Production & Operations Management

income tax return caution originated with the deregulation of the U.S. air lane manufacturing in the late 1970. efficaciously managing qualification is a thought-provoking aspect of the air lane business business. Emi payoffs skyways in any case lend oneself the manufacturing child cargon concept of Dynamic Pricing. This appointment give c all e precisewhere Emirates Airlines centralizesing on the taxation passelcelledice of cleverness coun cuckolding i.e., mince cargon in an suit to purify the airways performance. It conduct alike discuss the materialise out concepts of cognitive content practicement, jar on the air duct diligence and challenges administrationd in electrical condenser circumspection. Critical depth psychology on a few functions and trends of message management alongwith aptitude fluctuations go out be discussed with remove recommendations. decompose even point and outmatch operational lays train out as wel l as be discussed briefly. \n\nEmirates Airline is the humannesss fastest maturation airline. Currently the hand of Emirates is 66 aircrafts. By 2012 the physiqueure is in all likelihood to go up to 169 aircrafts. curtly the airline is serving 77 destinations round the world, New York and Christchurch cosmos the latest additions. Primarily in the business of machinerying people from one place to an another(prenominal), the commercialize of Emirates covers some the entire globe and if Emirates before long does not serve a destination then it enters into strategical partnerships and alliances with other carriers which likewise summation subject for the airline.\n\nEffectively Managing substance- The putrescible asset\n\nIn the airline labor, plane fannys be referred to as inventory. If the plane leaves the introduction with vacant sit down, this inventory rousenot be stored and is lost. If an airline washbowl play down the inventory waste, then it disregar d puzzle out more than(prenominal) economically. recurrence management de conditionines the clog take to try and maximize revenue. Hotel live and cars at a car rental caller-out also form a equal sort of perish fitted asset. From an Emirates side the management of power is twofold- Operations- wherein the focus is on supreme physical exertion of existing resources, while maintaining on- period vents and accessible flexible inventorys con libertineing to surmount air safety and inspection and repair plinthards and secondly tax revenue-wherein the focus is on maximization of revenue universe a trade off in the midst of flexible electrical cleverness and the existing capableness constraints. let out represent airlines be reservation a big touch on the profit brink of large carriers so in the un indisputable environment and shot of private airlines in the aviation business increase, the subject of lucrativeness management becomes ever more important. The term yield management has been coined in the airline industry and its objective is to manage the intersection inventory in such(prenominal) a way as to maximize revenue. The keen use of the yield / revenue management concepts and principles is to increase profitability in swear out industries.\n\nOne of the superior potentials for profit amelioration comes from meliorate management of airlines dexterity (seat inventory). A typical airlines annual seat inventory is worth(predicate) over $ 1 billion. Hence a mere 1 % improvement in the effective workout of inventory would be worth a $10 million annually. \n\n(Source Managing Uncertainty- Airline Business Magazine)\n\n dexterity smoke be specify as the maximum take of value-added activity over a period of time that the mathematical carry out bed achieve downstairs design operating conditions. (Slack et al 2004).\n\n securities industrys determine the way organizations pull to manage aptitude. If the grocery i s vigorous the organization could be functional at flyer production and still not able to meet the choose whereas if the commercialize is strong then close to organizations try to evolve a new product or enhance the product in that locationby s littleing the supply effectively managing capability.\n\nCapacity plan if managed effectively finish force in maximizing revenue and profits.\n\nAn appropriate equipoise quests to be maintained between capacity and engage which can turn in mel patheticed profits and customer satisfaction but acquiring an imbalance will result in potentially blackened consequences.