Bachelor of Business Administration

School of Business

Production and Operation Management

“Project Report on Production and Operations Management

of Sparkling Water”

BBA 2021-24
Semester V

Submitted To: Submitted By:

Dr. Richa Agarwal Divy Savani
(Faculty of School of Business) Shubham Chandak
Tanish Jain
Yukta Rajput

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ACKNOWLEDGEMENT
First and foremost, we would like to express our gratitude to our Mentor, Prof.
Richa Agarwal, who was a continual source of inspiration. She pushed us to think
imaginatively and urged us to do this assignment without hesitation. Her vast
knowledge, extensive experience, and professional competence in Production and
Operation Management enabled us to accomplish this project. This endeavour
would not have been possible without her help and supervision. We could not
have asked for a finer mentor in our studies. This initiative would not have been a
success without the contributions of every individual. We were always there to
cheer each other on, and that is what kept us together until the end.

I would like to thank AURO University for providing us with the opportunity to
work on the project. Finally, I would like to express my gratitude to my family,
siblings, and friends for their invaluable assistance, and I am deeply grateful to
everyone who has contributed to the successful completion of this project.

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DECLARATION
We hereby declare that the work presented in the project in the report
entitled "Project Report on Production and Operations Management
of Sparkling Water” in partial fulfillment of the requirement for the
award of the degree of "Bachelor of Business Administration" at AURO
University, Surat, is a record of our work.

Further, we declare that this is our original work, and the analysis and
the findings are for academic purposes only.

Divy Savani – 022021099

Shubham Chandak – 022021031

Tanish Jain – 042021001

Yukta Rajput – 022021062

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EXECUTIVE SUMMARY
The report provides an overview of Sparkling Joy Pvt. Ltd., a beverage company specializing
in the production of sparkling water. It covers various aspects of the company's operations,
including its mission and vision, the beverage industry outlook, production processes,
marketing and advertising strategies, competitor analysis, and quality control measures.

The report highlights the importance of understanding consumer demand and its impact on
resource allocation decisions and manufacturing optimization. It delves into four qualitative
methods for demand forecasting, including grassroots input and market research. These
methodologies aim to provide valuable insights into consumer preferences and market
dynamics, enabling the company to make informed decisions regarding production and
operations.

In terms of production processes, the report mentions the final design of the sparkling water,
which includes five flavors. It also discusses the conversion cycle and emphasizes the need for
short-term planning, such as inventory planning, personnel planning, raw material
procurement planning, and budgeting. Forecasting is identified as a useful tool for
anticipating future earnings, revenues, costs, sales, pricing, and raw material availability.

The report touches on factors to consider in production and operations management, such as
long-range capacity planning, facility location, inventory management, and plant layout. It
introduces the point rating method for site location selection, considering factors like urban
industrial zones, supply chain resilience, and automation and robotics.

Additionally, the report addresses sustainability considerations, including carbon footprints,

wastewater management, scalability, and sustainable energy sources. It emphasizes the
importance of continuous monitoring and evaluation to ensure the company's operations
align with sustainability

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TABLE OF CONTENTS
A. INTRODUCTION .................................................................................................................. 7
THE COMPANY ....................................................................................................................... 7
SECTOR OUTLOOK .................................................................................................................. 7
B. OUR PRODUCTS.................................................................................................................. 8
FLAVOURS .............................................................................................................................. 8
C. PRODUCT DESIGN .............................................................................................................. 9
IDEA GENERATION ............................................................................................................... 10
PRODUCT SCREENING.......................................................................................................... 10
PRELIMINARY DESIGN AND TESTING .................................................................................. 13
FINAL DESIGN ....................................................................................................................... 13
D. PRODUCTION SYSTEM ..................................................................................................... 14
E. PRODUCTION PROCESS ....................................................................................................... 16
PROCESS ............................................................................................................................... 16
QUALITY CONTROL .............................................................................................................. 18
BYPRODUCTS/WASTE .......................................................................................................... 19
F. STOCK-KEEPING UNIT .......................................................................................................... 20
G. CORE SERVICES .................................................................................................................... 20
H. VALUE-ADDED SERVICES ..................................................................................................... 21
I.CONVERSION CYCLE .............................................................................................................. 22
J. PROCESS DESIGN .................................................................................................................. 23
K. LONG RANGE CAPACITY PLANNING.................................................................................... 25
L. BOTTLENECK......................................................................................................................... 27
M. FORECASTING ..................................................................................................................... 29
QUALITATIVE METHODS ...................................................................................................... 29
Historical Data: ................................................................................................................. 29
Delphi Method: ................................................................................................................ 29
Grassroots Method: ......................................................................................................... 30
Market Research: ............................................................................................................. 30
QUANTITATIVE METHODS ................................................................................................... 30
SIMPLE MOVING AVERAGE MODEL ................................................................................ 30
WEIGHTED MOVING AVERAGE MODEL........................................................................... 33
N. PLANT LAYOUT .................................................................................................................... 37

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 REASONS FOR USING PRODUCTION LAYOUT ..................................................................... 38
O. FACILITY LOCATION ............................................................................................................. 39
POINT RATING METHOD ...................................................................................................... 40
FACTOR RATING METHOD ................................................................................................... 40
CENTER OF GRAVITY METHOD ............................................................................................ 42
P. INVENTORY MANAGEMENT ................................................................................................ 44
Q. BREAK-EVEN ANALYSIS ....................................................................................................... 47
R. JOB SEQUENCING ................................................................................................................ 49
FIRST-COME-FIRST-SERVED .................................................................................................. 49
SHORTEST OPERATING TIME ............................................................................................... 49
LAST COME FIRST SERVED ................................................................................................... 50
EARLIEST DUE DATE FIRST.................................................................................................... 50
S. REFERENCES ......................................................................................................................... 51

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 A. INTRODUCTION

THE COMPANY

Sparkling Joy Pvt. Ltd. is a beverage company that produces sparkling water. The company is
headquartered in Kim near Surat, Gujarat, India. Sparkling Joy was founded in 2023 by a team
of entrepreneurs who are passionate about creating healthy and refreshing beverages. The
company's mission is to provide consumers with delicious and refreshing sparkling water that
is also good for their health. Sparkling Joy's vision is to become the leading sparkling water
brand in India.

