Operations Management - Location Decision

Internet Case Study for Chapter 8: Location Strategies Consolidated Bottling: A

Consolidated Bottling Incorporated bottles spring water. Consolidated began its operations with one small plant in Baltimore and still maintains its corporate headquarters in that city. But over the years, the company has grown, and it now has bottling operations in or near twelve cities in the United States.

Plant	Monthly Capacity (in thousands of cases)
Albuquerque	250
Baltimore	270
Boston	143
Chicago	182
Dallas	265
Denver	183
Detroit	121
Houston	265
Kansas City	240
Los Angeles	157
Portland	121
St. Paul	105

Consolidated is about to embark on a large total quality management program. A new functional group is being created to bring new quality techniques to the operations. The group will travel to each plant. Because the new quality team will be spending so much time on the road, Consolidated wants to locate it central to the company's facilities rather than in Baltimore. Consolidated has developed a table of the coordinates of each of its facilities (the twelve bottling operations and its other operations).

City	Latitude	Longitude
Albuquerque	35°	107°
Baltimore	39°	77°
Boston	42°	71°
Chicago	42°	88°
Columbus	40°	83°
Dallas	33°	97°
Denver	40°	105°
Detroit	42°	83°
Houston	30°	95°
Indianapolis	39°	86°
Kansas City	39°	95°
Los Angeles	34°	119°
Miami	26°	81°
Montreal	46°	74°
Portland	45°	123°
Raleigh	36°	79°
St. Paul	45°	94°
San Francisco	38°	122°

DISCUSSION QUESTION

1. Examine the information and present a set of plans for centrally locating the total quality management team. Suppose that Consolidated wishes to place its team in a city in which the company has a plant. Which city is best? Suppose that Consolidated does not restrict itself to a city in which it currently operates. Where in the United States should the team be located?

Operations Management - Capacity Planning

Internet Case Study for Supplement 7: Capacity Planning Southwestern University’s Food Service

Southwestern University (SWU), located 30 miles southwest of the Dallas/Fort Worth metroplex, has witnessed tremendous growth in its football program (see Southwestern University: A, in Chapter 4). With that growth, fueled by the hiring of legendary coach Bo Pitterno, has come more fame, the need for a bigger stadium, and more complaints about seating, parking, long lines, and concession stand prices (see Southwestern University: C, in Chapter 6). Southwestern University’s president, Dr. Joel Wisner, was not only concerned about the cost of expanding the existing stadium versus building a new stadium, but also about the ancillary activities. He wants to be sure that these various support activities generate revenue adequate to pay for themselves. Consequently, he wants the parking lots, game programs, and food service to all be handled as profit centers. At a recent meeting discussing the new stadium, Wisner told the stadium manager, Hank Maddux, to develop a break-even chart and related data for each of the centers. He instructed Maddux to have the food service area break-even report ready for the next meeting. After discussion with other facility managers and his subordinates, Maddux developed the table below. This table shows the expected percent of revenue by item, the suggested selling prices, and his estimate of variable costs.

Item	Selling Price/Unit	Variable Cost/Unit	Percent Revenue
Soft drink	$1.50	$ .75	25%
Coffee	2.00	.50	25%
Hot dogs	2.00	.80	20%
Hamburgers	2.50	1.00	20%
Misc. snacks	1.00	.40	10%

Maddux’s fixed costs are interesting. He estimated that the prorated portion of the stadium cost would be: salaries for food services at $100,000 ($20,000 for each of the five home games); 2,400 square feet of stadium space at $2 per square foot per game; and six people in each of the six booths for 5 hours at $7 an hour.

Maddux wants to be sure that he has a number of things for President Wisner: (1) break-even point in dollars for all food sales; (2) realistic sales estimates (for instance, he wants to know how many dollars each attendee is spending on food at his projected break-even if attendance grows to 70,000); (3) what sales per attendee would be if attendance remained about 27,000; and (4) what his unit sales would be at break-even, that is, what are his sales of soft drinks, coffee, hot dogs, and hamburgers. He felt this latter information would be helpful to understand how realistic the assumptions of his model are. He also wanted to be prepared for any questions that Dr. Wisner and others might bring up at the next meeting.

DISCUSSION QUESTION

Prepare the report with the items noted so it is ready for Dr. Wisner at the next meeting.