Operational and Project Management Practical Report

This report covers five questions from question 4 to question 9 in the field of operational and project management. It discusses topics such as coffee procurement, juice masters outlet, staff planning for call center, security systems, and baggage handling problems at an airport.

Operational and Project Management-
Practical report

Table of Contents
TASKS.............................................................................................................................................3
4. Harvey Talbot – coffee procurement...........................................................................................3
Exploring two suggestions...........................................................................................................3
Merits and demerits of the restaurant manager’s suggestion.......................................................4
5. The new Juice masters outlet.......................................................................................................5
6. Staff planning for the Turista call centre.....................................................................................7
Total annual budget.....................................................................................................................7
Cost savings after equipping web based call handling system....................................................8
7. Sycamore Security Systems.........................................................................................................8
Maximum Production capacity and gross annual profit..............................................................8
Updated annual profit..................................................................................................................9
8. Baggage handling problems at Snowham Airport.....................................................................10
Total quality costs......................................................................................................................10
Assessing the business value of each proposal..........................................................................10
9. A new fire engine for the airport...............................................................................................12

Executive Summary
This report covers five questions from question 4 to question 9. In question 4; the optimization of
inventory has been done by implementation of EOQ method; the result shows that total annual
cost in case of bulk purchase will be £88,920; which is less than present annual cost of £94,000.
The difference lies under £5,080. Merits and demerits of manager’s suggestion will highlight the
loop holes in management method to optimize the cost of acquiring the inventory. Question 5
discusses about the juice masters outlet. This section includes recommended design of outlet so
that enough place is available for customer to sit and wait for their turn. Question 6 is about staff
planning for the Turista call centre. The result shows that the total cost after acquiring new
system will be £39,000 which is higher than previous cost £36,000. So, it is advised in this
section to not to proceed with the system. Question 7 discusses about Sycamore security systems
tackle customer complaints in pick period. The situation is about suggesting optimum employees
required to manage in pick time with optimized cost. The result shows that the new annual profit
is greater than previous profit when SSS was producing 9 systems only. The COGS has also
been increased by £750 due to additional surveyors. Question 8 is about baggage handling
problems at Snowhow Airport; the result from this section recommends that the subsequent to
breaking down every one of the three proposals; it was recognized that greatest expense spared
in third recommendation which was given by Dougie McDonald. Consequently, choice third
should be chosen via Airport. Question 9 is about choosing the best alternative to hire new fire
engine for the airport. So, based on the result it is prescribed to proceed with McDougal's
alternative since this producer has most elevated score and accessible at least expense to the
business toward the finish of fourth year.

TASKS
4. Harvey Talbot – coffee procurement
Exploring two suggestions
Suggestion 1 (EOQ):
Total demand in units (D) = 200 containers per 2 weeks
= 200 × 26 Weeks (52 weeks / 2 weeks = 26 weeks)
= 5,200 containers annually
Cost of placing order (O) = £40 per order
Holding cost (H) = £9 per container per year
EOQ = √ 2 DO
H
= √ 2 ×5,200 × 40
9
= Approx. 215 container per order
The result shows that company can order container at minimum cost if it orders 215 containers
per order.
Number of order to be placed in a year = 5,200 / 215 = Approx. 24
Total procuring cost = Total purchasing cost + Total cost of placing order + Total holding cost
= (5,200 × £14.50) + (£40 × 24) + (215 × £9)
= £75,400 + £960 + £1,935
= £78,295
If HT adopts EOQ method for placing order than its procurement cost will be £78,295 which is
much less than £94,000. The difference in both the cost is £15,705.
Suggestion 2 (Placing bulk order at discount)
Size of order = 2,500 containers
No. of order in a year = 5,200 / 2,500 = Approx. 3
Cost per container = £12.75

Total procuring cost = Total purchasing cost + Total cost of placing order + Total holding cost
= (5,200 × £12.75) + (£40 × 3) + (2,500 × £9)
= £66,300 + £120 + £22,500
= £88,920
The result shows that total annual cost in case of bulk purchase will be £88,920; which is less
than present annual cost of £94,000. The difference lies under £5,080.
Conclusion: Both the suggestions have the potential to reduce total annual cost of acquiring
coffee but suggestion 1; which is placing order based on EOQ method gives best result as
compared to suggestion 2 (Bulk purchase).
Merits and demerits of the restaurant manager’s suggestion
Merits
1. Less cost of internal transport
Decreased number of requests ordinarily implies diminished number of conveyances. That
permits diminishing expense on transportation. Particularly huge improvement would be
accomplished with generally less expensive materials contrasting with transportation cost. Cost
for dry land transportation by trucks essentially comprises of fuel, pay for the driver and support
for the truck.
2. Timely availability of materials
Numerous errands in organizations depend on undertakings with characterized plans. In the
event that one organization is taking a shot at a few ventures simultaneously, venture
advancement for various tasks most presumably are in various stages just as characterized
material use plan. That could suggest that for venture based plan of action decentralized
acquisition method would be more appropriate, in light of the fact that it is simpler to buy
materials considering only one undertaking without considering requirements for different tasks.
3. Lower chance of obsolescence
Another explanation behind picking decentralization is identified with lessening chances
identified with abrupt provider inability to flexibly. This is an issue for locales with high
likelihood for cataclysmic events like Japan, where seismic tremors are regular thing. Out of date