SECTOR OUTLOOK

The beverage industry is a large and growing sector, with a global market size of over $2
trillion. Sparkling water is a major sub-sector of the beverage industry, with a global market
size of over $40 billion.

The beverage industry is expected to continue to grow in the coming years, driven by several
factors, including:

Increasing demand for healthier beverages: Consumers are increasingly looking for healthier
beverage options, and sparkling water is seen as a healthier alternative to sugary drinks like
soda.

Growing popularity of flavored sparkling water: Flavored sparkling water is becoming

increasingly popular, as consumers are looking for more variety in their sparkling water
options.

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Expanding distribution channels: Sparkling water is becoming more widely available, as it is
being distributed through a wider range of channels, such as supermarkets, convenience
stores, and online retailers.

The sparkling water industry is expected to continue to grow in the coming years, driven by
these and other factors. This growth presents opportunities for beverage companies that can
capitalize on the trend toward healthier beverages and the increasing popularity of flavored
sparkling water.

Here are some specific trends that are expected to impact the beverage industry in the coming
years:

The rise of functional beverages: Functional beverages are beverages that contain ingredients
that are purported to have health benefits. This trend is expected to continue in the coming
years, as consumers become more interested in beverages that can help them improve their
health and wellness.

The growth of the ready-to-drink (RTD) beverage market: RTD beverages are beverages that
are pre-packaged and ready to drink. This market is expected to grow in the coming years, as
consumers become more demanding for convenience.

The increasing popularity of sustainable packaging: Consumers are becoming increasingly

aware of the environmental impact of packaging, and are demanding more sustainable
packaging options. Beverage companies are responding to this demand by developing more
sustainable packaging solutions.

These are just a few of the trends that are expected to impact the beverage industry in the
coming years. By understanding these trends, beverage companies can position themselves
for success in the future.

B. OUR PRODUCTS

FLAVOURS

1. Citrus – lemon
2. Fruit – blueberry
3. Herbal – mint
4. Spicy – ginger
5. Floral – rose

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 C. PRODUCT DESIGN

In the realm of production and operations management, creating a well-designed product is

essential to meet consumer demands and ensure operational efficiency. Designing a product
like sparkling water involves a meticulous process that considers both the aesthetics and
functionality of the packaging, as well as the quality of the beverage itself.

There are various steps in product design:

1. Conceptualization and Idea generation

This initial stage involves brainstorming and ideation to determine the basic concept and
features of the sparkling water product. Consideration is given to aspects such as target
market, packaging design, flavour options, and differentiation from competitors. Ideas may be
generated through market research, trend analysis, and consumer feedback.

2. Design and Development

In this stage, the conceptualized ideas are transformed into tangible designs. This includes
creating mock-ups of the packaging, labelling, and branding for the sparkling water. The design
team collaborates with experts in materials, engineering, and marketing to ensure that the
product's visual appeal aligns with its intended market positioning.

3. Prototyping and Testing

Prototyping involves creating physical samples of the sparkling water packaging and
conducting testing to evaluate its functionality, durability, and aesthetic appeal. For sparkling
water, the packaging should effectively contain the carbonation, maintain the product's
freshness, and provide ease of use. Testing might involve carbonation retention tests, drop
tests, and ergonomic assessments of the packaging.

4. Refinement and Optimization

Based on the feedback and results from prototyping and testing, the design is refined and
optimized. Adjustments may be made to the packaging materials, shapes, closures, and
labelling based on the performance data and user feedback. The goal is to arrive at a final
design that ensures the product remains appealing and functional throughout its shelf life.

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IDEA GENERATION
• The sparkling water market in India is growing rapidly. In 2021, the market was valued
at INR 1.5 billion and is expected to reach INR 3.5 billion by 2026.
• The growth of the sparkling water market is being driven by several factors, including
increasing health awareness, rising disposable incomes, and changing consumer
preferences.
• Sparkling water is seen as a healthier alternative to sugary drinks like soda. It is also a
good source of hydration and can help to improve digestion.

PRODUCT SCREENING
Industry Overview

The sparkling water market in India is growing rapidly. In 2020, the market was valued at INR
1.5 billion and is expected to reach INR 3.5 billion by 2026. The growth of the sparkling water
market is being driven by several factors, including increasing health awareness, rising
disposable incomes, and changing consumer preferences.

Consumer trends

Consumers in India are increasingly looking for healthier beverage options. Sparkling water is
seen as a healthier alternative to sugary drinks like soda. It is also a good source of hydration
and can help to improve digestion.

Product considerations

When screening sparkling water products in India, it is important to consider the following
factors:

• Ingredients: Sparkling water should only contain water and carbon dioxide. Avoid
products that contain artificial sweeteners, flavours, or colors.
• Carbonation level: Some people prefer sparkling water with a lot of carbonation, while
others prefer it with less carbonation. Choose a product with a carbonation level that
you enjoy.
• Flavour: Sparkling water is available in a variety of Flavours, including citrus, fruit,
herbal, spicy, and floral. Choose a flavour that you enjoy.
• Price: Sparkling water prices vary depending on the brand, flavour, and size. Choose a
product that fits your budget.
• Brand: There are many different brands of sparkling water available in India, both local
and international. Choose a brand that you trust.
• Packaging: Sparkling water is available in a variety of packaging options in India,
including bottles, cans, and boxes. Choose a packaging option that is convenient for
you.

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Market Opportunity

The sparkling water market in India is expected to continue to grow in the coming years. This
presents an opportunity for businesses to enter the market and offer innovative sparkling
water products that meet the needs of Indian consumers.

