BUSINESS MANAGEMENT SAC 3

Unit 3: Corporate Management

Area of Study 3: The Operations Management Function

Key Knowledge:
the operations function and its relationship to business objectives and business
strategy;
characteristics of operations management within large-scale manufacturing and
service organisations;
key elements of an operations system (inputs, processes and outputs) in different
types of large scale organisations;
productivity and business competitiveness, their importance for and impact on the
operations system;
strategies adopted to optimise operations, including:
facilities design and layout
materials management
management of quality
extent of the use of technology;
ethical and socially responsible management of an operations system.
Key Skills:
Accurately use relevant management terms;
Analyse business information and data;
Apply knowledge and concepts to practical and/or simulated situations.
Analyse business information
Analyse strategies that arise through practices within operations management

Time Allowed: Reading Time 5 minutes
Writing time 90 minutes
Marks Allocated: 40 marks

Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers, sharpeners and rulers.
Students are NOT permitted to bring into the examination room: blank sheets of paper and/or white out liquid/tape.
No calculator is allowed in this examination.
Materials Supplied
Question and answer book is 6 pages
Additional space is available at the end of the book if you need extra paper to complete an answer.
Instructions
Write your name in the space provided above on this page.
All written responses must be in English.
Students are NOT permitted to bring mobile phones and/or any other unauthorised
electronic devices into the examination room.
Students are also NOT permitted to leave the room during the SAC.
The Production of Yakult (step by step)
Yakult's purpose-built factory in Dandenong is a technologically advanced manufacturing facility. It
incorporates some of the most up-to-date food-processing equipment available. Strict standards apply
to producing Yakult, ensuring a drink yield that is close to 99 per cent (this means that 99 per cent of
the raw ingredients end up in the bottle). There are no by-products and little waste. The Yakult factory
in Australia is based in Dandenong, Victoria, which produces Yakult for the whole of Australia and
New Zealand. Australia was the first English-speaking country chosen to launch Yakult due to its
close proximity to Asia.
Steps in the production process
1 Mixing of raw
ingredients
Skim milk
powder, sugar
and dextrose
are mixed with
filtered,
sterilised water
to make a
sweet milky
solution.
2 Sterilisation
The sweet, milky solution is sterilised at a high temperature for a short time, destroying any
bacteria that may be present. This process is called UHTST (Ultra Heat Treatment, Short
Time). The solution is then transferred to a 6000-litre fermentation tank via a closed system of
pipes and valves.
3 Fermentation tank
Live Lactobacillus casei Shirota strain, cultured and tested in our laboratory, is added to the
tank. The temperature of the tank is then reduced until the contents are at 37C (body
temperature). The solution is allowed to ferment in the tank for 69 days or until the numbers of
Lactobacillus casei bacteria reach their ideal concentration.
4 Control Panel
This machine is
fully
computerised and
controls the flow
of production.
Different coloured
lights indicate any
areas that need
attention.
5 Flavour tank
Citrus flavour is added to the concentrate.
6 Storage tank
The flavoured, concentrate is transferred to a 12 000-litre storage tank, containing a chilled
syrup solution. The tank is chilled to around 2C.
7 Water steriliser
Yakult uses water that is de-mineralised (any dissolved chlorides and fluorides are removed) by
a process called reverse osmosis. The water is then UV sterilised, after which it is stored in a
25 000-litre holding tank before being used in the production process.
8 Mixing tank
Prior to bottling,
the concentrate is
diluted with
filtered, sterile
water at a ratio of
1:1.
9 Injection blow-
moulding
machine
The plastic bottles are produced, on-site, from triple-grade food polystyrene.
The injection blow-moulding machine has the capacity to produce 11 000 bottles per hour.
10 Bottle storage
tank
Extra bottles are
made and stored
in a large, sterile
bottle storage
tank that is
capable of storing
750 000 bottles.
11 Selector
Bottles drop down a large funnel from the bottle storage tank into a large circular selector that
places the bottles in an upright position before being fed onto the filling line.
12 Printing station
Bottles move along
the conveyer belt to
the printing station
where the name
Yakult and the
appropriate labelling
information required
by law are printed on
the bottle in an
instant-drying, red
ink.
13 Filling, capping and sealing machine
The filling machine has the capacity to fill 40 000 bottles of Yakult per hour.
After the bottles are filled with Yakult, they are capped with a foil lid, printed with a use-by date,
sealed and transferred along the conveyor belt to the packaging facility.
14 Shrink wrap and packaging machine
It is here that the single bottles of Yakult are sorted into groups of five or 10 and shrink-
wrapped in polyethylene film. Ten x five packs are grouped together and wrapped again in
polyethylene film and then heat shrunk, forming a slab of 50 Yakult bottles.

15 Finished product
16 Refrigeration room
The slabs are transferred to a pallet, wrapped and stored at a temperature of 23C while
awaiting delivery to the stores.
17 Distribution
Refrigerated trucks deliver Yakult to the warehouses of the major supermarket chains (e.g.
Woolworths and Coles) for distribution to individual supermarkets. Yakult is also delivered
directly to independent supermarkets, milk bars, gyms, health food stores, motels, hospitals
and other outlets by Yakult sales consultants.

