engi7943-A2 - lee Kershaw, manager of food services at a...

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Unformatted text preview: lee Kershaw, manager of food services at a medium-sized ate university in the Southeast, just had the wind taken at of her sails. She had decided that, owing to the success of "'ryear—old pizza service, the time was right to expand pizza- aldng operations on campus. However, yesterday the uni- " ity president announced plans to begin construction of a laden: center on campus that would house, among other utilities. a new food court. in a departure from past univer— _ policy, this new facility would permit and accommodate art—service operations from three private organizations: 'I'i Donuts, Taco Bell, and Pizza Hut. Until now, all food .:;.-.-.: on campus had been contracted out to 1553, Inc. mpus Food Service ,Inc., is a large, nationally operated food-services corn— serving client organizations. The level of service provided "es, depending on the type of market being served and the " icular contract specifications. The company is organized three market—oriented divisions: corporate, airline, and 'versity or college. Kershaw. of course, is employed in the 'Veisity or college division. At this particular university, BSB. In 13., is under contract to .' "de food services for the entire campus of 6,000 students 'tl_3,000 faculty, staff, and support personnel. Located in a ' of approximately 200,000 people, the campus was built on _ donated by a wealthy industrialist. Because the campus ontewhat isolated from the rest of the town, students want— 0 shop or dine off campus have to drive into team. The campus itself is a “walking” campus, with dormito— classrooms, and supporting amenities such as a hook- sundry shop, barbershop, branch bank, and food service clinics—all within close proximity. Access to the campus car is limited. with peripheral parking lots provided. The __',versity also provides space, at a nominal rent, for three 'd-service facilities. The primary facility, a large cafeteria used on the ground floor of the main administration build 5 located in the center of campus. This cafeteria is open threakfast. lunch, and dinner daily. A second location, at: ed the Dogwood Room, on the second floor of the admin~ ation building. serves an upscale luncheon buffet on kdays only. The third facility is a small grill located in the roar ofa recreational building near the dormitories. The is open from 11 AM. to 10 RM. daily and until midnight on a. day and Saturday nights. Kershaw is responsible for all 1.1 as operations. e Pizza Decision ' ,-inc., has been operating the campus food sendees for the ' leears—ever since the university decided that its mission r1 core competencies should focus on education. not on food ice. Kershaw has been at this university for 18 months. ..__I _ _ 'ously, she was assistant manager of food services at a small _"versity in the Northeast. After 3 to 4 months of getting ori- ented to the new position, she had begun to conduet surveys to determine customer needs and market trends. An analysis of the survey data indicated that students were not as satisfied with the food service as Kershaw had hoped. A large amount of the food being consumed by stil- dents, broken down as follows, was not being purchased at the BBB facilities: Percent of food prepared in dorm rooms 20 Percent of food delivered from off campus 36 Percent of food consumed off campus 44 The reasons most commonly given by students were (I) lack of variety in food offerings and (2) tight, erratic schedules that did not always fit with cafeteria serving hours. Three other findings from the survey were of concern to Kershaw: [1} the large percentage of students with cars, {2} the large percent age of students with refrigerators and microwave ovens in their rooms. and {3] the number of times students ordered food delivered from off campus. Percent of students with cars on campus 84 Percent of students with refrigerators or microwaves in their rooms 62 Percent of food that students consume outside 888, Inc., facilities 43 In response to the market survey, Kershaw decided to expand the menu at the grill to include pizza. Along with expanding the menu. she also started a deliVery service that covered the entire campus. New students would have not only greater variety, but also the convenience of having food delivered quickly to their rooms. To accommodate these changes, a pizza oven was installed in the grill and space was allocated to store pizza ingredients, to make cut-anduhox piz- zas, and to stage premade pizzas that were ready to cook. Existing personnel were trained to make pizzas, and addi- tional personnel were hired to deliver them by bicycle. In an attempt to keep costs down and provide fast delivery, Kershaw limited the combinations of toppings available. That way a limited number of "standard pizzas" could he preassembled and ready to cook as soon as an order was received. The Success Kershaw believed that her decision to offer pizza service in the grill was the right one. Sales over the past 10 months steadily increased. along with profits. Follow-up customer surveys indicated a high level of satisfaction with the reason— ably priced and speedily delivered pizzas. I-lowever, Kershaw realized that success brought with it other challenges. The demand for pizzas had put a strain on the grill’s facili- ties. lnitially, space was taken from other grill activities to accommodate the pizza oven, preparation. and staging areas. ..