mgt320 mo'men project

Modern Sciences and Arts University MGT 320 MO ‘MEN Project Spring 2014

1st stage (Forecasting):a) Naïve approach:

Ft-1 = At

F2014 = 143

b) Simple moving average: Average forecasted value of 9 years = MAN = ∑ A

n

¿ 143+129+100+133+124+98+150+149+1239

=127.67≈128 bcx

c) Weighted moving average:(0.10*143) + (0.08*129) + (0.26*100) + (0.25*133) + (0.20*124) + (0.11*98) = 119.45

d) Exponential smoothing:Because Mr. Mohamed Essam finds that it is not too risky although risk is exist because “Egyptians will not stop eating out home and the majority of Egyptians outing are to eat outside their homes”. So we will choose “0.3” as it projects the uncertain situation

Year Sales in numbers of meals

(000)

F Calculations

2000 85 - -2001 92 85 Naïve approach2002 113 87.1 85+ 0.3(92 – 85) = 87.12003 109 94.87 87.1 + 0.3(113 – 87.1) =

94.872004 111 99.11 94.87 + 0.3(109 – 94.87)

= 99.11

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2005 123 102.67

99.11 + 0.3(111– 99.11) = 102.67

2006 149 108.77

102.67 + 0.3(123 –102.67) = 108.77

2007 150 120.8 108.77 + 0.3(149 – 108.77) = 120.8

2008 98 129.6 120.8+ 0.3(150 – 120.8) = 129.6

2009 124 120.12

129.6+ 0.3(98 – 129.6) = 120.12

2010 133 121.3 120.12+ 0.3(124 – 120.12) = 121.3

2011 100 124.8 121.3+ 0.3(133 – 121.3) = 124.8

2012 129 117.36

124.8+ 0.3(100 – 124.8) = 117.36

2013 143 120.8 117.36+ 0.3(129 – 117.36) = 120.8

2014 - 127.46

120.8+ 0.3(143 – 120.8) = 127.46

e) MAD and MSE:

periods

sales

F e (a-f)

|e| e2

2000 85 - - - -2001 92 85 7 7 492002 113 87.1 25.9 25.9 670.82003 109 94.87 14.1 14.1 198.8

2


2004 111 99.11 11.9 11.9 141.62005 123 102.6

720.3 20.3 412.1

2006 149 108.77

40.2 40.2 1616.04

2007 150 120.8 29.2 29.2 852.642008 98 129.6 -31.6 -31.6 998.562009 124 120.1

23.88 3.88 15.05

2010 133 121.3 11.7 11.7 136.92011 100 124.8 -24.8 -24.8 615.042012 129 117.3

611.6

411.64 135.5

2013 143 120.8 22.2 22.2 492.82014 - 127.4

6- ∑|e|

=254.42∑ e2

=6214.8

MAD=∑|e|n

=254.4213

=19.57

MSE=∑ e2

n−1=6214.813−1

=517.9

f) Exponential smoothing because it is considering errors most accurate

g)Yea

XAdvertis

YSales XY X2 Y2

3


r ing appeara

nce times on

T.V.

in number of meals (000)

(000)

2000 51 85 4335 2601 72252001 63 92 5796 3969 84642002 44 113 4972 1936 127692003 23 109 2507 529 118812004 57 111 6327 3249 123212005 39 123 4797 1521 151292006 66 149 9834 4356 222012007 53 150 7950 2809 225002008 23 98 2254 529 96042009 49 124 6076 2401 153762010 81 133 10773 6561 176892011 35 100 3500 1225 100002012 62 129 7998 3844 166412013 66 143 9438 4356 20449

∑ x=712 ∑ y=1659∑ xy=86557∑ x2=39886∑ y2=202249

b=n∑ xy−∑ x∑ y

n¿¿

a=∑ y−b∑ xn

=(1659 )−0.59(712)

14=88.5

r=n∑ xy−∑ x∑ y

√n∑ x2−(∑ x)2∗√n∑ y

2−¿¿¿¿

4


YearX

Availability in

universities area

YSales in number

of meals (000)

XYIn (000)

X2 Y2

2000 17 85 1445 289 72252001 21 92 1932 441 84642002 24 113 2712 576 127692003 25 109 2725 625 118812004 25 111 2775 624 123212005 27 123 3321 729 151292006 29 149 4321 841 222012007 29 150 4350 841 225002008 31 98 3038 961 96042009 32 124 3968 1024 153762010 33 133 4389 1089 176892011 33 100 3300 1089 10002012 35 129 4515 1225 166412013 35 143 5005 1225 20449

∑ x=396 ∑ y=1659 ∑ xy=47796 ∑ x2=11580∑ y2=202249

b=n∑ xy−∑ x∑ y

n¿¿

a=∑ y−b∑ xn

=(1659 )−2.29(396)

14=53.72

r=n∑ xy−∑ x∑ y

√n∑ x2−(∑ x)2∗√n∑ y

2−¿¿¿¿

5


The relationship between sales and availability in universities is stronger than the relationship between sales and advertising appearance times on TV.

h) 1) The reason behind sales declining before the year 2006:Before 2006 Mo’men it is not famous enough and there are heavy competition like MAC or KFC more known than Mo’men and he didn`t offer any variety. Also Mo’men is Egyptians restaurants and people prefer more the international restaurants so because of that the sales are declining before 2006.2) The reason behind sales declining for the year2008:The world financial crisis that carried up in the US and went outside to affect the whole world is expected to have a major impact on the Egyptian economy. Definitely, the Egyptian stock market was the first to suffer due to the fall in foreign stock markets or in any place in the Egyptian market. And also in 2008 there are a bad reputation to Mo’men because there are one person have a poisoning from Mo’men sandwich.