The list of main participants in the Indian sparkling water industry:

i. Kinley:
Kinley is a brand of sparkling water owned by Coca-Cola.
It is available in a variety of flavours, including lemon,
lime, orange, and grapefruit. Kinley was first launched in
India in 1998. It is one of the most popular sparkling
water brands in India, with a market share of around 25%.

ii. Aquafina:

Aquafina is another brand of sparkling water owned

by Coca-Cola. It is available in a variety of flavours,
including lemon, lime, and orange. Aquafina was first
launched in India in 2000. It is one of the fastest-
growing sparkling water brands in India, with a market
share of around 15%.

iii. Perrier:
Perrier is a premium sparkling water brand that is imported from
France. It is available in the original flavour, as well as a variety of
other flavours. Perrier was first launched in India in 1995. It is a
popular choice for consumers who are looking for high-quality
sparkling water.

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iv. Schweppes:
Schweppes is a brand of sparkling water that is owned by The
Coca-Cola Company. It is available in a variety of flavours,
including ginger ale, tonic water, and club soda. Schweppes
was first launched in India in 1997. It is a popular choice for
consumers who are looking for a classic sparkling water
flavour.

v. Nestlé Pure Life:

Nestlé Pure Life is a brand of sparkling water that is
owned by Nestlé. It is available in a variety of flavours,
including lemon, lime, and orange. Nestlé Pure Life
was first launched in India in 2007. It is a popular
choice for consumers who are looking for a reliable
sparkling water brand.

vi. PepsiCo:
PepsiCo owns the brand Mountain Dew
Sparkling Water. It is available in a variety of
flavours, including black cherry, watermelon,
and mango. Mountain Dew Sparkling Water was
first launched in India in 2018. It is a popular
choice for consumers who are looking for a
refreshing sparkling water with a unique flavour.

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Competitor’s Share:
• Kinley – 25%
• Aquafina – 15%
• Perrier – 10%
• Schweppes – 8%
• Nestlé – 7%
• Pepsi Co – 5%

PRELIMINARY DESIGN AND TESTING

• Eco-Friendly Carbonation
• Infused Natural Flavours
• FSSAI Basic Registration

FINAL DESIGN

5 FLAVOURS

• Lemon
• Blueberry
• Mint
• Ginger
• Rose

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 D. PRODUCTION SYSTEM

BATCH PRODUCTION SYSTEM

• Artistry of Craftsmanship:
The batch production system weaves a tale of precision and creativity in crafting sparkling
water, capturing its unique taste and fizz in every batch.

• Planning and Scheduling:

Each batch's creation begins with careful planning, determining the quantity of sparkling
water to be produced, guided by market demands and available resources.

• Ingredient Alchemy:
Ingredients take center stage – purified water, the essence of sparkle, and if desired, natural
flavours akin to rare elixirs.

• Carbonation Choreography:
Carbon dioxide performs its effervescent dance, infusing water with bubbles and vibrancy,
crafting the heart of sparkling water's character.

• Flavour Symphony (Optional):

For flavoured varieties, natural flavours are introduced, transforming the brew into a
symphony of taste, and each drops a unique note.

• Quality Guardians:
Quality control takes the spotlight, ensuring carbonation levels, flavour balance, and overall
excellence meet the highest standards.

• Vessel Filling:
The climax arrives as sparkling water is poured into waiting vessels, capturing its magic like
starlight in crystal, sealed to retain its essence.

• Tapestry of Labels:
Bottles become canvases, adorned with labels of branding, flavour revelations, and
nutritional secrets, each telling its own story.

• Final Bow of Quality Assurance:

A select few bottles are chosen for a final assessment, the last bow to ensure the symphony
is complete, and excellence is sealed.

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 • Resting in Sanctuary:
Batches find their haven in storage, awaiting their destined journey to delight seekers,
promising tales of sparkle and flavour.

The batch production system for sparkling water encapsulates the craftsmanship, magic, and
excellence that characterize each batch, creating a symphony of taste and fizz in every sip.

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E. PRODUCTION PROCESS
PROCESS
1. Water treatment
The first step in the production of sparkling water is to treat the water to remove impurities
and contaminants. This may involve filtering the water, adding chemicals to disinfect it, or
degassing it to remove dissolved gases.
• Filtering: The water is filtered to remove impurities such as dirt, sediment, and
bacteria. This can be done using a variety of filters, such as sand filters, cartridge filters,
and activated carbon filters.
o Sand filters are the most common type of filter used in the production of
sparkling water. They remove large particles of dirt and sediment from the
water.
o Cartridge filters are used to remove smaller particles of dirt and sediment. They
are typically made of paper or plastic.
o Activated carbon filters are used to remove dissolved gases and impurities from
the water. They are made of activated carbon, which is a form of charcoal that
has been treated to have a high surface area.
• Disinfection: The water is disinfected to kill harmful bacteria and viruses. This is
typically done by adding chlorine or ozone to the water.
o Chlorine is the most common disinfectant used in the production of sparkling
water. It is effective at killing bacteria and viruses, but it can also give the water
a slight taste.
o Ozone is a more effective disinfectant than chlorine, but it is also more
expensive. It does not give the water a taste, but it can react with other
chemicals in the water to form harmful byproducts.
• Degassing: The water is degassed to remove dissolved gases such as oxygen and
nitrogen. This is done by bubbling the water through a vacuum or by heating it.
o Bubbling the water through a vacuum is the most effective way to degas the
water. However, it is also the most expensive.
o Heating the water is a less effective way to degas the water, but it is also less
expensive.
2. Carbonation
The next step is to carbonate the water. This is done by injecting carbon dioxide gas into the
water under pressure. The amount of carbon dioxide gas that is added will determine the level
of carbonation in the finished product. The higher the pressure, the more carbon dioxide gas
will dissolve in the water. The typical level of carbonation in sparkling water is between 2 and
4 volumes of carbon dioxide per liter (v/v).

