Wok Gourmet

Eric Leifland-Berntsson, Joanna Lu, Jessie Tsai, Kasey Wang, Ben Yelian,

David Yu

AgendaI. Introduction

II. Problem

III. Analysisa. Waiting Time

b. EOQ

c. Newsvendor

IV. Recommendations

V. Questions

Introduction Problem Analysis Recommendation Questions

Introduction• Chinese restaurant

• Located in Maryland

• Employees include: manager, cook and driver

• Offers dining in and delivery services– Currently 50/50 in services utilization

Introduction Problem Analysis Recommendation Questions

AnalysisIntroduction Problem Analysis Recommendation Questions

Competitive Analysis -Monthly Revenue

15%

15%

13%

9%8%6%

6%

5%

5%

5%5%

5%5%

Kenny's Sub ShopQQ ChinaRongHuaFengLinZhongChaoMayflowerCityBrothersChenLiWok Gourmet*PandaChina KingChina Best

I. Customer waiting time – Almost over 1-hour delivery service for some

customers

II. Inventory management– What level of vegetables to order?– How often?

III. Risk of under/overstocking poultry– What would the consequences of this be?

Current Problems

Introduction Problem Analysis Recommendation Questions

Fishbone Diagram

Methods

Equipment People

Materials

Customer SatisfactionEnvironment

Traffic

Ventilator

Freezer

FridgeRange

Driver, Chef incentives

Cooking

DeliveryIngredient Freshness

QualityPacking

Weather

Introduction Problem Analysis Recommendation Questions

Introduction Problem Analysis Recommendation Questions

Process Flow Diagram

Staffing: Monday

Cook10-15 min.Avg: 12.5 min.

Order1-4 min.Avg: 2 min.

Delivery5-15 min.Avg: 30 min.

Manager

Driver

Pack1-2 min.Avg: 1.5 min.

Introduction Problem Analysis Recommendation Questions

Staffing: Tuesday – Sunday

Cook10-15 min.Avg: 12.5 min.

Order1-4 min.Avg: 2 min.

Delivery5-15 min.Avg: 30 min.

Manager

Driver

Pack1-2 min.Avg: 1.5 min.

Cook

Introduction Problem Analysis Recommendation Questions

VUT Analysis

Introduction Problem Analysis Recommendation Questions

VUT CalculationEx. Saturday

Introduction Problem Analysis Recommendation Questions

Current Process Waiting (Buffer) Time

Ex. Saturday

Introduction Problem Analysis Recommendation Questions

VUT Analysis

Individual Waiting TimesEx. Saturday

Introduction Problem Analysis Recommendation Questions

New Process Buffer Waiting Time

Introduction Problem Analysis Recommendation Questions

Ex. Saturday

Waiting Time Comparison

Introduction Problem Analysis Recommendation Questions

EOQ Analysis

Introduction Problem Analysis Recommendation Questions

Inventory Management• Current process: fixed quantity– manager estimates supplies of

vegetables– drives to supermarket when

inventory low• Vegetables perishable (lasts a

week)• Most common vegetable in dishes:

70% have broccoli

Introduction Problem Analysis Recommendation Questions

Current Costs

• Total cost = procurement cost + order cost (opportunity cost of manager’s time, fuel costs) + holding cost (spoilage and financing costs)

• Annual total cost = $4,642.80 +$5,522.40 + $1,330.16 = $11,495.36

Introduction Problem Analysis Recommendation Questions

Optimized Costs: EOQ

• Annual total cost = $1,790.63 +$1,959.57 + $4,642.80 = $8,393

• Order 34 lbs (roughly once every 5-6 days)

• Re-order point: 1.6 lbs

Introduction Problem Analysis Recommendation Questions

New Costs: Restaurant Store

• Alternative– Order from restaurant store

(wholesaler)– Lead time is 2 days– Restaurant store delivers food directly

to Wok Gourmet• Benefits:– Price discount ($0.25 discount)– Saves manager’s time and fuel

Introduction Problem Analysis Recommendation Questions

New Costs: Restaurant Store with EOQ• Annual total cost = $1,027.96 +

$2,327.13 + $4,062.45 = $7,417.54• Order 22 lbs (roughly once every 3-

4 days)• Re-order point is 14 lbs

Introduction Problem Analysis Recommendation Questions

Newsvendor Analysis

Introduction Problem Analysis Recommendation Questions

Target Stock Level of Chicken

Co = $1/dish

Cu = $9/dish

Target Service Level = 90%

z = 1.281552

Introduction Problem Analysis Recommendation Questions

Chicken & Beef Dishes

Introduction Problem Analysis Recommendation Questions

Target Stock Level of Chicken

Q = 225.4 + 1.281552 *44.91 = 283 dishesNeed to order 141.5 pounds each week

* 1 dish = 0.5 pounds

Introduction Problem Analysis Recommendation Questions

Target Stock Level of Beef

Q = 161 + 1.281552 *32.08 = 202 dishesNeed to order 101 pounds each week

* 1 dish = 0.5 pounds

Introduction Problem Analysis Recommendation Questions

Recommendations

Introduction Problem Analysis Recommendation Questions

VUT Recommendations

• Current Layout:mCook = 4 (Cook & Manager)mPack = 1 (Driver) mDeliver = 2 (Driver)

• Reduce cooking capacity from 4 to 3• Allow driver to focus only on

deliveries mD = 3• Reduces buffer waiting time by

63.7%Introduction Problem Analysis Recommendation Questions

EOQ Recommendations

• Move away from intuition, use EOQ– Saves $3,102.36 annually

• Start ordering from restaurant store– Order 22 lbs (roughly once every 3-

4 days)– Re-order point is 14 lbs– Saves $4,077.82 annually

Introduction Problem Analysis Recommendation Questions

Newsvendor Recommendations

• Re-adjust inventory ordering for meat

• Order 141.5 lbs. of chicken weekly

• Order 101 lbs. of beef weekly

Introduction Problem Analysis Recommendation Questions

Takeaways

• Consider sourcing work to other firms for efficiency (ex. Delivery from restaurant store)

• Efficiency improves customer satisfaction

• Experience vs. Data AnalysisIntroduction Problem Analysis Recommendation Questions

Introduction Current Process Analysis Recommendation Questions