__...... ... ...» " {:6 PART 1 ' USENG OPERATEGNS TO COMPETE fits the demand for pizzas grew, so did the need for space and equipment. The capacities of existing equipment and space allocated for making and cooking pizzas now were inSuffi- cient to meet demand. and deliveries were being delayed. To add to the problem, grorrps were beginning to order pizzas in volume for various on-campus functions. Finally, a closer look at the sales data showed that pizza sales were beginning to level off. Kershaw wondered whether the capacity problem and resulting increase in delivery times were the reasons. 1-[owever. something else had been bother- ing her. In a recent conversation, Mack Kenzie, the grili’s super- visor, had told Kershaw that over the past couple of months requests for pizza toppings and combinations not on the menu had steadily increased. She wondered whether her on— campus market was being affected by the “pizza wars” off campus and the proliferation of specialty pizzas. The New Challenge As she sat in her office. Kershaw thought about yesterday’s announcement concerning the new food court. it would increase competition from other types of snack foods {Dunkin' Donuts) and fast foods (Taco Bell). Of more concern. Pizza Hut was going to put in a facility offering a limited menu and providing a limited selection of pizzas on a "waikhup—and- order" basis. Phone orders would not be accepted not would delivery service be available. Kershaw pondered several crucial questions: Why had demand for pizzas leveled oft? What impact would the new food court have on her operations? Should she expand her pizza operations? If so. how? QUESTIONS 1. Does BSB, lnc., enjoyr any competitive advantages or core competencies? 2. Initially, how did Renee Kershaw choose to use her pizza operations to compete with off—campus eateries? What were her competitive priorities? 3. What impact will the new food court have on Ker-Shaw's pizza operations? What competitive priorities might she choose to focus on now? 4. if she were to change the competitive priorities for the pizza operation, what are the gaps between the priorities and capabilities of her processes? How might that affect her operating processes and capacity decisions? 5. What would be a good service strategy for Kershaw’s opera— tions on campus to meet the food court competition? Source: This case was prepared by Dr. Brooke Saladin, Wake Forest University, as a basis {or classroom discussion. The new director of service operations for Roberts Auto Sales and Service (RRSASJ started work at the beginning of the year. it is now mid-February. RASAS consists of three car dealer— ships that sell and service several makes of American and Japanese cars, two auto parts stores, a large body shop and car painting business. and an auto salvage yard. ‘v’ikky Roberts, ovmer of RASAS, went into the car business when she inherited a Studebaker dealership from her father. The Studebaker Corporation was on the wane when she obtained the business. but she was able to capitalize on her knowledge and experience to build her business into the diversified and successful mini-empire it is today. Her motto, "Sell ’em today. repair 'em tomorrow!” reflects a strategy that she refers to in private as “Get 'em coming and going." Roberts has always retained a soft spot in her heart for Studebaker automobiles. They were manufactured in South Bend, indiana, from 1013 to 1966, and many are still operable today because of a vast number of collectors and loyal fans. Roberts has just acquired a 1963 Studebaker Avanti that needs a lot of restoration. She has also noted the public’s growing interest in the restoration of vintage automobiles. Roberts is thinking of expanding into the vintage car restoration business and needs help in assessing the feasibil— ity of such a move. She also wants to restore her 1963 Avanti in mint condition, or as close to mint condition as possible. If she decides to go into the car restoring business, she can use the Avanti as an exhibit in sales and advertising and take it to auto shows to attract business for the new shop. I Roberts believes that many people want the thrill of re— storing an old car themselves but they do not have the time to run down all the old parts. Still, others just want to own a vin- tage auto because it is different and many of them have plenty of money to pay someone to restore an auto for them. Roberts wants the new business to appeal to both types of people. For the first group. she envisions serving as a parts broker for NOS (“new old stock"), new parts that were matur— Jfaetured many years ago and are still packaged in their origi— nal cartons. It can be a time—consuming process to find the right part. RhSAS could also machine new parts to replicate those that are hard to find or that no longer exist. In addition, RRSAS could assemble a library of parts and hotlynranuals for old cars to serve as an information resource for do-it—yourself restorers. The do—it-yourselfers could come .15 RRSr‘rS for help in compiling parts lists, and RASAS could ' acquire the parts for them. For others, RASAS would take _ charge of the entire restoration. Roberts asks the new director of service operations to take a good look at her ovanti and determine what needs to hedone to restore it to the condition it was in when it came from the factory more than 40 years ago. She wants to restore it in time to exhibit it at the National Studebaker Meet in Springfield. Missouri. if the car wins first prize in its category, it will be a real public relations coup for RASAS—especially if Roberts decides to enter this new venture. Even if she does not, the car will be a showpiece for the rest of the business. Roberts asks the director of service operations to prepare a report about what is involved in restoring the car and whether it can be done in time for the Springfield meet in 45 working days using PERTICPM. The parts manager. the body shop manager. and the chief mechanic have provided