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The carbonation process can be done using a variety of methods, such as:
• Pressurized tanks: The water is pumped into a pressurized tank where it is mixed with
carbon dioxide gas.
o This is the most common method of carbonation used in the production of
sparkling water.
o It is a relatively simple and efficient process.
• Carbonation towers: The water is sprayed into a tower where it is mixed with carbon
dioxide gas.
o This method is less common than pressurized tanks, but it can be used to
produce a more uniform level of carbonation.
• Membrane carbonators: The water is passed through a membrane that allows carbon
dioxide gas to pass through but not water.
o This method is the most expensive, but it can produce a very high level of
carbonation.
3. Flavoring
If desired, flavorings may be added to the water at this stage. This can be done by adding
natural or artificial flavors, or by blending the water with other beverages such as juice or
syrup. The most common flavors for sparkling water are lemon, lime, and orange.
The flavorings are typically added to the water after it has been carbonated. This is because
the carbon dioxide gas can help to dissolve the flavorings in the water.
4. Bottling
The carbonated water is then bottled or canned. The bottles or cans are then sealed and
labeled. The type of bottle or can used will depend on the intended market for the sparkling
water. For example, glass bottles are often used for premium sparkling waters, while plastic
bottles are more common for budget brands.
The bottles or cans are then filled with carbonated water and sealed. The bottles or cans are
then labeled with the product name, nutritional information, and other relevant information.
5. Storage and distribution
The carbonated water is then stored and distributed to retailers. The storage conditions will
vary depending on the type of packaging. For example, glass bottles must be stored in a cool,
dark place to prevent the flavors from fading.
The carbonated water is distributed to retailers by trucks or ships. The retailers then sell the
carbonated water to consumers.

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QUALITY CONTROL
• Physical and chemical testing: The physical and chemical properties of the sparkling
water, such as its pH level, dissolved solids content, and carbon dioxide content, are
regularly checked to ensure that they meet the required standards.
• Microbiological testing: The sparkling water is also tested for the presence of
bacteria and other microorganisms. This is done to ensure that the water is safe for
consumption.
• Sensory testing: The sparkling water is also evaluated for its taste, smell, and
appearance. This is done to ensure that the water meets the desired quality standards.
• Packaging inspection: The packaging of the sparkling water is also inspected to
ensure that it is free of defects and that it protects the water from contamination.

In addition to these regular quality control measures, sparkling water manufacturers may also
implement additional measures to ensure the quality of their products. For example, they
may use aseptic packaging methods to prevent contamination, or they may use a HACCP
(Hazard Analysis and Critical Control Points) system to identify and control potential hazards.

Some of the potential concerns with sparkling water:

• Bacterial contamination: If the sparkling water is not properly treated or bottled, it

can become contaminated with bacteria. This can cause food poisoning.
• Chemical contamination: The sparkling water may also be contaminated with
chemicals, such as chlorine or lead. This can happen if the water is not properly treated
or if the bottles or cans are not made from safe materials.
• Loss of carbonation: The carbon dioxide gas in sparkling water can gradually escape
over time. This can make the water taste flat.
• Too much carbonation: Too much carbon dioxide gas in sparkling water can cause
bloating and other digestive problems.

It is important to choose sparkling water from a reputable manufacturer that follows strict
quality control standards. By doing so, you can help to ensure that the sparkling water you
drink is safe and healthy.

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BYPRODUCTS/WASTE
The main byproduct of sparkling water production is the wastewater from the water
treatment process. This wastewater can contain a variety of contaminants, including
particulate matter, dissolved solids, and bacteria. The wastewater is typically treated to
remove these contaminants before it is discharged into the environment.
Another potential byproduct of sparkling water production is the carbon dioxide gas that is
used to carbonate the water. This gas is typically released into the atmosphere, but it can also
be captured and reused.
The number of byproducts produced from sparkling water production depends on several
factors, including the source of the water, the water treatment process, and the carbonation
method. In general, however, the byproducts from sparkling water production are relatively
minor and can be easily managed.
Here are some of the ways to reduce the byproducts of sparkling water production:
• Using a more efficient water treatment process that can remove more contaminants
from the water.
• Capturing and reusing the carbon dioxide gas that is used to carbonate the water.
• Using recycled materials for the bottles or cans that the sparkling water is packaged
in.
• Choosing a sparkling water brand that is committed to sustainability.
By taking these steps, we can help to reduce the environmental impact of sparkling water
production.

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F. STOCK-KEEPING UNIT

FLAVOURS 200 ml 500 ml 1 liter TOTAL

Lemon 1 1 1 3

Blueberry 1 1 1 3

Mint 1 1 1 3

Ginger 1 1 1 3

Rose 1 1 1 3

TOTAL 5 5 5 15

PRICE 75/- 150/- 290/-

G. CORE SERVICES
• Price: The price of sparkling water is important to consumers, as they want to get a
good value for their money. The price of sparkling water can vary depending on the
brand, the flavor, and the size of the bottle.
• Speed: Consumers also want to be able to get sparkling water quickly and easily. This
means that sparkling water should be available at a variety of retailers, and it should
be easy to find the flavor that they want.
• Quality: Finally, consumers want to be sure that the sparkling water they are buying
is of high quality. This means that the water should be free of impurities and
contaminants, and it should have a good taste.

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H. VALUE-ADDED SERVICES
Sure, here are some value-added services that the brand Sparkling Joy can offer for sparkling
water:
• Customized flavors: Sparkling Joy can offer customers the option to customize the
flavors of their sparkling water. This can be done by allowing customers to choose from
a variety of flavors or by allowing them to create their flavor combinations. For
example, customers could choose from a base flavor of sparkling water and then add
different fruits, herbs, or spices to create their unique flavor.
• Personalized branding: Sparkling Joy can personalize the branding of their sparkling
water to appeal to a specific target market. This can be done by using unique
packaging, by creating custom logos, or by using targeted marketing campaigns. For
example, Sparkling Joy could create a line of sparkling water specifically for athletes,
with packaging that features images of healthy foods and fitness activities.
• Premium packaging: Sparkling Joy can use premium packaging to make their sparkling
water stand out from the competition. This can be done by using high-quality
materials, by using unique designs, or by offering gift sets. For example, Sparkling Joy
could offer a gift set that includes a bottle of sparkling water, a glass, and a recipe book
for sparkling water cocktails.
• A loyalty program: Sparkling Joy could offer a loyalty program that rewards customers
for their purchases. This could be done by giving customers points for every bottle of
sparkling water they buy, which they could then redeem for discounts or free products.
• A charitable donation program: Sparkling Joy could donate a portion of its proceeds
to a charity that supports a cause that its customers care about. This could help to
build goodwill with customers and make them feel good about supporting the brand.
• A recycling program: Sparkling Joy could offer a recycling program for its bottles. This
would help to reduce environmental impact and could also appeal to customers who
are concerned about sustainability.
By offering these additional value-added services, Sparkling Joy can further differentiate itself
from their competitors and create a strong brand reputation.

