HOLLY FARM

DATA FROM CASE

Two operations:
Farm tour providing service
Ice-cream production producing goods

Marketing Decisions :
50% increase in Farm Visitors
Increase in ice-cream flavours

Questions:
Can farm tour capacity meet demand?
Can ice cream factory meet demand? (Capacity,
schedule, and use of stocks)

hollyfarm

Reasons for Increased Visitors?

Sales & Contribution
Year

1998

Number of Visitors

15k

1999
(Proposed)
22.5k

Entry Income

60k

90k

Retail

75k

65k

Farm Shop

27k

40k

Total

102k

105k

Ice Cream Sales Costs

Retail
Farm Shop
Total

50k
13.5k
63.5k

43.3k
20k
63.3k

Ice Cream Sales

Contribution
Retail
Farm Shop
Total

25k
13.5k
38.5k

21.7k
20k
41.7k

Ice Cream Sales Income

hollyfarm

CAN FARM CAPACITY MEET DEMAND (1999)?

Car Park:
Average Daily Demand = 15,000 x 1.5 = 200 per day
7x4x4
Capacity

= 40 x 4 + 6 x 40 = 400 per day

Peak Daily Demand

(August Weekend)

= 3,400 x 1.5 x 2/6 = 425 per day

4

Trailers (No data to estimate capacity)

Exhibition (No data to estimate capacity)
Rare Breeds (No data to estimate capacity)
Adventure Playground (No data to estimate capacity)
Picnic Area (No data to estimate capacity)

Milking Parlour
Average Hourly Demand = 80% x 200 = 64/hour
2.5
Capacity
= 12 x 6 = 72/hour
Peak Demand

hollyfarm

= 80% x 425 = 136/hour

2.5
= 23 every ten minutes
or 12 every five minutes

ICE CREAM PRODUCTION FOR FARM SHOP

YEAR

1998

1999
(Proposed)

DEMAND IN LITRES
RETAIL

50k

43.3k

FARM SHOP

13.5k

20k

TOTAL

63.5k

63.3k

PRODUCTION
(LITRES)

67.2k

Did annual production capacity match annual

demand in 1998? Would it have done so in
1999?

Did monthly capacity match monthly demand in

1998? Would it have done so in 1999?

hollyfarm

CAPACITY CONSTRAINTS IN ICE CREAM

PRODUCTION FOR FARM SHOP
Ice Cream Factory
Fast Freezing:
Finished Goods Freezer:
Maximum Storage Time:

350 litres/day
7,000 10,000 litres
6 weeks

For production, assume that maximum daily output is 350

litres per day, as this is the daily maximum for the fast
freezer (and for an efficient operation the pace of mixing
and fast freezing should approximate to that of ice cream
mixing). At present, the factory is working a four day week
providing a weekly output of 1400 litres per week or 5600
litres per month. Has this fixed production policy been
effective during 1998? Would it have been effective during
1999?
At present only one flavour per day is mixed, and the
equipment takes one hour to clean. As the factory works a
daily 8 hour shift, 7 hours are consequently used for
production. A daily output of 350 litres consequently
suggests an hourly output of 50 litres.
If the number of flavours per day is increased from one,
additional cleaning time will be required during
changeover, and daily mixing capacity will consequently be
decreased. For example, if two flavours per day are
produced, two hours of cleaning would be required,
thereby reducing daily production to 300 litres per day
(1200 litres per week or 4800 litres per month), unless an
extra hour is worked each day to increase production to
the fast freezer daily capacity of 350 litres. Alternative
ways (probably through careful daily scheduling) should
therefore be used to increase flavours without reducing
capacity.

hollyfarm

Planning Monthly Ice Cream Production

For each month:
OPENING STOCK
+
PRODUCTION
DEMAND
=
CLOSING STOCK

OPTIONS:
(a)

CHASE DEMAND?

(b)

LEVEL CAPACITY AND USE OF INVENTORIES?

(c)

VARYING CAPACITY AND USE OF

INVENTORIES?