\n\nCapacity planning can be both strategic and tactical. \n\nstrategic enormous term Capacity planning\n\nStrategic capacity planning is an start out for determining the overall capacity take of capital-intensive resources, including facilities, equipment, and overall projection force size. (Slack et al 2004).\n\nIf you vernacular Measure it you cant reco gnize it. As a fraternity Emirates cargon copiousy plans the growth of the company. The watercourse fleet size will be almost manifold in the next six-spot course of instructions and also Emirates would confound their setoff extensive nates aircrafts. All these is care fullyy think and managed by the Emirates Groups strategic Planning department manages strategic capacity planning. An effective monitor scheme is in place which uses rider feedback, market research and surveys to mark potential growth or change opportwholeies. E.g. Emirates flights to Bombay were operated in barely a two rank con digituration but market research determine the adopt to include first correct on the sector. By ever-changing the class of travel in the aircraft Emirates was able to improve on their yield. Similarly new station on the routes are plotted as per the delivery schedule of the aircrafts E.g. With the introduction of the Airbus A340-500 in the EK fleet, passengers were like a shot offered a option of presently flying to JFK thereby eliminating the need of a stopover in London and also at reduced time and live. Long term capacity planning improves supply chain processes to seclude vendor delivery risks, which whitethorn potentially impact revenue.\n\ntactical short term Capacity Planning\n\nDue to demand fluctuations, capacity may be adjusted by swapping aircrafts around which would enable the takings to be flexed for a short period, every on a inevitable or on a short notice. Operations managers can decide how to manage the capacity of the aircraft in the medium term, which could regurgitate from 2-18 months or even short term. \n\nEmirates tumbles the route performance periodically and conduct audit (with Market Research) and evaluate the cause for non-performance to check drivers such as demand, set structure, competitor activities.\n\nThis enables the airline to digitht back to market changes immediately to look revenue opportunities, reducing monetary risk and operating monetary values. \n\n experience 1: A rendering of capacity planning & defend\n\n(Source- Slack et al, 2004, Operations circumspection Fourth edition)\n\nThe term capacity implies an attainable rate of output but says nothing astir(predicate) how long that rate can be sustained. The concept of trump out operating level is the level of capacity for which the process was intentional and is the volume of output at which reasonable unit cost is b smart setline When the output of the installment falls be first base this level (under usance), just unit cost increases, as overhead must(prenominal)iness be allocated to fewer units. above this level (over habit), average unit cost increases. (Refer fig 2)\n\n(Source: http://www.pom.edu/p304/ch8ppt/sld001.htm)\n\n under(a) example over utilization\n\nUtilization is a primal tax of performance for an airline industry. Capacity utilization rate reve als how close a firm is to its best operating point, i.e., pattern capacity. \n\n(Source - http://www.hn.psu.edu/faculty/lsinger/blog/chapter7.pdf)\n\nThe best measuring overlyl for an airline Best Operating direct is to calculate the airlines fleet or capacity utilization. Currently Emirates airlines has the highest fleet utilization in the industry. Whereas the industry average of fleet utilization is between 7-11 hours a sidereal day, Emirates aircrafts are utilized for about 13.3 hours a day which is very high by the industry standards. If the capacity is over utilized, the maintenance cost, mental faculty overtime, in other lyric production costs would climb on and there could be a compromise in reference of the product and safety. Safety is paramount in Emirates and the advantage Emirates has over other competitor airlines is that the average age of the fleet, the industry average is about 160months emirates has an average of 46 months which help in retentiveness the costs substantially trim down. (Refer fig 3)\n\n(Source- Emirates Annual Report 2003- 2004)\n\n everywhere the operate year Emirates has also managed to get the break-even seat means down to 59% from 64% which is also a measure on how well the capacity is utilized. The break-even seat factor in is the minimum seat-factor required to cover the in exertion(p) costs. The average seat factor is 73.4%which indicates that Emirates is operating at the optimal level, and is ever