University Case Study: McDonald's Capacity and Performance Analysis

This case study analyzes McDonald's business operations, focusing on capacity management strategies to reconcile demand. It explores approaches like level capacity, chase demand, and demand management. The study includes an analysis of the four D's (design, direct, develop, deliver) in relation to McDonald's operations, highlighting their impact on product design, employee direction, strategy development, and product delivery. Furthermore, it evaluates the five performance objectives (quality, speed, dependability, flexibility, cost) and their significance in McDonald's operations, emphasizing customer satisfaction and competitive advantage. The case study also calculates the average customer arrival rate and waiting time, demonstrating the importance of efficient service. The conclusion emphasizes the importance of effective capacity management and strategic direction for operational success. The provided references include books and journals related to the subject.

MBO CASE STUDY

Contents
Introduction.................................................................................................................................................3
What approaches are used by Mc Donald to reconcile capacity and demand of company?.....................3
Analysis of four D's in relation to McDonald’s.......................................................................................4
Evaluation of five performance objectives which mean for the operation in McDonald’s.......................5
Calculating the average number of customer which are arriving till average time...................................6
Conclusion...................................................................................................................................................7
REFERENCES............................................................................................................................................8

Introduction
Management business operations is an area associated with designing and controlling the
procedure of production & redesigning business operations within the production of products as
well as services. It is considered as one of the important function of an organization along with,
human resources, marketing and so on (Barnes, 2018). In the present report a case study of
McDonald’s is taken into consideration. It is an American fast food organization that was
established in year 1940. The report will cover different approaches of capacity management. In
addition to this there is an analysis of execution of strategies of four D's. Moreover, the five
performance objectives is evaluate in context of respective organization. In the last, there is
calculation of average customer drive through or take away for the delivery.
What approaches are used by Mc Donald to reconcile capacity and demand of company?
Capacity management is essential to meet with the demands of customers arise at market
place. In addition, it also helps to make effective use of available resources that is crucial to
maintain higher productivity as well as profitability of company. As per the given scenario, the
demand of products offered by Mc Donald are increasing rapidly so they are required to adopt
effective techniques of capacity management in order to cater the requirements of audience in an
efficient manner. It is analyzed that for fast food industry it is important to serve customers in
less time of period. So, managers of respective company are adopting effective strategies to
minimize the time between placement and delivering of an order. For this, different approaches
of capacity management are given as under:
Level Capacity: It has direct relation with the output in terms of ready goods and services
that are provided by an organization to meet with current level of demand arise at market place
(de Sousa Jabbour, 2019). For this, managers of Mc Donald first identify available resources,
level of inventory so that they can use full capacity to serve customers in better manner. It is also
helpful to make optimum use of resources that will further lead to minimize overall cost. With
the help of case study, it is monitored that organization focuses to minimize operating,
production as well as other cost to provide products to customers at lower price. And, level
capacity approach help to fulfil this aim.

Chase Demand: It is also an essential strategy in which organization take action as per
the level of demand at market place. Here, production is done to meet with current demand of
products and services in market without having surplus and shortage within company. For this,
administration of Mc Donald, make anticipation about future demand of products and arrange
raw material and other resources accordingly. For this, they also keep proper control over
inventory and adopt effective strategies such as Just in time to maintain proper level of stock
within company.
Demand Management: Here, organization adopts effective strategies to maintain a
predefined level of supply in order to meet with current requirements of customers that is also
crucial to maintain long term relationship with buyers(Korauš, 2019). In regards of Mc Donald,
they analyze the current level of demand within market and also make anticipation about future
requirements in order to prepare appropriate strategies. It is monitored that they undertake just in
time approach to cater the instant need of customers in food supply chain. For this, they are using
pull strategy in which production is done as per the actual level of demand prevailing at market
place.
With above stated points, it is seen that there are different approaches such as level of
capacity, chase of demand and demand management are adopted by Mc Donald in order to
manage capacity of company in an efficient manner. It also helps to keep the overall cost of
production at minimum possible level by making efficient use of available resources.
Analysis of four D's in relation to McDonald’s
Managing ope rations and process involves a wide range of separate decision which will
analyze their overall structure, process and practices. The four D’s analysis involve design,
direct, develop and deliver and management of all such activities within the set of interconnected
is important. The four D’s in relation to McDonald’s is given below:
Design: It is one of which is having high value in the whole process of delivering and
providing services. The designing of product plays an important role as it attract large number of
people and is advantages in taking decision towards buying. In relation to McDonald’s, it is
determined that it has its product designers that are needed for different customer base full storm
the professional assist in choosing the flavor, ingredient, fragrance and many more that can be

