Background Information for Acme Mexico City
Acme Home Improvements, Inc. was founded in 1982 in Raleigh, North Carolina, USA. By mid 2015, the company had 125 stores along the US East Coast from Florida to Maine. Its annual sales are currently ~$5,400,000,000 with $280,000,000 net income. The average store is about 100,000 square feet with an additional 10,000 square feet of outside garden center. The stores typically carry 40,000 different products from 5,000 vendors worldwide. Major US competitors include Ace, Home Depot, Lowe's, and TruValue. All four operate already in Mexico. In the interests of seeking greater profits and buffering against downturns in the US market, Acme has determined to follow these and other competitors to Canada and Mexico. In the latter, it has established, in accordance with Mexican law, a joint venture with local interests, known as Acme Home Improvements de México, SA de CV ("Acme de México" or "Acme Mexico City"). (SA de CV = Sociedad Anónima de Capital Variable, a Mexican corporate form.)
There are five major product groups within each Acme store: plumbing and electrical supplies, building materials, hardware and tools, seasonal and garden/yard items, and paint, flooring and wall coverings.
Each store has a store manager, assistant store manager, bookkeeper, an information systems manager and an assistant, a manager for each of the five major product groups, customer service employees on the store floor to assist customers with their purchases, cashiers, receiving/stocking employees, and maintenance/janitorial employees.
Techniques Used in Operations Management
Overview
Working individually, students will demonstrate competency in operations management by analyzing three operations management techniques and applying them to improve Acme Mexico City's operations in an integrated report.
Two of the techniques are mandatory. They are:
• Data-driven decision-making aka data analytics
• Linear programming
The student will select the third technique from the following list:
• Sustainable supply chain management
The student will submit a report in pdf format that integrates their three analyses and the applications to Acme Mexico City.
Within your analyses on the first - Data-driven decision-making aka data analytics - and third - your choice of one from among
• Decision support systems
• Outsourcing to include offshoring, reshoring, and nextshoring
• Sustainable supply chain management techniques, please address the following:
• What is the general purpose of the technique?
• How does or should this help operations in general?
• What are the limitations of the technique?
• What are the costs involved? What training is needed to use the technique? What else is needed?
• At Acme Mexico City, what is the problem, opportunity, or challenge that this technique can address?
• How will the technique help Acme Mexico City's operations? Why?
• What would be the areas that present challenges in the approach (e.g., cost, personnel, training, culture, technology, management commitment, etc.?)
Within your analysis on linear programming applied at Acme Mexico City, address the following:
• What is your recommended low-cost (not necessarily the minimum cost) customer service employee daily assignment schedule?
• What are your underlying assumptions and any qualitative factors that you believe are involved?
• How might non-typical days affect the schedule?
Optionally, and for extra points to be determined by your section professor, provide a sensitivity analysis that shows how relaxation of the 50% constraint on the hours worked by part-time customer service employees might affect the daily personnel costs.
The following information is provided for your use in this linear programming analysis:
To the extent permitted by local law, each Acme Home Improvements store, including Acme Mexico City, is open from 7 am - 11 pm every day.
Acme Mexico City advance planners in North Carolina have provided the following table, which identifies the minimum number of customer service employees estimated to be needed on the floor of the store each hour of a typical work day:
Customer Service Employees
Time Period Minimum number needed on the floor
7 am - 8 am 10
8 am - 9 am 12
9 am - 10 am 18
10 am - 11 am 22
11 am - 12 pm 22
12 pm - 1 pm 26
1 pm - 2 pm 26
2 pm - 3 pm 26
3 pm - 4 pm 26
4 pm - 5 pm 26
5 pm - 6 pm 28
6 pm - 7 pm 28
7 pm - 8 pm 24
8 pm - 9 pm 22
9 pm - 10 pm 14
10 pm - 11 pm 12
In the interest of cost control, the planners have also imposed a not-to-exceed maximum of 30 customer service employees on the floor at any time.
Full-time customer service employees at AMC work a 9 hour shift (8 hours of work plus a 1 hour meal break) either from 7 am to 4 pm or from 2 pm to 11 pm. Workers on the 7-4 shift are assigned an hour-long lunch break at either 11 am or 12 noon. Workers on the 2-11 shift are assigned an hour-long dinner break at either 5 pm or 6 pm.
Part-time customer service employees work four consecutive hours per day and their shifts can start any hour between 7 am and 7 pm. They receive no meal breaks.
By company policy, which is consistent with Mexican labor law, the company limits the hours worked by part-time customer service employees to 50% of the day's total scheduled hours.
Part-time customer service employees earn $500 per day, and full-time customer service employees earn $1100 per day in salary and benefits (here, $ = Moneda Nacional, i.e., the Mexican peso).
Acme operations analysts working in North Carolina, working with the AMC advance planners, have used linear programming to propose in accordance with the foregoing factors, an employee assignment schedule for a typical day. Their proposed schedule is the following item in Course Content. You may elect to recommend this schedule or to recommend one that is different.