18 Hygiene
Yakult is a fermented milk drink that contains a live bacterial culture. In order to maintain the
high quality of Yakult, strict hygiene standards must be met in the production.
19 Yakult quality management system
Yakult maintains a comprehensive quality management system that complies with the
International Organization for Standardization (ISO 9001:2000). This ensures that its products
and services meet the highest international food-manufacturing standards. To make sure that
Yakults product is of the highest quality, samples are collected for laboratory analysis
throughout the production process to confirm that the quality assurance measures and the
quality control testing have been effective.
Yakult testing involves more than 120 samples per production run, upon which a total of more
than 120 tests are conducted. These determine Lactobacillus case numbers, check for potential
contaminants, microbiological quality, composition, acidity, physical attributes and taste. In
addition, each bottle is inspected for undesirable markings and incorrect printing.
Quality assurance measures are in place to maintain standards for personnel and factory
hygiene, equipment cleaning, processing methods and parameters, and product handling.
Yakult's quality assurance utilises a system called Hazard Analysis and Critical Control Points
(HACCP). The principles of HACCP are internationally recognised as an excellent method for
assuring stringently high standards.
20 Waste management
Cleaning: Yakult adheres to a comprehensive hygiene and sanitation program, following a
cleaning program that is predominantly governed by CIP (Cleaning in Place). Steam, an
environmentally friendly cleaner, is used to sterilise the pipes and tanks. A single-phase
chemical cleaner is used, reducing the numbers of chemicals introduced into the drains;
chlorine-based chemicals are not used.
Solid wastes: the amount of solid waste is relatively small and a number of measures are made
to reduce waste. Recycling occurs where it is economically and environmentally viable. Paper
products (skim milk powder bags, etc.) are recycled. The bottles are crushed and mixed with
other resin to be made into a variety of plastic products, such as chairs and tables.
Liquid wastes: any liquid waste goes into a holding tank in our water treatment facility. The
acidity (pH) of the water is adjusted with acid or alkaline to meet Melbourne Water standards
before being released into the sewage system.
21 Energy management
Yakult has a commitment to using energy efficiently and wisely for sound environmental and
economic reasons. The factory incorporates the latest equipment and techniques to reduce the
amount of energy used. For example:
all fluids are heated using heat exchange plates
all machinery is well maintained to function optimally, ensuring that energy is not lost or
wasted
no CFCs are used in cooling or refrigeration
off-peak rates are used for utilities whenever possible. For example, the ice bank water
storage keeps all water at 0C using compressors that are run in the evenings, during off-
peak rates
Yakults boiler uses natural gas and is run for short periods as required (therefore, no
pollution is emitted).
Source: Yakult Australia Pty Ltd website, http://www.yakult.com.au/product04.htm
Questions
Question 1
Identify and explain the three key elements of Yakults operations management system. In your
answer provide one example of each key element.














3 marks
Question 2
For each of the three key elements of Yakults operations management system that you described in
your answer to Question 1, describe one ethical or socially responsible management practice that
Yakult employs. Discuss how one of the practices could affect the corresponding element.























5 marks
Question 3
Describe the type of facilities layout used at Yakult. Justify your answer.




1 mark
Question 4
Yakult purpose-built its factory and office complex in Dandenong in 1993 at a cost of $30 million.
Explain one factor that Yakult could have considered in designing the layout of its operations at
Dandenong.




1 mark
Question 5
Explain one factor that Yakult might have considered when locating its Australian plant at
Dandenong.




1 mark
Question 6
Explain what is meant by the just-in-time (JIT) approach. Discuss the potential benefits of this
approach for Yakult.












3 marks
Question 7
Identify and describe two strategies (other than JIT) that Yakult uses or could employ to manage its
materials.









2 marks
Question 8
Discuss one benefit to Yakult of adopting an ethical and socially responsible approach to operations
management.








2 marks
Question 9
Explain why productivity would be important to Yakult and its operations.




1 mark
Question 10
The Dandenong plant in Victoria is the only factory in Australia and produces products for the
Australian and New Zealand markets. Explain how this affects its ability to be competitive in a global
environment.




1 mark
Question 11
Describe and justify two performance indicators that Yakult could use to measure the efficiency or
effectiveness of its operations.








2 marks
Question 12
Identify one type of computer-based process technology and explain how it is used or could be
applied at Yakults Victorian plant to improve efficiency.




1 mark
Question 13
A number of quality strategies are mentioned in the Yakult case study. Select two of these strategies
and explain how each strategy helps Yakult to optimise its operations.
















4 marks
Question 14
Analyse how the three central principles of total quality management (TQM) could help optimise
operations at Yakult.












3 marks
Question 15
a. Distinguish between the operations management system of a service organisation (e.g. hotel or
hospital) and a manufacturing organisation (e.g. a ball or car manufacturer).








2 marks
b. Identify and justify two strategies that could be used to optimise the operations management
system of both a service organisation (e.g. hotel or hospital) and a manufacturing organisation
(e.g. a ball or car manufacturer).
























4 marks
c. Analyse two strategies that a service organisation (e.g. hotel or hospital) or a manufacturing
organisation (e.g. a ball or car manufacturer) could use to ensure that its operations are ethical
and socially responsible.
















4 marks
Total: 40 marks