Solution for Case Studies - Data Tech. Inc., Creature Care Animal Clinic, and Biddy’s Bakery

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OPRERATIONS AND TECH.
MANAGEMENT
Solutions for 3 Case Studies - Data Tech.
Inc., Creature Care Animal Clinic, and
Biddy’s Bakery
PREPARED BY:
S. No. NAME Phone No
1 ANDUALEM TSEGAYE 0926175817
MAY, 2020
DILLA, ETHIOPIA

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- . .,
‟
 CASE - ONE
Take Ways for Case 1: Data Tech. Inc.
The story of the first case study discusses about a company called Data Tech. Inc which has
been established by Jeff Styles which transfers hard copy documents (i.e., invoice, bills) into
CDs. As a startup he started his business in his garage through purchasing necessary office
equipment‟s. The beginning of his operation he got a job offer from 2 companies.
His business involves simple steps which can be simply depicted as follows:
As a challenge for smooth running of his business he encountered and needed to expand his
capacity and even relocate operating facility. And he listed Proximity to Postal Service &
Closeness to the Airport as an important factor to take this decision.
For the capacity issue he considered Two locations in which; One is larger than he needs
and can offer excess growth and the other meets his need for Capacity but doesn’t offer
ample room for expansion.
By: Andualem Tsegaye
Phone #: +251 (0) - 926.175817
Email: andualem192@gmail.com

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 Additional Information:
Likely Hood of Demand Being: High Low
70% 30%
Estimated Profit for moving the business to:
Large Facility Small Facility
$ 1M or $ 600T $ 500,000
Profitability – if he takes a decision to expand
his company’s capacity, or not:
To Expand Not to Expand
$ 800 T $ 500 T
 Solutions Forwarded for CASE ONE
1. Help Jeff to decide whether to move to smaller facility with possibility of moving to
large facility. Decide on the best alternatives and choose weights for two capacity
factors.
The issue that Mr. Jeff „the owner of Data Tech Inc.‟ has faced is related to Facility
Planning; which is one of the key aspects of operations management as it determines the
amount of goods or services which can be produced within a given time duration. Too less
capacity indicates that customers won‟t be satisfied and too much capacity would result in the
operation being under-utilized with resultant high fixed costs and also affecting breakeven
and profitability.
A company, when it has to increase its capacity it has various options to consider, from
working overtime to building or relocating to a new facility or a plant. Forecasting demand
is critical to capacity planning and companies can also adopt different strategies of capacity
planning, to ensure customer satisfaction and maintain the operations well within their budget
and other constraints.
As we have seen with in the story lines of the our first case study Mr. Jeff have started new
company which seemingly is getting more job offers and profits; and thereby he made a
forecast on demand and also profit.
Facility Management is a customer-oriented, complete service, covering the comprehensive
decision-making principles for optimum planning, usage and adaptation of buildings, their
installations, premises, and services - reinforced by information systems supporting company
management in a strategic manner and with regard to each job/performer participating in the
core process.
Jeff should look for facility management in order to decide which facility would be the most
Sensible choice. This type of management looks at each component necessary in choosing the
proper facility for one‟s business.

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Now Jeff has only acquired two new clients, which adds to a total of only four clients. His
strategy should include forecasting based on the four clients that he already has. He should
look at the amount of time it took to obtain the third and fourth client and weight it with the
time it took for him to got the first two clients.
After he has ascertained that information, he can then work that into the facilities
management process. Examining the profitability of a smaller facility to a larger one will help
with determining the expansion rate Jeff should take.
According to the Case Study of Data Tech, Inc., if Jeff moves into a large facility he has a
profitability of $1,000,000 if the demand is high and profitability of $600,000 if demand is
low. If he moves into a small facility and a low demand, he has a profitability of $500,000.
If Jeff moves into the small facility with the opportunity to expand, he‟s looking at a
profitability of $800,000 with high demand, and he would still have a profitability of
$500,000 with a low demand.
In order to save resources that are not currently needed and to cut down on waste, it may be
more economical to decide on the smaller facility with the possibility of expanding
2. After selecting a factor from the two alternatives, use the factor rating to select new
location.
As there are only thirty points to left to allocate, the potential expansion factor should receive
twenty points. This amount of points seems more practical because of the potential merits
that expanding a business contains. When a company has the potential to expand and still
maintain its profitability, it would be more advantageous to select a location based on
potential when profitability can remain high.
For excess capacity, the weighted points should be ten because excess capacity for any
amount of time is wasteful. Proper forecasting should alleviate any waste within a
company‟s facilities. It is a waste of finite sources that company owners cannot afford to
lose. Jeff will maintain profitability if he chooses the potential expansion factor over excess
capacity. Anything in excess can lead to a loss in profitability.
3. How would the factor analysis be different if you had selected another capacity
alternative?
If I had chosen Excess Capacity as the recipient of the twenty points, Location Number Two
would have a weighted score of three-hundred and sixty points and would be the optimum
location for Jeff to set up shop. The issue with this location is that excess capacity equals
excess money spent and therefore less profitability.

