Airport Transportation System and Logistics Management

This assignment involves three different cases: (1) Sun Air of Scandinavia's baggage handling technology, which aims to reduce pressure from employees and customers by implementing efficient systems. (2) The Airport Transportation System (ATS), designed to improve transportation at Snowham Airport via an underground subway system. (3) Mustang Logistics, a company dealing in Italian wine supplies, looking for a new location to minimize high transportation costs. Each case requires analysis and recommendation of strategies to optimize performance and reduce costs.

OPERATIONS AND PROJECT
MANAGEMENT

Table of Contents
A. Sun Air Data Analysis.................................................................................................................1
C. SverigeTech – Air Traffic Control System.................................................................................6
D. The Snowham Grange Hotel.......................................................................................................7
E. Staff planning for the Turista Call Centre...................................................................................8
F. Sycamore Security System..........................................................................................................9
G. Baggage Handling Problems at Snowham Airport: .................................................................11
H. The Airport Transportation System (ATS) .............................................................................13
I. Mustang Logistics.......................................................................................................................16

A. Sun Air Data Analysis
Management and operations are the essential aspect of organisational performance and
management, it is important to analyse the conductivity and stability of organisation in order to
determine the frequencies of tasks and projects in proper manner. There is a data given of Sun
Air is a small low cost airline that provide aircraft facilities to different airline groups. It has
leased single Boeing 737-800 aircraft sustain the capacity of maximum 198 passengers. Aircraft
is used expect Sunday. After evaluation of schedule of flights it is seen that type of flights was
rotated to the aircraft at week days in different durations.
The main problem is to bifurcate the take-off revenues and landing revenues separately
by the routes. There is a mix proportion of take off and landing details are given consolidated
form. To analyse the revenue structure it is important to analyse the take off and landing
revenues separately at initial stage. After consolidating both the revenues as take off and landing
the performance of overall organisation be able to determine after consolidating.
Take off route
1. From Snowham
Flight Day Time To
SR1214 Monday 730 Malaga
SR1216 Monday 1330 Faro
SR1314 Tuesday 845 Chania
SR1414 Wednesday 730 Nice
SR1416 Wednesday 1330 Florence
SR1514 Thursday 645 Bodrum
SR1616 Friday 1330 Paris
SR1714 Saturday 845 Paphos
2. Form Malaga
Flight Day Time To
SR1215 Monday 1020 Snowham
3. Form Faro
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Flight Day Time To
SR1217 Monday 1640 Snowham
4. From Chania
Flight Day Time To
SR1315 Tuesday 1440 Snowham
5. From Nice
Flight Day Time To
SR1415 Wednesday 1020 Snowham
6. Form Florence
Flight Day Time To
SR1417 Wednesday 1640 Snowham
7. Form Bodrum
Flight Day Time To
SR1515 Thursday 1220 Snowham
8. From Paris
Flight Day Time To
SR1617 Friday 1640 Snowham
9. Form Paphos
Flight Day Time To
SR1715 Saturday 1440 Snowham
Gross Revenues form task off
Destination Total route Revenues
Snowham 6 5394
Malaga 1 1850
Faro 1 795
Chania 1 995
Nice 1 2750
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Florence 1 2980
Bodrum 1 299
Paris 1 3750
Paphos 1 799
Total revenues 19612
Gross revenues form Landing
Destination Total route Revenues
Snowham 6 5394
Malaga 1 2690
Faro 1 795
Chania 1 1495
Nice 1 3250
Florence 1 2980
Bodrum 1 299
Paris 1 4950
Paphos 1 799
Total revenues 22652
Cbaggage handling technology ost and staff expenses
Destination Miles Cost
Snowham Nil nil
Malaga 1020 4977
Faro 1050 4977
Chania 1620 7678.8
Nice 620 2938.8
Florence 732 3469.68
Bodrum 1660 7868.4
Paris 190 900.6
Paphos 1970 9337.8
Total cost 42148.08
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Destination Miles Cost Cost per day
Snowham Nil nil 3000
Malaga 1020 4977 3000
Faro 1050 4977 3000
Chania 1620 7678.8 3000
Nice 620 2938.8 3000
Florence 732 3469.68 3000
Bodrum 1660 7868.4 3000
Paris 190 900.6 3000
Paphos 1970 9337.8 3000
Total cost 42148.08 27000
Consolidated revenues statement
Consolidated
revenue statement Amount
Revenues form
take off 19612
Revenues from
landing 22652
Less
Per day staff cost 42148.08
Jet fuel cost 27000
Profit and loss -26884.08
It is analysed that the cost is required to consolidate in significant manner.
