Production and Operations Management - MIDORI Match Jam
1. Production and Operations Management (1203253)
Project name’s: MIDORI Match Jam
Student Name
Phetphailin Yammaneechai 5731210159
Manlika Udta 5731210180
Wisaruta Chaolaka 5731210201
Wissuta Teeragerayut 5731210202
Lecturer’s Name: Aj. Anvar Variskhanov
Semester: 2/2017
Link: https://www.youtube.com/watch?v=QArOEbGXg-U&t=142s
2.
3. Table of contents
Title page
Type of business selection……………………………………………………………....1
QFD and House of quality……………………………………………………...……….2
Designing product models…….……………………………………………………… ...5
Project management
Activity timeline………………………………………………………………...……… 11
- AON network (Activity on node network)……………………………………...12
- the critical path……………………………………...…………………………...13
- Project crashing………………………………………………………………….15
Demand Forecasting
- Moving average forecast ( 3 Periods moving average )………………… ……19
- Weighted moving average…………………………………………………… ….20
- Exponential smoothing……...……………………………………………… …...21
- Trend projections…………………………………………………………… …...22
- MAD calculation (Mean Absolute Deviation)…………………………………...23
- Selection of demand forecasting method…………………………… ………...24
Complex decision tree……………………………………………………………… …...26
4. Production and Operations Management
Project: Matcha Jam
Which one do you shoes between production and service, why you chose it?
We choose the business which mainly involve with the production because it can
show operation relationships or processes clearly than service includes management control
is easier to conduct than services. Moreover, we would like to focus on precise processes
setting more than related the employees serving the services to customers. Hence our group
decided to choose to produce green tea jam according to some Thai people include our group
member love to eat jam with bread in the morning. In addition, Green tea has loaded with
antioxidants and nutrients that have pretty good benefits to your body and good for healthy.
Besides of ordering good quality of green tea jam from japan which is really expensive or
come up with the so common jam jars that sale in the supermarket. Includes, a nosy problem
when we want to smoothly spread the jam on the bread in the busy morning. So, we would be
the first one who produces the good quality of green tea jam in Thailand with the special
packaging for customer convenience.
However, when we are thinking about Chiang Rai or our second home, the first things
that come to our mind is absolutely be a green tea field such as Choui Fong Tea, Mae Chan
Tea House & Plantation ,or Doi Mae Salong where famous place that produce the largest
dried green tea in the northern part of Thailand. So in Chiang Rai, they grow green tea in
Camellia sinensis var. Assamica and Camellia sinensis var. Sinensis. Its green tea has high
quality and almost green tea in Chiang Rai are organic green tea.
Then our group see the opportunity to produce green tea jam by design our product in
the way of high quality, low fat, easy to use packaging, and reasonable price (strategies
combination). Furthermore, we have opportunities to get fresh main ingredient, abundant
green tea availability. Includes saving times and cost in transport green tea because we have
good supplier in Chiang Rai. And also can enhance our business by partnership with Chui-
Fong and Singha-Park suppliers.
5. Design product or service by Using QFD and House of quality in detail
In part of designing product our group use QFD (Quality Function Deployment) to
determining customer requirements and identify how products will satisfy customer want
moreover, it's a process for evaluate competing product by show how well do competing
products meet customer want? (Jay Heizer, 2006).
(Figure: QFD and House of quality)
6. QFD of Green Tea Jam has shown about:
Customer requirement
We are brainstorming to identify customer want in green tea jam and also their general
requirement. In the general, we divided the main customer requirement factors in 5 parts
which are reasonably priced, healthy, attractive packaging, good taste and fresh ingredient
selection.
Operation activities (how to satisfy customer want)
We collect the information includes brainstorming to identify how product can satisfy
customer requirement. In this part, we divide the main factors that effect to our product that
can satisfy customer need are cost, size, shape, organic ingredient, packaging material,
ingredient product, screening on packaging, shelf life, and Fresh.
Relationships between customer requirement and operation activities
We defined the relationship by rated the number to identify how strongly or weak of
the operation activities important to response customer requirements as show in the QFD
tools.
Interrelationships in between operation activities
We identified how operation processes are correlation with each other and likely to
happen in our process to meet customer requirement as show in the QFD tools.
Customer important rating
We rated the numbers which are 1 to 5 according to customer perspectives. 5 for
strongly important to customer need and 1 are for weak important as show in the QFD tools.
Then we found that customers are mostly required about the quality of ingredients, products
freshness, and taste of jam, easy spread and price of products.