quality danger is the danger that a cycle, item, or innovation utilized or created by an
organization for benefit will get out of date and subsequently not, at this point serious in the
commercial center. This would decrease the benefit of the organization. Outdated nature hazard
is generally huge for innovation based organizations or organizations with items or
administrations dependent on mechanical favorable circumstances.
Demerits
1. Poor layout of space
Low space usage is a consequence of a helpless design, which can be brought about by wasteful
tasks and material stream. One such working failure that causes low space use is stock
administration. Another working shortcoming that can add to low space use is material taking
care of. HT has 45 stores; thus every store will need to keep up discrete space for holding items.
All shops are not intended to make separate segment for distribution center; this will bring about
helpless format of room.
2. More finance required
For holding materials in distribution center requires more space and this will build more
subsidize to pay additional lease for the extra space possess by the store to hold items.
3. High cost of insurance
At regular stockroom; organization gets a preferred position of paying single protection expense
to make sure about from the dangers however on the off chance that stores began putting in
isolated requests than they need to pay separate protection premium to make sure about the stock
holding by them.
4. Economies of scale
Incorporated arrangement of putting request have a bit of leeway of better economies of scale as
it get markdown and credit on their acquisition of mass requests from single provider.
Economies of scale are cost points of interest procured by organizations when creation gets
effective. Organizations can accomplish economies of scale by expanding creation and bringing
down expenses. This happens in light of the fact that expenses are spread over a bigger number
of merchandise. Expenses can be both fixed and variable. The size of the business for the most

part matters with regards to economies of scale. The bigger the business, the more the cost
reserve funds. Economies of scale can be both inward and outside. Inside economies of scale
depend on administration choices, while outer ones have to do with outside variables.
5. The new Juice masters outlet
Queuing, ordering, delivery and payment process:
Queuing theory is the mathematical study of the clog and deferrals of holding up in line. Lining
hypothesis (or "queueing hypothesis") analyzes each part of holding up in line to be served,
including the appearance cycle, administration measure, number of workers, number of
framework places, and the quantity of clients—which may be individuals, information parcels,
vehicles, and so on As a part of activities research, lining hypothesis can assist clients with
settling on educated business choices on the most proficient method to construct productive and
financially savvy work process frameworks. Genuine utilizations of lining hypothesis cover a
wide scope of uses, for example, how to give quicker client support, improve traffic stream,
productively transport orders from a stockroom, and plan of media communications frameworks,
from information organizations to call focuses.
Client after enter from the entryway need to initially reach at charge counter; where he
needs to submit a request and pay the sum. He will get two tokens (bill); out of which 1 token
must be given to staffs that are planning juice. For each bill, a number is created (likewise called
token number) with holding up time. This symbolic number will show on the LED screen; where
client can check whenever his possibility will come. After get shown token number on the
screen; client can get his request from the counter. This cycle will abbreviate the holding up line;
as all out time devoured in putting request and offer token to staff per client is 35 seconds ( this
is normal time, it can shift dependent on number of requests set by client). The most extreme
time taken by charge administrator is 1:01 minutes and least time is 10 seconds.
For getting ready request; normal time taken by staff for planning and serving the request
is 3 minutes (in light of assortment requested by the client). For example, in the event that client
requested 6 sorts of juices, at that point it will take (3 × 6 = 18 minutes to plan request). The
Juice ace is well known for new squeezes; so it plans squeeze just when client orders. It doesn't
put away squeeze ahead of time, yet staff readies the crude material ahead of time like stripping,
washing and cutting of organic products.

Layout design:
In view of the clients every hour; it was seen that from 0600 to 1800 high recurrence of client
visits Juice aces, thus an additional staff for given move has been named to share the weight. The
available layout design has a capacity of sitting arrangement for 56 customers at a time and some
free space where customer can stand and wait for their turn.