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B. Harvey Talbot:
According to the mentioned case scenario, it has been seen that HT restaurant is one of the chain
of American style restaurants in overall UK which is known for the high quality coffee to their
customers. The all the coffees are supplied by the Kenyan Coffee supplies KCS ltd. Because of
the margin the HT finance director was not be able to make chances by reducing total purchasing
spend on every consumables product (Statistical analysis of airline sunrise airline industry.
2019). The director has decided find out two basic ideas which can improve the contract with
KCS. There are two suggestions that are ordering would be efficient if the EOQ (Economic order
quantity) methods was being used. In that particular situation, the results would be:
EOQ: √2*D*S/H
 Cost for standard coffee during the year: 14.50
 Units demanded per year(D)= 200*26= 5200
 Holding cost (H)
 Cost per order (s)
EOQ: √2*5200*9/40
: √93600/40
: 48.37.
From the above suggestion, it has been found that HT need to kept a total of 48.37 level
of economic level so that to maintain proper balance in the total orders. The HT finance directors
has also found that the total cost of procuring coffee was presently £94,000 p.a without any
consistent order policy. The recommendation for the orders with KCS were places in a
haphazard manner. The directors would have two ideas as to about they could improve the terms
of their contract with supplier company. Ordering suggestion is required to be considered more
efficient after calculating the EOQ level.
The total cost was counted as 94000 + 7500 = 101500.
Merits: The major benefits of using the EOQ method is to determine each material that
can be the most economical quantity. Positive control can be easily being exerted to maintain
total stock investment at the sufficient level.
Demerit: There are certain increment at irregular intervals in which it cannot be
convenient to the supplier KCS. There is always an effective chance that the ordering level for an
item has been reached but not been noticed in which case stock out can be occur.
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On the other hand, second suggestion to KCS should probably provide the company a
specific discount for bulk purchasing. It is essential to make follow proper suggestion that are
made by the HT director in accordance with the supplier.
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C. SverigeTech – Air Traffic Control System
As per mentioned scenario, it has evaluated that company named by SverigeTech is one
of the best corporation in UK which deals in air traffic control system. Currently, employers of
this firm has got a contract from Snowham Airport Control Tower to supervise the installation
and testing process. For this process, upgraded system will be designed and fabricated at its
factory in Gothenburg. But due to some problems, senior executive has rejected to work on this
project therefore, employers has given entire responsibilities to young man, who has to supervise
a team of five engineers, according to mention Gantt Chart. But, due to shortage of finance,
company cannot hire more engineers for completing this project and young person is also new in
this field. Therefore, Director has decided to provide some solutions by rescheduling the whole
plan. But before this, to analyse the planning problem, a resource histogram is used. It helps in
identifying the main resourcing problems.
Therefore, the new plan to utilise available resources and reduce the need of hiring extra
engineers, is described as below:-
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D. The Snowham Grange Hotel
It has interpreted from present case that there are near about ten hotels around Snowham
Airport among which three are of 4 Star Category. Snowham Grange Hotel is one of the three
hotel which is independently owned. Through customer point of view, it has seen that this hotel
takes long time during check-in process. Therefore, they used to move on in other hotels which
directly impact on its profitability. Currently, this hotel has near about 400 rooms where 75%
guests stay for one night only i.e. before their flight. To overcome from this issue, its managers
have made a proposal i.e. if check-in time will take more than 5 minutes, then first night will be
free for customers. This would help in attracting more and more customers as well as ensure
them that check-in time will not be a long process. For this process, operational manager also
suggest to hire more receptionists on zero-hour contract who will be called during hike period
only.
