A STUDY OF OPERATIONS MANAGEMENT IN HOTEL JK RESIDENCY

Group 4B Bibek Samantaray (B10075) Parag Jain (B10094) Pinaki Majumdar (B10095) Smriti Mehrotra (B10111) V S Rama Krishna Chava (B10116)

Hotel Industry in India

Tremendous boom in recent years due to thriving

economy and increased business opportunities Supply of 110000 rooms and shortage of 150000 rooms currently Demand to exceed supply by 100% in next 2 years Hotel rates in India to rise by 25% Occupancy of hotels to rise by 80% 60000 rooms in planning and development stages Huge growth expected in budget and mid-market hotel segment

JK Residency
Located in Sakchi, Jamshedpur

Started around 5 months back

37 elegantly furnished rooms Tariff range: Rs 2000 Rs 6000 Restaurant (Appetite) that can seat 120 people Conference Hall (Concurrence) 60 people

capacity Rooftop Banquet (Steelscapes) 200 people capacity

Service Process Matrix

The Service Process Matrix is a classification matrix of service industry firms based on the characteristics of the individual firm's service processes

HOTELS

Managerial Challenges Service Factory

Low labor intense firms
Infrastructure choices are extremely important Inflexible capacity Scheduling service delivery is more important

Low customer interaction firms

Relatively more marketing challenges Attention to physical surroundings required to keep

track of constantly evolving industry standards SOPs can be used Organizational structure with many layers and a rigid relationship between layers is appropriate

Organization Structure JK Residency

Organization Structure
Total no. of employees : 120 Total no. of Administrative staff : 25 Heads: General Manager: Mr. Saikat Chatterjee Food & Beverage Production (Head): Mr. Ranjit Sharma Food & Beverage (Head): Mr. Hemant Gupta Room Division (Head): Mr. Saikat Chatterjee Housekeeping Department(Head): Mr. Paramjit Singh Finance & Accounts (Head): Mr. Barwa, Mr. Chinmaya Safety and Security (Head): Mr. Lakhanpal Front Office (Lead): Mr. Niranjan Baid Maintenance (Head): Mr Anurag Jain

Core functioning departments (1/3)

Food & Beverage Department
Responsible for food and beverage services to the

guests Second largest revenue generator for the hotel Separate sub-departments for restaurant, banquets, room service etc.
Food & Beverage Production Department
Responsible for preparation of food items.
Dish Type Process Type Indian Dish Chinese Dish Continental Dish Assemble to Order Made to Order Made to Order

Core functioning departments (2/3)

Front office department
Most important department of the hotel Largest revenue generator Responsible for processing guest reservations,

registering incoming guests, settling guest accounts, checking out guests etc.
Housekeeping Department
Responsible for cleanliness of guest rooms and

public areas Employs maximum number of people

Safety & Security Department
Responsible for security of the Hotels guests and

employees

Core functioning departments (2/3)

Finance & Accounting Department
Responsible for accounting work Responsible for managing required finances for day

to day operations Cost control

Maintenance Department
Responsible for maintaining exterior and interior

facilities of the hotel

Forecasting
Major business operations revolve around

forecasting right amount of occupancy Manpower planning and food preparation in the restaurant is based on forecasts of Room/Restaurant/Conference Hall/Banquet Hall occupancy Demand Management
JK Residency follows Active Demand Management Discounts to students (for e.g.: XLRI students) Organizing special functions on festival days Attractive discounts on bookings of conference hall/banquet hall Maintaining a superior quality of service and food

Basic components of forecasting Hotel

Raw material forecast for the kitchen
Affected by Room occupancy Banquet Hall/Conference Hall bookings Restaurant traffic

Linen forecast
Affected by Number of rooms Room occupancy Laundry service quality

Forecasting methodology at JK Residency

Qualitative forecasting employed
Historical Analogy

Seasonality Factor Analysis Past 5 month data

Month Actual Sales (Rs lakhs) November December January February March(Projected ) Total sales 28.25 28.25 5 5.4 5.75 6.2 5.9* Average Sales (Rs lakhs) 5.65 5.65 5.65 5.65 5.65 Seasonality factor 0.885 0.956 1.018 1.097 1.044

Seasonality Factor
Seasonality factor
1.2

Seasonality Factor

0.8

y = 0.046x + 0.8619 R = 0.786

Seasonality factor

0.6

0.4

Linear (Seasonality factor)

