MC DONALDS CASE:LOCATION AND LAYING OUT OF FAST FOOD BUSINESS:
Centroid Method: Outlets | No of burgers sold per month | Himayat Nagar | 1000 | Secunderabad | 2000 | Ameerpet | 2500 |

Coordinates of stores:
Himayat nagar(600,200)
Secunderabad(800,900)
Ameerpet(200,600)

The centriod point:
X coordinate: 600*1000+800*2000+200*2500/1000+2000+2500=490.9
Y coordinate: 200*1000+900*2000+600*2500/1000+2000+2500=636.36

Now from the cost point of view:
Suppose total requirement is 5500 burgers: LOCATION | FIXED COST/YEAR | VARIABLE COST/Unit | Total Cost | Banjara Hills | 250000 | 100 | 800000 | Himayat Nagar | 100000 | 300 | 1750000 | Mehndipatanam | 150000 | 200 | 1250000 | Secunderabad | 200000 | 400 | 2400000 |

From point of view of cost Banjara Hills is suitable.

TRANSPORTATION PROBLEM:

1. By Northwest Corner Method: In this method we will fulfill the demand starting from north and will proceed to south. BLUE= Demand Fulfilled or units supplied. BLACK= Cost of / unit transportation. Therefore, total cost of transportation using Northwest Method: = 80*4+20*7+70*3+120*8+10*8+150*5 =2460

FROM | TO | HiamayatNagar | | Secunderabad | | Ameerpet | Supply | Banjara Hills | 80 | 4 | | 12 | | 8 | 80 | Secunderabad | 20 | 7 | 70 | 3 | | 10 | 90 | Mehndipattanam | | 7 | 120 | 8 | | 16 | 120 | HimayatNagar | | 1 | 10 | 8 | 150 | 5 | 160 | | | | | | | | | Demand | | 100 | | 200 | | 150 | |

2.Least Cost Method: This method allocates as much as possible to the least-cost cell. Ties may be broken arbitrarily. Rows and columns that have been completely allocated are not considered, and the process of allocation is continued. The procedure is completed when all row and column requirements are addressed
Therefore total cost using least cost method :
=100*1+90*3+110*8+80*8+10*16+60*5
=2350

FROM | TO | HiamayatNagar | | Secunderabad | | Ameerpet | Supply | Banjara Hills | | 4 | | 12 | 80 | 8 | 80 | Secunderabad | | 7 | 90 | 3 | | 10 | 90 | Mehndipattanam | | 7 | 110 | 8 | 10 | 16 | 120 | HimayatNagar | 100 | 1 | | 8 | 60 | 5 | 160 | | | | | | | | | Demand | | 100 | | 200 | | 150 | |

3) Vogel's Approximation Method of Allocation:
This method also takes costs into account in allocation. Five steps are involved in applying the method
Step 1: Determine the difference between the lowest two cells in all rows and columns, including dummies.
Step 2: Identify the row or column with the largest difference. Ties may be broken arbitrarily.
Step 3: Allocate as much as possible to the lowest-cost cell in the row or column with the highest difference. If two or more differences are equal, allocate as much as possible to the lowest-cost cell in these rows or columns.
Step 4: Stop the process if all row and column requirements are met. If not, go to the next step.
Step 5: Recalculate the differences between the two lowest cells remaining in all rows and columns. Any row and column with zero supply or demand should not be used in calculating further differences. Then go to Step 2.

Iterations | Difference in rows | Difference in columns | | Row 1 | R-2 | R-3 | R-4 | Column-1 | C-2 | C-3 | Allocated | 1 | 4 | 4 | 1 | 4 | 3 | 5 | 3 | C2-R2 | 2 | 4 | 3 | 1 | 4 | 3 | 4 | 3 | C1-R4 | 3 | 4 | 3 | 1 | 3 | 3 | 4 | 3 | c2R3 | 4 | 4 | 3 | 8 | 3 | 3 | 4 | 3 | c1R3 | 5 | 4 | 3 | 7 | 3 | 3 | 4 | 3 | c3R4 | 6 | 4 | 3 | 7 | 8 | 3 | 4 | 2 | c3R1 |

Total Cost=2350

FROM | TO | HiamayatNagar | | Secunderabad | | Ameerpet | Supply | Banjara Hills | | 4 | | 12 | 80 | 8 | 80 | Secunderabad | | 7 | 90 | 3 | | 10 | 90 | Mehndipattanam | | 7 | 110 | 8 | 10 | 16 | 120 | HimayatNagar | 100 | 1 | | 8 | 60 | 5 | 160 | | | | | | | | | Demand | | 100 | | 200 | | 150 | |

ANS 1)Using the service design matrix the Mc Donalds service design would be at Faece to Face tight spects in which there is moderate to high production efficiency ,sales opportunities are also moderate to high and the customer contact is also on the higher side.

SERVICE SYSTEM DESIGN MATRIX

FACE TO FACE TOTAL CUSTOMISATION
FACE TO FACE LOW SPECTS
FACE TO FACE TIGHT SPECTS
PHONE CONTACT
INTERNET ON SITE TECH
MAIL CONTACT LOW SALES OPPORTUNITY HIGH
LO
HIGH PRODUCTION EFFICIENCY LOW LOW LOW CUSTOMER CONTACT HIGH

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