Master of Business Administration (Online)

TOMS 5302 Operations Management (SEM) Winter 2025

Mini Case Analysis

Instructor: Sana Mohsni

Submitted by: Group 21

Wael Al Hussan (101345551)

Neeraj Kumar (101360693)

Md Abu Sayed (101361431)

Konul Aliyeva (101363457)

Ghassan Bachour (101362434)

Gamino Khobalakrishnan (101362582)

February 16, 2025

JAM’s restaurant has been experiencing a decline in customer satisfaction, which is indicated by
their recent survey results. The primary issue contributing to the decline is their slow service,
inconsistent food quality and their inefficient kitchen operations. Their inefficient habits lead to
poor customer experience which in turn affects their profitability. Customers tend to expect fast
service and high-quality food at a reasonable price. Currently their employees struggle with their
workload due to an inefficient process and a lack of quality ingredients. Management on the
other hand are aiming for profitability and reputation management, but they lack quality control
systems on how to fix these concerns.

The cost of poor quality is evident in various areas. Internal failure costs include ingredient
wastage, wrong meal preparations and overall inefficiencies in the kitchen workflow. Their
external failure costs arise from customer complaints and negative reviews. Their profitability
also takes a hit with a significant number of customer refunds. This significantly impacts on
their revenue and brand. Appraisal costs involve efforts to inspect and maintain food control and
service quality and prevention costs include investments in employee training and process
enhancements.

Using a fishbone diagram shows root causes are poor kitchen workflow and understaffing during
peak hours is a big contributor to their issues. The limitations of their survey must also be
considered, the data was collected only from the weekend. It limits the full scope of the customer
experience by missing important weekday insights.

To address these challenges JAMs restaurant needs to implement several key improvements.
Optimizing kitchen processes can help reduce meal preparation times and ensure that food
quality is up to par and stays consistent. Employee efficiency can be increased by providing
structured training for both waitstaff and kitchen staff. This allows improved coordination and
communication between departments. Getting customer feedback outside of the weekends will
give more insight into what issues they have on other days, with real-time feedback
implemented.

By enhancing service efficiency, improving food quality and addressing their operational
incompetence, Jam’s Restaurant can improve significantly in many aspects. They will increase
customer satisfaction, strengthen their reputation and improve profitability. Introducing a
structured approach to quality management and process improvements will enable the restaurant
to sustain long-term success and remain competitive.
Question 1

Quality can be defined by the customers to illustrate their general satisfaction with a goods or
service1. Customer satisfaction contributes to profitability and ultimately the long-run success of
a company2. However, definition of quality varies among stakeholders, including external
customers, internal staff, and management.

In this report, the quality at JAM’S restaurant will be defined from the perspective of various
stakeholders, considering at least three dimensions of quality for each stakeholder group. The
factors that affect the quality are a combination of the promptness of seating, service of the
waiter, speed of service, enjoyability of food, and price of dinner. In addition, freshness and
authenticity of ingredients, proper preparation techniques adhering to traditional Mexican
recipes, consistent taste and presentation of dishes, excellent customer service, and positive
customer feedback are also considered. At the end of the day, the loyal customer is that a
restaurant needs to be focused.

1. External Customers (Diners or Patrons)

Restaurant diners or patrons feel that quality depends on the taste, texture, freshness,
presentation, and nutritional value of the food served. Customers expect dishes to be cooked to
their specifications, using fresh ingredients, and presented appealingly. They put a significant
emphasis on the flavor of the food. Both the aromas and tastes of the dish need to be enjoyable,
and the consistency needs to be suitable for the kind of meal being served. An ordered medium-
rare steak should arrive cooked as requested, with sides that complement its flavor. It is crucial
for patrons to leave the restaurant with the impression that the money spent on the meal and time
was satisfactory.

The quality of the service needs to be efficient, friendliness, attentiveness, and knowledgeable of
the wait staff. Customers value how kind and attentive the personnel are, and how long it takes to
serve. Patrons appreciate prompt seating, timely order-taking, and attentive service throughout
their dining experience. If a waiter anticipates drink refills without being asked that enhances
service quality.

The quality of the surrounding area, meaning servicescapes is determined by the atmosphere,
cleanliness, comfort, and aesthetic appeal of the restaurant environment. The ambiance of a
restaurant has a significant role in the quality of the experience as a whole. It is important that
guests feel welcome and at ease at the restaurant. Diners value a clean, well-maintained dining
area with appropriate lighting and background music that enhances the dining experience without
overpowering conversations.

Another important dimension is the perceived value of the dining experience in relation to its
cost. Customers expect that the amount of food and quality is justified by the menu prices. A
well-priced lunch menu offering substantial portions and high-quality ingredients provides good
value for money. In general, customers define quality is through value, or how well the meal
serves its intended purpose at a price customer are willing to pay1.