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I.CONVERSION CYCLE

Inputs:
• Water source (tap water, spring water)
• Carbon dioxide (CO2) gas
• Flavorings (optional)
• Bottles or containers

Conversion Process:

• Carbonation:
• Water is sourced and filtered if necessary.
• Carbon dioxide gas is injected into the water under pressure.
• The gas dissolves in the water to create carbonic acid, resulting in carbonation.

• Flavoring and Sweeteners:

• Flavorings can be added at this stage to create flavored sparkling water.
• Bottling:
• The carbonated water is filled into bottles or containers.
• Bottles are sealed to maintain carbonation.

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Random Fluctuations:
• The Quality of the water may vary depending on the source.
• Carbonation Variability:
Due to factors like temperature, pressure, and water composition, carbonation levels
might vary.
• Flavor Intensity:
If flavorings are added, the intensity of flavor can vary slightly.

Feedback:
• Quality of Sparkling Water.
• Packaging of Sparkling Water.

Output:
• Bottled sparkling water.

J. PROCESS DESIGN

Process design is the process of defining the steps involved in producing a product or service.

Process strategy is the overall approach to designing and managing processes.

There are three main types of process strategies:

• Process focus: This type of focus is used when the products or services are similar,
and the demand is relatively stable. The goal is to improve efficiency by streamlining
the process and reducing waste.
• Repetitive focus: This type of focus is used when the products or services are
somewhat similar, and the demand is relatively high. The goal is to balance efficiency
and flexibility by standardizing some of the steps in the process.

• Product focus: This type of focus is used when the products or services are very
different, and the demand is relatively low. The goal is to maximize flexibility by
customizing the process for each product or service.

Sparkling water production can be a process-focused process. This is because the products
(sparkling water) are all very similar and the demand is relatively stable. The goal is to improve
efficiency by streamlining the process.

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The process of producing sparkling water can be divided into the following steps:

1. Water filtration: The water is purified to remove impurities.

2. Carbonation: The carbon dioxide is injected into the water under pressure.
3. Flavoring and Sweeteners: Flavorings (if any) are added to the water.
4. Bottling: The sparkling water is bottled or canned.

Each of these steps can be further optimized to improve efficiency. For example, the water
purification process can be made more efficient by using more advanced filters. The
carbonation process can be made more efficient by using a more powerful compressor and
the bottling process can be made more efficient by using automated machines.

By optimizing each step in the process, sparkling water producers can improve efficiency and
reduce costs. This can lead to higher profits and a more sustainable business.

Here are some other factors to consider when choosing a process focus for sparkling water
production:

• The type of sparkling water being produced. Some types of sparkling water, such as
flavored sparkling water, may require more customization than others.
• The volume of sparkling water being produced. Larger production volumes may
require a more process-focused approach.
• The desired level of quality. A more process-focused approach can help to ensure that
the sparkling water is produced to a consistent quality.

Ultimately, the best process focus for sparkling water production will depend on the specific
circumstances of the business.

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K. LONG RANGE CAPACITY PLANNING
Long-range capacity planning in operations and production management refers to the
strategic process of determining and establishing the optimal production capacity that an
organization needs to meet its future demand and growth objectives. This planning horizon
typically spans several years and involves making key decisions related to facility expansion,
equipment acquisition, workforce management, and overall resource allocation.
The primary goal of long-range capacity planning is to ensure that an organization's
production capabilities align with its anticipated future market demand. By effectively
managing capacity, a company can avoid situations of overcapacity (excess resources leading
to inefficiency) or under capacity (insufficient resources leading to missed opportunities and
customer dissatisfaction)

PERIOD CAPACITY IN CAPACITY PER DAY TOTAL MONTHLY

(LTR) CAPACITY (LTR)
PERCENTAGE
MONTH 1 70% 700 21,000
MONTH 2 75% 750 22,500
MONTH 3 80% 800 24,000
MONTH 4 85% 850 25,500
MONTH 5 90% 900 27,000

In this table, each row represents a specific period (e.g., months) for your capacity planning.
The "Capacity Utilization" column indicates the percentage of total production capacity that
you plan to use. The "Capacity per Day" column represents the number of units you aim to
produce each day during that period. The "Total Capacity" column shows the calculated total
production capacity for each period.

PERIOD TOTAL CAPACITY EFFECTIVE CAPACITY ACTUAL OUTPUT

(ltr) -15 days (ltr) (ltr)
MONTH 1 21,000 10,500 10,500
MONTH 2 22,500 11,250 11,250
MONTH 3 24,000 12,000 12,000
MONTH 4 25,500 12,750 12,750
MONTH 5 27,000 13,500 13,500

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In this table, the values represent the following:
• Period: The specific months or quarters in the planning horizon.
• Total Capacity (units): The maximum production capacity the facility can achieve
under ideal conditions during that period.
• Effective Capacity (units): The maximum production capacity considering planned
downtime, maintenance, and other operational factors that may affect production.
• Actual Output (units): The actual number of units produced during the given period.
As seen in the table, the first year of our production shows a 70 percent production rate, which
is 750 ltr per day and an annual total capacity of 21,000 ltr, and it increases every year by 75%
in the second, 80% in the third, and finally reaches 90 percent capacity of production, which
is 27,000 ltr of production in just five months, demonstrating that the product is well-liked by
all demographics. This gives the company the go-ahead to continue manufacturing.
Long-range Capacity Planning for Sparkling Joy
1. Demand Forecasting
2. Production Capacity Analysis
3. Capacity Expansion Strategies
4. Technology and Automation
5. Supplier Relationships
6. Skilled Workforce Planning
7. Seasonal Variations
8. Sustainability Considerations
9. Scalability and Flexibility
10. Continuous Monitoring and Evaluation