0.2

0 0 1 2 3 4 5 6

Months

Inventory Control (1/2)

Linen Inventory
Bed sheets, blankets and drapes are unique to

each room Absolutely necessary to maintain a minimum inventory of these items Fixed Order Quantity model employed
Grocery Inventory
Agreement with private contractors Price of the items fixed Contract renewed

annually Fixed Order Quantity model employed - order is made when the grocery inventory reaches a minimum threshold

Inventory Control (2/2)

Beverage Inventory
Procured through a local distributor Fixed Order Quantity model is employed

Manpower Planning
Months Days Full time employees Full time days Salary expense of full time workers Number of special occasions Expense on contract workers(per day) Contract Workers Salary expense of contract workers November 25 100 2500 400000 5 250 35 8750 December 27 120 3240 480000 9 250 63 15750 January 26 122 3172 488000 10 250 70 17500 February 24 130 3120 520000 12 250 84 21000

# Full time employee salary is Rs.4000 pm # No. of contract workers required per special occasion is

Materials Requirement Planning (1/5)

Final Output Food produced in the restaurant

kitchen Rough estimate of daily requirement of raw materials provided below

Materials Requirement Planning (2/5)

Materials Requirement Planning (3/5)

Based on raw material data, a sample material

requirements planning schedule was created

Non-Vegetarian Item Chicken Mutton Sea Food Daily Order Quantity 4 kg 2 kg 1 kg *Special Order Quantity 21 kg 8 kg 3 kg 1 day 1 day 2 days Lead Time

* Special Order Quantity refers to the occasions when both of their Banquet halls are occupied (as seen earlier one has a capacity of 200 people & another of 60 people)

Day 1 Day 2 Day 3 Day 4 Day 5 Day 6

Chicken
LT = 1 day Order quantity = lot-for-lot

Gross requirement Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases

4 4

21

0 0 4 2 2

4 4 4 2

4 4 4 2

4 4 4 2

4 4 21 2

21 21 4 8

Mutton
LT = 1 day Order quantity = lot-for-lot

Gross requirement Scheduled receipts Projected available balance Net requirements Planned order receipts Planned order releases

0 0 2 1 1

2 2 2 1 1

2 2 2 1

2 2 2 1

2 2 8 1

8 8 2 3

Sea food
LT = 2 days Order quantity = lot-for-lot

Gross requirement Scheduled receipts Projected available balance Net requirements

Planned order receipts

Planned order releases

0
1

0
1

1
1

1
3

1
1

3
1

Materials Requirement Planning (5/5)

The Restaurant business is basically Assemble to

Order in nature, hence the benefits from MRP as can be seen from the following table are HIGH
Industry Type Assemble to stock Fabricate to stock Assemble to Order Fabricate to Order Manufacture to Order Industry Applications & Expected Benefits Expected benefits High Low High Low High

Raw Material Security (1/2)

Most of the raw materials locally procured

Sea food and Dry fruits procured from other cities

through intermediaries Assured & continuous flow of raw material is required as inventory cannot be maintained due to the perishable nature of raw materials Raw Material Procurement Method followed: Fixed Period Contracts
Provides Raw material security
Provides insulation from price changes over the

time period

Raw Material Security (2/2)

Raw Material Type Period of Contract Other Salient Contract

features
Vegetables Monthly Price Fixed at the start of the month Non-Vegetarian Monthly Price Fixed at the

selection
Lowest Bid selected Lowest Bid

items
Grocery Yearly

start of the month

selected

Price Fixed at start of Lowest Bid the year, Mid-year price review also selected, also Parties allowing

done

Mid-year price
review given preference

Beverages

Yearly

Price Fixed at start of Lowest Bid

the year

Selected

Quality Management
Customer satisfaction key priority Restaurant
Inspection of raw materials for quality Quality ingredients used for preparing dishes Inspection of dishes before serving to customers

Rooms
Cleanliness of rooms ensured Clean linen used Perfect room service

Overall hygiene is given very high importance

Customer feedback on Quality solicited & utilized

Suggestions :Standard processes for maintaining quality(1/2)

ISO 22000
Standard on issues related to food safety It consists of: Interactive communication system management Pre-requisite programs HACCP

Hazard Analysis Critical Control Point (HACCP)

