1. Discuss five strategic decisions of operations management used in Ikea based on the given article.
IKEA is a private global corporation that specializes in retailing home products including flat pack furniture, kitchen and bathroom items, and accessories using their own retail stores that have been established globally.
IKEA is the largest furniture retailer globally and is considered the pioneer of affordable flat pack design furniture. Formed in 1943 in Sweden by Ingvar Kamprad, the firm has grown to increase its global presence and dominance in the retail furniture industry. As of 2011, the company owned and operated 332 retail stores distributed in 38 nations. Its product portfolio comprises of more than 12,000 products.
With this global scale of operations and a large product portfolio, there is no doubt that operations management is vital in ensuring the success of the company. The company also relies significantly on a complex suppliers' network comprising of 1300 direct suppliers, 26 centers for distribution, and 10,000 sub suppliers.
Besides, the firm relies significantly on its supply chain, which entails a range of processes from raw materials acquisition to the delivery of their products to their customers. The key operational processes are managed and controlled at the firm's headquarters in Almhult, Sweden. Nevertheless, there are some operational problems that have been reported at the organization including customers' frustrations because of overcrowding in its retails stores and product availability and wait times.
Some of the measures that IKEA has implemented to address these operational problems include establishment of checkouts for customers with small items and increasing the number of employees to provide assistance at key points.
System and operations management based principles are utilized in the organizations for several processes such as the store arrangement and layout in order to facilitate a smooth flow of customers; stylish design of products in order to enable flat packing; effective job design in order for the staff to contribute to the store effectiveness and efficiency; placing the retail stores in the right places in order to develop an effective supply chain; guaranteeing on-shelf availability by using inventory management systems; and monitoring and measuring the quality of its products by use of effective quality control systems in order to ensure high quality service for its customers.
IKEA places a lot of emphasis on its customers' convenience, who are mostly young adults living in cities; as a result, most of IKEA stores are often located at the heart of a city to facilitate accessibility using public transport because the customer may not be owning a car and that IKEA focuses on environmental conservation.
In addition, the store location is often found in the middle of several apartments and condominium communities and surrounded by shopping centers. In addition, each store takes a sizable land with the packing space designed to accommodate several moving tracks.
IKEA stores combine both a warehouse and a showroom. In addition, the store is designed in a manner that it facilitates smooth flow from the parking, walking in the store, placing an order, picking the goods, and lastly making payments. In addition, a number of facilities have been integrated within IKEA stores in order to persuade consumers to stay longer; for instance, there is a children's play area that is supervised, a parent and baby room, small cinemas, and cafes and restaurants.
2. Acoffee shop owner wants to make a decision on purchasing a new espresso machine and he is having three options for the espresso machine. The fixed costs and variable costs are given below (Note: Write the formula and units)
|
Machines
|
Fixed cost
|
Variable cost
|
|
Machine A
|
$ 800
|
$13
|
|
Machine B
|
$1200
|
$9
|
|
Machine C
|
$2000
|
$5
|
a. Over what range of production is each machine most economical
b. Which machine should the owner choose for production of 100 cups of coffee and why? What would be the profit for selling this quantity if the selling price is $15 per cup?
3. A jewelry Company wants to establish an assembly line for producing motorcycles. There is a demand for 30 units per day with 600 minutes of work per day. The tasks, task times, and immediate predecessors for the tasks as follows:
|
Task
|
Time (min)
|
Immediate predecessor
|
|
A
|
15
|
-
|
|
B
|
13
|
A
|
|
C
|
5
|
A
|
|
D
|
7
|
B, C
|
|
E
|
20
|
D
|
(Note: Write the formula and units)
a. Draw a precedence diagram of this operation.
b. Assign tasks to workstations
c. What is the cycle time?
d. What is the theoretical minimum number of the workstations?
e. What is the efficiency?
4. Tala Company wants to find some central location in which to build a new warehouse. The table given provides information about the locations of each retail store in the area as well as the quantity of goods to be shipped to each location. What coordinates represents a good location for the warehouse.
|
Locations
|
Demand
|
X-Coordinates
|
Y-Coordinates
|
|
A
|
22,000
|
90
|
20
|
|
B
|
3,000
|
80
|
50
|
|
C
|
6,000
|
60
|
70
|
|
D
|
8,000
|
100
|
50
|
|
E
|
10,000
|
80
|
70
|
|
F
|
18,000
|
60
|
40
|