Mama’s Eggs
A complimentary case study for chapter 11, Operations and SupplyChain Management, Bozarth et al….
Mama was well known around town and was even better known for hercooking. She had opened her restaurant 6 years ago and it was THEplace to go for the best homecooked food in town. Mama had akindness that could be found in all her foods.
Mama was busy. She not only owned the business, but was head cookand the host all at once. She was up at 5am and by 6am therestaurant was open. Her hearty breakfasts were legend, but ofcourse that was just the beginning. She also had the lunch anddinner rush to deal it.
The all-day breakfast was quite popular especially amongst thelocal early risers, including the truckers and floor workers at theauto plant. Her number one food input was the egg (Mama would sayher eggs are an “art” of all her recipes). She had a local supplycontract with a nearby egg farm, and she picked up eggs at 72 (6dozen) at a time. The egg supply farm was a pretty large operationand had to supply bulk quantities, so the minimum order incrementwas always 6 dozen eggs.
One September, Mama was planning her month. She would go to the eggfarm every Saturday and pick up her eggs for the coming week. Shehad established that she would use about 600 eggs per week. Alsofor September, the town labour day parade came right by therestaurant, and this always lead to an increase in demand.
Further, Mama had heard the that the local union may be planning awildcat labour intervention if talks with a local factory didn’t gowell. She knew what this meant; a picket line filled with hungrymen and women, all potential customers.
She was comfortable with seeing her egg inventory run down, but byFriday she would be around 12 dozen left with her busiest day infront of her. She had never run out of eggs except that one time.But she prefers no to talk about it. Even customers dare not bringit up.
Although the farm has offered to deliver her eggs, Mama prefers topick them up. Still on occasion she has used this service althoughit takes two days for them to place an order and for her to takedelivery. She finds these two days could cut into her remaining egginventory.
Her grandson is interested in her business and wants to help. As arecent graduate of an Operations course, he feels he can supportMama with her inventory management. The first thing he does isimplement an accurate measurement of food used on a weekly basis.He finds that eggs are used as per the following. However, this isfrom Mama’s memory, as she does not track all her weeklyusage.
Week Eggs Consumed
1 585
2 620
3 560
4 620
5 606
6 590
Questions
1) What types of inventory is Mama facing this September? Make sureyou provide the definition of the types of inventory and justifyyour answer based on the hints given in the case study.
2) What does the 6 dozen, order increment do to impact Mama’sordering practises? What motivates Mama to order from thissupplier?
3) What type of inventory back up can the store use to supplementtheir inventory. How can Mama improve her inventory practices andoffer more accurate data to her grandson?
4) Her grandson asks Mama if it would be ok to run out of eggs 10%of the time. “No way!” She cried. “I never run out of food. That itbe a sin!” He then suggests a 1% likelihood of running out, andMama agrees with this service level. What are, the equivalentZ-scores for these two service levels?
5) Given Mama’s eggs sales in the past, calculate the restockingpoint.
     What would the restocking points be if theservice level was based on the service levels as per Q#4
6) What are the implications of these two restocking points?
    To calculate standard deviation, use the formulafrom text
7) With a service level of 2.33, if the restaurant had 100 eggsleft over, what would the order for eggs be
8) If the weekly egg usage was exactly 576 eggs that were consumedevery week, using the Restocking formula, what would the safetystock requirement be? Why?