1IIE/RA CONTEST PROBLEMSCONTEST PROBLEM 3IIE/RA Contest ProblemsThird Annual Contest: Sally Model’s SM Pizza ShopBefore I outline my problem, here is a little background information that might help youbetter understand my specific request. When I was in college, I worked part time at aMom and Pop pizza parlor. Everything was handmade, so I had the opportunity to learna lot about making pizzas. After I graduated and started raising a family, I began toexperiment with making different kinds of pizza. Over time, I developed a unique pizzaproduct that was a big hit with all our friends. After my children left the nest, I decided toopen a pizza shop and expose the public to my new product. The business was animmediate success in terms of customer appreciation, but not from a profit standpoint,so I began to explore better ways to produce my product. With a new set of plans, Iopened a second store, revised the plans, then opened a third store, and so on. Over anumber of years, I refined my design to where I now have a standard concept that isimplemented in all of my stores—currently numbering over 300.I am about to undertake a major expansion program that I hope will result in the SMPizza brand becoming a national chain of stores. Although the store design concept isfirmly established, the staffing and operational aspects are still a problem. This is thearea where I need your recommendations. First, let me describe our expansion philoso-phy, then our store operation, and finally, my request.Our new stores will be of the DELCO variety, DELivery and Carry-Out, only. Theyare designed to be small and cover only a limited delivery area. This allows us to providea high-quality product in a reasonable time. It also allows us to limit our store hours,which is a distinct advantage since we tend to hire retired individuals to manage and runeach store. The limited hours are ideal for these types of employees, and they allow us toconfine our sales to the dinnertime crowd. Normally, we locate our stores in suburbanareas where we cater to working families who have little time to cook supper. We havefound that these individuals are quite happy if we can have carry-out orders ready in 35minutes or less and have our delivered orders in the customers’ hands in 45 minutes orless. If we exceed these times, we start receiving customer complaints and a decrease insales. Thus, these two performance measures are what we use to determine our customer-satisfaction levels.Our store operation is really quite simple. It consists of five operations: order taking,pizza making, oven, cut and box, and delivery or carry-out. As I indicated earlier, wehave a standard design concept we use in all our stores. It starts with a high-tech phonesystem that allows us to take the customers’ orders (automatically, for many) and displaythe order at the pizza-making operation. We have no problems with this operation, so itdoes not need to be considered in your analysis.IIE_RA_3.pmd 5/30/2006, 12:01 PM12IIE/RA CONTEST PROBLEMSThis phone system is installed in all our current stores, and we have used it to collectinformation on customer demand. Although there is some minor variation from store tostore, a typical order contains from one to three pizzas. Our data tell us that 64% of theorders are for one pizza; 31%, two pizzas; and 5%, three pizzas. We also have three pizzasizes (large, medium, small) and our data appear to tell us that the pizza size is not depen-dent on the order size (32%, large; 56%, medium; and 12%, small). We only sell sevendifferent types of pizza: 12%, Veggie; 13%, Fungus; 18%, Red Meat; 15%, Fat Free;16%, Dairy Delight; 11%, Hot & Spicy; and 15%, The Works.The pizza-making process is performed at a standard make table with positions forup to three people. A layout of this table is shown below.We have divided our pizza-making process into three operation steps or tasks. Someof the pizza-making process is highly confidential; therefore, we will only highlight thethree tasks. The first task is the selection of the correct size pizza dough (pre-made) andthe saucing of that dough. The second task adds the primary ingredients, and the thirdtask adds the final ingredients. Although each different pizza type requires some differ-ent ingredients, we have developed our standard times based on the pizza size and task,independent of the pizza type. Since you will be using simulation for your analysis, Iassume that you will need to know something about the variation of our standards. Wehad a co-op student conduct a preliminary study, which concluded that this variation isbest described by a triangular distribution. Thus, the table entries shown next are theparameters for that distribution. SizeTask Large Medium SmallDough and saucing 0.5, 0.7, 0.8 0.4, 0.6, 0.8 0.3, 0.5, 0.7Primary ingredients 0.6, 0.8, 1.0 0.5, 0.7, 0.9 0.4, 0.5, 0.6Final ingredients 0.5, 0.6, 0.7 0.4, 0.5, 0.6 0.3, 0.4, 0.5Although there are three logical positions, we do not always allocate three individualsto the pizza-making process because the staffing cost is estimated at $6.15 per hour. Thenumber allocated to this process should be dependent upon the demand. However, ifthere are three people assigned to this process, the first person performs the first task andIIE_RA_3.pmd 5/30/2006, 12:01 PM23IIE/RA CONTEST PROBLEMSpasses the product to the second person. If the second person is busy, the product isplaced between them to wait for the second person. If three people are assigned to themake table, there is only room for one product between task stations. Thus, the line willsometimes back up because the person has nowhere to place the pizza they just finished.If there is only one person assigned to this process, all three tasks are performed by thatperson before work starts on the next pizza. If two people are assigned to the line, theyare allowed to determine the best way to share the work. We eventually would like todevelop a standard assignment policy for this condition, but have not accomplished thisto date. If time permits, we would appreciate your input on this matter.The assembled pizza is then sent to the oven. We use the Magic Baker line of ovens inall our stores. These ovens are fairly standard for the industry. They are basically a simpleconveyor with an enclosure of the central part of the unit, which contains the oven. Thepizzas are placed on the load area of the conveyor at the left (see diagram below). Theytravel through
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