1. Bruegger’s maintains relatively little inventory at either its plants or its retail stores. List the benefits and risks of this policy.
Bruegger’s Bagel Bakery operates with a minimal amount of inventories at the plant as well as their stores. This is an example of Just-in-Time (JIT) form of Operations where in the firm orders for inventory as and when they require. JIT form of operations has various advantages and benefits attached with it. The reasons for which Bruegger’s follows it is due to the “degree of freshness” it adds to the final product at the stores. It also helps in reducing the costs and space for storage. However, when a company follows JIT the quality of the final product augments and simultaneously results in higher level of customer satisfaction. Since there is no bulk orders taking place the “Ordering Cost” also goes down, lowering the ratio between “Ordering Costs” and “Holding Costs”. JIT also assists in reducing the “Lead Time” for the products and also diminishes the amount of Scrap and Waste during the operations. Finally, JIT form of Operations helps in reducing the overall “Cycle Time” for the whole Operations Process. On the contrary JIT also has various risks attached with it. The firm would not be able to satisfy in case of higher demands as they would not have enough inventories. Also in case there is an interruption in the production process due to the unavailability of raw materials, the productivity would fall. In JIT, firms depend upon certain suppliers and this could create a problem. The supplier might not be able to supply the required materials and availability of other suppliers might be limited. A JIT inventory system increases the risk of problems and failures on one end would affect the production chain and the operations. If the supply chain gets interrupted, everything would grind to a halt.
If too little inventory is maintained, there is a risk of stockout and potential lost sales. In addition, if there is not sufficient work-in-process inventory, the production process may become too inefficient, raising the cost of production. On the other hand, if too much inventory is maintained, the carrying cost may become excessively high. 2. Quality is very important to Bruegger’s

(a) What features of bagels do customers look at to judge their quality of bagels?

Quality is important feature of a successful business. Customer judge the quality of bagel by their appearance (size, shape, and shine), taste, and consistency. Customer also sensitive to the service they receive when they make their purchases. Bruegger’s devotes careful attention to quality at every stage of operation from choosing suppliers of ingredients, careful monitoring of ingredient, and keeping equipment in good operation condition to monitoring output at each step in the process. (b) At what points in the production process do workers check bagel quality?

At each stage of the production process, workers check bagel quantity. At the stores, employees are instructed to watch for deformed bagels and to remove them when they find them. (Deformed bagels are returned to a processing plant where they are sliced into bagel chips, packaged, and then taken back to the stores for sale, thereby reducing the scrap rate). Employees who work in the stores are carefully chosen and then trained so that they are competent to operate the necessary equipment in the stores and to provide the desired level of service to customer. The company operates with minimal inventories of the raw material and inventories of partially completed bagels at the plant and very little inventory at the stores. One reason for this is to maintain a high degree of freshness in the final product by continually supplying fresh product to the store. A second reason is to keep cost down; minimal inventories mean less space is needed for storage.

(c) List the steps in the production process, beginning with purchasing ingredients, and ending with the sale, and state how quality can be positively affected at each step.

Production of bagels at Bruegger’s begins at a processing plant, where the basic ingredients of flour, water, yeast, and flavorings are combined in a special mixing machine. After the dough has been thoroughly mixed, it is transferred to another machine that shapes the dough into individual bagels. Once the bagels have been formed, they are loaded onto refrigerated trucks for shipping to individual stores. When the bagels reach a store, they are unloaded from the trucks and temporarily stored while they rise. The final two steps of processing involve boiling the bagels in a kettle of water and malt for one minute, and then baking the bagels in an oven for proximately 15 minutes. Deformed bagels are returned to the main plant where they are sliced into bagel chips, packaged, and then taken back to the stores for sale, thereby reducing the scrap rate.

Steps for Bruegger’s Bagel Bakery Operations: i. Purchase ingredients from suppliers ii. Mix the dough iii. Shape the dough iv. Ship to stores v. Store the bagels vi. Boil and malt vii. Bake viii. Sell to customers
The company can improve quality at each step by monitoring output more carefully and training and education of the employees.

3. Which inventory models could be used for ordering the ingredients for bagels? Which model do you think would be most appropriate for deciding how many bagels to make in a given batch?

The basic ingredients can be purchased using either fixed order interval or fixed order quantity models. EOQ production lot size model is most appropriate for deciding the size of production quantity.

4. Bruegger’s has bagel-making machines at its plants. Another possibility would be to have a bagel-making machine at each store, what advantages does each alternative have?

If there is a bagel-making machine at each store, the company would have to invest in more machinery, more space for production and storage, and more workers training for the production of bagels. However, the lead time to make the bagels will be shortened. The shorter lead time will provide faster, more flexible response to customer demands and fresher bagels.