2. Internal Customers (Cook, Hostess Staff, Wait Staff, Ivan etc.)

For internal customers, quality depends on the fact that food is cooked in the same manner each
and every time. Consistency is of the utmost importance for a restaurant. The restaurant must
ensure that customers have the same experience every time they order food, and that includes
having the same experience with the flavor, the texture, and the presentation of the dish. Also,
delivering food on time and efficiency is also crucial.

No matter what, the food needs to be prepared in accordance with the criteria and standard
procedures established by the restaurant. The cook ensures overall kitchen workflow, quality of
ingredients, ease of preparation, and a safe work environment. Staff have full faith that the food
can be consumed without risk and that it is prepared appropriately.

Internal staff feel that customers judge the quality of the meal based on how aesthetically
pleasing it is presented. The way in which the food is presented is a significant component of the
overall quality. It is important that the food be presented in an appetizing style on the dish and
that it is visually attractive.

3. Restaurant management

Restaurant management defines quality in many different way that need to be addressed by the
organization. Quality work environment is one of the aspects for core management issue. The
conditions and support are conducive to efficient and effective work performance. Employees
value a well-organized kitchen with modern equipment and sufficient staffing levels to handle
peak hours without compromising food quality or service.

Arranging professional development programs through internal and external training sessions is
a vital process that ensures quality. Management ensures the opportunities and resources
provided for skill development and career advancement. Employees appreciate regular training
sessions on new menu items or customer service techniques, enhancing their ability to deliver
exceptional service consistently.

Management emphasizes monitoring and evaluating quality from external resources like
customer feedback. Surveys can be done by online reviews and ratings, customer survey,
feedback from regular patrons etc. Internal quality check is another tool that management
considers improving quality. These checks include regular taste tests by kitchen staff and
management, ingredient quality inspections, monitoring food safety compliance etc.

1. Krajewski L.J., Malhotra M.K., Ritzman L. (2019).: Operations Management - Processes and
Supply Chains, 12/E, 7th Edition; Pearson.

2. David A. Collier, and James R. Evans (2020): Operations and Supply Chain Management; 2nd
edition; Cengage.

Question 2

What are some examples of sources of costs of poor quality from the
perspective of the management and Ivan, respectively? Provide at least
three examples in each of the four quality cost categories (e.g., preventive
costs, appraisal costs, etc.).

Cost of poor quality is attributed to preventive costs, appraisal costs, internal failure cost
and external failure costs. Case mentions issues with promptness in seating, waiter service, speed
of service and enjoyability of food and dinner cost as criteria used in survey.
Cost of poor quality can be avoided by preventing defects and problems from occurring.
From Management perspective food quality can improve through good supplier relationships and
ensuring that restaurant receives higher quality ingredients such as fresh lettuce and tender
chicken. Investing in both kitchen and waiter staff training can improve food preparation and
customer service quality. This will lead to reduced mistakes and smoother operations. Incoming
food quality inspection can prevent lower quality product entering the kitchen, thus prevent
inferior quality food. Ivan can take initiative to learn efficient use of his time to manage orders,
improve customer interactions, addressing customer complaints and prevent poor service. He can
collaborate more closely with cook and provide him right information so that excellent quality
food is served within standard time of 12 minutes.
 Appraisal cost is associated with measuring and monitoring the quality of goods and
services. Management can introduce quality check list for the incoming ingredients to verify if
they meet set criteria and standards. Management should implement regular inspection at all
processes from order taking, food preparation to serving. They should conduct regular customer
survey and feedback and make improvements on those concerns. Ivan should double check
orders and provide right information to the cook so that correct meal is prepared as per customer
requirements. Ivan should inspect the meals before delivering to the customer and match it to the
order. He should monitor time from customer order and deliver food within standard delivery
times. He should engage with customer to ask often if they need any thing, and their informal
feedback as this could improve customer satisfaction.

Internal failure cost is associated with quality concerns within restaurant before food
reaches the customer. Management should implement measures to prevent food waste. If
restaurant discard wilted lettuce, tough chicken, and replace it with fresh product this can leads
to extra cost and lost time. Meal preparations should be accurate, as overcooked, or undercooked
meals can lead to customer dissatisfaction and lost time in food replacement. Mistakes in order
taking can increase delivery lead time and increased cost. Ivan should be careful when taking
orders and delivering food. Managing dissatisfied customer who did not get proper food add to
lost time. Any lost time means Ivan can only serve fewer customers in a day. Ivan would also
lose on tips. Dissatisfied customer may pay lower tip amount or worse not come back again to
the restaurant due to these internal failure cost.