(d)

INCREASE IN FLAVOURS PER DAY?

hollyfarm

Holly Farm Demand Calculations in Litres

J
Monthly retail
ice-cream sales
1998

2600

Monthly farm shop

ice-cream sales
1998
Farm visitors 0
Locals 300
Total 300

Total

2700

5300

3400

4400

5700

5500

5000

4900

3200

2300

5000

50000

0
500
500

0
400
400

600
200
800

900
300
1200

1400
600
2000

1600
600
2200

1700
700
2400

900
300
1200

300
500
800

0
500
500

0
1300
1300

7400
6200
13600

Total ice cream

sales
Production

2900

3200

5700

4200

5600

7700

7700

7400

6100

4000

2800

6300

63600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

67200

Stockholding

2700

5100

5000

6400

6400

4300

2200

400

-100
(0)

1500
(1600)

4300
(4400)

3600
(3700)

Forecast ret.
demand in 1999
Forecast farm
demand in 1999
Total forecast
demand in 1999
Production
Stockholding3600

hollyfarm

Holly Farm Production & Stockholding in Litres (Fixed Capacity) (One Flavour per Day)
J
Monthly retail
ice-cream sales
1998

Total

2600

2700

5300

3400

4400

5700

5500

5000

4900

3200

2300

5000

50000

0
300
300

0
500
500

0
400
400

600
200
800

900
300
1200

1400
600
2000

1600
600
2200

1700
700
2400

900
300
1200

300
500
800

0
500
500

0
1300
1300

7400
6200
13600

Total ice cream

sales
Production
Stockholding

2900

3200

5700

4200

5600

7700

7700

7400

6100

4000

2800

6300

63600

5600
2700

5600
5100

5600
5000

5600
6400

5600
6400

5600
4300

5600
2200

5600
400

5600
-100

5600
1500

5600
4300

5600
3600

67200

Forecast ret.
demand in 1999

2254

2341

4595

2948

3815

4942

4769

4335

4248

2774

1994

4335

43350

Forecast farm
demand in 1999
Total forecast
demand in 1999

450

750

600

1200

1800

3000

3300

3600

1800

1200

750

1950

20400

2704

3091
(3100)

5195
(5200)

4148
(4150)

5615
(5600)

7942
(7950)

8069
(8050)

7935
(7950)

6048
(6050)

3974
(3950)

2744
(2750)

6285
(6300)

63750

(2700)

Production
Stock holding
3600

5600
6500

5600
9000

5600
9400
(7000)

5600
10850
(7000)

5600
10850
(7000)

5600
8500
(4650)

5600
6050
(2200)

5600
3700
(0)

5600
3250
(0)

5600
4900
(1650)

5600
7750
(4500)

5600
7050
(3800)

67200

Monthly farm
ice-cream sales
1998

V
L
T

(7000)

hollyfarm

Holly Farm Production & Stockholding in Litres (Variable Capacity) (One Flavour per Day)
M

2700

5300

3400

4400

5700

5500

5000

4900

3200

2300

5000

50000

0
300
300

0
500
500

0
400
400

600
200
800

900
300
1200

1400
600
2000

1600
600
2200

1700
700
2400

900
300
1200

300
500
800

0
500
500

0
1300
1300

7400
6200
13600

Total ice cream

sales
Production
Stockholding

2900

3200

5700

4200

5600

7700

7700

7400

6100

4000

2800

6300

63600

5600
2700

5600
5100

5600
5000

5600
6400

5600
6400

5600
4300

5600
2200

5600
400

5600
-100

5600
1500

5600
4300

5600
3600

67200

Forecast ret.
demand in 1999

2254

2341

4595

2948

3815

4942

4769

4335

4248

2774

1994

4335

43350

Forecast farm
demand in 1999
Total forecast
demand in 1999
Production
Stockholding
3600

450

750

600

1200

1800

3000

3300

3600

1800

1200

750

1950

20400

2704

3091
(3100)