Competitive assessment
We had identified how competitor does well in this product to meet the customer
requirement and compare performance between our product and competitor’s product. And
we can see that our company does a good job on product/ingredient freshness, taste,
packaging than competitor , but our company fail on price of product with it’s have a higher
price than competitor.
7. In conclude, we defined the product design and mainly focus on as:
Quality of ingredients, product freshness and taste of Green tea Jam
Because Taste and smell of jam is rely on ingredients so we will focus on use a good
ingredient to make Green tea jam whether it is tea leaves, sugar, milk and etc. to provide a
good texture and attractive smell.
Packaging
Our product development team will in charge of product design by make it beautiful
to attract customer, find the suitable size of product and make it convenient y to use (Easy to
spread jam on bread)
Price
We will find Price Sensitivity Measurement (PSM) to make sure that we provide
reasonable price to customer.
Design model of the product/service
We would like to produce Green Tea Matcha jam which fit in the new look of
packaging and has the unique attractive smell. We introduce the flatted mouth of bottle for
spreading the jam easily and can bring along to anywhere you want. Including, print screen
on the packaging is beautiful and attractive. Green Tea Matcha jam is rather solid and has the
intense texture.
(Figure: the picture of jam texture)
In term of packaging, we design to produce as squeezes plastic bottle for convenient
to use, and the bottle have to quietly strong enough but not too robust (not easily broken).
8. The body of bottle wrapped around by olive green plastic which implicitly mean to green tea.
And the middle of the bottle stick the logos label that named “Midori” includes the pic of
green tea leaf. The name of product and logo represented the traditional of japan countries
which well-known as origin of good quality of green tea (related to the customer aesthetics).
Border around the logo is dark green color that contrasts with the white color of background
perfectly. In addition, we focus to make this product easy to use and convenient to bring
along. So, we design the mouth of bottle to be flat. The customer can spread the jam without
using the knife.
Product model and inspections
(Figure: The packaging of Midori jams design)
(Figure: The packaging of Midori jams design)
9. (Figure: The packaging of Midori jams design)
(Figure: The packaging of Midori jams design)
10. (Figure: The packaging of Midori jams design)
(Figure: Exampling how to use MODORI jam)
jam
13. Project management with clear timeline, activities and crashing opportunities
Table show about MIDORI matcha jams manufacturing’s activities and processes with
duration time in each activity
Activity Description
Immediate
predecessors
Time
(hours)
A Receive green tea powder - 0.5
B Receive straw and jam lid - 0.5
C Receive sugar, milk, and water - 0.5
D Check all equipment A,B,C 1
E Wash, clean and disinfect bottle and lid D 0.5
F
Put water into the large pot. (After water boiled
transfer the half of water to another pot.)
D 0.5
G
Put sugar into the half of boiled water from F
activity.
F 0.5
H Put green tea powder into the boiled water. F 0.5
I Mix green tea water and syrup together. G ,H 0.5
J Put milk I 0.5
K Stir jam J 1
L Waiting jam to cool down. K 1
M Put jam into the bottle. E ,L 1
N Cover jam’s bottle with lid. M 1
O Clean and pasteurize process N 1
P Blow the jam’s bottle until it dry. O 1
Q Put the sticker on the jam’s bottle. P 1
R Seal bottle. Q 1
S Pack jam’s bottle into the box. R 2
(Figure: MIDORI’s activities and processes)
14. The picture below is showing the AON network of MIDORI production processes with a clearly time
15. Form the figure above show that we have nineteen activities (from A to S). There are
eighteen critical activities which mean all activities’ slack time equal to zero, except activity
E (slack time is 3.5 hrs.). And this project will be completed normally within 13.5 hours.
Project crashing
Project crashing is the opportunity to shorting activity time in a network to reduce
time on the critical path to speed up project. The table below shown about Normal crash and
crash cost per unit time (min) for each activities data in each activity.
Activities Description
Normal
Time
(Minute)
Crash
Time
(Minute)
Normal
Cost
(Baht)
Crash
Cost
(Baht)
Crash Cost
Per
minute(Baht)
A Receive green tea powder 30 15 2,000 4,500 166.7
B Receive straw and jam lid 30 15 2,000 4,500 166.7
C Receive sugar, milk, and water 30 15 2,000 4,500 166.7
D Check all equipment 60 15 3,000 7,000 88.9
E Wash, clean and disinfect bottle and lid 30 4,000
F Put water into the large pot. 30 15 4,000 6,000 133.3
G
Put sugar into the half of boiled water
from F activity.