Systematic preventive approach to food &

pharmaceutical safety Addresses physical and biological hazards by tackling them through prevention techniques rather than inspection To reduce/eliminate the risk of hazards before they are realized Used at all stages of food production and preparation processes including packaging & distribution

Suggestions :Standard processes for maintaining quality(2/2)

Seven Principles of HACCP
Conduct a hazard analysis Identify critical control points Establish critical limits for each critical control point Establish critical control point monitoring

requirements Establish corrective actions Establish record keeping procedures Establish procedures for ensuring the HACCP system is working as intended

A study on day to day operations

Check-in and Check-out process
Check-in Personal Information & Security Deposit collection Luggage Check-in into the room Room service 5 10 15 20 25 60

Check-out Resolving outstanding account balances. Updating information. room guest

status

Creating guest history records. Feedback Housekeeping activities

Day to day operations

Housekeeping Responsibility of the housekeeping is to provide with clean rooms JK Residency runs a good practice of distributing a room cleanliness rating card Some issues noticed:
In some rooms, glass windows at both wall sides

where curtains cover over are not well dusted and cleaned Lack of proper inspection

Day to day operations

Outsourcing of laundry
Advantages - Convenience and low cost Disadvantages Checking laundry quality is not possible Hotel staff cannot spend time in checking every item Random checks may not give a proper picture Defects occur during cleaning process or transportation which will not be under the control of hotel Damaged items cannot be fixed and are very costly to replace

To avoid these issues, JK Residency adopted an

in-house laundry system

Day to day operations

Laundry Inventory Controlling items such as bedspreads, curtains Inefficient supervision leads to extra costs Loss and damage to be recorded immediately Use, Balance and Supply levels form critical control information to ensure availability when needed JK Residency keeps 3 times the number actually required Set 1 - Used in the room Set 2 Laundry Set 3 - Spare

Day to day operations - Maintenance

Furniture care and maintenance:
Interior furniture has a significant impact on the

guests perceptions of the hotel Preventive maintenance is essential and instructions on wooden items, glass ware should be strictly practiced Laminated tops are an essential element of most institutional furniture - spilled drinks and beverage rings would quickly mar the finish Furniture might get damaged while vacuuming the floor
Electrical Maintenance
Regular check-ups of lighting and other electrical

equipment in the guest rooms

Plumbing Maintenance

Fire equipment and fire procedures

Following equipment are installed
Emergency lighting system Automatic fire alarm system, Complete automatic sprinklers Room smoke detector

Exit signs and external escape stairs

Access to fire equipment stations are kept clear

and available at all times. Regular inspection of the equipment conducted to ensure that all are in working condition

Fire drills and procedures

Fire safety information and emergency

instructions, emergency contact numbers are provided in guest rooms Floor diagram and assembly exits are clearly guided Fire drills for all staff are conducted in the hotel regularly Staff are given clear instructions about appropriate use of fire extinguishers to different types of fire Issues noticed:
Portable fire extinguishers in between guest rooms

Security
A separate security section

Surveillance cameras, intercoms, public address

system installed 24x7 manned control room Regular training sessions conducted for security personnel

Suggestions(1/3)
Performance Management System- Balance Scorecard Best way to improve service quality is to institute performance management systems Implementation of Balance Score Card strategic performance management tool Helps to gauge the efficiency the hotel from both the owner's and manager's viewpoints
Financial parameters
Customer perspective related Measures Internal Business Process related Measures Learning and Growth related Measures

Suggestions(2/3)
Implementing Proper Yield Management Systems Yield management - Process of allocating the right type of capacity to right type of customer at the right price and time to maximize revenue or PRICE yield FIXED VARIABLE
PREDICTABLE Quadrant 1: Movies, Stadium/Arenas,
DURATION

Quadrant 2: Hotels, Airlines,

Convention
Centres UNPREDICTABL E Quadrant 3:

Rental cars,
Cruise lines Quadrant 4:

Restaurants, Golf Continuing courses care hospitals

Suggestions(3/3)
Implementing Proper Yield Management Systems Restaurant business falls in the 3rd quadrant Improvising the business by controlling duration of indeterminate time to determinate time. Example - Following a fix time reservation planning - It will ensure that the reservations are not blocking our manpower & capacity beyond a time. Yield from such an investment in capacity will be enhanced

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