1400
2300

4200
3400

4148
(4150)
5600
5250

5615
(5600)
7000
6650

7942
(7950)
7000
5700

8069
(8050)
7000
4650

7935
(7950)
7000
3700

6048
(6050)
5600
3250

3974
(3950)
2800
2100

2744
(2750)
4200
3550

6285
(6300)
5600
2850

63750

(2700)

5195
(5200)
5600
3800

Monthly retail
ice-cream sales
1998

Monthly farm
ice-cream sales
1998

V
L
T

2600

Total

63000

hollyfarm

Holly Farm Production and Stockholding in Litres (Fixed Capacity) (Two Flavours per Day)
M

2700

5300

3400

4400

5700

5500

5000

4900

3200

2300

5000

50000

0
300
300

0
500
500

0
400
400

600
200
800

900
300
1200

1400
600
2000

1600
600
2200

1700
700
2400

900
300
1200

300
500
800

0
500
500

0
1300
1300

7400
6200
13600

Total ice cream

sales
Production

2900

3200

5700

4200

5600

7700

7700

7400

6100

4000

2800

6300

63600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

5600

67200

Stockholding

2700

5100

5000

6400

6400

4300

2200

400

-100

1500

4300

3600

Forecast ret.
demand in 1999

2254

2341

4595

2948

3815

4942

4769

4335

4248

2774

1994

4335

43350

Forecast farm
demand in 1999
Total forecast
demand in 1999
Production
Stockholding
3600

450

750

600

1200

1800

3000

3300

3600

1800

1200

750

1950

20400

2704

3091
(3100)

4800
5700

4800
7400

5195
(5200)
4800
7000
(6600)

4148
(4150)
4800
7650
(7250)

5615
(5600)
4800
6850
(6450)

7942
(7950)
4800
3700
(3300)

8069
(8050)
4800
450
(50)

7935
(7950)
4800
-2700
(0)

6048
(6050)
4800
-3950
(0)

3974
(3950)
4800
-3100
(850)

2744
(2750)
4800
-1050
(2050)

6285
(6300)
4800
-2550
(0)

63750

(2700)

Monthly retail
ice-cream sales
1998
Monthly farm
ice-cream sales
1998

V
L
T

2600

(7000)

Total

57,600

hollyfarm

10

Holly Farm Production & Stockholding in Litres (Variable Capacity) (Two Flavours per Day)
J
Monthly retail
ice-cream sales
1998

Total

2600

2700

5300

3400

4400

5700

5500

5000

4900

3200

2300

5000

50000

0
300
300

0
500
500

0
400
400

600
200
800

900
300
1200

1400
600
2000

1600
600
2200

1700
700
2400

900
300
1200

300
500
800

0
500
500

0
1300
1300

7400
6200
13600

Total ice cream

sales
Production
Stockholding

2900

3200

5700

4200

5600

7700

7700

7400

6100

4000

2800

6300

63600

5600
2700

5600
5100

5600
5000

5600
6400

5600
6400

5600
4300

5600
2200

5600
400

5600
-100

5600
1500

5600
4300

5600
3600

67200

Forecast ret.
demand in 1999

2254

2341

4595

2948

3815

4942

4769

4335

4248

2774

1994

4335

43350

Forecast farm
demand in 1999
Total forecast
demand in 1999
Production
Stockholding
3600

450

750

600

1200

1800

3000

3300

3600

1800

1200

750

1950

20400

2704

3091
(3100)

2400
3300

3600
3800

4148
(4150)
6000
6450

5615
(5600)
6000
6850

7942
(7950)
6000
4900

8069
(8050)
6000
2850

7935
(7950)
6000
900

6048
(6050)
6000
850

3974
(3950)
4800
1700

2744
(2750)
4800
3750

6285
(6300)
4800
2250

63750

(2700)

5195
(5200)
6000
4600

Monthly farm
ice-cream sales
1998

V
L
T

62,400

hollyfarm

11

RECOMMENDATIONS
Farm Capacities?

Ice Cream Annual Production Capacity?

Monthly Fixed or Variable Capacity?

Ramifications for HRM?

Number of Flavours?

Which Flavours?

Flavours per Day?

Influence of Fixed and Variable Capacity?

hollyfarm

12