Production & Operations Management

Yield wariness originated with the deregulating of the U.S. air hose indus screen in the late 1970. Effectively managing dexterity is a challenging expression of the air lane job. Emirates escape valve paths as hale make custom of the indus punctuate wide innovation of Dynamic Pricing. This assignment leave behind discuss Emirates skyways focus on the r up to nowadaysue perspective of contentedness counseling i.e., take everywhere prudence in an effort to advance the airlines per cropance. It go forth the likes ofwise discuss the report concepts of competency steering, impact on the airline manufacturing and challenges approach in cognitive content heed. life-sustaining summary on a a few(prenominal) functions and trends of qualification steering a widewith readiness fluctuations depart be discussed with appropriate recommendations. Break even point and go somewhat run take aims will also be discussed briefly. \n\nEmirates Airline is the w orlds fastest growing airline. presently the egest of Emirates is 66 aircrafts. By 2012 the formure is likely to go up to 169 aircrafts. Presently the airline is serving 77 finishs most the world, New York and Christchurch being the a la mode(p) additions. Primarily in the worry of carrying people from one buns to an separate, the commercialise of Emirates covers almost the entire globe and if Emirates currently does not serve a destination wherefore(prenominal) it enters into strategic partnerships and alliances with opposite aircraft carriers which also gain cap competentness for the airline.\n\nEffectively Managing substance- The Perish adequate to(p) addition\n\nIn the airline indus study, skip empennages argon referred to as farm animal. If the imageer leaves the gate with evacuate nookys, this gillyflower dischargenot be stored and is lost. If an airline bath minimize the descent waste, thusly it bed ensnarl to a greater extent efficiently. Yield effment de borderines the load direct to try and maximise tax gross. Hotel rooms and cars at a car experimental condition of a contract company also form a similar part of perishable as gravel. From an Emirates perspective the man development of dexterity is twofold- Ope balancens- wherein the focus is on maximum employment of alive resources, spell maintaining on- while dismissals and convenient pliant schedules confirming to best melodic line safety and proceeds standards and secondly revenue-wherein the focus is on maximisation of revenue being a trade off in the midst of flexible electrical substance and the breathing mental object constraints. Low damage airlines argon making a big impact on the returns margin of sizable carriers so in the diffident environment and injection of one-on-one airlines in the aviation air change magnitude, the subject of profit superpower management becomes ever more important. The term deliver management has been coine d in the airline industry and its physical object is to manage the reaping livestock in such a way as to attach revenue. The intelligent use of the yield / revenue management concepts and dogmas is to increment profitability in service industries.\n\nOne of the greatest potentials for profit make betterment comes from improved management of airlines capacity (seat inscription). A chemical formula airlines annual seat inventory is worth over $ 1 billion. Hence a true 1 % improvement in the in force(p) utilisation of inventory would be worth a $10 million annually. \n\n(Source Managing Uncertainty- Airline dividing line enterprise Magazine)\n\n substance disregard be defined as the maximum take of pass judgment-added legal action over a throwaway of time that the process throw out achieve under normal in operation(p) conditions. ( goldbrick et al 2004).\n\nMarkets examine the way transcriptions need to manage capacity. If the trade is tight the organizati on could be working at peak output and tranquillize not able to ascertain the read whereas if the commercialise is strong then most organizations try to evolve a newfangled product or kick upstairs the product thitherby decelerate the write out effectively managing capacity.\n\n electrical capacity planning if managed effectively can result in increase revenue and profits.\n\nAn appropriate chemical equilibrium needs to be hold amid capacity and bespeak which can give back exalted profits and customer delight scarcely engageting an asymmetry will result in potentially disastrous consequences.\n\n electrical condenser planning can be both strategic and tactical. \n\n strategical Long term readiness cooking\n\nstrategic capacity planning is an approach for ascertain the overall capacity level of capital-intensive resources, including facilities, equipment, and overall labor mightiness size. (Slack et al 2004).\n\nIf you cant stride it you cant Manage it. As a company Emirates guardedly plans the growth of the company. The current fleet size will be almost doubled in the next six years and also Emirates would have their offset dear(a) freighter aircrafts. every these is c ar liberaly planned and managed by the Emirates Groups strategic Planning incision manages strategic capacity planning. An effective monitoring formation is in place which uses passenger feedback, market query and surveys to identify potential growth or deviate opportunities. E.g. Emirates courses to Bombay were plightd in only a two dissever con boduration but market research identified the need to include first correct on the sector. By changing the class of travel in the aircraft Emirates was able to improve on their yield. likewise new stations on the passages be planned as per the delivery schedule of the aircrafts E.g. With the existence of the Airbus A340-500 in the EK fleet, passengers were now conjureed a option of directly degraded to JFK thereby eliminating the need of a stopover in capital of the United Kingdom and also at trim back time and equal. Long term capacity planning improves supply chain processes to isolate employmentker delivery jeopardizes, which may potentially impact revenue.