Gator Pop Operations
Dr. Everette S. Gardner, Jr.
1. Introduction
The alert student will recall that Alligator Sushi was originally developed at Wildflour
Restaurant’s flagship location in Missouri City. This product is composed of thin
slices of fresh alligator marinated in corn liquor. The processing cycle is relatively
simple. Fresh alligators are received daily from a supplier in Hope, Arkansas. On
arrival, the alligators are released in a pit in Wildflour’s bar. Accompanied by cheers
from bar patrons, Danny Darwin and John Cangelosi descend into the pit, wrestle
the alligators into submission, and tie them up. Next, the executive chef, Jose Lima,
enters the pit to slay and slice the beasts. Jose tosses the sushi into vats of 150proof corn liquor. Bartenders fish out slices from the vats as needed.
Matt Galante, Wildflour CEO, decided to develop a new version of Alligator Sushi as
a supermarket and liquor-store product. The sushi will be frozen and marketed as
an adult popsicle under the trade name “Gator Pops.” You have been engaged as
an operations management consultant to Matt.
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2. Simple exponential smoothing and seasonal adjustment
Your first task is to forecast national quarterly sales of Gator Pops. The table below
shows the results of seasonal adjustment for the first two years of actual sales (in
millions of pops).
Year Qtr t
1998 1 1
2 2
3 3
4 4
1999 1 5
2 6
3 7
4 8
Actual
Data
280
290
400
350
270
295
410
350
Moving
Avg.
Ratio
0.0
0.00
0.0
0.00
330.0
1.21
327.5
1.07
328.8
0.82
331.3
0.89
331.3
1.24
0.0
0.00
Sum of # of
ratios ratios
0.82
1
0.89
1
2.45
2
1.07
1
Sum
Avg. Seas. Adj.
ratio Index Data
0.821 0.820 341.4
0.891 0.889 326.1
1.225 1.223 327.0
1.069 1.067 327.9
4.005 4.000 329.2
331.7
335.2
327.9
Apply simple exponential smoothing with a weight of 0.50 to the last year of
seasonally-adjusted data. Start with a forecast of 329.2 for the first quarter of 1999.
A. What are the MAD and MSE values for 1999?
B. What are the seasonally-adjusted forecasts for each quarter in the year 2000?
C. Reverse the seasonal adjustment in the forecasts. What are the final forecasts
for each quarter in the year 2000?
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3. Trend-adjusted smoothing
Sales in Arcola, Texas (in thousands of pops) for the first three months after product
introduction in that market were:
Month
September
October
November
Arcola sales
100
120
130
There is not enough data to estimate seasonality in that market. Apply trendadjusted smoothing with the following weights: level = .3, trend = .1, and trend
modifier = .9.
A. What is the forecast for December?
B. What is the forecast for January?
C. What is the forecast for April?
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4. EOQ and safety stocks
After several years of Gator Pop production, Matt Galante realized that he needed a
better inventory management system for the major Gator Pop components: Gators,
wrappers, and popsicle sticks. Matt ordered every item once per week. He was
concerned about the reordering workload and wanted to explore alternative ordering
rules.
Matt asks you to develop an EOQ-based inventory management system for Gator
Pop components. As a test case, Matt provides annual demand forecasts in dollars
for the Brice’s Crossroads, Mississippi, sales region:
Item
Gators
Wrappers
Sticks
Annual demand $
$10,000
900
64
You may assume that demand is very stable and there is no need for safety stock.
The demand values above are forecasts for the next year from simple exponential
smoothing. You may ignore corn liquor demand because it is produced on site in bulk
quantities from very inexpensive components—fermentation time is only about two
hours so any shortages can be remedied quickly.
Answer the following questions:
A. What is Matt’s total inventory investment and re-ordering workload for these
items under current policy (ordering every item once per week)? Assume that the
work year includes 50 weeks, that is Matt orders every item 50 times per year.
B. Suppose that you implement the EOQ model with K = 1. Compute inventory
investment and re-ordering workload. What are the investment and workload
savings from the EOQ model?
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4. EOQ and safety stocks (cont.)
Matt becomes unhappy with the EOQ using K = 1 for Gators. He feels that the
ordering rate is still too high. Furthermore, demand has become variable and he is
concerned about possible stockouts. The demand forecast for next year is still
$10,000, although the standard deviation of forecast errors for monthly forecasts has
increased from near zero to $120.
Answer the following questions:
C. Compute the EOQ and reordering workload for Gators using K = 5.
D. Compute the reorder point and safety stock. Leadtime is 1 month and Matt
wants a 10% probability of running out of stock during one leadtime.
E. What are the minimum and maximum inventory investment values for the new
EOQ and safety stock policy for Gators?
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5. MRP
Matt asks you to experiment with MRP techniques for managing Gator Pop sticks.
Here are gross requirements for the next 6 weeks, in thousands of sticks:
Week
1
Gross requirements 20
2
5
3
10
4
20
5
5
6
70
Currently, there are 25,000 sticks on hand, with 5,000 sticks allocated to a special
order (for “Road Party 77” to celebrate the completion of the last section of the Sam
Houston Tollway—never mind that less than half of the exits on the Tollway are
complete). There is a scheduled receipt of 15,000 sticks due in week 1. Matt asks
you to order lot-for-lot, with a 2-week leadtime, and maintain a safety stock of 5,000
sticks.
Answer the following questions:
A. What are the net requirements for the 6-week period?
B. When should planned orders be received and released?
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6. Project management
Here are the activities in rolling out a new Gator Pop promotion:
Task
Description
Time
Immediate Predecessors
A
Get Matt to approve budget
2 weeks
B
Select advertising theme
2
A
C
Produce flyers
12
A
D
Buy radio time
3
B
E
Schedule magazine ads
3
B
F
Train salespeople
1
B
G
Prepare radio copy
4
D
H
Prepare magazine copy
6
E
I
Distribute flyers
2
C,F
J
Run special in supermarkets
3
G,H,I
Draw this project in activities on arrows format. Then answer the following
questions:
A. What is the earliest that this project can be finished?
B. Which activities are critical?
C. Which activities have the most slack?
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7. Waiting-line analysis
Matt asks you to analyze the idea of selling Gator Pops from a refrigerated cart on
the club level at Enron Field. This idea came from Yogi Berra, who was coaxed out
of retirement to assist the Astros in food service. Yogi estimates that customers will
arrive at the cart at the rate or 170 per hour throughout a ball game. Yogi plans to
run the cart himself and thinks he can serve about 3 customers per minute.
Matt’s instructions were as follows: “This may be a super idea, but I want to know
how long the waiting line is likely to be. If there are too many people in line, the club
level could get congested. I think about 20 people in line is all we can stand. Also,
how long will it take for people to wait in line and get served? If the fans think they
will miss a half-inning, they won’t bother to get in line. Here’s something else to
worry about: How do we know that Yogi can handle this thing himself? What would
happen if we had two or even three cart attendants? Get back to me when you can
answer my questions.”
What is your response to Matt?
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8. Dimensional analysis
There are two alternative sources of alligators that offer the quality necessary to
make Gator Pops. Shania’s Gators (Wildflour’s current supplier) has a 5-day
leadtime and sells its Gators for $38.50 per pound. Monica’s Gators is both cheaper
($35.00 per pound) and quicker (4-day leadtime). However, Monica’s records show
that she is in stock only 80% of the time, while Shania is in stock 95% of the time.
Matt asks you to pick a supplier using dimensionless analysis. He feels that leadtime
should receive a weight of 2, with price weighted at 4. The in-stock percentage is
most important and should receive a weight of 5.
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