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Although this location has no zeroes for any of the factors, which would seem the optimal
location, it does not have a weighted score high enough to be considered a prime location. It
is, however, the optimal location for excess capacity of the three locations. Jeff would have
an ideal location set up with extra space, but would lose money. It would be in Jeff‟s best
interest to start small with his expansion because it is not clear whether he will get more
clients.
 CASE - TWO
Take Ways for Case 2: Biddy’s Bakery
Elzabeth McDoogle started her business in collaboration with her friends as Biddy‟s Bakery
with a mission to produce variety of baked goods (i.e., pies and caked) with old-fashion style
and taste.
The small production and sales facility was housed in a mixed commercial and residential
area on the first floor of “Biddy‟s” home. And most of customers place advanced order and
the bakery also take pride in accepting special requests.
Initially sales were slow thereby the business incurred loss, however after few years the
Bakery started to attract loyal customers. And in 1994 the first floor storage area was
expanded to accommodate growing business but quickly the bakery quickly outgrow its
current capacity.
But in May 2000 Elzabeth decided to purchase adjacent building and move the entire
operation to much larger facility with expectation of growing business, but unfortunately at
the end of the year she found that sales expectations had not been mate there by paying for
unused space.
Then after so as to get management advice she called upon business students from local
university and then after considerable analysis the team of business students came up with
their plan and advised her to primarily focus on production of the McDoogle pie in large
volumes which would be delivered in set quantities to one store location twice a week. The
volume of pies required would use up all of the current excess capacity and take away most
of the capacity from production of other pies.

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 Solutions Forwarded for CASE TWO
1. Explain the challenge Elizabeth faced in meeting her capacity needs. What
should she have considered before moving into the larger facility?
The challenge she is having is related to Capacity Planning. Most organizations operation
start to grow through time and thereby an increase in demand for the company‟s product or
service would require taking capacity planning decision.
Capacity planning is the process of determining the production capacity needed by an
organization to meet changing demands for its products. Effective capacity is the maximum
amount of work that an organization is capable of completing in a given period due to
constraints such as quality problems, delays, material handling, etc.
The capacity of plant is limited by the level of current demand. Stable demand makes the task
of capacity planning simple while fluctuations in demand create problems concerning the
acquisition of resources and matching them up with demand levels. Estimation of demand is,
therefore, the first step in capacity planning. The challenge faced by Elizabeth is also related
with execution of capacity decision without any ground (Estimation of Demand and
Projection of Sales) along with oversized capacity planning.
Even from the ground of selecting and going for larger capacity than required can turn in
additional costs which are capable of shrinking the profit that the organization can afford
deciding more fit capacity and facility alternative.
2. What is wrong with the proposal made by the team of business students? Why?
Even though the problem of the organization being Capacity planning issue; the students
have proposed Elizabeth to primary focus only on a single line of product that the Bakery is
producing.
Even if we see this one from customer base perspective; execution of such decision would
force customers to flee to another alternative. Anyone can think that, the current customers of
the organization have a variety of preferences over a number of products offered by the firm.
And from this ground focusing on a single line of product might also involve withdrawal of
the other products; resulting in loss of profit from other products and also loss of customer on
the other hand.
The proposal the business students at the university made for Elizabeth might not be the
correct structure for her business due to the layout they are proposing involving a repetitive