delicious an attractive in order to increase the demand of product. The process design is one that
can assist in declining the overall cost and enhance the profitability of organization.
Direct: In order to perform activities by employees, it is important for the higher
authoritie’s to properly direct on instruct them as it will help in effective execution of operations
an activities that will lead to increasing productivity and profitability of an organization (Luo,
Lin and Zheng, 2019). Herein, management plays an important role with in the procedure as it
guide from prediction to the delivery of products to its employees. Changing any of the activity
arise a challenge for management to instruct it’s staff members properly and if not there is high
problem arises that effect negatively on the performance of respective organization.
Develop: It is one that assist businesses to develop new strategies which in turn help in
gaining higher growth and success. It include brain storming And the desire to evaluate the
responsibilities on the execution of activities within the given budget. It is important for
McDonald’s to develop effective strategies and execute them in a proper manner.
Deliver: this step take place after the production of product is finished. Delivery of the product
plays an important role in order to enhance and provide high customer experience it is important
for McDonald’s to ensure that delivery of its product to customers is given on time and is
manageable. Here in, inventory management can assist in maintaining a balance between
demand and supply of a product.
Evaluation of five performance objectives which mean for the operation in McDonald’s
Quality: It is one of the important objective of McDonald’s as its aim is to provide
quality products to its customers that will help in customer satisfaction and retention. Providing
of high quality predict help in developing positive brand image at marketplace and attract large
number of customer to consume it’s product (Dincer, Hacioglu and Yüksel, 2018). For this, the
company executes some techniques and check activities on continuous manner so that its quality
is maintained.
Speed: In context to delivery of its product, customers required to wait for the finished
product. The higher authoritie’s of McDonald’s is focusing on declining the delivery time of its
products as it will help in maintaining customer base level an improve its sales as well.

Dependability: It is one that refers to service on time and here in the delivery of product
on time is one of the important aspect. In order to provide delivery to its customer on time,
McDonald’s is dependable on its employees and the process as well.
Flexibility: It refers to the flexible within the product associated to working hours of staff
members that provides trust towards the organization.
Cost: It is one of the important aspect that company is focusing in order to gain high
profits and provide its product at reasonable price in market (Slack and Brandon-Jones, 2018). It
is determined that McDonald’s provide its offerings at affordable pricing that help company to
attain competitive advantage at marketplace.
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
There are about 20 customers per hour for the delivery of product. In order to decline the waiting
time, there is requirement to improve waiting time that will help in maintaining customer base
level and performance as well. With the help of technology and online platform for ordering and
payment help in improving waiting time of customer (Guha and Kumar, 2018). It will also leads
to satisfaction and retention of customer which in turn leads to raise in sales and profitability of
respective organization.
Conclusion
From the above discussion, it can be concluded that it is important for an organization to
make use of effective capacity management strategies and it helps in maintaining a balance
among demand and supply. It is determined that evaluation of five objectives help company to
improve it’s productivity and efficiency in an effective manner. Moreover, it is analyzed that
company is required to focus on providing right direction to its staff members so that they can
give delivery on time to its customer.

REFERENCES
Books and Journals
Barnes, D., 2018. Operations Management. Macmillan International Higher Education.
de Sousa Jabbour, and et, al., 2019. Circular economy business models and operations
management. Journal of cleaner production, 235, pp.1525-1539.
Korauš, A., and et. al., 2019. Using quantitative methods to identify insecurity due to unusual
business operations. Entrepreneurship and Sustainability Issues, 6(3), p.1101.
Luo, S., Lin, X. and Zheng, Z., 2019. A novel CNN-DDPG based AI-trader: Performance and
roles in business operations. Transportation Research Part E: Logistics and
Transportation Review, 131, pp.68-79.
Dincer, H., Hacioglu, Ü. and Yüksel, S., 2018. Strategic Design and Innovative Thinking in
Business Operations. Series: Contributions to Management Science. Publisher:
Springer International Publishing.
Slack, N. and Brandon-Jones, A., 2018. Operations and process management: principles and
practice for strategic impact. Pearson UK.
Guha, S. and Kumar, S., 2018. Emergence of big data research in operations management,
information systems, and healthcare: Past contributions and future roadmap. Production
and Operations Management, 27(9), pp.1724-1735.
Erjavec, J. and Trkman, P., 2020. Behavioural operations management-identification of its
research program. International Journal of Services and Operations
Management, 36(1), pp.42-71.
Kapur, P.K., Kumar, U. and Verma, A.K., 2018. Quality, IT and Business Operations (pp. 332-
335). Springer.