Business Development: Operation Management at Snowham Airport

This report presents a comprehensive analysis of operation management challenges and solutions, using the Snowham International Airport as a detailed case study. The report examines several key areas, including coffee procurement strategies for Harvey Talbot, the layout and operational aspects of a new Juicemasters outlet, staff planning for the Turista call center, an analysis of Sycamore Security Systems, baggage handling problems, and the acquisition of a new fire engine for the airport. Each section includes detailed calculations, alternative solutions, and recommendations for improving efficiency and reducing costs. The report utilizes various business development concepts such as Economic Order Quantity (EOQ) to optimize operations and enhance profitability across different departments within the airport's ecosystem. It provides valuable insights for business development, project management, and operational efficiency.

OPERATION
MANAGEMENT

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Harvey Talbot – coffee procurement:.....................................................................................4
The new Juicemasters outlet:..................................................................................................6
Staff planning for the Turista call centre:...............................................................................8
Sycamore Security Systems:................................................................................................10
Baggage handling problems at Snowham Airport:..............................................................12
A new fire engine for the airport:.........................................................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

EXECUTIVE SUMMARY
Operation Management is essential element which help to define the core objectives of a
project and effective execution of all task related to project. This study summaries all the major
aspects of project management with help of multiple topics connected with case study of
Snowham International Airport. Each topic consist of specific issue which is to be solved for
improving overall operations. In study each issue is thoroughly analysed to provide effective
recommendations and identify issues in existing processes adopted.

INTRODUCTION
Operation management includes effective planning, controlled implementation, strict
supervision and completion of specific project in all stages in order to reach defined project goals
and accomplish them in the context of a specified time and on budget. The management of
operations interacts regularly with approaching daily and also with strategic business problems.
Project management normally relates to the planning, coordination, encouragement and
allocation of resources in order to accomplish particular objectives (Branch, 2012). Management
of operations implies to ongoing activity of an entity that conducts activities that generate goods
or services. This study covers different topics and project related to Snowham International
Airport's case study. Here in each case several computations are done to assess the viability of
decisions and recommend the best alternatives in respective topics.
MAIN BODY
Harvey Talbot – coffee procurement:
Harvey Talbot (HT) is a UK-wide network of American-style restaurants that delivers its
consumers high-quality filtered coffee. As given in project study, at Snowham international
airport, HT has one restaurant. Here company named Kenyan Coffee Supplies (KCS) Ltd
generally supplies all company's coffee. Here major issue is increasing costs of purchasing
coffee. HT's Finance Director aims to boost its overall performance through cutting spendings on
purchases on consumables. Here as per HT's director current purchasing policy adopted is far
from optimal-point and Margins currently are quite tight.
Unit cost of one standard coffee container 14.5
Company generally gets total containers ( 2 Weeks) 200
HT company trades 52 weeks a year
Annual Demand 5200
Cost of placing an order 40
Holding cost 9
Delivery Cost 7500
Total costs of procuring coffee 94000

Calculation of annual aggregate cost:
Cost of one container ( 14.5 * 100 * 52 weeks) 75400
Cost of placing order (40 * 100 * 52 weeks) 208000
Holding cost (9 * 100 *52 weeks) 46800
Delivery Cost 7500
Cost of Procuring Coffee 94000
Total Annual Cost 431700
First Alternative:
Under first alternative, it is suggested by director that ordering will be more cost efficient
in case EOQ method is applied. The purpose of EOQ method is to determine the optimum figure
of units to be order. A company could reduce its unit acquisition, distribution, and storage costs.
This is effective approach which can minimise the overall cost by identifying optimal-point for
order (Battini, Persona and Sgarbossa, 2014). Following are merits and demerits of such
alternative, as follows:
Merit: Placing order as per EOQ is more systematic method also it will help company to
minimise overall inventory cost.
Demerit: EOQ is technical method which require calculations but in practical life it is not easy to
assess accurate EOQ due to other contingent factors. Also fluctuation in annual demand affects
EOQ.
Economic Order Quantity:
EOQ = √(2 * D * S)/ H
= √ ( 2 * 5200 * 40 ) / 9
= √ 416000÷9
= √ 46222.22
= 214.99 or 215 containers
Total cost based on EOQ alternative:

Particulars 215 Containers
Cost of one container ( 14.5 * 215 containers * 52 weeks) 162110
Cost of placing order (40 * 215 containers * 52 weeks) 447200
Holding cost (9 * 215 containers *52 weeks) 100620
Delivery Cost 7500
Cost of Procuring Coffee 94000
Total Annual Cost 811430
Note: Here it is assumes that delivery cost and cost of procuring coffee are fixed costs thus
would not change.
Second Alternative:
Here in second suggestion, KCS will provide corporation a discount in case of bulk purchasing
and also KCS's Sales Director agreed to provide company a bulk buying discount, charging just
£12.75 per container. But here is condition company should order at least 2,500 containers. Here
following is merit and demerit of each alternative, as below:
Merit: Discount of 1.75 per container is main advantage of this suggestion as this will reduce
overall cost. Further no estimation require as to ordering because discount will receive only if
2500 containers ordered at single time.
Demit: Single large order of 2500 container can increase overall cost of inventory handling as
well as storage.
Thus as per this scenario aggregate total cost will be:
2500 Containers
Cost of one container ( 12.75 * 2500 Containers) 31875
Cost of placing order (40 * 2500 Containers) 100000
Holding cost (9 * 2500 Containers) 22500
Delivery Cost 7500
Cost of Procuring Coffee 94000
Total Annual Cost 255875

Note: Here it is assumes that delivery cost and cost of procuring coffee are fixed costs thus
would not change. Also it is assumed that single order will be placed in a year.
As per the above calculations based on suggestions it has been analysed that current
annual cost is £ 431700, if organisation consider the first alternative then annual cost will be £
811430, while as per second suggestion such amount will be £ 255875. Thus suggestion second
will be more appropriate. As cost in this alternative will be lower as compare to other one.
The new Juicemasters outlet:
Here in this section main issue is that one outlet has become vacant which is leased to
independent company named Juice-masters. The corporation is specialize in broader variety of
healthy juices and smoothies alternatives along with several cold-vegetarian snacks like
baguettes. Speciality beverages like teas/coffees are also available for consumers. Corporation
has already opened outlets in 3 other major airports. Company's Chief Executive officer is
enthusiastic regarding new outlet in Snowham. In this context following is overview of interior
of area provided as follows:
 Area: 17 m x 15 m corner
 2 side Storage Space
 Staff Toilet Facility
 2 doors and 4 windows
 One Main Window
Based on above details, here is following is layout for recommended floor layout, as follows:
Queueing: For managing customers crowed, there should be two queues for making payment in
two separate single windows as well as two queue for collecting food items at main window.
Ordering: Self ordering system should be adopted here, as this system provides increase in order
accuracy and require less staff.
Delivery: In peak hours, customer will collect order from main window and during period other
than peak hours delivery will be made by staff in waiting area.
Payment Processes: Company should provide all payment alternatives like credit and debit card,
cash currency, mobile banking etc. From payment windows, customer will get token or receipt
after making payment. At the time of delivery customer will provide such token/receipt. At the
end of the day tokens and payment should be matched which can increase accuracy in entire
process.

Furniture and equipment: Here following is list of all the major items of furniture and
equipments, as follows:
 Refrigerator  Knives
 Ice machine (small/ medium size)  Cutting board
 Juicer  Portion scale
 Blender  POS system
 Dishwasher  Napkins
 Measuring cups  Counter Tables
 Large trash can  Chairs
 Plastic wraps  Fruit Peeling Machine
Job Roles:
Juicer:
Customer Service:
 All buyers are treated with dignity and gratitude.
 Describe everyday items on the Glowing menu as well as its advantages. This involves
drinks, juices and other items.
 Helping customers in making order process by offering suggestions and describing each
item's nutrient value.
Food and Drink Prep & Production:
 Appropriately decreasing food wasting following recipes.
 Juice & drinks are made as per consumer and restaurant requirements.
 Washing, cutting and preparing all the fruits and ingredients for juices and smoothies.
 Know the components of juices and make recommendations based on consumer tastes.
Cashier:
 The payments are handled quickly and accurately.
 Re-stocking refrigerated bottled beverages and utensils where required.
 Update inventories of shop on regular basis.
 Periodically tally all receipts and payments.