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operation design. With a repetitive operation, the product variety is low, the degree of
standardization is high, and the throughput time is shorter.
These are all characteristics that would not fit the business for a bakery. Her operation is
Intermittent. A bakery is labor-intensive, because of the specialized orders taken by
customers that Elizabeth and her business takes pride in. The workers need to be able to
perform different tasks, depending on the processes needed of the products being produced.
The students just proposing the production of the McDoogle pie in large volumes, changes
Elizabeth‟s whole operations from Intermittent to Repetitive. She would need to create an
assembly line type of organization and still suffer from unused capacity because she would
then be cutting out a large part of her company‟s products by no longer taking special request
orders.
3. What type of operation does Biddy’s Bakery currently have in place? What type
of operation is needed to meet the proposal made by the team of business
students? Explain the differences between these two operations.
The current operation of Biddy‟s Bakery involves mass production of variety of products
with old fashion and taste and then delivering and selling them to a number of unidentified
and undiversified customers that are available to the market.
And now the proposal of the business students involves in focusing on a single product that
the organization is now offering to the general public. And after focusing to a single product
they are supposed to deliver the product to a nearby shop twice a week.
Taking on such decision requires a firm that operates by segmenting its customers through
their preference over the companies product.
For Example: let‟s take Moha Company which is popular in Ethiopia, producing variety of
soft drinks to the general public for a number of decades. Some of popular products produced
by Moha Co. are – Mirinda, 7UP, Pepsi… So such organization can do a research on the
trend of customers purchase for such products and may decide to focus on one of them which
he found as profitable to work with. Employing such strategy for the organization like
Elizabeth may not work as previously considered and may also result in a fatal loss to the
organization.
4. Elizabeth senses that the business would be different if she accepts the proposal
but does not know how and why. Explain how it would be different.
The business would be very different if Elizabeth decides to accept the university student‟s
proposal. She would be changing her whole operations system and would need automation
equipment since she would only be producing one type of pie rather than the variety she has
been used to.

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She would also have fewer inventories and mainly have to organize the layout differently to
accommodate the new processing needs. The time however, would be increased and she
would possibly see an increase in sales. The mission she originally set-forth with her business
was producing a variety of baked goods with old-fashioned style and taste. With accepting a
repetitive design, her mission statement would not be altered.
There also exist big difference from the current mode the Elizabeth‟s bakery is operating and
the way the students have proposed for the company to operate. For example to see:
 The current Elizabeth‟s organization work for sum of customers with variety of
preferences without segmenting and without having business related discrimination to
its customers. And the proposed organization by the students involves in focus and
supply of a given product to the market for the customers which have matched
preference for the company‟s product.
 The proposed organization can also be different in number and type of inventory they
will be employing for their production process and also the way they preserve their
finished goods to be delivered to customers.
 And also focusing only on one product might also need to incur additional cost for a
refresher course to get all to be perfect and also employing additional employees
might be required. And also to sum on this; more than the cost incurred in
reengineering the existing working condition costs to get rid of previous inventory
and equipment‟s could also be incurred.
 And also focusing only on one product of the organization can also require reframing
finished product delivery process and supplying chain management process in which
the organization is getting its inputs for the production process.
 Though after focusing on a specific product of the organization, attracting and finding
more customers who prefer that line of product have to be performed. Which can
bring in hard time for organization to work with new customers with different taste,
preference and purchasing trend.
5. What would you advise Elizabeth?
 Focusing only on one product of the organization may bring in profitability for the
organization; and more than the costs and losses incurred during restructuring the
business operation, this can also make the business to be more risky on the other
hand.
 As if the organization is having more product or service lines, it can make a
recovery and even survive with the other available products, on the times where
the demand for a specific product falls and where product life cycle of it is in
declining stage.
My advice for Elizabeth would be to focus and work on one of the following points to restore
the condition and status of her organization:

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 Reframe: I would like to advice Elizabeth to review and reframe her capacity
planning and even resize it (to a size that fits her to reduce non-reasonable related
costs) after deep analysis of factors involved for capacity planning i.e., Market
demand, expected profit if she resize her facility and if not, costs involved in one way
or other.
 Strive for more: reasonable measure can be undertaken when it is not possible to
reframe capacity planning decision for a time being. And while thinking to do so
Elizabeth can employ a number of strategies to cover for the additional cost that she is
currently incurring for unused space in the large facility. i.e.,
 Elizabeth can also try to achieve even more than what she has planned
throughout the year to allocate for the cost.
 She can also arrange for additional line of business with the facility that is
in excess of what is actually required – i.e., - letting it for rent, use the
extra facility as a ware house.