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L. BOTTLENECK
Bottleneck refers to a point in a manufacturing or operational process where the flow of
work or materials is restricted due to a limitation in capacity or efficiency. It is essentially the
slowest or least productive element in the entire process, which hinders the overall
throughput and efficiency of the system.
In simpler terms, a bottleneck is like the narrow neck of a bottle through which only a limited
amount of liquid (work, materials, tasks) can flow at a time. This constraint creates a situation
where work accumulates before the bottleneck, leading to delays, inefficiencies, and a
reduced output rate.
Identifying and managing bottlenecks is crucial in production and operations management
because they can severely impact the overall efficiency and productivity of a system. It's
essential to either increase the capacity of the bottleneck, optimize its efficiency, or manage
the flow of work around it to ensure smooth operations and maximize throughput.
"Sparkling Joy" water related to technology or data science, "bottleneck" refers to a point
of congestion or limitation within a system that significantly slows down its overall
performance or throughput. Sparkling Water is also the name of a technology that integrates
the H2O open-source machine learning platform with Apache Spark, allowing data scientists
to leverage the capabilities of both platforms for advanced analytics and machine learning
tasks.
SHORT-TERM VERSUS LONG-TERM BOTTLENECK
Short-Term Bottlenecks:
Short-term bottlenecks are temporary limitations that arise due to specific, often unforeseen,
circumstances. They can be caused by factors such as equipment breakdowns, sudden spikes
in demand, absenteeism of key personnel, or supply chain disruptions. Short-term bottlenecks
can have immediate impacts on production and operations, leading to delays, decreased
throughput, and increased lead times.
Characteristics:
1. Sudden
2. Temporary
3. Impact
Mitigation Strategies:
1. Quick Response
2. Temporary Workarounds
3. Resource Allocation
4. Capacity Reserves

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Long-Term Bottlenecks:
Long-term bottlenecks are persistent limitations that hinder a process over an extended
period. These bottlenecks often result from systemic issues such as inefficient process designs,
inadequate capacity planning, outdated technology, or inadequate workforce skills. Long-term
bottlenecks can significantly impede overall productivity and competitive advantage.
Characteristics:
1. Persistent
2. Systemic
3. Cumulative Impact
Mitigation Strategies:
1. Process Optimization
2. Capacity Planning
3. Technology Upgrade
4. Training and Skill Development
5. Continuous Improvement
Both short-term and long-term bottlenecks can disrupt operations and impact overall
performance. Businesses need to develop strategies that address both types of bottlenecks to
maintain efficient production and operations.
In this, we will delve into the key bottlenecks faced by the sparkling joy water industry
from both production and operational perspectives.

Production Bottlenecks:

1. Carbonation Process Efficiency

2. Flavour Infusion and Consistency
3. Quality Assurance and Testing

Operational Bottlenecks

1. Production Capacity and Scalability

2. Supply Chain Disruptions
3. Equipment Maintenance and Downtime
4. Environmental Sustainability

28 | P a g e
M. FORECASTING
• Forecasting assists managers in planning the production system and output for the
next week/month/year. Planning the productive system requires both long- and
short-term strategies.

• Long-term objectives include the sort of items to sell, in our instance bread. In
addition, the required facilities and equipment for bread production, as well as the
location of the factory.

• Short-term plans include responsibilities like inventory planning, personnel planning,

raw material procurement planning, and budgeting. Forecasting may also be used to
anticipate future earnings, revenues, costs, sales, pricing, and raw material
availability.

QUALITATIVE METHODS

In our endeavour to manufacture sparkling water efficiently, it is critical that we gain a deep
understanding of consumer demand. This understanding forms the foundation for our
resource allocation decisions and the optimization of our manufacturing processes. Our
report delves into four distinct qualitative methods for demand forecasting, each tailored to
address specific aspects of the demand prediction process. These methodologies will equip
us, as manufacturers in the sparkling water industry, with the knowledge and tools to make
well-informed decisions regarding our production and operations.

Historical Data:
We understand the significance of historical data in our demand forecasting efforts. By
meticulously examining our past sales records, we can uncover invaluable insights into
predicting future trends. Historical data allows us to analyze sales volumes, seasonal
fluctuations, and long-term growth patterns. When we have readily available historical data
and the market exhibits consistent dynamics, this method becomes a solid foundation for our
forecasting.

Delphi Method:
The Delphi method is an approach that resonates with our company culture, promoting
consensus-driven forecasting with the involvement of experts from relevant fields. In our
sparkling water manufacturing, we bring together a panel of industry experts, production
managers, and market analysts to provide their insights and opinions on future demand.
Through multiple rounds of discussions and feedback, we aim to achieve consensus and refine
our forecasts. We find the Delphi method particularly valuable when dealing with high levels
of uncertainty and when a collective expert perspective is necessary to make data-driven
decisions.

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Grassroots Method:
For us, incorporating grassroots input is a proactive approach to gathering valuable insights.
Engaging our production staff, sales representatives, and personnel with direct experience in
market conditions is an integral part of our forecasting strategy. These individuals offer
firsthand understanding of consumer preferences and are crucial in providing insights into
demand trends that affect our business. Grassroots input becomes invaluable when we
require real-time information from the front lines.

Market Research:
Our commitment to understanding consumer preferences and market dynamics leads us to
embrace comprehensive market research. This approach includes surveys, focus groups, and
in-depth analyses of consumer behaviour. In the context of manufacturing sparkling water,
we conduct consumer surveys to uncover flavor and packaging preferences and track evolving
trends in health-conscious consumer behaviour. Market research proves to be an invaluable
asset when we need to stay on top of emerging trends and shifts in consumer sentiment.