External failure costs result from defects found after the product reaches the customer. If
customer complains about food or service and request refunds or discounts this can lead to extra
cost and lost revenue. Dissatisfied customers can spread negative reviews about restaurant, this
could affect restaurant consumer rating and reduced business. Customer could even report food
authorities about food quality and concerns which could lead to additional legal costs. Ivan
should treat customer with respect and serve with utmost care. A dissatisfied customer could
complaint management. If customers are complaining about speed of service as shown in data, it
might lead to reduce tips and can directly affect Ivan’s income. If multiple customers are
complaining every day than it can affect Ivan’s job satisfaction and could be demoralising.

Management should change quality control systems, especially incoming ingredient

Use some of the tools for improving quality to assess the situation at JAM’s, especially the
histograms and Pareto diagrams of customer complaints and the Cause-and-Effect
Diagrams (Fishbone) of dissatisfied customers. Utilize survey results and personal dining
experiences to make assumptions.
At JAM’s restaurant, customer satisfaction is closely tied to the quality of service and food. To
assess the situation, we can use quality improvement tools such as histograms, Pareto diagrams,
and cause-and-effect (fishbone) diagrams based on survey results and general dining
experiences.
The customer survey results indicate that while many customers are satisfied, there are
noticeable concerns about the speed of service and food quality. By organizing the responses into
a histogram, we can see that while most ratings are in the 1-2 range (satisfied), there are
significant numbers of 3, 4, and 5 ratings in the speed of service and food quality categories. This
suggests that these two factors contribute the most to dissatisfaction.
Using a Pareto diagram, we can analyze the primary causes of dissatisfaction. The data shows
that the speed of service and food quality are the leading concerns. If the restaurant prioritizes
addressing these issues, overall customer satisfaction is likely to improve significantly.
According to the Pareto principle, solving these key issues could resolve a majority of
complaints.
A cause-and-effect (fishbone) diagram helps in identifying the root causes of customer
dissatisfaction. Speed of service issues could stem from understaffing, inefficiencies in kitchen
workflow, or poor coordination between the waitstaff and the cook. The cook’s frustration with
poor-quality ingredients, such as wilted lettuce and tough chicken, suggests that supplier issues
might be contributing to food quality problems. Additionally, preparation times might be
inconsistent, especially during peak hours, leading to delays. These inefficiencies can impact
both customer experience and financial performance due to lost revenue from dissatisfied
customers and reduced tips for waitstaff.
The dining experience is also affected by seating arrangements. Since there is no designated
waiting area inside, customers must wait outside during peak hours, which can be frustrating.
This could impact their overall perception of the restaurant. Furthermore, if the waitstaff is
overworked, the service may not be as attentive, leading to lower customer satisfaction.
To improve the situation, JAMs should focus on better supplier relationships to ensure fresh and
high-quality ingredients. Improving kitchen efficiency by optimizing order management and
ensuring better coordination between the cook and the waitstaff could help reduce service delays.
Training staff to handle peak-hour demand more effectively may also help improve customer
experience. Additionally, implementing a more structured system for seating or a digital queue
system could manage customer expectations more effectively.
By addressing these issues, JAM’s can enhance customer satisfaction, which may lead to
improved tips for waitstaff like Ivan and better overall restaurant performance.
References
Collier, D. A., & Evans, J. R. (2020). Operations and Supply Chain Management (2nd ed.).
Cengage.
Krajewski, L. J., Malhotra, M. K., & Ritzman, L. P. (2019). Operations Management:
Processes and Supply Chains (12th ed.). Pearson.