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 CASE - THREE
Take Ways for Case 3: Creature Care Animal Clinic
Creature Care Animal Clinic is a veterinary clinic established and operated by Dr. Julia Barr;
for a medical care of Dogs and Cats, and operated from Monday to Friday and half day at
Saturday.
Through passage of time number of patients requesting specialized service has increased –
initial requests were few and were accommodated by the Dr.
One of the nurses was also trained in grooming services and began to alternate between her
regular duty and grooming. And however number of pets being groomed increased even
interrupting work flow.
The number of customers requesting grooming service was growing rapidly and even
customers drop-off their pets for a package of examining, grooming and even medical
procedure.
 The space for grooming was rapidly taking over the room
 Staff was not trained to provide the type of service the customers are requesting
She is wondering how to handle the operation dilemma, and no longer sure in what type of
business she was in.
 Solutions Forwarded for CASE THREE
1. Identify the operations management problems that Dr. Barr is having at the clinic
It is ordinary that customers may ask different type and line of service from what the owner
or manager thinks the type of service the organization is into. While dealing with such
scenarios, the operations manager should have to look over such customers enquiries deeply
as it can also embrace a great and much profitable line of business idea than what the owner
is operating in.
The problem that Creature Care Animal Clinic is having involves with, service requests from
customers that is totally outside the regular the Animal Clinic Service that they were
rendering before; and what has been started incidentally, turn out to have more number of
customers requesting the Pet Grooming which have started to take over the time and space of
the clinic to render regular line of service that it is intended to render.
There is a quote of Richard Branson (British business magnate, investor, author and founder
of the Virgin Group) - “Business opportunities are like buses, there’s always another one
coming.” – means that what you have picked as best is not the end, and there can be more
business ideas you will suddenly find that worth trying, on the way you are doing your first
business.

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Branson‟s Virgin has proven that from record labels to airlines, where there is a will there is a
way. The door isn‟t always open, but sometimes it‟s ajar or the key is on the floor. All you
must do is pick it up and turn the lock. Basically, the right environment for success ebbs and
flows, but a keen businessperson is never passive.
There is always a way to reconcile paths on a business lane – here also Dr. Julia can apply a
number of strategies to address the issue she is having with scheduling, and operation
management which would be discussed in question 4 of this case study.
2. How would you define the “service bundle” currently being offered? How is this
different from the initial purpose of the clinic?
Service bundling can be seen as a gift for attracting customer and which is beneficial for the
organization as customers wanting one specific service from a bundle package can pay visit
to other services in which he is not considering using or has been using it from other
customer. Service bundling should be used in a way to attract customers and also advertise
additional services which are not publically known; but here it is not properly used by Dr.
Julia as such strategy.
The primary purpose of the clinic was intended to provide clinical care for animals which
does not include Pet Grooming; and more than that the Clinic was previously rendering
service to its customers – service in a single base; which does not involve in service bundling.
3. Identify the high-contact and low-contact segments of the operation. How should
each be managed?
High contact segments are the reception and customer waiting area. The low contact
segments are the examining, grooming, and surgical areas. Although grooming is currently
performed in high contact area where in these segments, services must be performed while
the customer is present and in contact.
Low segments can be performed while the customer is not there and there isn‟t a need for
customer contact. As the grooming operations demonstrate, customer contact with low
contact segment can decrease performance.
4. What should Dr. Barr have done differently to avoid the problems she is currently
experiencing? What should Dr. Barr do now?
I believe she should have studied the impact of change in the mix of services offered prior to
accepting a significantly different mix. At this time, she may have to reject the business that
is outside her original plans until she is able to redesign the clinic to better accommodate or
handle the current mix. Redesigning the clinic can include a new facilities layout, employee
training, and services packages.

Solution for Case Studies - Data Tech. Inc., Creature Care Animal Clinic, and Biddy’s Bakery

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