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Operation management is a process or system in which created goods or provided

services are managed through actions such as quality control and assurance, aggregate planning,

inventory management, scheduling, motivating employees, location, size and design of facilities,

forecasting among many others. These concepts are discussed below, in reference to the case

studies.

Strategic capacity planning for products and services is one key operational management

concept that comes out in the case study. Capacity involves defining what capacity is needed,

how much is needed to match the demand and when is it needed. Capacity decisions are key in

determining the ability to meet future demands, affect costs, competitiveness, ease of

management and long term saving (p.185). How capacity is utilized is measured as a percentage

of actual output over design capacity. It enables additional variable costs associated with excess

capacity (p.187). Therefore, capacity must be effective to fit its purpose. Determinants of

effective capacity include factors relating to supply chain, operational factors, human

considerations, processes, products and services and facilities. In order to plan capacity, one

must be able to estimate future capacity, evaluate the current capacity, the available facilities as

well as gaps to be filled. Alternatives to the capacity requirement are identified, together with

financial implications so that we are able pursue the best in long run (p. 190). The capacity

requirements are then forecasted, to suit both long term and short term needs. This is done by

studying the demand over time and trends in demand in various special periods like holidays

(p.190). Then the processing requirements are calculated to know exactly what level of

equipment or furniture is needed (p. 192). In the case of Wegmans Food Markets, the owners

have opted for giant 100,000 square foot super store for many of their stores. This size is double
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or even tripled the size of average supermarkets. The stores employs approximately 500 to 600

people with between 25 to 35 checkout lanes. These capacities are just perfect for the large

number of services they provide as well as the large number of customers they serve.

Another important concept that appears in the case study in the management of quality

and quality control. Quality product or service is its ability to meet and even exceed customer

expectations (p.373). A quality product must have durability, serviceability, perceived quality,

reliability, conformance, special features, aesthetics and performance oriented (p. 373). Quality

services can be assessed by an instrument called SERVIQUAL, used to obtain feedback to the

business on their performance regarding the product. The determinants of quality include, the

design, conformity to the design, ease of use as well as service delivery, (p.376). Quality

enhances a good reputation for the organization, its ability to command premium rates, greater

customer loyalty, increased market share and thus higher productivity and revenues. In the case

of Wegmans Food Markets, the management and thus the employees have placed quality and

customer satisfaction at the front line. The way quality is implemented is great, as the products

both privately labelled and brands are evaluated regularly in the test kitchen. These are done

along with potentially new products. In each department, the departmental managers are tasked

with confirming quality of the goods and services as well as their maintenance. The employees

are obliged to report quality related issues to the respective managers. Customers come first and

their complaints regarding quality is taken very seriously, including being offered a choice of

alternative replacement, or a refund. Then such a complaint is evaluated to find the source of the

low quality product or service. The approach this business takes in quality management and

assurance is excellent and thorough. This reflects the importance of quality as the consequences

of poor quality include costs, low productivity, liability and loss of business (p.379).
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Inventory management is the third key operational management concept, brought out in

the case study involving Wegmans Food Markets. Inventory is the physical stock of goods in the

business. Inventory are necessary for business operations and ensure customer satisfaction

(p.556). Inventory includes raw materials, supplies, tools for maintenance and finished goods and

services (p.557). Proper inventory control prevents over and under stocking thus keeping

inventory costs at reasonable levels while satisfying the customer. For effective inventory

management, one requires, an inventory tracking system, both on hand and ordered, a classified

system for inventory items, a reasonable estimates of inventory holding, ordering and shortage

costs, and a proper knowledge of lead times and lead time variability (p. 559). The Wegmans

Food Markets uses a companywide system for tracking inventory as it moves. Each month, each

department counts its inventory to verify the amount shown in the company wide system.

Ordering of products is the responsibility of each department. The departments each receive a

periodic report in which the number of days of the inventory are in the hands of the departments.

The departments must have an appropriate amount of inventory each time. Not too much or too

low.

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