30 15 5,000 7,000 133.3
H
Put green tea powder into the boiled
water.
30 15 5,000 7,000 133.3
I Mix green tea water and syrup together. 30 15 3,000 5,000 133.3
J Put milk 30 15 3,000 5,000 133.3
K Stir jam 60 30 15,000 17,500 83.3
L Waiting jam to cool down. 60 30 1,000 3,500 83.3
M Put jam into the bottle. 60 30 13,000 15,500 83.3
N Cover jam’s bottle with lid. 60 30 13,000 15,500 83.3
O Clean and pasteurize process 60 30 20,000 25,500 183.3
P Blow the jam’s bottle until it dry. 60 30 8,000 10,000 66.7
Q Put the sticker on the jam’s bottle. 60 30 10,000 13,500 116.7
R Seal bottle. 60 30 10,000 13,500 116.7
S Pack jam’s bottle into the box. 120 60 7,000 11,000 66.7
16. From the table above we can see that if we do the project crashing on all critical paths the
total crash cost will be 176,000 baht and time will be shortened from 13.5 hours to 6.5
hours.5 minutes
However, we don’t need to do the project crashing on all activities so, we have to
identify activities that can be crashed by the total crash cost shouldn’t more than 30,000 baht.
We need to pick the activities with the smallest crash cost per minutes in each activity which
it can help shorten the time, so we would like to select activity D first then F, G ,H ,I ,J K ,L
M, N and S to be crashed. Even if on activity D and S have a higher cost than other activity
but we still prefer crashing it for the shorten time.
Therefore, the total crash cost would be 4,000 + 2000 + 2000 + 2000 + 2000 + 2000 +
2500 + 2500 + 2500 + 2500 + 4000 = 28,000 baht, so we can finish 2,000 bottle of Green Tea
Jam in 8.75 hours (approximately 525 minutes) instead of 13.5 hours by adding 28,000 baht
in the project. We illustrate project crashing network for Midori Jam in the picture below
(next page)
18. Forecasting the demand for your product/service
We select the best reasonable forecast method out of these below by calculated to
evaluate MAD Value (Mean Absolute Deviation). The best suitable method has
lowest MAD value which is the most accurate information and reliable.
1. Moving average forecast
2. Weighted moving average
3. Exponential smoothing
4. Trend projections
5.1 Moving average forecast: forecasts based on an average of recent values
The formulation:
Period Actual Demand
Forecast
Demand
Error Abs error
January 60000
February 75000
March 45000
April 60000 60000 0 0
May 45000 60000 -15000 15000
June 48000 50000 -2000 2000
July 48000 51000 -3000 3000
August 60000 47000 13000 13000
September 54000 52000 2000 2000
October 60000 54000 6000 6000
November 75000 58000 17000 17000
December 89970 63000 26970 26970
(Unit: Bottle)
Use 3 Periods moving average
19. 5.2 Weighted moving average: a moving average with weight the vary
From:
Given 3, 2, 1 for weights the demand to forecast the new demand by given 3 for the latest
demand, 2 for second last month and 1 for 3 month ago, as show in the table below.
Weight number % of weighting
Demand last month 3 0.5 or 50%
Demand in 2 month ago 2 0.333 or 33.3%
Demand in 3 month ago 1 0.167 or 16.7%
Period Actual Demand Forecast Demand Error Abs error
January 60000
February 75000
March 45000
April 60000 57495 2505 2505
May 45000 57510 -12510 12510
June 48000 49995 -1995 1995
July 48000 49005 -1005 1005
August 60000 47499 12501 12501
September 54000 54000 0 0
October 60000 54996 5004 5004
November 75000 58002 16998 16998
December 89970 66498 23472 23472
(Unit: Bottle)
20. 5.3 Exponential smoothing
Exponential is a moving average with weight following an exponential distribution
From: ; Given α = 0.5
Period Actual Demand Forecast (𝛂 = 0.5) Error
Absolute
error
January 60000 2100 57900 57900
February 75000 31050 43950 43950
March 45000 53025 -8025 8025
April 60000 49013 10988 10988
May 45000 54506 -9506 9506
June 48000 49753 -1753 1753
July 48000 48877 -877 877
August 60000 48438 11562 11562
September 54000 54219 -219 219
October 60000 54110 5890 5890
November 75000 57055 17945 17945
December 89970 66027 23943 23943
(Unit: Bottle)
21. 5.4 Trend projections: fitting a trend line to historical data or a regression line to an
independent variable
From:
The results are:
The linear of forecast demand during the next whole year is show in the chart below
Period
(Y)
Actual Demand
X (Period) X*Y X^2 Forecast Error Abs error
January 60000 1 60000 1 51350.02 8649.98 8649.98
February 75000 2 150000 4 101127.77 -26127.77 26127.77
March 45000 3 135000 9 150905.52 -105905.52 105905.52
April 60000 4 240000 16 200683.27 -140683.27 140683.27
May 45000 5 225000 25 250461.02 -205461.02 205461.02
June 48000 6 288000 36 300238.77 -252238.77 252238.77
July 48000 7 336000 49 350016.52 -302016.52 302016.52
August 60000 8 480000 64 399794.27 -339794.27 339794.27
September 54000 9 486000 81 449572.02 -395572.02 395572.02
October 60000 10 600000 100 499349.77 -439349.77 439349.77
November 75000 11 825000 121 549127.52 -474127.52 474127.52
December 89970 12 1079640 144 598905.27 -508935.27 508935.27
Total 719970 78 4904640 650
mean 59997.5 6.5 408720.0 54.2
Intercept (a) 49777.75
Slope (b) 1572.27
(Unit: Bottle)
Figure: Forecasting demand chart calculated by weighted moving average method
Bottle
Month
Y =1572.27X+49777.75
, And
Y =1572.27X+49777.75
22. 5.5 MAD calculation (Mean Absolute Deviation) to compare the accuracy of forecasting
in each method.
From:
Calculation method MAD
Moving average forecast 9441.11
Weighted moving average 8443.33
Exponential smoothing 16046.46
Trend projections 266571.81
From the table; MAD value of each four method we can conclude that weighted moving
average is the most accuracy method for demand forecasting in MIDORI Company. Because
of it has a lowest MAD value.
The forecasting method for this project
Period Actual Demand Forecast Demand
January 60000
February 75000
March 45000
April 60000 57495
May 45000 57510
June 48000 49995
July 48000 49005
August 60000 47499
September 54000 54000
October 60000 54996
November 75000 58002
December 89970 66498
Figure: Demand forecasting table calculated by weighted moving average method
Weighted moving average forecasting
(Unit: Bottle)
24. Complex decision tree for major business decisions with probabilities and
expected monetary value (earnings or cost)
We use the complex decision tree process to choose the best decision for our
company. As first, we indicate the decision alternatives, state of nature and their respective
probabilities, and payoff for each combination between do/not do survey and construct S/M
Figure: Complex decision tree of Midori
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Unit: Baht
25. Figure: Complex decision tree of Midori manufacture
From the figure: we have the 2 alternatives ways
A: Do survey; the survey can result as favorable (A1) or either (A2)
B: not to do survey; only one result which is not to do survey (B1)
And we have another problem in complex decision tree which is to construct small
plant, large plant or do nothing (state of nature). So,
C: the company decision to choose the best properly plant size
Large plant (C1)
Small plant (C2)
Do nothing (C3)
1. EMV(A1) : given the favorable results
EMV (A1C1) = (0.8) (242,000) + (0.2) (-242,000) = 145,200 baht
EMV (A1C2) = (0.8) (67,000) + (0.2) (27,000) = 48,200 baht
The EMV for no plant (A1C3) = -8,000 baht so, if the survey results are favorable,
build the large plant.
So, A1 = 145,200 * 0.6 = 87,120 baht
26. 2. EMV (A2): Given the negative survey results
EMV (A2C1): (0.1) (242,000) + (0.9) (-242,000) = -193,600 baht
EMV (A2C2): (0.1) (67,000) + (0.9) (-27,000) = -17,600 baht
The EMV for no plant (A2C3) = -$8,000 so, if the survey results are favorable, build
the large plant.
So, A2 = -8,000 * 0.4 = 3,200 baht
3. EMV (B1): If the market survey is not conducted
EMV (B1C1) :( 0.5) (250,000) + (0.5) (-234,000) = 8,000 baht
EMV (B1C2) :( 0.5) (75,000) + (0.5) (-19,000) = 28,000 baht
The EMV for no plant (B1C3) = 0 so, given no survey, build the small plant.
In conclusion, the expected monetary value of not conducting the study is 28,000 baht and
the EMV for conducting the study is 83,920 baht. Including, The EMV for no plant = -8,000 baht. So,
the best choice is to seek marketing information and build the small plant
EMV for node 1
= 83,920 ฿
Unit: Baht