Above calculation table presents net income of Oshodi Plc from absorption method and
marginal costing. Net income through marginal costing is 61000 and 101000 in November and
December respectively. Whereas figures from absorption costing is 79000 and 83000 in both
months respectively.
Q = √(2 x 5200 x 40)/ 9
= 215
D =Annual Demand
H = Holding Cost
S = Standard Ordering Cost
Through this calculation, it has analysed that only in a single day, business will gain near
about 24k Pounds. Therefore, at the end of month, it may generate approx. 720k Pound when
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guests stay only for a night. In case of discrepancies, where employees may take more than 5
minutes during check in period with 100 clients, then as per proposal, company has to give first
night free. It will take loss of 7500 Pounds which seems to be much less in terms of profitability
ratio.
Another way through which this hotel can improve its performance is giving employment
to more employees in reception who are good in providing effective services to clients in short-
period of time (Evaluation of traffic at international airports. 2016). This would help in reducing
check-in time process so that higher satisfaction of guests and their retention for long period can
be gained.
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E. Staff planning for the Turista Call Centre
This present case is based on Turista Airways which operates flights from several
airports. Since major portion of travellers use company's website to book their tickets, therefore,
this firm maintains a small call centre at Snowham Airport. This call centre works for 250
working days in a year i.e. 5 days per week. In this regard, demand pattern has fluctuated in three
main periods. In first period, near about 5200 calls of customers are received, whereas during II
period which is also called peak time, more than 15000 calls are received. Apart from this, in last
phase, approx. 600 calls are made.
As it has mentioned that- there are two permanent members of staff in this company who
are able to take at least 30 calls per day. While a temporary staff-member takes 20 calls a day
then number of extra employees to be recruited in peak period :
Since only two members are permanent who take 30 calls daily on individual basis, then
total no. of calls received by them in peak period will be: 6000 (2x30x150days).
While, total no. of calls received by temporary member during hike period will be- 3000
(20x150days).
Therefore, in this regard, to attend rest of calls, managers of Turista need to hire two
more employees in temporary staff. If each member take £60 per day then total annual budget
required for temporary staff will be:
Total Budget in peak period = 60 x 3 x 150 days
= 27k Pounds.
While, Total Annual Budget = 60 x 3 x 250 days
= 45k Pounds.
But, if this company will introduce an IT system whose cost will be near about 24k Pound which
increases productivity of both existing temporary and permanent staff, then saving cost of hiring
new employee will be:
No. of calls received by permanent two staff members in all periods = 2x 50 x 250
= 25,000.
No. of calls received by temporary one member in all periods = 40 x 250 = 10,000
Saving Cost = 45000 – 24000 = 32000 Pounds.
Therefore, it reduces the need of hiring extra employees so company will definitely introduce
this system at workplace.
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F. Sycamore Security System
It has observed from this study that Sycamore Security System, which is an international
company (Observations from diplomatic, 2015). It deals in technical sector which design and
provide services for installation of CCTV cameras for corporations including airport. Each and
every system of this company is designed for specific purpose and as per demand of clients.
Currently its two employees have installed CCTV system at an airport.
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Production capacity of the company per week will be calculated in following manner:-
Total unit cost = £128,000 per system
Overhead cost = £90,000 per week
Salesman = £300 p/day
Surveyor = £400 p/day
Manufacturing Technician = £1000 p/week (3 Technician = 1 team)
Installation Technician = £1500 p/week (4 Technician = 1 team)
Total production cost = 128000 + 90000 + 2 x 300 + 3 x 2 x 400 + 5 x 1000 + 6 x 1500
= 600 + 2400 + 5000 + 9000
= £235,000
Gross profit per week when company charge average price £160,000 per CCTV system and fix
9 system per week, will be
= 160,000 x 9 – 235,000
= 1,440,000 – 235,000
= £1,205,000
Gross annual profit, if company trade for 50 weeks = 50 x 1205000 = £60,250,000
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Illustration 1: Process of CCTV installation

G. Baggage Handling Problems at Snowham Airport:
According to mention case, it has interpreted that staff at Snowham Airport handle all the
outgoing bags checked in by passengers. They used to tag every bag with a bar-coded label and
helps in returning right luggage to right passenger. Thus, error to do this operation, is naturally
occurred. But they are not acceptable by passengers and airline managers, because it leads to
create various issues like customers get angry and demand for compensation etc. In a year, near
about 2000 bags per day are handled by staff-members of this airport. It is aware by managers
that 0.5% of luggage are loaded into incorrect manner but if this arise the chance of mistake to
70% during loading. If a bag misses correct flight or load into wrong flight, then total cost of
compensation per bag will be £125 per bag. But in case, mistake is detected by external baggage
handlers just before loading into flight, then cost for relocating the bag to correct staff is near
about £40. To overcome from this situation, its airport staff have developed three suggestions.
