Holly Farm Case Study

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As for the farm shop sales, it seems that the Gillian’s forecast is a kind of optimistic to a certain extend. According to the proposal of Holly Farm to increase visitors by 50%, the number should grow from 14800 in 1998 to 22000 in 1999. Assuming that the “farm shop only” visitors is stable in 1999, and on average, every two paying visitors buy one liter of ice-cream, the sales generated from “farm shop only” visitors should be 12400 pounds

27200-14800/2*2=12400 pounds

and the sales in 1999 should be 34600 pounds.

12400+(14800*1.5)/2*2=34600 pounds

It is clear that the farm shop sale of 40000 pounds in 1999 is an overestimated forecast, and it should be around 35000 pounds.

2. Analysis and identifications of the capacity constraints within farm visit businesses. If Holly Farm wants to complete its objective to increase farm visitors by 50%, it may need to handle four major capacity constraints. The first one is the lack of parking area. Assuming that the peak of visiting occurs in August, 1999, with the number of 5100 (3400*1.5), and every Saturday and Sunday have the greatest visitor volume, with the number of 425 (5100/4/3), the existing parking area, with the number of 400 (40*4+6*40), cannot afford to satisfy 425 visitors to come.

The second constraint is the short opening period of the farm. It could be known from the case that the farm only opens from Friday to Monday, during April to October, and the opening hours only last 8 hours per day. With the growth of visitors by 50%, the company should arrange more opening hours and days during the peak month, and increase the number of months in which the farm is available.

The third constraint is the small capacity of milking parlor and its gallery. Based on the information of the case, the milking parlor opens from 4:30 pm to 7:00 pm, the gallery can only allow up to 12 people to visit. The queuing problem is serious in busy period, with a queue beginning to develop at 4:00 pm, and up to 80 people per hour passing through the parlor. This problem would be increasingly disturbing due to a great growth of visitors in the coming 1999.

Lastly, the fourth constraint is the idle time in the whole visiting process. According to the description in the case, although the farm is accessible at 11:00 am on opening days, nearly 90% of cars and coaches arrive later than 12:30 pm. The idle time is almost 1.5 hours.

Question 3

To extend its product flavors from 4 to 10, Holly Farm should take the following factors into consideration:

- The demand forecast and the customers‘ preferences. When Holly Farm plan to increase its flavors of products, the first thing it should do is the market research, aiming at investigate the preferences of flavors of customers. Then, to arrange its purchasing of raw materials and capacity of production, a new aggregate plan with new demand forecasts is a must, which is made based on the results of market research.

- The new raw materials and their storage. The extension of flavors requires several new kinds of raw materials, which the company has never considered and handled before. The company needs to seek proper suppliers and set purchasing prices at reasonable levels. The quality of materials, the reputation of suppliers, the distance of suppliers and the transportation methods are all the factors that need to be considered. Furthermore, after the receiving of raw materials, the storage of them is also essential. The expiration dates of raw materials may not consistent with the 6 weeks’ holding time of ice-cream, and new materials may need to be stored in different environment from before.

- The frequent clean-ups in the process. According to the case, the change of flavors in production will lead to a clean-up process, and it needs 1 hour. With a significant increment of flavors, the more frequent clean-ups are foreseeable. It will cause a rise of the production cost, and increasing idle time, which means the lower capacity of production. Moreover, clean-up process may become more difficult and time-consuming due to the increase of flavors, which may require more than one hour.