MGSC5128 -Operations Assignment 1

MGSC5128 -Operations
Management
(Winter 2024)
Assignment 1
Shannon School of Business
1. Sobeys
Sobeys Inc. is the second largest grocery store chain in Canada (the largest is Loblaw). Sobeys
distinguishes itself from Loblaw by offering better quality fresh food and customer service.
Sobeys grew out of Nova Scotia mostly through acquisition of other grocery chains. The
integration of the latest acquisition, Safeway Canada (over 200 stores in Western Canada), has
been challenging. Sobeys now owns 908 grocery stores and franchises 977 stores throughout
Canada. Sobeys has revenues of over $24 billion and employs over 125,000 people. Sobeys is also
a wholesaler to over 8,000 retail accounts.
Sobeys has five different store sizes and formats, and uses them in each location based on market
size and customer demographics. There is the large full-service format (such as Sobeys, Sobeys
extra, IGA extra, Safeway and Thrifty Foods); urban fresh format (such as Sobeys Urban Fresh
and IGA in Quebec); small community format (such as Foodland, Marché Bonichoix, and Les
Marchés Tradition); discount format (such as FreshCo and Price Chopper); and convenience
format (such as Needs Convenience and IGA express). Approximately 350 large full-service stores
have in-store pharmacies. Sobeys also has a chain of 78 drugstores (Lawtons Drugs) in Atlantic
Canada, over 300 retail gas stations, and 80 liquor stores.
In addition to national brands, Sobeys has its own private label brands: Compliments (over 5,000
products) and S!gnal. Sobeys also has its own manufacturer—Big 8 Beverages—for its private
label soft drinks and water in Atlantic Canada.
Sobeys is a wholly owned subsidiary of Empire Company Limited, which also has a 41.5 percent
equity interest in Crombie REIT, a real estate development and management company. Crombie
owns the buildings and shopping plazas that Sobeys stores occupy, as well as other properties.
Sobeys has implemented SAP (an enterprise resource planning software) nationwide and across
its brand stores. The stores are organized by region: Atlantic Canada/Ontario, Quebec, and
Western Canada.
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Most products are bought centrally and distributed to the stores through 34 regional distribution
centres (DCs) located throughout the country. The fully automated Vaughan and Terrebonne DCs
are state of the art. Sobeys is retrofitting the Rocky View Alberta DC that it bought from Target
Canada.
Operations management activities and decisions are split between corporate office and store
operations.
The corporate office initiates and manages various programs to increase the number of customers,
including constant evaluation of store performance, closing low-profit stores, opening new stores,
and modernizing existing stores. It also manages the computer technology, performs data analytics
to improve category management, initiates training programs, and performs accounting and
finance activities. Directors of operations (i.e., district managers) interact with the store managers
in their district to implement improvement programs such as sharing best practices.
A store manager manages all facets of the store and ensures operational excellence in retail
merchandising, inventory management, and customer relations. He/she ensures execution of the
retail programs by communicating the operational requirements and/or changes and store vision
to the employees. This includes occupational health and safety, food safety, and other regulatory
requirements and procedures. The store manager also oversees recruitment, orientation, training,
and performance management.
Sobeys cares about its employees and their training. It has a careers website, provides on-the-job
and web-based training, and even provides scholarships to exemplary employees who are still in
high school.
Sobeys also cares about sustainability. It sets targets for greenhouse gas reduction and measures
its progress. It has reduced its use of electricity and amount of material sent to landfill.
Questions
I. What are the inputs, process, output, and feedback/control for a grocery store such as
Sobeys?
II. What are the operations decisions for running a grocery store such as Sobeys?
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2. Southwest Tube (now called Webco Industries) is a fabricator of specialty tubes used in boilers
and other equipment. Southwest buys the tubes in long segments and cuts, bends, cold draws, and
welds the pieces to make what is needed for the products. A few years ago, Southwest Tube was
facing tough competition. The prices were falling while the costs were rising. To improve
productivity, consultants were brought in. They pointed out problems with labour turnover,
absenteeism, weak supervision, staffing mismatch, lack of performance goals, and a dislike for the
weekly rotating schedule as causes of the problem. One of the solutions tried, in addition to other
improvements, was changing the work schedule to four 12-hour days followed by three days off.
The productivity seemed to improve gradually. To ascertain this, the following data for two
physically demanding work centres were collected starting the year before the change in work
schedule. LO3
Question:
I. Has workers’ productivity in the two work centres increased? Explain.
II. Find the growth rate for each department.
Cold Draw Department Weld Mill Department
Labour Output Labour Output
Year (1,000 hr) (1,000 ft) Year (1,000 hr) (1,000 ft)
0 228 18,269 0 132 22,434
1 234 19,576 1 157 34,777
2 183 17,633 2 102 26,715
3 150 18,870 3 77 25,227
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3. A production line has three machines A, B, and C, with reliabilities of 0.99, 0.96, and 0.93,
respectively. The machines are arranged so that if one breaks down, the others must shut down.
Engineers are weighing two alternative designs for increasing the line’s reliability. Plan 1 involves
adding an identical backup line (i.e., a series backup), and Plan 2 involves providing a backup for
each machine (i.e., a parallel backup). In either case, three additional machines(A, B, and C) would
be used with reliabilities equal to the original three.
a. Which plan will provide higher reliability?
b. Explain why the two reliabilities are not the same.
c. What other factors might enter into the decision of which plan to adopt?
d. Assume that a single switch is used in Plan 1 to transfer production to the backup line if the
first line fails, and this switch is 98 percent reliable, while reliabilities of the machines remain
the same. Recalculate the reliability of Plan 1. Compare this reliability with the reliability of
Plan 1 calculated in solving the original problem. How much did reliability of Plan 1 decrease
as a result of a 98 percent reliable switch?
e. Assume that three switches are used in Plan 2 to transfer production to the backup machines if
the original machines fail, and these switches are all 98 percent reliable, while reliabilities of
the machines remain the same. Recalculate the reliability of Plan 2. Compare the reliability of
this plan with the reliability of Plan 2 calculated in solving the original problem. How much
did reliability of Plan 2 decrease?
4. Prepare a house of quality for chocolate chip cookies made in a bakery. List what you believe
are the three most important customer requirements and the three most relevant technical
requirements. Next, indicate by a checkmark which customer requirements and which technical
requirements are related. Finally, determine the target values. There is no need to fill in the other
parts of the house.

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