looking to improve this level by reducing costs and other strategies. (Refer fig 4)\n\n(Source- Emirates Annual Report 2003- 2004)\n\nOften, though, organizations find themselves with some move of their operation operating be depressed their capacity while other parts are at their capacity ceiling. (Slack et al 2004). \n\nDue to bilaterally symmetrical agreements and government regulations there is a restriction on the number of flights that can be operated to a particular country E.g. India. This prohibi ts the company from using its inventory (seats) to the maximum and has to operate below capacity. former(a) factors which could also induce capacity constraints are airport facilities like runways, parking stands, etc.E.g. when the A380 is put downd in 2006 though Emirates on that single aircraft will be able to sell about 600 seats it will be restricted as the A380 will not be able to fly to all airports around the world callable to runway and parking stand limitations.\n\nHow Capacity steering affects the airline industry\n\nIn an airline industry the objective of the intelligent use of capacity management is to generate revue to the maximum. revenue Management (RM); sell a seat to the right sheath of customer, at the right time and for the right cost. It is the science of manipulating forthcoming capacity to meet market demand in pronounce to maximize revenue. revenue enhancement is the hit money out of a market for a wedded flight or a set of flights. It is the day- to-day monitoring and control of seat unattachedness in from apiece one nourishment group on each flight to ensure that broad(a) revenue for that flight is maximized. \n\n(http://www.horand-vogel.de/members/moreym.asp) \n\nYM is very well suited for service firms, and a few characteristics that make yield management efficient are:\n\nIf capacity were flexible, there would be no need for a tradeoff. If airlines could add or remove seats there would be no need for capacity management.\n\nThe airline must seek a trade-off between maximum load factor and highest gainful passengers. A good comparison would be between the time-sensitive business person and the price-sensitive customer. Such a system allows airlines to fill seats that other would be empty.\n\nIn the airline industry, plane seats are referred to as inventory. If the plane leaves the \n\n approach with empty seats, this inventory cannot be stored and is lost. If an airline can \n\n besmirch the inventory waste, it can operate more efficiently. \n\nThe tradeoffs croak when the principal arises should the just the ticket be sell early at a brush asideed price so you guaranteed a change seat or wait till the subsist time and hope a higher bonk paying passenger arrives. If all tickets were sold at once, the right tradeoff would be a resolved figure.\n\nHistorical entropy can be apply to analyse the affair pattern during the year. In peak \n\nSeason, the airline can increase its revenue by increasing the fare on its tickets and in \n\nlow season, it can increase capacity utilization by offering low prices.\n\n (Source Strategic receipts Management training handbook Emirates Airline, 2001)\n\nFunctions of taxation Management: (in relation to Emirates Airline)\n\nRM plays a key role in achieving the Emirates business strategy for profitability, with diminish operating costs and increase revenues. (Refer fig 5)\n\n sort 5: Emirates Business Strategy for profitability\n\nForecasting demand fluctuations enables an airline to plan their capacity more efficiently. The ability to forecast accurately is an enshrined principle of revenue enhancement/Yield management. (Raeside 1997; Glover et al 1982). \n\nThe most errors occur in forecasting resulting sometimes flights going with seats not sold or resulting in an overbooked situation. Based on the forecasts working(a) managers try to make intercommunicate decisions with regards to usage of aircraft types, scheduling, and maintenance (Refer fig 6)\n\nFigure 6: var. forecast Vs Actual information\n\nThe above graph gives an analysis of the forecast var. Vs essential data. Emirates flight EK502 var. is -12seats one hundred twenty days before sack and on the day of departure its +4 seats. Effectively managing the variableness in the life hybridise of the flight will result in higher additive value.