3) The reason behind sales declining For year 2011:.The Revaluation in Egypt is has caused a lot of damage to Egypt's economy and people's ability to supply and

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demand, causing a lot of damages to all the Egyptian market in restaurants and shops.

2 nd Stage (Capacity): Actual output = 2000,000a) Designed capacity = 1000 u\h *(12 *365) = 4,380,000b) Effective capacity = 1000*(329*8) =2,632,000c) Efficiency ratio = actual output /designed capacity*100 = 2000, 000/4,380,000 * 100 =46%d) Utilization ratio =actual output /effective capacity*100 = 2000, 000/2632000= 0.759*100 =76%e) The indicator will use the effective capacity because the effective capacity is more accurate than designed capacity.f) Effective capacity= 2,632,000 Exponential Smoothing= 127.46

Processes Made by machine

Ty1 Ty2 Ty3

Cans production 2400 1200 1200Pouring coke liquids 5880.4 4410.3 16171Finishing cans 16507.

513206 13206

Total 247879 18816.3

30.577 297272

Design capacity =(8*365)= 2920

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Estimated number of machine = Total processing time /design Capacity =

Ty1= 297272/247879 = 1.199 =1.2Ty2= 297272/8816= 15.799=15.8Ty3= 297272/30577= 9.7

Ty1= 1.2*885,000=1062000 Ty2= 15.8*1000, 000=15800000 Ty3= 9.7*850000= 8245000

So, it can produce Ty3 or Ty1 but can't produce Ty because it's cost more than budget.

3 rd stage (productivity)

Outputs: 2,632,000Inputs: - -labor cost=No. of workers *No. of works hour * Wages =128*4*4=2048 LE -Material cost=4000 LE -overhead cost= 20,000 LE + 0.1*(Labor Cost) =20,000 LE +0.1(2048) =20204.8(a) Labor productivity =Outputs\labor cost =2,632,000\2048=1285.15

(b)Machines productivity=2,632,000\4000*40=16.45

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(c)Multi-factor productivity =outputs\ (Labor cost +material cost +overhead cost+ machines productivity) =2,632,000\(2048+4000+20204.8+16.45)=100.20 units\LE

So, each 1 LE spent as investment in total inputs can generate 100.20 of outputs.

4th Stage (Product & Services design):

A. The first package design is good enough and very clear and it is very good an idea that 2 sandwich and frieze and Pepsi with only 25 Egyptian pound it is very cheap. And the design has all the details about the meal considering components of the meal, the price, and the restaurant number for delivery.

B. Mo’men is the first restaurant to prepare sandwich in centimeters he is the first mover and it could be an advantage for the restaurant.

C. The logo is an important branding element, so it should be evaluated with the same carefulness as the brand name itself. Mo'men Logo is very appropriate for a fast food restaurant; the colors and font type are attractive and memorable. Mo'men's logo is unique, simple and appropriate as it conveying a sense of style, the spirit of

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the business, and the type of customers it wants to attract.

5th Stage (Location Analysis):1)Center of gravity location method:

Area / Zone “X” “Y” Annual Demand

(000)D1: Haram 21 67 400D2: Giza 25 34 300D3: Dokki & Mohandeseen

33 61 350

D4: Zamalek 52 22 150D5: Nasr City 87 88 600D6: Heliopolis 79 81 400D7: Shoubra 41 93 400Total 338 446 2600

Calculations: If the quantity is constant :

X=∑ (x)n

=3387

=48 .3

Y=∑ ( y)n

=4467

=63 .7

If the quantity change:

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X=∑ (X∗Q)

∑Q=

(21∗400 )+ (25∗300 )+(33∗350 )+(52∗150 )+ (87∗600 )+(79∗400 )+(41∗400)2600

=52

Y=∑ (Y∗Q)

∑ Q=

(67∗400 )+(34∗300 )+(61∗350 )+(22∗150 )+ (88∗600 )+(81∗400 )+(93∗400)2600

=71

So ,The coordinates is (52, 71)

D1 = (21-52) + (67-71) = 35D2 = (25-52) + (34-71) = 64D3 = (33-52) + (61-71) = 29D4 = (25-52) + (22-71) = 49D5 = (87-52) + (88-71) = 52D6 = (79-52) + (81-71) = 37D7 = (41-52) + (93-71) = 11 (best distance as it is the nearest destination to the Centre of gravity)