QUANTITATIVE METHODS

SIMPLE MOVING AVERAGE MODEL

3 Week Simple Moving Average

Week Demand 3SMA Error Absolute

1 9500
2 11000
3 10500
4 12000 10333.33 1666.67 1666.67
5 11500 11166.67 333.33 333.33
6 13000 11333.33 1666.67 1666.67
7 12500 12166.67 333.33 333.33
8 14000 12333.33 1666.67 1666.67
9 13500 13166.67 333.33 333.33
10 15000 13333.33 1666.67 1666.67
11 14166.67

766.67 1095.24
BIAS MAD

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 DEMAND AND 3 SMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11 12

Demand 3SMA

4 Week Simple Moving Average Model

Week Demand 4SMA Error Absolute

1 9500
2 11000
3 10500
4 12000
5 11500 10750 750 750
6 13000 11250 1750 1750
7 12500 11750 750 750
8 14000 12250 1750 1750
9 13500 12750 750 750
10 15000 13250 1750 1750
11 13750

750 1250
BIAS MAD

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 DEMAND AND 4 SMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11 12

Demand 4SMA

5 Week Simple Moving Average

Week Demand 5SMA Error Absolute

1 9500
2 11000
3 10500
4 12000
5 11500
6 13000 10900 2100 2100
7 12500 11600 900 900
8 14000 11900 2100 2100
9 13500 12600 900 900
10 15000 12900 2100 2100
11 13600

810 1620
BIAS MAD

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 DEMAND AND 5 SMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11 12

Demand 5SMA

WEIGHTED MOVING AVERAGE MODEL

3 Week Weighted Moving Average

The weights assigned were: 0.6, 0.3, and 0.1.

Week Demand 3WMA Error Absolute

1 9500
2 11000
3 10500
4 12000 10050 1950 1950
5 11500 10950 550 550
6 13000 11050 1950 1950
7 12500 11950 550 550
8 14000 12050 1950 1950
9 13500 12950 550 550
10 15000 13050 1950 1950
11 13950

945 1350
BIAS MAD

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 DEMAND AND 3 WMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11 12

4 Week Weighted Moving Average

Week Demand 4WMA Error Absolute

1 9500
2 11000
3 10500
4 12000
5 11500 10350 1150 1150
6 13000 11250 1750 1750
7 12500 11350 1150 1150
8 14000 12250 1750 1750
9 13500 12350 1150 1150
10 15000 13250 1750 1750
11 13350

870 1450
BIAS MAD

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 DEMAND AND 4 WMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11

Demand 4WMA

5 Week Weighted Moving Average

Week Demand 5WMA Error Absolute

1 9500
2 11000
3 10500
4 12000
5 11500
6 13000 10650 2350 2350
7 12500 11550 950 950
8 14000 11650 2350 2350
9 13500 12550 950 950
10 15000 12650 2350 2350
11 13550

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 DEMAND AND 5 WMA
16000
14000
12000
10000
8000
6000
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11

Demand 5WMA

USAGE OF BIAS AND MAD

Bias in Production of Sparkling Water:
Bias refers to the systematic error or deviation from the true value in the measurement,
estimation, or forecasting of various production parameters. It is essential to understand and
manage bias to ensure the accuracy and consistency of production processes. Here's how bias
can be relevant:

• Ingredient Measurements: During the production of sparkling water, precise

measurements of ingredients, including carbonation levels, flavors, and minerals, are
critical. Any bias in these measurements can result in an inconsistent product that does
not meet quality standards.
• Production Equipment Calibration: Bias can also occur in the calibration of production
equipment, such as filling machines and carbonation systems. Inaccurate calibration
can lead to underfilled or overfilled bottles, impacting product quality and potentially
causing customer dissatisfaction.
• Demand Forecasting: Bias in forecasting can lead to overproduction or
underproduction of sparkling water. Overproduction can result in increased holding
costs and product wastage, while underproduction can lead to stockouts and missed
sales opportunities.
• Quality Control: In quality control processes, bias can affect the detection of defects
or contaminants in the water, bottles, or packaging materials. Biased testing methods
may miss critical issues, compromising product quality.

36 | P a g e
Managing bias in the production of sparkling water involves implementing precise
measurement and calibration procedures, regularly auditing forecasting models to identify
and correct systematic errors, and maintaining rigorous quality control protocols to reduce
the risk of bias affecting product quality.
Mean Absolute Deviation (MAD) in Demand Forecasting:
MAD, or Mean Absolute Deviation, is a metric used in demand forecasting to assess the
accuracy and reliability of forecasting models. It measures the average magnitude of the errors
between forecasted and actual demand. In the production of sparkling water, MAD plays a
crucial role in assessing the quality of demand forecasts. Here's how MAD is relevant:

• Forecasting Accuracy: MAD provides a quantitative measure of how accurate our

demand forecasts are. High MAD values indicate a large deviation between forecasted
and actual demand, signifying a less accurate forecasting model.
• Inventory Management: MAD is vital for effective inventory management. A high MAD
suggests that our forecasts are not reliable, which can lead to overstocking or
understocking issues. Accurate demand forecasts help us maintain optimal inventory
levels.
• Production Planning: MAD also influences production planning. A forecast with low
MAD allows us to plan production schedules with confidence, avoiding last-minute
adjustments, which can be costly and inefficient.
• Customer Satisfaction: Accurate forecasting and low MAD values contribute to better
customer service. Customers receive products when they expect them, and stockouts
are minimized, resulting in higher satisfaction.

N. PLANT LAYOUT

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The layout process used in a sparkling water production facility typically follows a
combination of various layouts to optimize efficiency and productivity. The specific layout
design may vary depending on factors such as the scale of production, available space, and
equipment used.
Here are some layout processes commonly used in sparkling water production:

1. Process Layout (Functional Layout):

• In a process layout, the production facility is organized by function or process.
Different areas or departments are designated for specific tasks or processes, such as
mixing, carbonation, bottling, and packaging.
• This layout is suitable for small to medium-sized sparkling water production facilities
where equipment can be grouped based on similar functions.

At sparkling joy, we follow the PRODUCT LAYOUT

2. Product Layout (Line Layout):

• In a product layout, the production process is organized in a linear fashion, with the
product moving along a production line from one stage to the next.
• This layout is efficient for high-volume production of standardized sparkling water
products. It minimizes handling and transportation between processes.