the following estimates of times and tasks that need to be done. as well as cost estimates. - Order all needed material and parts (upholstery, winds shield. carburetor, and oil pump}. Time: 2 days. Cost (phone calls and labor]: $100. ' Receive upholstery material for seat covers. Cannot be done until order is placed. Time: 30 days. Cost: $250. - Receive windshield. Cannot be done until order is placed. Time: 10 days. Cost: $130. - Receive carburetor and oil pump. Cannot be done until order is placed. Time: 7 days. Cost: $180. - Remove chrome from body. Can be done immediately. Time: 1 day. Cost: $50. - Remove body (doors. hood, trunk, and fenders) from frame. Cannot be done until chrome is removed. Time: 1 day. Cost: $150. - Have tenders repaired by body shop. Cannot be done until body is removed from frame. Time: 4 days. Cost: $200. - Repair doors, trunk. and hood. Cannot be done until body is removed from frame. Time: 6 days. Cost: $300. * Pull engine from chassis. Do after body is removed from frame. Time: 1 day. Cost: $50. - Remove rust from frame. Do after the engine has been pulled from the chassis. Time: 3 days. Cost $300. - Regrind engine valves. Have to pull engine from chassis first. Time: 5 days. Cost: $500. 0 Replace carburetor and oil pump. Do after engine has been pulled from chassis and after carburetor and oil pump have been received. T irne: 1 day. Cost: $50. - Rechrome the chrome parts. Chrome must have been removed from the body first. Time: 3 days. Cost: $150. - Reinstall engine. Do after valves are reground and car- buretor and oil pump have been installed. Time: 1 day. Cost: $150. ' Put doors, hood, and trunk back on frame. The doors, hood, and trunk must have been repaired. The frame also has to have had its rust removed. Time: 1 day. Cost: $80. 1‘16 PART”! tJESiNiB ‘RPERATlO‘NS TC? CGMF‘ETE ° Rebuild transmission and replace brakes. Do so after the engine has been reinstalled and the doors. hood. and trunk are back on the frame. Time: a days. Cost: $?00. - Replace windshield. Windshield must have been received. Time: 1 day. Cost: $70 - Put fenders back on. The fenders must already have been repaired and the transmission rebuilt and the brakes replacedTime: 1 day. Cost: $60. - Paint car. Cannot be done until the fenders are back on and windshield replaced. Time: 4 days. Cost: $1 .1700. - Reupholster interior of car. Must have first received upholstery material. Car must also have been painted. Time: ? days. Cost: $1.200. - Put chrome parts back on. Car has to have been painted and chrome parts rechromed. Time: 1 day. Cost: $50. - Pull car to Studebaker show in Springfield. Missouri. Must have completed reupholstery of interior and have put the chrome parts back on. Time: 2 days. Cost: $500. Roberts wants to limit expenditures on this project to what could be recovered by selling the restored car. She has already spent $1.500 to acquire the car. in addition. she wants a brief report on some of the aspects of the proposed business, such as how it fits in with RASAS’s other businesses and what RASAS’s operations task should be with regard to cost. quality. customer service. and flexibility. According to Turning Wheels. a publication for owners and drivers of Studebakers, and other books on car restoration, there are various categories of restoration. A basic restoration gets the car looking great and running. but a mint condition restoratiori pu ts the car back in original conditionu—as it was “when it rolled off the line." When restored cars compete. a car in mint condition has an advantage over one that is just a basic restoration. its cars are restored. they can also be cus- tomized. That is. something is put 0n the car that could not have been on the original. Customized cars compete in a sep- arate class. Roberts wants a mint condition restoration. with- out customization. [The proposed new business would accept any kind of restoration a customer wanted.) The total budget cannot exceed $8,500 including the. $1,500 Roberts has already spent. In addition. Roberts can- not spend more than $1,700 in any week given her present financial position. Even though much of the work will he done by Re berts’s own employees. labor and materials costs must be considered. All relevant costs have been included in the cost estimates. QUESTIONS 1. Using the information provided. prepare the report that Roberts requested. assuming that the project will begin immediately. Assume 45 working days are available to complete the project. including transporting the car to Springfield before the meet begins. Your report should briefly discuss the aspects of the proposed new business.- such as the competitive priorities that Roberts asked about. 2. Construct a table containing the project activities. with a. letter assigned to each activity. the time estimates. and the precedence relationships from which you will asserti- ble the network diagram. 3. Draw a network diagram of the project similar to Figure 3.5. Determine the activities on the critical path and the esti- mated slack for each activity. 4. Prepare a project budget showing the cost of each activ- ity and the total for the project. Can the project be com» pleted within the budget? Are there any cash flow prob- lems? If so. how might Roberts overcome them? Source: This case was prepared by and is used by courtesy of Pro-2 fessor Sue Perrott Siferd. Arizona Stale University. ...
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This note was uploaded on 05/02/2011 for the course FINANCE 9924603 taught by Professor Ssgdbfb during the Spring '11 term at Kyung Hee.

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engi7943-A2 - lee Kershaw, manager of food services at a...

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