evaluation of five performance objectives for the operation in McDonald's..............................6
Calculate average number of customers arriving........................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Operations management includes various concepts that are related to handling operations
of the business effectively. One such concept related to operations management is capacity
management. It refers to those acts in a business which are performed to ensure that business
maximises its potential activities and production output (Bititci, 2016). This report aims at
assessing capacity management and operational performance of the McDonald's. McDonald's is
a multinational American fast-food company. It operates through two modes of operations -
franchise model and restaurant managed by the company itself. Approaches used by
management of McDonald's to reconcile its capacity and demand of inventory are discussed
below. Next, implementation of four D's – Direct, Design, deliver and develop are discussed.
Further, five performance objectives – quality, speed, dependability, flexibility and cost are
evaluated for the company. In the final part, a practical example to understand the concept of the
average number of customers and their waiting time is illustrated.
Section B
Approaches used by McDonald's to reconcile capacity and demand under capacity management
Capacity management of a company is aimed at measuring the capacity of the business as
to how much it can produce and sell in a definite period of time. These processes are streamlined
through IT solutions and software which consider all the resources that the business have and
plan for short, medium and long-term inventory demand and supply capacity. McDonald's have
its own software which takes into information through data entered into it and analyse this data
to arrive at the result which is aimed at offsetting the cost of the inventories and bringing a
balance into the inventories demand and supply process (Bozarth and Handfield, 2016).
Company is a fast-food joint and its inventory turnover is cycle very quick as it has large number
of outlets and thousands of customers daily visit those outlets to consume the final products
which include burgers, fries, shakes, wraps, ice-cream, salads, etc. However, during lock-down
induced due to COVID-19 pandemic, its inventory cycle was disrupted and whole capacity
management has to be rescheduled to ensure that no situation of over-stocking and under-
stocking of raw material arises so that neither cost structure of the company is obstructed nor its
demand and supply is hampered both during lock-down and in the post lock-down situation.
Company can use below mentioned approaches for capacity management:
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