2011

Production and operations Management Case Study On Fitness Plus.

SUBMITTED TO: DR. R.JAGADEESH

Submitted by Ashwini Mahadev Elizabeth Betsy Harshwardhan Singh Rathore Surbhi Malhan Vijeth

FITNESS PLUS CASE STUDY

Fitness Plus is a full service health and sports club in Greensboro, North Carolina. The club provides a range of facilities and services to support three primary activities as follows: Fitness Activities Aerobic Rooms (35people/class) Free weights Workout room (24Nautilus machines) Cardiovascular workout room ( 9 stair steppers, 6 treadmills, 6 lifecycle bikes, 3 airdyne bikes, 2 cross-aerobics machines, 2 rowing machines, and 1 climber) total 29equipments) Recreation Activities 8 Racquetball courts 6 tennis courts Outdoor pool City Recreation (Softball, Volleyball, Swim teams) Relaxation Activities Yoga classes (twice a week) Whirlpool tubs located in each locker room Trained massage therapist

Hours of Operation Monday to Thursday- 6:30 a.m. to 11:00 p.m. Friday and Saturday- 6:30 a.m. to 8:00 p.m. Sunday12:00 p.m. to 8:00 p.m.

ISSUEDue to growth in membership and increased in demand, Fitness Plus become congested. The case study will focus on the current capacity issues of Fitness Plus and the decision whether to expand the existing capacities or build a new facility. Focus for the capacity solution will be on the three areas of customer complaints that is cardiovascular, aerobics and nautilus. New competitors in the area include YMCA (offers a full range of services at a low cost), OASIS (caters to members above 16) and Golds Gym (weight and cardiovascular training only).

1. What method would you use to measure the capacity of Fitness Plus
The suitable method to measure capacity of Fitness Plus is by using the input measures because the club is a flexible flow process and members can choose their own workouts. At current time with current flow of members, Fitness Plus has large periods of operating near peak capacity in multiple areas. This caused flow issues including bottleneck in more popular workout areas. We can assume that members are using more than one area of fitness centre during each visit. Currently, approximately 80 members per hour enter the club during peak hours but we cannot identify which areas the member specifically visit . Has Fitness Plus reached its capacity? From the calculation of capacity cushion in year 2000 and 2005, it shows that Fitness Plus has reached its capacity by increasing of demand Weekly Operation Hours 101 hours Peak Demand 3 hours daily from 4.00 pm to 7.00 pm Aerobics : 35 members per hour Cardiovascular : 29 pieces of equipment ( we assume equipment will be limited to 30minutes per member) Nautilus : 24 pieces of equipment ( we assume equipment will be limited to 60 minutes per member)Current capacity measured as inputs for nautilus, cardiovascular, and aerobics fitness Current demand is 88 members per hour (35+ 29 +24 = 88)

Capacity cushion is the amount reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity. It measures the amount by which the average utilization falls below 100%. Large cushions are appropriate when demand varies and uncertain where in this case, demand on some days of the week is predictable higher than on other days. In 2000 Average is 15 members per hour Utilization = Average Output Rate/ Maximum Capacity x 100 =15/88 x 100 = 17% Capacity cushion in 2000 = 100% - 17% = 83% In 2005 Average is 25 members per hour Utilization = 25/88 x 100 = 28% Capacity cushion in 2005 = 100%-28% = 72%

2. Which capacity strategy would be appropriate for Fitness Plus?

For the short term strategy: Focus at the bottlenecks areas which are Aerobics, Cardiovascular and Nautilus. This strategy implies the limitation of time for these 3 areas during peak demand. Continued tracking of member usage of facility services and the new membership c a m p a i gn i n J a n u a r y. It c a n b e d o n e t h r o u g h l i m i t i n g t h e m e m b e r s h i p d u e t o excessive in capacity demanded. Therefore, customer satisfaction will be increased. Effective maintenance of equipment and facility. To lower the repairing cost and maximize its life. Increase the time of operation by reducing the down time. Reduce the racquetball courts and increase cardiovascular equipments. Give service to under 16 customers as the competitors are not focusing on this segment. Give privilege cards, economy packages, and other packages as per the needs of the customer to beat the competition Increase hours of operations on weekends (Shift system for employees).

For the long term strategy: In the current situation, Fitness Plus has three long term alternatives No expansion of existing facilities and wait to see what market bear in the future before proceed with the decision on expansion. Minor expansion of existing facilities on the limited land available at the current site. Major expansion to a second facility in the downtown area.

Need to consider expansion in order to determine the optimum economics of scale to Fixed costs, Reduced construction costs, Identify process advantages. Based on customers complaint and average capacity running well, First alternative, no expansion, might be eliminated. For the second alternative, minor expansion of the existing facility, the limit is due to lack of land at the current location. Third alternative, the expansion strategy, is the best choice for the long term strategy. It is because this strategy keeps the Fitness Plus ahead of customer demand. Finally, the Fitness Plus needs to announce its long term expansion plans to prevent the competitors to do the same thing. It also will increase customers loyalty.

3. How would you link the capacity decision being made by Fitness Plus to other types of operating decisions?
Other types of operating decisions are 1. Handling a waiting line problem The service system has multiple lines and mixed arrangement of facilities involving customers with individual service needs. Current practise or priority rules of Fitness Plus are based on First Come First Serve basis. In order to solve this problem, Fitness Plus needs to calculate both arrival and service time distributions by considering these five factors: a) Line Length both in terms of customer service and capacity b) Number of customers in systems efficiency and capacity c) Waiting time in line including service rate and customer perceptions d)Total time in systems indicate problems with service, capacity or customers e) Service facility utilization operating costs of total facility 2. The Layout Decision Layout increase space, equipment, peak capacity of some areas. The purpose of facility to satisfy more/current customer base and attract new customers Fitness Plus must consider alternatives to customer flow such as assigned customers to designated time for using equipment especially during peak hour Members have opportunities to take advantage of other, less popular areas while they wait Based on designated time, customer can have gap to return to Nautilus or Cardiovascular equipment for workout. Have a set time limit for their workout on this equipment (during peak time only)