Job Roles:
The general manager of a restaurant is straightforwardly liable for all the tasks in the café. Head
supervisors are likewise accountable for the floor administrators, the kitchen director, and
different workers of the café. The head supervisor ought to consistently keep an eye on the floor
chiefs to guarantee that all arrangements and guidelines are being met. This will keep tasks
running easily. Another significant obligation is to sort out and control the staffing of the café.
The floor supervisors normally compose the worker plan; be that as it may, the head supervisor
is still straightforwardly liable for appropriate staffing for the period. This will assist keep with
working expenses to around 20% of deals. The senior supervisor additionally leads worker audits
and preparing.
6. Staff planning for the Turista call centre
Total annual budget
It is assumed that permanent and temporary staff will not take leave during 250 working day
year.
Number of staff requires in first period
Number of calls attend by temporary member = 20
Number of calls attend by permanent member = 30
Number of calls received during first period = 5,200
Capacity of permanent member to receive calls during first period = 100 × 30 × 2 = 6,000
Hence, permanent staffs are capable enough to receive all calls in first period. So, no temporary
staff requires.
Number of temporary staff requires in peak holiday period
Calls receives per day = 15,000 / 50 days = 300 calls
Calls receive by permanent staffs per day = 30 × 2 = 60
Remaining calls per day = 300 – 60 = 240
Temporary staff requires to meet 240 calls = 240 / 20 = 12

Number of temporary staff requires after 150 days
Since, permanent staffs can attend 6,000 calls, hence no temporary staff requires in this period
also.
Total annual budget required for temporary staff only
Cost of temporary staff per day = £60 × 12 = £720
Total annual budget requires = Cost of first period + Cost of peak period + Cost after 150 days
= 0 + (£720 × 50 days) + 0 = £36,000
Cost savings after equipping web based call handling system
As temporary staff only requires in peak period only; so, cost has been calculated for this period.
Calls will receive by permanent staff per day = 50 × 2 = 100
Remaining calls requires to receive by temporary staff = 300 – 100 = 200
Temporary staff requires to receive 200 calls = 200 / 40 = 5
Total cost of temporary staff during peak period = £60 × 50 × 5 = £15,000
Add: Fixed cost of system = £24,000
Total cost £39,000
Hence, the total cost after acquiring this new system will be £39,000 which is higher than
previous cost £36,000. So, it is advised to the company to not to proceed with the system.
7. Sycamore Security Systems
Maximum Production capacity and gross annual profit
Sales visit = 5 hours / 2 = 2.5 hours
Site survey = 16 hours / 3 = 5.33 hours
Manufacture = 20 hours / 5 = 2 hours
Installation = 22 hours / 6 = 3.66 hours
Total time for one complete system = 13.5 hours
Total hours in a week = 24 hours × 5 = 120 hours
Total production capacity = 120 hours / 13.5 hours = Approx. 9 systems per week

Process bottleneck:
The primary bottleneck with organization's cycle is doing creation at their greatest limit. It is
bottleneck since, in such a case that there's any additional interest got from client side, than SSS
will neglect to fulfill that need and will misfortune the customer.
Accordingly, it is proposed that SSS ought to either build staff or prepared existing staff to
expand its current creation limit. According to future desire; where request is required to be
expanded up to 10 – 11 frameworks every week; expanding the creation limit becomes order for
the organization.
Gross annual profit:
Units
Week
s Cost per unit Amount £
Sales 9 50 160,000 72,000,000
Less: COGS 9 50 128,000 57,600,000
Gross Profit 14,400,000
Less: Fixed overheads 50 90,000 4,500,000
Net Profit 9,900,000
Updated annual profit
Let’s assume in a week total 11 systems will be demanded by the clients. Current capacity of the
company is delivering 9 systems; hence, it has to be increased to 11.
Hours required completing each system to produce 11 systems in a week:
Total hours in a week = 24 × 5 = 120 hours
Hours required per system = 120 hours / 11 = 10.9 or Approx. 11 hours per system.
The existing system takes 13.5 hours to complete one system. Therefore, it has to reduce by 2.5
hours to meet the demand of 11 systems in a week.
Now, the main problem arises with the decision about which category of additional staff should
be added. For this total cost after recruiting single staff category has been calculated with
variance in hours below:

