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A Study Of The Operations Management At Holly Farm An Icecream Manufacturing Company. We Were Required To Find The Feasibility Of Expanding Teh Facilities And Production Processes.

3659 words - 15 pages

1. IntroductionThis consultancy report is prepared for Holly Farm in order to improve its future business. In the second part of this report; 'Evaluation of Current Operations and Gillian's Business Strategy' and 'Conclusion', Holly Farm's operations will be critically evaluated in the aspect of current and future potential capacity constraints and any other operational problems. Also, I will discuss the feasibility of Gillian Giles' strategy for the business there. In the last part; 'Recommendations and Action Plan', I will show a recommended alternative strategy for the business and several solutions for alleviating its constraints.2. Evaluation of Current Operations and Gillian's Business Strategy2.1 Gillian's Aims and Objectives2.1.1 Sales ForecastAccording to Gillian's forecasts, while there will be an increase in farm shop sales by 50%, there will be a decline in retail shops sales by 13.3% in 2004 (Table 1). However, these forecasts are unlikely to come true. Firstly, its retail shops sales has increased by 75% on average of each year, and its farm shop sales has increased by 28% on average each year for the latest five years. It may be unreasonable that she dramatically changes these recent growth trends on her forecast without any factors that could impact on both channels. Secondly, since the ice cream market in the UK is mature and stable (Table 2), sudden changes of previous trend hardly happen excepting entering strong new players into the region, spoiling the farm's reputation hugely and investing tremendously on the marketing for its farm shop. Moreover, in terms of Holly Farm's managing on its farm visitors, this sudden change of the number of visitors could lead to collapses of its operations. These reasons discussed above clearly show that Gillian's demand forecast is not reliable. Hence, they have to forecast in the other way.2.1.2 Line ExtensionGillian wishes to increase the number of ice cream flavours from four to ten. However, this line extension can cause the following problems.First of all, many products of relatively lower demand items would be abolished due to their expiration dates. In 1999, the Ice Cream Alliance published the date of top ten ice cream flavour in the UK in 1998 (Table 3). I can assume that, when Holly Farm produced all of these ten items, the share of each item in their products would be the same as the market shares of each flavour ice cream in the whole market. The items that total demands are less than 1,516 litres per annum, hence below the fourth position, should not be produced because it is obvious that the items would be abolished due to their expiration dates (Table 4, Calculation 1). Moreover, in the case of retail sales, the minimum annual demand for each item is 3,035 litres (Calculation 1).Secondly, also major of the raw materials would be thrown away before they are used. Since the periods that are needed raw materials to be completed to use are longer than maximum storage times allowed,...

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