Capacity Strategy Analysis and Operations Management Approaches at McDonald's
Overview
This case study examines McDonald's capacity management strategies, arguing that the level capacity strategy is optimal for the company's operations. The paper analyzes how McDonald's implements the four Ds model in operations management to maintain workforce stability, control inventory, and meet fluctuating customer demand across different peak hours.
What this case study covers
- Question 1: Level Capacity Strategy - evaluates why the level strategy is superior for maintaining steady workforce and production rates while managing inventory buffers during demand fluctuations
- Question 2: Four Ds Operations Model - discusses how McDonald's applies directing and design elements to coordinate complex operations and ensure quality and customer satisfaction
- Implementation considerations - addresses monitoring requirements, costs associated with excess inventory and outsourcing, and resource management
Preview
MCDONALD’S CASE
Question 1
The level capacity strategy is the best option for McDonald's over the other two capacity and demands reconciliation approaches. The level strategy is set to allow the business to maintain the workforce level and output rates over the planning. In this view, McDonald’s is bound to maintain an inventory level of the completed products higher than expected in situations of low demand variabilities. When the demand increases above the steady production rate, the business can continue maintaining a constant production and a stable workforce. In all this period, the surplus inventory of the completed products accumulated over the low demand can absorb the increased demand (Salvatore, Roberto, Borja & Jose, 2018). The approach is well applicable in the business, especially because peak hours are when the customers flock to the restaurant. This is when the demand is high, but the employees are steady, and the production rate is maintained. When the business experiences the low peak hours, the workforce is still steady, and production rates are maintained. The products surplus produced during the low peak hours can meet the demand during the high peak hours when the customers are more than expected capacity.
When using this strategy, McDonald’s is bound to set the production level in the forecasting period and break down the results regularly. The strategy is set to be sustainable at McDonald’s owing to the existence of adequate machines, equipment, and materials. In this strategy, the focus is always on the product output.