Operation Management Report

DIPLOMA IN BUSINESS MANAGEMENT (AB101)
OPERATION MANAGEMENT (PMG 3043)

SEMESTER 5 (0715)
SECTION 24
GROUP MEMBERS: AMY EZREEN BINTI SAZALEE (PTM 130715391)
MOHD ZAKI BIN ZAINAL ABIDDIN (PTM 130715741)
FATIN NAJIHA BINTI AZMAN (PTM 130715380)
MOHD FARIDZUAN BIN MOHD SUHAIMI (PTM 130715349)
HASBUL ASYRAF BIN MOHD YUSOF (PTM 130715740)
LECTURERS NAME : SIR SHARMIN BABA

OUR OBJECTIVES
Be transparent and open for others to view, to participate, and to learn from discussion
Foster lifelong learning for myself and others
Permit both creativity and curiosity
Be used to share ideas, to play, to have fun, and to continuously explore
OUR GOALS
Develop real conceptual understanding.

Provide insight into how businessmen know what they know.
Develop analytical and problem solving skills
Develop greater awareness of technical terms
Provide a basis for being interested in businesses throughout their lives
IMPORTANCES OF LEARNING THIS CHAPTER
Gain an appreciation of strategic importance of operations and supply chain

management in a global business environment.
Understand how operations relates to other business functions.
Develop a working knowledge of concepts and methods related to designing and
managing operations and supply chains.
Develop a skill set for quality and process improvement.
BACKGROUND COMPANY
Type Public
Traded as NYSE: MCD

Dow Jones Industrial Average Component
S&P 500 Component
Industry Restaurants
Founded May 15, 1940; 75 years ago in San Bernardino, California

( as McDonalss )
Founders McDonalss Richard and Maurice McDonald

McDonalds Corporation Ray Kroc
Headquarters Oak Brook, Illinois, United States
Number of locations 36,000+ worldwide
Area served Worldwide
Key people Andrew J. McKenna ( Chairman )

Steve Easterbrook ( President and CEO )
Products Hamburgers, chicken, french fries, soft drinks, coffee,

milkshakes, salads, desserts
Revenue US$ 28.1057 billion (2014)

US$ 27.567 billion (2013)
Operating income US$ 8.7643 billion (2014)

US$ 8.6046 billion (2013)
Net income US$ 5.5859 billion (2014)

US$ 5.4648 billion (2013)
Total assets US$ 36.6263 billion (2014)

US$ 35.3865 billion (2013)
Total equity US$ 16.0097 billion (2014)

US$ 15.2936 billion (2012)
Number of employees 420,000 (2014)
Slogan Im Lovin It
McDonalds is the worlds largest chain of hamburger fast food restaurants, serving
around 68 million customers daily in 119 countries across 35 thousand outlets. Founded in
the United States in 1940, the company began as a barbeque restaurant operated by Richard
and Maurice McDonald. In 1948, they organized their business as a hamburger stand using
production line principles. Businenessman Ray Kroc joined the company as franchise agent
in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its
worldwide growth.
A McDonalds restaurant is operated by either a franchisee, an affiliate, or the

corporation itself. The McDonalds Corporation revenues come the rent, royalties, and fees
paid by the franchisees, as well as sales in company-operated restaurants. In 2012, the
company had annual revenues of $27.5 billion and profits of $5.5 billion. According to a 2012
BBC report, McDonalds is the worlds 2nd largest private employer, behinnd Walmart with 1.1
million employees, 1.5 million of whom work for franchises.
McDonalds primarily sells hamburgers, cheeseburgers, chicken, french fries,

breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer
tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, fruit,
and seasoned fries.
Brand Mission
To be our customers favourite place.
Brand Promise
To provide Simple Easy Enjoyment to every customer at every visit.
Values
McDonalds mission is to be our customers favourite place and way to eat with inspired people
who delight each customer with unmatched quality, service, cleanliness and value every time.
McDonalds corporate logo used from November 18, 1968 to 2006. It still exists at some
restaurants.
The oldest operating McDonalds restaurant was the 4th one to build, opening in 1953. It is
located at 10207 Lakewood Blvd. at Florence Ave. in Downey, California.
The latest looks of Mcdonalds

PRODUCT LAYOUT (McDonalds)
If all the processing equipment and machines are arranged according to the sequence of
operations of the product, the layout is called product type of layout. In this type of layout,
there are various types of products are produced in an operating area. These products must
be standardized and produced in large quantities in order to justify the product layout.
The raw material is supplied at one end of the line and goes from one operation to the next
quite rapidly with a minimum work in process, storage and material handling.
To a large extent the objectives of McDonalds layout will depend on the strategic objectives
of the operation, but there are some general objectives that are relevant to all operations:
1. Inherent safety
- All processes which might constitute a danger to either staff or customers should not
be accessible to the unauthorised.
2. Length of flow
-The flow of materials, information or customers should be appropriate for the

operation. This usually means minimising the distance travelled by transformed
resources.
3. Clarity of flow
- All flow of materials and customers should be well signposted, clear and evident to
customers and staff alike.
4. Staff conditions
- Staff should be located away from noisy or unpleasant parts of the operation.
5. Management coordination
- Supervision and communication should be assisted by the location of staff and

communication devices.
6. Accessibility
- All machines and facilities should be accessible for proper cleaning and maintenance.
7. Use of space
- All layouts should use space appropriately which this usually means minimizing the
space used.
8. Long term flexibility
- Layouts need to be changed periodically. A good layout will have been devised with
the possible future needs of the operation in mind.
Advantages offered by Product Layout to McDonalds :
1. Straight-line flow pattern or adaptation.