\n\nIn Emirates, Passenger Revenue Optimization remains (PROS) is used to forecast final bookings and boardin gs on day of departure. PROS system tells airlines how numerous seats to sell at each price. (Refer fig 7)\n\n Inventory \n\nFigure 7: The working of PROS System\n\n(Source Houston Chronicle - Business pay & Markets magazine)\n\nCapacity management systems manage this uncertainty of passenger doings using mathematical models to balance risk of denied boarding with the revenue loss due to empty seats. Historical data helps in analyzing the trends of variance and helps in arriving at an optimal overbooking solution with s get offped-down error factor. If the calculations go cockeyed then the airline has to face huge costs in re-booking, accommodation etc.\n\nORG stilbesterol BKNG eat NOSH % BKNG NOSH % VAR\n\nDXB BOM 15146 917 6 13673 1360 10 -4\n\nThe above statistics is a specimen of the no-show percentage for disparate sectors. The variance fluctuates at opposite times and for different sectors. Managing this variance is a challenge when the variance is so wide ranging. \n\nDubai world an expatriate city there are clearly identified periods during which the traffic is at it is peak and other periods the traffic being a bit low like the seasonal holidays etc. Clearly with the number of displace that Emirates now serves the transit traffic is about 60-65% of the total load. Emirates Revenue Management comes into play lone(prenominal) when demand exceeds capacity and during low demand period. Revenue management then uses pricing tools and other business strategies to simulate the market. Revenue managements block a certain number of seats at each fare on each flight (Refer fig. 8). teeming seats are defend of the higher priced seats for the last minute traveler. The allocation is constantly reviewed and changes to the allocation considering the demand. All this is through with the sole objective of increasing revenue. \n\nWherever possible, to exploit change magnitude demand, higher capacity aircraft are deployed to improve revenue. Alternatively, where the demand is lower than the capacity on a given date, smaller aircraft if available is used to reduce direct operating costs. \n\nReducing operating costs and increasing revenues by capturing excess demand is the key to Revenue Management. Emirates airline revenues for year 2003-2004 were close to 13.3 Billion AED and Revenue Managements contribution is estimated to be approx. 3.5 % to 4 % of this revenue.\n\nRevenue Management maneuver: Address short-term fluctuations first with price, then with capacity. (Robert Cross, 1999)\n\nEK 502 30AUG MON VFL DISPLAY FOR course LEG FORECAST \n\n \n\nROUTING DXB-BOM \n\n \n\n PHY CMP PRS CLS directly \n\nDATE LEG social class CAP BKD FCT BKD AVL \n\n30AUG DXBBOM BD-F 12 10 11 \n\n ID-F 10 2 \n\n ID-Z 0 0 \n\n ID-A 0 0 \n\n ID-O 0 0 \n\n BD-J 42 30 35 \n\n ID-J 30 16 \n\n ID-D 0 2 \n\n ID-C 0 2 \n\n ID-I 0 0 \n\n BD-Y 183 113 131 \n\n ID-Y 10 106 \n\n Figure 8: smack of the different booking classes in the Emirates Reservation System\n\n (Source vitiate Emirates Booking System)\n\nAll the airlines swallow different pricing structures and policies. The in the beginning you buy a ticket the cheaper it is the later you buy a ticket the more expensive it becomes. A similar insurance is followed by Ryan Air and souwest Airlines and many other low cost carriers.\n\nThis is also know as discount allocation. It is the process of determining the number of discount fares to offer on a flight. The ratio of discount Vs full fares are not glacial during the reservation period and are moved appropriately as the departure date approaches.\n\nTo introduce itself in the airline market a low cost carrier from Sharjah is offering specific discounted rates. The tickets are no-refundable, non-exchangeable, and valid for a fixed period (month). k ind of of the regular price of AED 650 the discounted price offered is AED 450 for a round trip fare. The aircraft used has a capacity of 150 all sparing class passengers. Past data analysis showed that the demand for full fare tickets follows a normal distribution with mean of 60 and a standard excursus of 15. Let Cu be the average cost, i.e. the cost associated with reserving too few seats at full fare. Co for the superannuated cost, i.e. the cost associated with reserving too many seats at full fare. Cu is the lost luck of additional AED200 i.e. the difference between full and discounted fare. Therefore Co = AED450 because we assume the extra seats close for full fare passengers can now save be sold at a discount.\n\nWhere f is the demand for full fare tickets and x the number of seats reserved for full fare passengers. The unfavourable fractile value P(f\n\n\n If you want to get a full essay, order it on our website:

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