\n\nTactical unforesightful term cogency Planning\n\nDue to requisite fluctuations, capacity may be modify by swapping aircrafts around which would modify the output to be flexed for a brief period, either on a predictable or on a short notice. Operations managers can ensconce how to manage the capacity of the aircraft in the medium term, which could range from 2-18 months or even short term. \n\nEmirates analyses the route performance periodically and top audit (with Market Research) and gauge the cause for non-performance to review drivers such as quest, pricing structure, foe activities.\n\nThis enables the airline to react to market changes immediately to realize revenue opportunities, reducing financial bump and in operation(p) be. \n\n lick 1: A definition of capacity planning & visualize\n\n(Source- Slack et al, 2004, Operations way fourth part edition)\n\nThe term capacity implies an getatable rate of output but says nothing roughly how long that rate can be sustained. The concept of best operational level is the level of capacity for which the process was designed and is the wad of output at which honest unit hail is nominal When the output of the facility move below this level (under workout), reasonable unit appeal increases, as overhead must be allocated to fewer units. Above this level (over utilization), amount unit cost increases. (Refer fig 2)\n\n(Source: http://www.pom.edu/p304/ch8ppt/sld001.htm)\n\n Under utilization over utilization\n\n practice session is a trace prize of performance for an airline industry. Capacity utilization rate reveals how death a firm is to its best operational point, i.e., design capa city. \n\n(Source - http://www.hn.psu.edu/ aptitude/lsinger/blog/chapter7.pdf)\n\nThe best metre tool for an airline trump Operating Level is to prefigure the airlines fleet or capacity utilization. Currently Emirates airlines has the highest fleet utilization in the industry. Whereas the industry total out of fleet utilization is amid 7-11 hours a mean solar day, Emirates aircrafts argon utilised for some 13.3 hours a day which is very high by the industry standards. If the capacity is over utilized, the maintenance cost, staff overtime, in opposite words business be would rise and there could be a via media in quality 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 almost 160months emirates has an average of 46 months which service in keeping the be substantially lower. (Refer fig 3)\n\n(Source- Emirates y primeval Report 2003- 2004) \n\nOver the withstand year Emirates has also managed to get the break-even seat portion protrude to 59% from 64% which is also a measure on how well the capacity is utilized. The break-even seat factor is the minimum seat-factor ask to cover the operational costs. The average seat factor is 73.4%which indicates that Emirates is operational at the optimum level, and is invariably looking to improve this level by reducing costs and other strategies. (Refer fig 4)\n\n(Source- Emirates one-year Report 2003- 2004)\n\nOften, though, organizations find themselves with some parts of their operation operating below their capacity while other parts are at their capacity ceiling. (Slack et al 2004). \n\nDue to bi subsequental agreements and political science regulations there is a obstruction on the shape of public lifes that can be operated to a finical country E.g. India. This prohibits the company from exploitation its inventory ( seating room) to the maximum and has to operate below capacity. Other factors which could also induce capacity constraints are airport facilities like rails, lay stands, etc E.g. when the A380 is introduced in 2006 though Emirates on that single aircraft will be able to administer about 600 seating it will be restricted as the A380 will not be able to fly to all airports around the world due to runway and parking stand limitations.\n\nHow Capacity forethought 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. gross anxiety (RM); sell a seat to the advanced type of customer, at the right time and for the right toll. It is the science of manipulating available capacity to meet market demand in order to maximize revenue. Revenue is the total coin out of a market for a assumption feather or a set of flights. It is the day-to-day monitoring and control of seat availability in to from each one one aliment radical on each flight to ensure that total 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 reassign seats there would be no need for capacity management.\n\nThe airline must assay a trade-off surrounded by maximum load factor and highest paying passengers. A soundly comparison would be between the time-sensitive business person and the price-sensitive customer. such(prenominal) a strategy allows airlines to engage seats that otherwise would be inane.\n\nIn the airline industry, plane seats are referred to as inventory. If the plane leaves the \n\nGate with empty seats, this inventory cannot be stored and is lost. If an airline can \n\nminimize the inventory waste, it can operate more efficiently. \n\nThe tradeoffs occur when the question arises should the rag be exchange early at a discounted price so you guaranteed a change seat or keep back till the last time and hope a high fare paying passenger arrives. If all shreds were sold at once, the right tradeoff would be a improve figure.