Staff planning for the Turista call centre:
Under this section it is given that Turista Airways operating flights through no. of UK
airports. It maintains a small scale call centre at the Snowham
airport that handles calls through customers during whole year. Here company wants to assess
the aggregate cost of hiring temporary employees. Following are key calculations based on
information provided in case study as follows:
Current Scenario:
Working day (year) 250 days
(50 weeks * 5 days a week)
Last Year aggregate calls 26200 calls
Three period in a year
First Period Working days 0 and 100 5200 calls
Peak holiday period Day 100 and day 150 15000 calls
Third Period After day 150 6000 calls
Two permanent members of staff
Capable of processing 30 calls
per day each
Temporary member of staff 20 calls a day
Temporary staff cost £60 per day
Total annual budget for temporary staff only:
First Period
Peak holiday
period
Third
Period Total
Days 100 50 100 250
Calls 5200 15000 6000 26200
2 Permanent Members:

Calls can hey handle 2*30*100 2*30*50 2*30*100
Total Calls handled 6000 3000 6000 15000
Excess calls handled as compare to
last year 800 -12000
800
Net Shortage -11200
If Temporary member of staff
handle 20 calls each day
Then number of temporary
members required - (11200)/20 -
- 560 employees -
Temporary staff cost £ 60
Total annual budget required for
temporary staff only £ 33600
As per new web based call handling system, experienced and permanent staff productivity will
rise to least 50 calls per day and untrained temporary staff to 40 calls a day. This system will cost
£24,000 thus following is cost saving of company in hiring temporary staff:
Total annual budget required for temporary staff only £ 33600
New proposed system is priced at fixed cost of: £ 24000
Aggregate Saving £ 9600
Sycamore Security Systems:
Average price charged for full integrated CCTV system £ 160000
Total unit cost (including all materials and staff costs) £ 128000
Contribution each unit £ 32000

All other fixed overheads cost the company 90000
Working hours a day 8 hours
Working days a week 5 Days
Total Weeks in a Year 50 Weeks
Rates provided by employment agency:
Salesman Wages £300 p/day
Surveyor Payment £400 p/day
Manufacturing technician payment (3 technicians = 1 team) £1000 p/week
Installation technician (4 technicians = 1 team) £1500 p/week
Computation of gross yearly profit generated by Sycamore (using above provided information):
Particulars 9 Systems in a week 11 Systems in a week
Total Weeks in a Year 50 Weeks 50 Weeks
Average price charged £ 72000000 £ 88000000
( £ 160000 * 9 systems
* 50 weeks)
( £ 160000 * 11
systems * 50 weeks)
Less: Unit Cost £ 57600000 £ 70400000
( £ 128000 * 9 systems
* 50 weeks)
( £ 128000 * 11
systems * 50 weeks)
Less: All other fixed overheads costs £ 4500000 £ 4500000
Annual Gross Profit £ 9900000 £ 13100000
Also if company decided to utilise services of employment agency, following will be the
additional staff cost and extra annual profit can be generated, as follows:
Particulars 9 Systems in a week 11 Systems in a week

Average price charged £ 72000000 £ 88000000
Less: Unit Cost £ 57600000 £ 70400000
Less: Other Costs related to hiring of
staff
Salesman Salaries £ 75000 £ 75000
(£300 p/day * 5 days a
week * 50 weeks) (£300 p/day * 5 days a
week * 50 weeks)
Surveyor Payment £ 100000 £ 100000
(£400 p/day * 5 days a
week * 50 weeks)
(£400 p/day * 5 days a
week * 50 weeks)
Manufacturing technician payment (3
technicians = 1 team) £ 150000 £ 150000
(3 technicians * £1000
p/week * 50 weeks)
(3 technicians * £1000
p/week * 50 weeks)
Installation technician (4 technicians =
1 team) £ 300000 £ 300000
( 4 technicians * £1500
p/week * 50 weeks)
( 4 technicians * £1500
p/week * 50 weeks)
Gross annual profit £ 13775000 £ 16975000
Thus Extra Annual Profit will be:
Particulars 9 Systems in a week 11 Systems in a week
Annual Gross Profit (in existing scenerio0 £ 9900000 £ 13100000
Annual Gross profit (in proposed scenario) £ 13775000 £ 16975000
Additional Profit £ 3875000 £ 3875000