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Kathmandu University

School of Management

Managing Operations and Technology Assignment

Operation management tools on

Everest Food Products

Submitted to:

Jayan Nyachhyon

Submitted by:

Shishir Sharma

Roll Number: 17329

MBA 2nd Trimester

Date of Submission: 16th of August , 2017


Introduction

I own a potato chips manufacturing company, Everest food products. We currently


produce only potato chips. It is located in Maharajgunj, Kathmandu. Potato chips is only
source of revenue of my company. I myself am working as the factory manager too and have
appointed 5 people (temporary and permanent staffs) for the production purpose. We
currently buy all the supplies required for the manufacturing and they all come from Kalimati
vegetable market since potato is main raw materials of the product. The demand for our
product is all year. During festival season the demand of potato chips is higher.

We are targeting the customers of all classes and all age groups. We are offering two
different potato chips varieties.

 Spicy potato chips


 Plain potato chips

There are many competitors in case of potato chips. So, the core competencies on
which our company would be competing are taste, quality and less oily chips for
health conscious consumers. Since there are less manufacturer of confectionary items
in Nepal and there are few who are producing quality products so we are planning to
be number one in our product category by providing quality and healthy products. We
are planning to expand our product line by producing Nachos which will be made
from Corn as the demand for Nachos are increasing day by day. Currently our chips
are only available in the Kathmandu valley; soon we are planning to expand it to
Pokhara and Chitwan.
Supply Chain Management

My company has a many suppliers in Kalimiti Vegetable Market which supplies the
main raw material that is potato that we require on preparing the potato chips. Another raw
material for our product is pamolein oil and spices which are supplied by nearest wholesaler.
We don’t export anything from outside since we prepare chips from locally available
materials. As we gain the raw materials, we start producing the chips in our factory. The
finished products are then distributed by various distributors around Kathmandu. Finally, it
reaches the end customers.

Supplier
Kalimati Vegetable matrket Pamolein oil distributor

Everest food products

Distributors
Wholesaler Retailer

Figure: Supply chain of Everest food products

Our supply chain strategy is primarily focused on many suppliers, from Kalimati
Vegetable Market. We order raw materials in every 15 days from our supplier. We
don’t hold large amount of inventory since potato is perishable product and we have
good relation with our suppliers.

However, in our production process here at Kathmandu, we also apply strategies such
as vertical integration, specifically forward integration. As per forward integration,
our company ourselves also distributes the finished products from various retail
outlets at Kathmandu.
ANNUAL DEMAND

Since potato chips is confectionary items its demand is same all the year. The demand for
potato chips is higher around festival season i.e. during Bhadra, Ashoj and Kartik.

A rough estimate of annual demand is made in the following way:

Months Tentative demand schedule


Baisakh – Shrawan 50,000 packets
Bhadra – Mangsir 75,000 packets
Poush – Chaitra 40,000packets
Total demand 1,65,000packets

Also, here, calculating the average production requirement per day assuming that in a
year total number of production days is 200 days,

Average Requirement per Day= 1,65,000/200 = 825 units per day.


PRODUCTION PROCESS CHART

An order has
been placed

No
Are all Raw
materials Place an inventory order
available?

Yes

Peel the potato

Slice the potato in slicing machine

Dry the the slices of potato in the dryer

Mix the spices

Put it in the packet and seal it

Finish the Packaging and Deliver


KAIZEN:

 We are placing machine used for making potato chips in order first potato peeling
machine then potato slicing machine, potato frying machine, spices mixing machine
and in last packaging machine.
 We are also using first in first out method of inventory method to save potato from
decaying.
 We are using slider in packaging which makes easy in opening package and consumer
can store it by closing slider which helps to make chips crispy for longer period.
 Cleanliness is another major factor after the production of potato chips in our factory.
 We are introducing seasoning sachet in potato chips so the consumer can mix spices
as their want.
 We are keeping the order of wholesaler and procurement needed according to their
urgency so that there will be no delay in fulfilling order and in the production
process.
 We are producing the potato chips as if we are making it for the self-purpose.
PRODUCT DESIGN:

Potato chips are thin slices of potato, fried quickly in oil and then salted. We are also
producing potato chips without adding salts into it for the consumer who are health conscious
since sodium contained in salt is responsible for high blood pressure, but instead include a
small salt sachet in the bag for seasoning to taste. This makes our product different from
other. We treat the potatoes with chemicals such as phosphoric acid, citric acid, or calcium
chloride to reduce the sugar level, and thus improve the product's color.

QUALITY CONTROL:

Taste samples are made from each batch throughout the manufacturing process, usually at a
rate of once per hour. The tasters check the chips for salt, seasoning, moisture, colour, and
overall flavour. Colour is compared to charts that show acceptable chip colours. Preventing
breakage is a primary goal for potato chip manufacturers. Companies have installed
safeguards at various points in the manufacturing process to decrease the chances for
breakage. The heights that chips fall from conveyer belts to fryers have been decreased.
Plastic conveyer belts have been replaced with wide mesh stainless steel belts. These allow
only the larger chips to travel to the fryers and the smaller potato slice to fall through the
mesh.

INVENTORY MANAGEMENT:

We follow the JIT methods of inventory management that is we keep only what we need to
produce and sell products in inventory, which reduces storage and insurance costs, as well as
the cost of liquidating or discarding unused, unwanted inventory. To balance this style of
inventory management, we work together to monitor the availability of resources on ours end
and consumer demand on the retailer’s. Since our main raw material is potato and it is
available all around the year so we are not facing too much trouble by adopting this method.
Also we don’t have storage system for potato; due to this reason also we are using JIT
methods of inventory management.

HUMAN RESOURCE AND SCHEDULING:

There are currently 5 employees in our factory. One is helper for loading and unloading the
inventory and for cleaning purpose. Three employees look after manufacturing process.one
employee is driver of the van for inbound and outbound logistics. We also hire part time
employee during the peak season.
EQUIPMENT MAINTENANCE:

Equipment maintenance is important for any business. The heating and air conditioning units
are a considerable expense so they are maintained and checked regularly in our company. The
logistic van our company uses is always the oil changed and tires rotated according to the
manufacturer's recommendations. Additionally, any other necessary maintenance are
performed to keep them in good operating condition. Computers and other hardware (like
printers, copiers and scanners) used in our business is kept in good running order. Virus
protection, regular cleaning and proper care are utilized to keep them performing well.
Maintenance calendars is created to track all related tasks.

PRODUCT SCHEDULING:

We complete product schedules that help to get us from product development to the point of
sales to consumers. Product schedules is used in small business like ours and adapted to fit
our needs. We use scheduling to plan long-range projects or overall goals throughout the year.
We set deadlines for stages of projects and we pass accurate progress reports so everyone
involved is updated.

PROJECT MANAGEMENT:

In our factories I as project managers spend considerable amounts of time planning each
aspect of a product line. From acquisition of supplies and scheduling employees to shipment
costs and tariff fees, every detail of what is required to get a product manufactured and into
the hands of a consumer is considered by me. To effectively create a budget or devise a
strategic plan, every detail about our business, including marketing, overhead costs, salaries
and supply fees is accounted. From start to finish, we go through everything needed to
complete a project and create a timeline for it. We use a spread sheet to track the details and
logistics to perform long-term scheduling and planning.