Operations managment

OPERATIONS MANAGEMENT I
Solutions to Homework #1
Solution #1
There is no unique set of correct answers for this question. A possible set of answers is
the following:
a) Fresh Directs’ business strategy is to provide low-cost, quality & fresh products in
customizable portions, delivered direct to its customers homes. In order to achieve
their strategy, Fresh Direct has implemented amass customization operational
philosophy, relying on an extremely efficient inventory management practice.
b) Operational capabilities
• Processing Center – This 30,000 square foot location in Long Island City is one of
FreshDirect’s most important capabilities. The center is equipped with various
different areas that are temperature controlled to maintain freshness. It also
includes spacefor meat/poultry/seafood processing to allow for the fulfillment of
custom orders. Lastly, the location is less than a quarter-mile from the densely
populated midtown Manhattan and within a 10 mile radius of about 4 million
people.
• Computer Systems – The customized SAP manufacturing application puts each
order in an Oracle database that produces a production and packing schedule for
everydepartment.
• Direct Sourcing – FreshDirect uses a next day delivery model to allow for fresh
preparation of the products that are sourced directly from suppliers. Using the
seafood example, we see how they plan and place orders based upon customer
demand. They then prep and pack the fish in the seafood processing area for
delivery later that day. This short lead time and reduced inventorylevel allow
them to offer fresh food at low prices.
c) Fresh Direct achieves cost-effective mass customization by focusing on 2 key aspects:
1- Information system planning & technology: Fresh Direct has invested in a complex
SAP manufacturing application that marries every customer order in an Oracle
database to a production schedule for every department. This system eliminates
waste byaccurately matching supply and demand for its goods.
2- Modular process design: The information accumulated by the proprietary
information systems is then filtered into a batch processing manufacturing line that
allows end users to customize their order to their exact specifications. For
example, meats can be cut to desired thickness or marinated in a particular way.
3- Postponement: Freshproducts are cut and prepared in exact quantities as ordered
by the customers.
Solution #2
There is no unique set of correct answers for this question. A possible set of answers is
the following:
a) Airlines:
- By offering their customers a frequent flyer program that they can use towards
future flights. The customers “own” their miles. This tangible program builds
customer loyalty and returncustomers.
- By showing in the cabin main screen (or individual screens) the flight map that
shows the progress of the aircraft towards destination.
b) Hotel:
- Hotels offer customer loyalty and rewards programs, similar to airline’s that build
brand loyalty and offer a tangible benefit to its customers.
- Adding little touches to a customer’s room for example, mints on pillows, maid
service,turning down the bed and a paper wrapper on a newly cleaned toilet seat.
These additions leave the customer feeling good about their recent stay and leave
them with a memory for the next time they are choosing a hotel.
c) Retail:
- Some apparel store departments attach a quality check stamp to persuade
customers of the care that has been put on the merchandise displayed.
- It can alsomaterialize its customer services by providing facilities that allow a
customer to shop more freely. These offerings can range from childcare services,
such as the one employed by IKEA, and TV-equipped waiting areas for husbands,
like those at some department stores.
d) Internet Provider:
- An internet provider can materialize high-speed delivery to its subscribers by
providing a dashboard...