Old
hours
After recruiting one
additional staff hrs Variance
Additional staff
requires Cost
Total
cost
Salesman 2.5 1.67 0.83 3.00 300 900
Surveyors 5.33333 4.00 1.33 1.88* 400 750
Manufacture 4 3.33 0.67 3.75* 1,000 3,750
Installation 3.66667 3.14 0.52 4.77* 1,500 7,159
(*Note: In additional staff; figures are given in points, this indicates that staff cost can be
adjusted in the form of their shifts)
The above table clearly shows that profit could be maximized if only Surveyors recruited as an
additional staff to meet the demand.
Updated annual profit:
Units
Week
s
Cost per
unit Amount £
Sales 11 50 160,000
88,000,00
0
Less: COGS 11 50 128,750
70,812,50
0
Gross Profit
17,187,50
0
Less: Fixed overheads 50 90,000 4,500,000
Net Profit
12,687,50
0
Hence, the new annual profit is greater than previous profit when SSS was producing 9 systems
only. The COGS has also been increased by £750 due to additional surveyors.
8. Baggage handling problems at Snowham Airport
Total quality costs
Total bags handled by team in a year = 2,000 × 365 = 730,000
Total annual mistakes done by Baggage Handlers = 730,000 × 0.5% = 3,650 bags
Total bag misses annually = 3,650 × 30% = 1,095 bags
Total mistakes done only by Baggage Handlers = 3,650 × 70% = 2,555 bags
Total cost of bag misses the correct flight = 1,095 × £125 = £136,875

Total cost of mistakes done by Baggage Handles = 2,555 × £40 = £102,200
Total quality cost £239,075
Assessing the business value of each proposal
Business proposal by Joey Wong
Investment = £800,000
Total annual mistakes done by Baggage Handlers = 730,000 × 0.25% = 1,825 bags
Total bag misses annually = 1,825 × 30% = Approx. 548 bags
Total mistakes done only by Baggage Handlers = 1,825 × 70% = 1,278 bags
Total cost of bag misses the correct flight = 548 × £125 = £68,500
Total cost of mistakes done by Baggage Handles = 1,278 × £40 = £51,120
Total quality cost £119,620
After investing £800,000; airport could save £119,455
Business proposal by Ted Jones
Investment = £58,000
Total annual mistakes done by Baggage Handlers = 730,000 × 0.5% = 3,650 bags
Total bag misses annually = 3,650 × 10% = 365 bags
Total mistakes done only by Baggage Handlers = 3,650 × 90% = 3,285 bags
Total cost of bag misses the correct flight = 365 × £125 = £ 45,625
Total cost of mistakes done by Baggage Handles = 3,285 × £40 = £131,400
Total quality cost £177,025
After investing £58,000; airport could save £62,050.
Business proposal by Dougie McDonald
Total annual mistakes done by Baggage Handlers = 730,000 × 0.1% = 730 bags
Total bag misses annually = 730 × 30% = 219 bags
Total mistakes done only by Baggage Handlers = 730 × 70% = 511 bags
Total cost of bag misses the correct flight = 219 × £125 = £27,375
Total cost of mistakes done by Baggage Handles = 511 × £40 = £20,440

Total quality cost £47,815
Total cost saved will be £191,260.
Recommendation: Subsequent to breaking down every one of the three proposals; it was
recognized that greatest expense spared in third recommendation which was given by Dougie
McDonald. Consequently, choice third should be chosen via Airport.
9. A new fire engine for the airport
Weighted scoring system:
Decision
factor
McDouga
l
Weigh
t
Tota
l
GV
X
Weigh
t
Tota
l
Schellinge
r
Weigh
t
Tota
l
Compatibility
with existing
airport
equipment 3 0.5 1.5 6 0.5 3 8 0.5 4
Ease of
maintenance
and servicing 6 0.6 3.6 7 0.6 4.2 8 0.6 4.8
Overall fire-
fighting
performance 7 0.8 5.6 5 0.8 4 4 0.8 3.2
Durability and
build quality 8 0.9 7.2 5 0.9 4.5 4 0.9 3.6
Client
references 4 0.4 1.6 6 0.4 2.4 5 0.4 2
Total score 19.5 18.1 17.6
Based on the result of weighted scoring system; it is recommended that Airport committee
should go with McDougal option. It has scored highest among three alternatives.
Before reaching at some conclusion; analyzes of actual cost burden on Airport at the end of 4
years have been calculated:
McDougal GVX
Schellinge
r
Purchase Price £347,000
£289,00
0 £295,000
Annual Servicing:
Year 1 £18,000 £15,000

Year 2 £18,000 £15,000
Year 3 £18,000 £15,000
Year 4 £18,000 £15,000
Less: Resale value £86,750 £72,250 £73,750
Total cost £260,250
£288,75
0 £281,250
The above table shows same outcome as like weighted framework; proposition by McDougal
which has most noteworthy price tag however just expenses £260,250 toward the finish of fourth
year to Airport. GVX which has most minimal price tag appears to be excessively costly as from
generally speaking expense of the task perspective.
Recommendation: Subsequent to evaluating both Weighted scoring framework and by and large
fire motor cost; it is prescribed to proceed with McDougal's alternative since this producer has
most elevated score and accessible at least expense to the business toward the finish of fourth
year.