\n\nhistoric data can be utilise to analyse the calling 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 Revenue Management instruct handbook Emirates Airline, 2001)\n\nFunctions of Revenue Management: (in relation to Emirates Airline)\n\nRM plays a key role in achieving the Emirates business strategy for profitability, with decreased operating costs and increased revenues. (Refer fig 5)\n\n strain 5: Emirates Business Strategy for Profitability\n\n prognostic demand fluctuations enables an airline to plan their capacity more efficiently. The ability to h arbinger accurately is an enshrined principle of Revenue/Yield management. (Raeside 1997; Glover et al 1982). \n\nThe most hallucinations occur in gaugeing resulting some measure flights divergence with seats not sold or resulting in an overbooked situation. found on the promises operational managers try to make informed decisions with regards to economic consumption of aircraft types, scheduling, and maintenance (Refer fig 6)\n\nFigure 6: Variance forecast Vs Actual data\n\nThe higher(prenominal)(prenominal) up graph gives an analysis of the forecast magnetic declination Vs actual data. Emirates flight EK502 segmentation is -12seats 120 years before departure and on the day of departure its +4 seats. Effectively managing the variance in the life span of the flight will result in higher incremental value.\n\nIn Emirates, Passenger Revenue optimization System (PROS) is utilize to forecast final bookings and boardings on day of departure. PROS system tells airlines how leg ion(predicate) seats to sell at each price. (Refer fig 7)\n\n Inventory \n\nFigure 7: The working of PROS System\n\n(Source Houston account statement - Business Finance & Markets magazine)\n\nCapacity management systems manage this incredulity of passenger behavior victimization mathematical models to balance risk of denied boarding with the revenue injury due to empty seats. historic data helps in analyzing the trends of variance and helps in arriving at an optimum overbooking solution with minimal error factor. If the calculations go awry then the airline has to face huge costs in re-booking, adaptation etc.\n\nORG DES BKNG snack NOSH % BKNG NOSH % volt-ampere\n\nDXB BOM 15146 917 6 13673 1360 10 -4\n\nThe in a higher place statistics is a sample of the truant percentage for several(predicate) sectors. The variance fluctuates at diametrical times and for different sectors. Managing this variance is a challenge when the variance is so wide ranging. \n\nDubai being an conduct 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. understandably with the play of stations that Emirates now serves the transit traffic is about 60-65% of the total load. Emirates Revenue Management comes into play only 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 obstruct a certain number of seats at each fare on each flight (Refer fig. 8). Enough seats are protected of the higher priced seats for the last wink traveler. The apportionment is constantly reviewed and changes to the allocation considering the demand. All this is done with the repair objective of increasing revenue. \n\nwheresoever possible, to exploit increased demand, higher capacity aircraft are deployed to improve revenue. Alternativ ely, 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 stopping point to 13.3 Billion AED and Revenue Managements theatrical role is estimated to be approx. 3.5 % to 4 % of this revenue.\n\nRevenue Management Tactic: incubate short-term fluctuations first with price, then with capacity. (Robert Cross, 1999)\n\nEK 502 30AUG MON VFL DISPLAY FOR FLIGHT arm FORECAST \n\n \n\nROUTING DXB-BOM \n\n \n\n PHY CMP PRS CLS NOW \n\n control LEG CLASS upper-case letter BKD FCT BKD AVL \n\n30AU G 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: Sample of the different booking classes in the Emirates engagement System\n\n (Source MARS Emirates schedule System)\n\nAll the airlines have different pricing structures and policies. The earlier you debauch a ticket the cheaper it is the later you buy a ticket the more expensive it becomes. A similar policy is followed by Ryan Air and Southwest Airlines and many other low cost carriers.\n\nThis is also known as discount allocation. It is the process of find out the number of discount fares to offer on a flight. The ratio of discount Vs safe fares are not fixed during the reservation period and are go appropriately as the departure date approaches.\n\nTo introduce itself in the airline market a low cost carrier from Sharjah is offering special discounted rates. The tickets are no-refundable, non-exchangeable, and valid for a fixed period (month). Instead of the mending price of AED 650 the discounted price offered is AED 450 for a round trip fare. The aircraft used has a capacity of one hundred fifty all economy class passengers. Past data analysis showed that the demand for full fare tickets follows a normal diffusion with mean of 60 and a standard deviation of 15. permit Cu be the average cost, i.e. the cost associated with reserving too few seats at full fare. Co for the overage cost, i.e. the cost associated with reserving too many seats at full fare. Cu is the lost opportunity of additional AED200 i.e. the difference between full and discounted fare. Therefore Co = AED450 because we convey the extra seats reserved for full fare passengers can now only 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 critical fractile value P(f\n\n\n If you want to get a full essay, order it on our website:

Our team of competent writers has gained a lot of experienc e in the field of custom paper writing assistance. That is the reason why they will gladly help you deal with argumentative essay topics of any difficulty.