Question 4

The survey data from the mini case of JAM Restaurant, which includes metrics like
"Promptness of seating," "Service of your waiter," "Speed of service," "Enjoyability
of food," and "Price of dinner," shows that most of the customers are very satisfied
(625) or satisfied (289), indicating overall positive experiences. However, there are
areas of dissatisfaction, particularly in "Speed of Service" and "Service of Waiter."
This result of the survey does not reflect the actual reality, and it is not helpful to
address the reasons for poor performance when it exists for two reasons. First, it
does not represent all of JAM's customers, and second, some instances of
information were not collected.
The survey data does not necessarily represent all of JAM's customers, for
the following reasons:
1. Voluntary Response Bias: Voluntary response bias occurs when survey
participants do not reflect the entire population. In the context of JAM
Restaurant, this indicates that customers who chose to complete the survey
likely have stronger opinions, either very positive or very negative compared
to those who opted out. Those with negative experiences are more likely to
respond, whereas individuals with neutral views may not participate (silent
majority). This will cause considerable bias, leading to wrong conclusions
about customers. It leads to a sample that over-represents extreme opinions
and under-represents moderate or neutral experiences.
For example, customers who waited too long to be seated might be motivated to
complain. In contrast, a customer with an average waiting time might not feel
compelled to respond. This can make the data seem more polarized than it actually
is and may exaggerate issues or successes and give misleading conclusions. If we
get a real example, let’s suppose 15% of survey respondents rated the speed of
service poorly. This might not mean that 15% of all customers were dissatisfied.
Instead, it means that only those who experienced unusually slow service chose to
respond, while most customers who received convenient and in-time service did not
participate.
To mitigate voluntary response bias, we may incentivize participation by offering a
small reward or discount or trying to take random sampling or trying to reach
customers through other channels like online reviews, social media, and in-person
conversations,
2. Limited Reach: The questionnaire might have reached only a portion of the
customers, for example, those making orders for takeout or delivery will not
be included in the survey.
3. Time Constraints: The survey could have been conducted during a certain
period of the day, thereby missing customers who dined outside that period.
However, as mentioned previously, many channels need to be used to reach
customers and gather their reviews. This will help overcome limitations in
accessibility and time.
Instances of Information Not Collected:
Instances of information not collected are specific details or data points that were
not gathered during the survey process, particularly when customers provided
negative or neutral feedback.
In the case of JAM restaurant, the survey will not provide a path for a customer to
relate in detail to his bad experience, such as the rudeness of a waiter or an
incorrect order. These pieces of information, if not available, may limit the
restaurant's response because it does not understand the issues expressed by its
customers. Because the survey uses a rating but does not include open-ended
questions. This means customers cannot explain why they were dissatisfied or
provide specific details about their experience. Another example is if a customer
rated "Speed of service" poorly, the survey does not capture whether it was due to
understaffing, kitchen delays, or other factors. Additionally, one of the main aspects
that the survey didn't address is the frequency of issues and whether the problem
the customer experienced is a one-time or recurring issue.
Demographic information such as age and gender were also not collected. This data
could help identify the relevance of information to each group. A negative response
about the "Price of dinner" might come from a college student on a budget, but the
survey does not capture this context.
Preferences are another area the survey didn't address. It does not ask what
customers preferred alternatives are. For example, if a customer finds the dinner
price too high, the survey does not capture what they consider a fair price.
In other words, the survey data does not represent all JAM customers, and it also
lacks in touching on the main reasons for issues and their priorities and, therefore,
the best way to address them.
Question 5
The breakdown of the quality costs above provides several key insights for JAM’s
restaurant managers. Indeed, the most significant quality cost category is internal
failure costs which accounts for 50.6% of the total quality cost, underlining JAM’s
operational inefficiencies. The high costs associated with rework and scrap indicate
frequent defects in its process design activities and the inconsistent ingredient
quality imported. JAM’s management should improve its processes and work with
suppliers to increase ingredient quality, optimize its kitchen processes and reduce
rework and scrap.
Furthermore, appraisal costs constitute 25.5% of the total quality costs with a
significant amount of the budget being spent on testing and inspections. While
these are essential for detecting and correcting problems (Collier & Evans, 2021),
JAM’s managers should strengthen prevention efforts on the front end in order to
reduce test and inspection costs on the back end.
In fact, comparatively, prevention costs only make up around 11.6% of the total
quality costs which indicates little to no investment in training, quality audits and
proactive measures. The managers need to increase investment in employee
training, supplier quality audits and process improvements to reduce future failure
costs. It is also important to note that Company XYZ lacks a prevention strategy
which is increasing JAM’s internal failures for rework costs due to vendor faults.
On another note, external failures represent 12.3% of the total quality costs. The
adjustment cost of customer complaints and formal complaints to vendors indicate
that defective products are reaching end consumers which can greatly impact JAM’s
reputation and its customer’s loyalty. In this case, JAM’s managers should address
customer concerns quickly by applying a clearly documented service recovery
process and empower its employees to use it whenever necessary (Collier & Evans,
2021). JAM needs to also improve vendor selection/accountability and enhance
service quality to reduce the risk of external failure costs.
Ultimately, to enhance the overall process efficiency and reduce quality-related
costs, JAM’s management should balance between prevention and appraisal efforts
and focus on increasing prevention investments to prevent and identify issues
before they lead to internal failures. Indeed, by shifting towards a proactive
approach with stronger prevention measures, reducing appraisal costs (by
optimizing inspections with standardized processes) and addressing external
failures, JAM’s managers can reduce waste, improve efficiency and enhance the
overall customer experience/ satisfaction which will lead to better profitability and
long-term success.

Reference:
Collier, D. A., & Evans, J. R. (2021). Operations and supply chain management (2nd
ed.). Cengage Learning.

1. Krajewski L.J., Malhotra M.K., Ritzman L. (2019).: Operations Management - Processes and
Supply Chains, 12/E, 7th Edition; Pearson.
2. David A. Collier, and James R. Evans (2020): Operations and Supply Chain Management; 2nd
edition; Cengage.