Operation Management

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Research Project|
New Zealand Natural Ice Cream|
|

Operations Management
Operations Management

Executive summary
The paper concentrates on studying operation management of ‘New Zealand Natural Ice Cream’in terms of its demand forecasting and inventory management strategies. The purpose is to improve the efficiency of the operation network. For doing so, qualitative data are researched and analyzed to reflect the current operation of the shop. Then, various demand forecasting, based on quantitative data, would be conducted to find out the optimal solutions for improving operational efficiency.

Currently, the shop faces severe competition and certain inventory problems like seasonal stock out and excess inventory. As a result, accurate demand forecasting and establishing inventory model seem the priorities for the shop. After analyzing acquired data, it is found that the 3-month weighted moving average is the most suitable demand forecasting method for the shop, which helps eliminating inventory problems. Meanwhile, EOQ analysis also provides some significant suggestions for counter the current inventory problems. Firstly, it is suggested for the shop to order more than 2000 units per order for taking the advantage of the 7% discount price and in turn saving costs. Further, inventory is recommended to be automatically replenished when stock level decreases to 22 packages in order to reducing stock out. In addition, it seems necessary to regular communicate with major suppliers.

Table of Contents
Executive summary1
List of tables3
Introduction4
Research Objective4
Background4
Discussion on chosen topic5
Discussion on current situation7
Data analysis8
Forecasting sales of Ice Cream Shop8
Process of 3-Month moving average9
3- Month Weighted moving average (1:2:3)10
Exponential Smoothing (α= 0.1, α= 0.5)11
Trend projections13
Comparison of MAD, MSE and MAPE15
EOQ Model16
Recommendations18
Conclusion19
References19
Appendix:20

List of tables
Table 1: the original data collected and to be used in the further analysis p09 Table 2: Ice cream shop sales in 2011 (3-month moving average) p10 Table 3: ice cream shop sales in 2011 (3-month weighted moving average) p11 Table 4: ice cream shop sales in 2011 (exponential smoothing) p13 Table 5: ice cream shop sales in 2011 (trend projections) p14 Table 6: ice cream shop sales in 2011 (trend projections) p15 Table 7: comparison of MAD, MSE and MAPE in different forecasting methods p16 Table 8: EOQ quantity discount model assumptions p17 Table 9: quantity discount calculations p17 Table 10: Q3 calculation p18

Introduction
The report would focus on analyzing operation management of ‘New Zealand Natural Ice Cream’ in terms of its demand forecasting and inventory management perspective. Qualitative research basing on interviews is conducted to understand and evaluate the company’s current operation while certain significant suggestions would be made to optimize the operational network with minimized costs. Further, the attention would be drawn on the sales of ice cream.

In this paper, research objectives would be first introduced before explaining the chosen topics (demand forecasting and inventory management). Then, current operations of the business are going to be investigated with respect to the two chosen topics and the focus would be on data analysis part where various demand forecasting methods would be analyzed. Finally, certain recommendations for improving the operation network are going to be discussed.

Research Objective
The objective of this report is to analyze the operation management of New Zealand Natural Ice Cream located in a crowded metropolitan area in Melbourne. The purpose of this study is to investigate how...
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