Therefore, business value of each proposal as per comparison with current cost of operational
problem are:-
Case 1: Make investment in budget handling technology i.e. near about: £800,000. This will cut
down handling defects by 50%.
Case 2: Recruit new four baggage inspectors which helps in enabling staff members to inspect
luggage more carefully. Total cost in employment in this regard, per year will be- £58,000.
Case 3: Giving training to existing staff-members would drop errors to 0.01% or less.
Total budget 800000
Total compensation of
bags 2000*125 250000
Mistakes found as 70% to 90%
Total cost of employment 58000
Out of the three cases, managers of Snowham Airport have chosen case 1 as the most
effective plan to enhance the performance of the firm and to achieve overall objectives of the
business. There are ongoing modifications in technology and depending on technologies for
baggage counters seems a viable plan for the airport. This is because extensive training programs
will be required to implement in order to enhance effectiveness of existing employees. In
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addition to this, hiring new employees will add to the cost of training along with the time
required to make them efficient. The baggage handling technology, however, would decrease the
pressure from the employees as well as managers and more ease could be provided to the
customers who don't wish to stay in long queues to acquire their luggage. Instead, it will be an
easy come-easy go strategy which would enhance the performance levels of the airport.
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REFERENCES
Online
Statistical analysis of airline sunrise airline industry. 2019. [online]. Available through:
<https://centreforaviation.com/data/profiles/airlines/sun-air-of-scandinavia-ez>.
Observations from diplomatic, 2015. [Online]. Available through:
<https://www.sciencedirect.com/science/article/pii/S1352231015002848>
Evaluation of traffic at international airports. 2016. [Online]. Avalialbel through: <
https://www.internationalairportreview.com/article/32311/top-20-largest-airports-world-
passenger-number/>.
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H. The Airport Transportation System (ATS)
As per this case, from last three years, Snowham Airport was starting to suffer from own
success because it increases passenger congestions. For this process, its managers has made a
planned for improving transportation at the airport via an underground subway system. This way
is also known as Airport Transportation System (ATS), which is designed to improve transmit
time and experience of passengers who are travelling between three passenger terminals, as
shown below:-
Therefore, time and working schedule for whole procedure is shown through given Gantt
Chart as shown below:-
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Illustration 2: ATS Project

According to this chart, ATS project manager has refused to carry out project for less than £16
million because, cost required to complete the same will be near about £3,150,000.
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TBM crew 100000
Total cost 2600000
Rescheduled
Fixed cost 2000000
Project team 200000
Extra night shift cost 225000
Project manager 325000
TBM and
equipments 300000
TBM crew 100000
Total cost 3150000
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I. Mustang Logistics
This specified case is based on mustang logistics who deals in the supplies of wines,
especially Italian wine. This company is on agreement for England for the supplies of wines
from Italy to the distribution centre within the England that is completely free of charge. It is
clear that profitability of the Mustang is effecting because of high transportation cost especially
fuel. The lease for the current will expire soon. Because of high cost incurring, company is
looking for other location to minimise such costs. It is advantageous for the Mustang to select
most appropriate location to save extra costs incurred and increase the profitability.
As per shown eight customer locations, highest volume of Mustang Shipments is in are of
Liverpool, where most of the locations are found near by it. Therefore, it will be beneficial for
Mustang Shipments to relocate its location in this area.
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