Production and Operations Management-A2J

Objectives
This assessment task relates to course learning outcomes numbers 1 to 5.
Purpose
The primary purpose of this assessment task is to help students develop skills in the use of OM principles,
theories and models in the analysis of the current operations of a service organisation. The assignment
requires you to analyse the current situation, identify the operational problems within the organisation, and
develop a set of recommendations that when implemented, will overcome the identified problems without
creating new ones. In this assessment piece you are expected to solve the case.
The secondary purpose of this assignment is to give students the opportunity to further develop analysis and
problem identification skills, as well as skills in presenting an argument for change within the framework of
a business report.
Details
Before starting this assessment read the marking criteria (at the end of this course profile) and Chapters 1,
2 and 4 in the Faculty s Guide for students on website:
http://www.cqu.edu.au/faculties/faculty-of-arts,-business,-informatics-and-education/generalinformation/
guide-for-students
You should also read the Assignment Writing Guidelines on the course website.
The objective of the case study is to provide an operations management situation that can be studied and
analysed. You will need to put yourself in the role of a management professional who is asked by the
organisation to identify why or how the problem happened and make recommendations as to what should be
done.
This assessment involves the presentation of a case study which relates theory and research in an area of
POM to a practical application. Refer to Chapter 4, Guide for students for guidance on formats for report
writing. Be sure however to comply with the formatting requirements published on the course website in the
Assignment Writing Guidelines section.
This assessment item involves researching your assigned topic to enhance your understanding of Production
and Operations Management concepts and utilisation of academic literature. Whilst you should AVOID
using only textbooks, the prescribed textbook for the course should be cited in regard to broad operations
management principles. You will be expected to present information and evidence from, and cite, at LEAST
eight (8) relevant peer-reviewed, academic journal articles (minimum requirement). Refer to your
recommended readings for examples of academic journals. While you can cite these articles, you must find
at least eight (8) peer reviewed journal articles not listed in the course materials. The quality and number of
citations will demonstrate the breadth and depth of the literature used to formulate your argument. Your
marker is interested in the analysis that you have developed from YOUR review of the literature and how
well you use the literature to respond to the topic.
AVOID presenting a descriptive account ONLY of your readings. What is required in this assessment is a
critical evaluation of the academic literature as it relates to the specific details of the case study. Your
marker is interested in the conclusions that YOU arrive at from YOUR evaluation of the literature and of
the case study.
Case study: Planning for Growth at Viverra Motors
Llew Gwych, CEO of Viverra Motors, has just returned to his office after visiting the company s newly
acquired automotive dealership. The new dealership was the fourth Viverra Motors dealership in a
network that served a metropolitan area of over a million people. Beyond the metropolitan area, but
within a 45-minute drive, were another half a million people. Each of the dealerships in the network
marketed a different make of car and historically had operated autonomously.
Gwych was particularly excited about this new dealership because it was the first auto supermarket in
the network. Auto supermarkets differ from traditional car dealerships in that they sold multiple makes
of cars at the same location. The new dealership sold a line of Hyundais, Volkswagens and Cherys.
Starting 15 years ago with the purchase of a bankrupt Mitsubishi dealership, Viverra Motors had grown
steadily in size and in reputation. Gwych attributed this success to three highly interdependent factors.
The first was volume. By maintaining a high volume of sales and turning over inventory rapidly,
economies of scale could be achieved, which reduced costs and provided customers with a large
selection. The second factor was a marketing approach called the hassle-free buying experience.
Listed on each automobile was the one price”lowest price. Customers came in, browsed, and
compared prices without being approached by pushy salespeople. If they had questions or were ready to
buy, a walk to a customer service desk produced a knowledgeable sales person to assist them. Finally,
and Gwych thought perhaps the most important, was the after sales service. Viverra Motors had
established a solid reputation for servicing, diagnosing, and repairing vehicles correctly and in a timely
manner”the first time.
High-quality service after the sale depended on three essential components. First was the presence of a
highly qualified, well-trained staff of service technicians. Second was the use of the latest tools and
technologies to support diagnosis and repair activities. And third was the availability of the full range of
parts and materials necessary to complete the service and repairs without delay. Gwych invested in
training and equipment to ensure that the trained personnel and technology were provided. What he
worried about, as Viverra Motors grew, was the continued availability of the right parts and materials.
This concern caused him to focus on the purchasing function and management of the service parts and
materials flows in the supply chain.
Gwych thought back on the stories in the newspaper s business pages describing the failure of
companies that had not planned appropriately for growth. These companies outgrew their existing
policies, procedures, and control systems. Lacking a plan to update their systems, the companies
experienced myriad problems that led to inefficiencies and an inability to compete effectively. He did
not want that to happen to Viverra Motors.
Each of the four dealerships purchased its own service parts and materials. Purchases were based on
forecasts derived from historical demand data, which accounted for factors such as seasonality.
Batteries and alternators had a high failure rate in the winter, and air-conditioner parts were in great
demand during the summer. Similarly, coolant was needed in the spring to service air-conditioners for
the summer months, whereas antifreeze was needed in the autumn to winterise cars. Forecasts were also
adjusted for special vehicle sales and service promotions, which increased the need for materials used to
prepare new cars and to service other vehicles.
One thing that made the purchase of service parts and materials so difficult was the tremendous number
of different parts that had to be kept on hand. Some of these parts would be used to service customer
vehicles, and others would be sold over the counter. Some had to be purchased from the car
manufacturers, or their certified wholesalers, and to support, for example, the guaranteed genuine
parts promotion. Still other parts and materials such as oils, lubricants, and fan belts could be
purchased from any number of suppliers. The purchasing department had to remember that the success
of the dealership depended on (1) lowering costs to support the hassle-free, one price”lowest price
concept, and (2) providing the right parts at the right time to support fast, reliable after-sales service.
As Gwych thought about the purchasing of parts and materials, two things kept going through his mind:
the amount of space available for parts storage and the level of financial resources available to invest in
parts and materials. The acquisition of the auto supermarket dealership put an increased strain on both
finances and space, with the need to support three different car lines at the same facility. Investment
dollars were becoming scarce, and space was at a premium. Gwych wondered what could be done in the
purchasing, supply chain, and inventory areas to address some of these concerns and alleviate some of
the pressures.
Task
As a newly appointed Purchasing Manager at Viverra Motors you are required to prepare a report for Llew
Gwych that addresses the following questions:
1. How might purchasing and inventory management policies and procedures differ because the
dealerships purchase different types of service parts and materials (e.g. lubricants versus genuine
parts) from different types of suppliers?
2. What do you see as the main weaknesses of the current purchasing and inventory management
practices at Viverra Motors, and how could these weaknesses be affected by the new acquisition?
3. How can supply-chain and inventory management concepts help Llew Gwych reduce investment
and space requirements whilst maintaining adequate service levels?
4. What recommendations would you make to Llew Gwych with respect to structuring the purchasing
and inventory functions for the Viverra Motors dealership network?
The report should be a confidential report for the CEO, and be presented as a suitably professional
document.
It is expected that your discussion will refer to appropriate models and theories covered in this course, but
your research should extend the theoretical discussion beyond the course material. The assessment criteria
should give you a clear indication of what you need to include in this assignment. The report should include
an effective introduction and conclusion; an executive summary of no more than one page to preface the

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