Operation Management for Michigan Dinning

Hill Dining CenterTeam: Mojo-Jojo

Jessie ChenBrian Green

Daniel GuslitsKarina PuskoriusRomina Reversi

Jake Schmidt

M A R K E T P L A C EAT HILL DINING CENTER

What’s on the Menu

Homestyles Buffet Dish Room Inventory

Management

Background Analyses & Recommendations Q & A


• Run by Michigan Housing

• 300 Student Employees

• Daily Customers Served:– Breakfast ~500– Lunch ~1,500– Dinner ~1,500

• Projected Demand of 5,000

HDC – Market Place


Homestyles Buffet


• Analyzing– Main Line– Express– Process Time

Process Time Analysis

• – Waiting Time– Queue Length– Optimal

Servers– Optimal Setup

Express M A I N

Queue Length

12:0012:03

12:0612:09

12:1212:15

12:1812:21

12:2412:27

12:3012:33

12:3612:39

12:4212:45

12:4812:51

12:5412:57

1:001:03

1:061:09

1:121:15

1:181:21

1:241:27

1:300

5

10

15

20

25

30

35

40

Line, 3-21Line, 3-26Line, 3-28

Leng

th o

f Que

ue (n

umbe

r of c

usto

mer

s):08 :18 :08 :18

:08 :18 :08 :18

Wait Time

12:0012:03

12:0612:09

12:1212:15

12:1812:21

12:2412:27

12:3012:33

12:3612:39

12:4212:45

12:4812:51

12:5412:57

1:001:03

1:061:09

1:121:15

1:181:21

1:241:27

1:300

2

4

6

8

10

12

Wait Time, 3-21Wait Time, 3-26Wait Time, 3-28

Aver

age

Wai

t Tim

e (m

inut

es)

Max: 9.55 min

Max: 4.29 min

Max: 4.02 min


express 2 3 4 50.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

21-Mar

Proc

ess T

ime

per C

usto

mer

(min

utes

)

2 3 40.00

0.05

0.10

0.15

0.20

0.25

26-Mar

Proc

ess T

ime

per C

usto

mer

(min

utes

)

1 2 3 4 50.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

28-Mar

Proc

ess T

ime

per C

usto

mer

(min

utes

)

Process Time by # of Servers

Servers:08 :18 :08 :18

12:0012:03

12:0612:09

12:1212:15

12:1812:21

12:2412:27

12:3012:33

12:3612:39

12:4212:45

12:4812:51

12:5412:57

1:001:03

1:061:09

1:121:15

1:181:21

1:241:27

1:300

1

2

3

4

5

6

Servers, 3-21

Servers, 3-26Servers, 3-28

Num

ber o

f Ser

vers


• Monetary– Assumption: Time valued @ $10/Hr– Average Total Wait Time Per Lunch Period: 120 minutes – Average Value lost per day (Lunch): $20.00– Value Lost per year for Lunch: ~$4,480

• Non-Monetary– Emotional pain of being in line and hungry

Current Issues


Use a max of 4 servers

Maintain 4 servers for rush, :08 to :18

Only pre-served food on express

Assembly-line serving during peak (specialization)

Recommendations

+ Maximizes flow rate and reduces wait time+ Pools demand in a single queue+ Increase retention of upperclassmen to meal plans


Dish Room


Process Flow Diagram

Pull dishes off traysConveyor

Load Dishwasher

Dishwasher CycleUnload Dishwasher

Bring Dishes out to Dining Room

Dolley


Dish Room Analysis

Process Flow Rate

Pull dishes off tray (2 People) 18 plates/min

Load Dishwasher (1 Person) 40 plates/min

Dishwasher 40 plates/min

Unload dishwasher (1 Person) 43 plates/min


• Average of 6 student workers during peak times

• 4 student workers during non peak times

• Workers paid average of $9.20/hour

• Peak time labor costs: $331.20/day

Labor Costs


Process Recommendations

• Allocate worker from clean dirty side– 18 dishes/min 30 dishes/min

• Implement silverware drop • Implement trash removal – Speeds up first process step

• Non peak time labor 4 workers 3 workers– Savings of $11,776/school year


Dishwasher Breakdowns


• $.75/person for paper products • Dinner average breakdown cost: $2,250/school

year– No maintenance fees due to contracts

• Dishwasher operation cost: $1,211.40/semester• Cost of an additional dishwasher purchase:

$80,000– Additional labor and operation costs

Breakdown Costs


Mojo Procurement

Inventory Analysis

Inventory Analysis


Inventory Order Process Cycle

Inventory Analysis

Projections from historical data

Orders placed online through

Sysco before 4 pm

Trucks deliver next day at 11:00

am


Inventory Arrives Dairy Room

Produce Room

Freezers

Dry-Storage Room

Inventory Movement


Cheese Please

Pizza Cheese!•1,344 portions of pizza consumed per day•Largest order at Mojo


Key Data

Demand

•13.5 cases/ week

Cost

• $41.45/case


Key Data

Purchasing Manager

• 1 hour/week• 4 orders/week• $19.25/hour $4.81/order

Stock Keeper• 1 hour/week• 4 orders/week• $16.30/hour $4.08/order

Setup Cost

• $21.11/order


Key Data

Opportunity Cost

• i=10% annually• $0.07/week

Spoilage Cost • 5-week spoilage period• 41.45/5=$8.29/week

Holding Cost

• $8.36/Week


• Haphazard ordering system• Ordering decisions are not clearly defined

Current Ordering System

Beginning Balance Amount Ordered Demand

Week 1 11 15

3/12 4

3/14 3

3/15 2

3/16 3

Week 2 8 12

3/19 5

3/20 3

3/21 6

3/23 6

Week 3 16 14

3/26 3

3/27 4

3/28 4

3/29 8

Total Cost

• $683.02


• Options

Optimal Method?

1 •Current Method (“eyeballing it”)

2 •Fixed-Order Quantity

3 •Fixed-Time Period


Economic Order Quantity

Q opt=9 cases/order


Fixed-Order Quantity

Fixed Order Quantity

• 9 Cases

Lead Time

• 1 day

Service Level

• 98%

Reorder Point

• 3 cases

Safety Stock

• 1 case

Total Cost

• $653.98


Safety Stock

• 5 cases

Fixed-Time Period

Review Period

• 1 week

Target Stock Level

• 20 cases

Total Cost

• $670.41


Cost Comparison

Current

• $683.02


• $653.98

Fixed-Time Period

• $670.41


• Short spoilage period high holding cost• Short lead time low safety stock

Intuitions


Savings:• 683-654=$29/weekCost:• Minimal

Cost & Benefit Analysis

$29/week 8 months $928/ school year


Recommendation

Use fix-order quantity for items with short lead time and short spoilage period

Other such items include milk, fruits, breads and eggs


• Homestyles Buffet:– Use 4 servers during peak period– Assembly line style serving

• Dish Room:– Implement silverware drop & trash removal– 3 workers during non-peak hours

• Inventory Management:– Fixed-order quantity for items with short lead time

& short spoilage periods

Summary


Questions?

Thank You!


APPENDIX I


• Average demand = 13.5 cases/ week• Cost per unit=$41.45/case• Setup cost=$ 21.11 /order– $16.30 for 1 hr of stockkeepers time, $19.25/4 for 15 mins of

purchasing manager's time • Holding cost=$8.36/week– We assume i=10% annuallyi=0.18% weekly – Spoilage cost: 41.45/5=$8.29/week.– Utility cost is fixed cost and therefore not considered.– Therefore, the total holding

cost=41.45*0.18%+8.29=$8.36/week.

APPENDIX II


• Labor cost savings in dish room – 8 hours of non-peak time/day– Average wage of $9.20/hr– 5 days/week– 4 weeks/month– 8 months/school year

• Savings = 8*$9.20*5*4*8 = $11,776/school year

APPENDIX III


• Savings:– $ 675.58-$645.61=$27/week– Saves $755/semester

• Costs:– Increase Monitoring of Inventory (+.5 Hrs/wk)– Extra Costs of $128/Semester

• Net Savings:– $755 - $128 = $627/ Semester

APPENDIX IV


Fixed-Time Period

Avg. pipeline inv. Avg. cycle inv. Avg. total inv.

(cases) (cases) (cases)1.93 6.75 13.25

Avg. weekly inv. cost

Avg. weekly setup cost

Total weekly cost

($/ wk) ($ / wk) ($/ wk)110.83 84.45 670.41


F-O Inventory Data


(cases) (cases) (cases)

1.929 4.5 7.5

Average Inventory Data




Avg. weekly setup cost Total weekly cost

($ / wk) ($ / wk) ($ / wk)

62.73 31.67 653.98

Average Inventory Costs


Current Method


(cases) (cases) (cases)

1.929 2 5


Avg. weekly setup cost Total weekly cost

($ / wk) ($ / wk) ($ / wk)52.19 71.25 683.02

Average Inventory Costs

Average Inventory Data

Operation Management for Michigan Dinning

Business