2. Backtracking kept to a minimum.
3. Production time predictable.
4. Little interstage storage of materials.
5. Open plant floors so everyone can see what is happening.
6. Bottleneck operations under control.
7. Workstations close together.
8. Orderly handling and storage of materials.
9. No unnecessary rehandling of materials.
10. Easily adjustable to changing conditions.
Disadvantages of Product Layout to McDonalds :
1. No flexibility which is generally required is obtained in this layout.

2. The manufacturing cost increases with a fall in volume of production.
3. If 1 or 2 lines are running light, there is a considerable machine idleness.
4. A single machine break down may shut down the whole production line.
5. Specialized and strict supervision is essential.
CALCULATIONS
Task Time (sec) Predecessor

A Order 90 -
B Payment 30 A
C Wrapping 10 B
D Buns 15 C
E Sauce 10 D
F Vegetables 10 E
G Chicken Slices 25 F
H Scoop Fries 30 B
I Salted 30 H
J Cups 10 B
K Ice Cubes 15 J
L Beverage 30 K
M Tray 10 G, I, L
N Serve 5 M
Cycle Time = 320 seconds
McDonalds Precedence Graph
10 15 10 10 25
C D E F G
90 30 30 30 10 5
START A B H I M N
9
10 15 30
J K L
Cycle Time : Available time per day
Required Output
: ( 8 x 60 ) 60
320 secs
: 90 seconds
Min. no. of workstation : PTT

CT
: 320
90
: 3.5 ~ 4 workstations
McDonalds Production Line
A BHI CDEFG KLN

MJ
90 90 90 50 = 20 secs
Idle : 0 0 0 40 = 40 secs
Efficiency : Total task time

X 100
n x CT
: 320
X 100
4 x 90
: 88.88 %
Idleness : 100 % - 88.88 %
: 11.11 %
CONCLUSION
Facility layout is where the rubber meets the road in the design and operation of a
production system. A good factory or office layout can provide real competitive advantage by
facilitating material and information flow processes. It can also enhance employees work life.
A good service layout can be an effective stage for playing out the service encounter
REFERENCES
1. http://www.aboutmcdonalds.com/mcd.html
2. http://www.inc.com/encyclopedia/facility-layout-and-design.html

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DIPLOMA IN BUSINESS MANAGEMENT (AB101)

OPERATION MANAGEMENT (PMG 3043)

GROUP MEMBERS: AMY EZREEN BINTI SAZALEE (PTM 130715391)

MOHD ZAKI BIN ZAINAL ABIDDIN (PTM 130715741)

FATIN NAJIHA BINTI AZMAN (PTM 130715380)

MOHD FARIDZUAN BIN MOHD SUHAIMI (PTM 130715349)

HASBUL ASYRAF BIN MOHD YUSOF (PTM 130715740)

LECTURERS NAME : SIR SHARMIN BABA

Develop real conceptual understanding.

IMPORTANCES OF LEARNING THIS CHAPTER

Gain an appreciation of strategic importance of operations and supply chain

Traded as NYSE: MCD

Founded May 15, 1940; 75 years ago in San Bernardino, California

Founders McDonalss Richard and Maurice McDonald

Headquarters Oak Brook, Illinois, United States

Number of locations 36,000+ worldwide

Area served Worldwide

Key people Andrew J. McKenna ( Chairman )

Products Hamburgers, chicken, french fries, soft drinks, coffee,

Revenue US$ 28.1057 billion (2014)

Operating income US$ 8.7643 billion (2014)

Net income US$ 5.5859 billion (2014)

Total assets US$ 36.6263 billion (2014)

Total equity US$ 16.0097 billion (2014)

A McDonalds restaurant is operated by either a franchisee, an affiliate, or the

McDonalds primarily sells hamburgers, cheeseburgers, chicken, french fries,

To be our customers favourite place.

To provide Simple Easy Enjoyment to every customer at every visit.

The latest looks of Mcdonalds

-The flow of materials, information or customers should be appropriate for the

- Supervision and communication should be assisted by the location of staff and

8. Long term flexibility

Advantages offered by Product Layout to McDonalds :

1. Straight-line flow pattern or adaptation.

Disadvantages of Product Layout to McDonalds :

1. No flexibility which is generally required is obtained in this layout.

Task Time (sec) Predecessor

Cycle Time = 320 seconds

McDonalds Precedence Graph

Min. no. of workstation : PTT

A BHI CDEFG KLN

Efficiency : Total task time

Idleness : 100 % - 88.88 %

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