Depending on center of gravity, the best location for the warehouse is Shoubra

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10 20 30 40 50 60 70 80 90 1000

10

20

30

40

50

60

70

80

90

100

D1(33,61)

D2(25,34)

D4(52,22)

D5(87,88)

D6(79,81)

D7(41,93)

(52,71)

D3(33,61)

2)Cost – profit volume analysis:

Location Fixed cost Variable costA: October 300,000 13B: El Sheikh Zayed

120,000 32

C: El Tagamo’a 170,000 24D: El Shrouq 200,000 35

Step 1: To get 1st point for each alternative of TC, when Q = 0

TC = FC + (Q*VC/U)

T.C October= 300,000+ (0*13) = 300,000 LE (0, 300000)T.C El Sheikh Zayed= 120,000+ (0*32) = 120,000 LE (0, 120000)

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T.C El Tagamo’= 170,000+ (0*24) = 170,000 LE (0, 170000)

T.C El Shorouq= 200,000+ (0*35) = 200,000 LE (0, 200000)

Step 2 : Graph

Step 3: By assuming that:

T.C October= T.C El sheikh Zayed

300000+ (13q) =120000+ (32q)300000-120000=32q-13q19q=180000q=9473 T.C A= 300000+ (13*9473) =423149 ∴A and B (9473, 423149)

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T.C El sheikh=T.C El Tagamo’

120000+32q=170000+24q32q-24q=170000-1200008q=50000q=6250 T.C B= 120000+ (32*6250) =320000 ∴ B and C (6250, 320000)

T.C October=T.C EL Shrouq

300000+13q=200000+35q35q – 13q = 300000-200000100000=22qq=4545 T.C A= 300000+ (4545*13) =359085 ∴ A and D (4545, 359085)

Step 4: Ranges of output:

From 0 to 4,545: alternative “B” is optimalFrom 4,545 to 6,250: alternative “B” is optimalFrom 6,250 to 9,473: alternative “C” is optimalFrom 9473 to 11818: alternative “C” is optimalMore than 11,818: alternative “A” is optimal

3)Factor rating:

All factors are equally weighted so 1/7 = 0.14

Weig 10th of ElTaga ElShoro 10th of El El 14


ht Ramadan

moa uq Ramadan

Tagamoa

Shrouq

0.14 90 50 50 0.14*90 = 12.6

0.14*50 = 7

0.14*50 = 7

0.14 70 60 70 0.14*70 = 9.8

0.14*60 = 8.4

0.14*70 = 9.8

0.14 30 80 70 0.14*30 = 4.2

0.14*80 = 11.2

0.14*70 = 9.8

0.14 50 60 50 0.14*50 = 7

0.14*60 = 8.4

0.14*50 = 7

0.14 40 70 80 0.14*40 = 5.6

0.14*70 = 9.8

0.14*80 = 11.2

0.14 50 50 40 0.14*50 = 7

0.14*50 = 7

0.14*40 = 5.6

0.14 60 70 80 0.14*60 = 8.4

0.14*70 = 9.8

0.14*80 = 11.2

54.6 61.6 61.6

Using factor rating analysis, having equal weights, we found that the best location is El Tagamoa and El Shrouq, because both have the highest score which is 61.6. So the manger have two alternative to choose the best location.

6th Stage (Inventory Management): Given:

The average working days per year is 360

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D =127.46*1000=127,460 (the exponential smoothing forecast for the year 2014) “as one Pepsi for each meal is a must”S = 5,000 L.E.H= 0.2 L.E.

Required: 1. You have to compute the economic ordered quantity

of Pepsi cans?

Q0 (EOQ )=√ 2DSH =√ 2 (127,460∗5,000 )0.2

=79,831L . E

2. Determine the ROP in units of Coke cans.

ROP= d × LT d= Dworkingdays

= 127 ,460360×7days=2 ,478can

3. If you know that the MO ‘men was ordering monthly an order of 388,000 cans, compute the cost savings that the company will realize if it implements the new optimal inventory decisions.

TC=Q2H+D

QS , When Q= 388,000

cans

=( 388,0002×0.2)+(127 ,460388,000

×5,000)= 40,442.5 ≈ 40,443

L.E

TC=Q2H+D

QS , When Q= Q0=

79 ,831 cans

16


=( 79 ,8312×0.2)+( 127 ,46079 ,831

×5,000)= 15,966 L.E

The cost saving from using this new decision = 40,443-15,966 = 24,477 L.E

4. Compute the cycle time using EOQ & using original order size.Cycle time=Q

D×Operating day

By using EOQ: 79,831127,460∗360=225 .4 ≈225

By using original order size: 388 ,000127,460

∗360=1095.8≈1096

5. Compute the number of orders using both EOQ &

using original order size.

Number of order=DQ

By using EOQ ¿ 127,46079,831=1.596Order

By using original order size: ¿ 127,460388,000=0.328Order

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mgt320 mo'men project

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