REASONS FOR USING PRODUCTION LAYOUT

Using an effective production layout for sparkling water production offers numerous benefits
that can contribute to the efficiency, quality, and cost-effectiveness of the production
process.

Here are ten reasons for using a production layout in sparkling water production:

1. Optimized Workflow: A well-designed layout streamlines the workflow by arranging

equipment and workstations in a logical sequence, minimizing unnecessary movement, and
reducing production bottlenecks.
2. Improved Efficiency: Production layouts can help eliminate or reduce idle time, waiting
time,
and unnecessary handling of materials and products, leading to increased overall efficiency.
3. Cost Reduction: By reducing wasted time and resources, a production layout can lead to
cost
savings in terms of labor, energy, and materials.
4. Consistent Product Quality: A consistent layout ensures that each step of the production
process is standardized, reducing the likelihood of variations, and ensuring consistent product
quality.
5. Reduced Errors and Defects: A well-organized layout minimizes the chances of errors,
leading to fewer defects and less rework or waste.
6. Safety Improvement: Layouts can be designed with safety in mind, minimizing the risk of
accidents, such as spills, collisions, and ergonomic issues.

38 | P a g e
7. Space Utilization: Efficient layouts maximize the use of available space, allowing for more
equipment and processes in each area, which is especially valuable when space is limited.
8. Scalability: A good layout can be designed with scalability in mind, making it easier to
expand or modify the production facility as demand for sparkling water grows.
9. Inventory Management: Properly designed layouts can help in managing raw material and
finished product inventories more effectively, reducing carrying costs and waste due to excess
inventory.
10. Improved Employee Morale: A well-organized and efficient layout can create a more
pleasant and less stressful work environment for employees, improving morale and
productivity.

O. FACILITY LOCATION
The following factors should be considered when choosing a location for sparkling water
manufacturing:
● Urban Industrial Zones
● Supply chain resilience
● Automation and robotics
● Near Major Transportation Hubs
● Co-Location with Bottling Plants
● Reverse osmosis and filtration systems
● Proximity to Natural Springs or Sources of Carbonated Water
● Water quality
● Carbon footprints
● Waste water managements
● Scalability
● Sustainable energy sources

39 | P a g e
 POINT RATING METHOD

FACTORS FOR SITE LOCATION POINT SACHIN KIM HAZIRA

RANGE
Urban Industrial Zones 0-150 105 120 90
Supply chain resilience 0-125 80 100 75
Automation and robotics 0-200 150 180 130
Near Major Transportation Hubs 0-150 105 120 90
Co-location with Bottling Plants 0-200 150 180 140
Reverse osmosis and filtration systems 0-250 175 220 150
Proximity to Natural Springs or Sources of 0-175 140 140 90
Carbonated Water
Water quality 0-200 140 190 130
Carbon footprints 0-180 130 160 110
Waste water managements 0-220 160 190 140
Scalability 0-150 100 130 80
Sustainable energy sources 0-200 140 170 130
TOTAL 2200 1575 1900 1355

According to the point rating method, KIM is the best location for establishing our plant.

FACTOR RATING METHOD

Following is the process while applying this method:

• List the most relevant factors in the location decision

• Rate each factor (e.g., 1 for very low & and 5 for very high) according to its relative
importance
• Rate each location (say 1 for very low and 10 for very high) according to its merits on
each factor
• Compute the product of ratings by multiplying the factor rating by the location rating
for each factor
• Compute the sum of the product of ratings for each location

40 | P a g e
 FACTORS IMPORTANC SACHI I*S KI I*K HAZIR I*H
E N M A

Urban Industrial Zones 2 7 14 9 18 5 10

Supply chain resilience 4 5 20 8 32 6 12

Automation and robotics 3 6 18 7 21 5 15

Near Major Transportation 2 6 12 8 16 5 10

Hubs

Co-Location with Bottling 2 4 8 7 14 6 12

Plants

Reverse osmosis and filtration 4 7 28 6 24 5 20

systems

Proximity to Natural Springs 4 5 20 7 28 5 20

or Sources of Carbonated
Water

Water quality 2 6 12 9 18 5 10

Carbon footprints 3 5 15 8 24 6 18

Waste water managements 1 7 7 5 5 8 8

Scalability 2 6 12 8 16 7 14

Sustainable energy sources 3 9 27 9 27 7 21

TOTAL 73 19 91 243 70 170

3

According to the factor rating method, KIM is the best location for establishing our plant.

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CENTER OF GRAVITY METHOD
With the provided coordinates for Kim (21.4006° N, 72.9269° E), Sachin (21.0847° N, 72.8822° E),
Hazira (21.1784° N, 72.6588° E), and Pandesara (21.1503° N, 72.8250° E), let us calculate the center
of gravity and perform an analysis:

Calculation of the Center of Gravity

Calculation of the center of gravity by finding the average of the latitude and longitude
coordinates:

Center of Gravity Latitude (Yc) = (ΣLatitude) / Number of Locations

Center of Gravity Longitude (Xc) = (ΣLongitude) / Number of Locations

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Calculation of the center of gravity coordinates:

Center of Gravity Latitude (Yc) =

(21.4006° N + 21.0847° N + 21.1784° N + 21.1503° N) / 4 = 21.2035° N

Center of Gravity Longitude (Xc) =

(72.9269° E + 72.8822° E + 72.6588° E + 72.8250° E) / 4 = 72.8232° E

Analysis

The calculated center of gravity coordinates is approximately 21.2035° N for latitude and 72.8232° E
for longitude. These coordinates represent the center of gravity based solely on geographic location.

In this analysis:

• Kim's coordinates (21.4006° N, 72.9269° E) are the farthest from the center of gravity.
• Sachin's coordinates (21.0847° N, 72.8822° E) are also relatively distant from the center of
gravity.
• Hazira's coordinates (21.1784° N, 72.6588° E) are relatively closer to the center of gravity, but
not the closest.
• Pandesara's coordinates (21.1503° N, 72.8250° E) are the closest to the center of gravity
based on geographical coordinates.

Given these results, Pandesara is the location closest to the calculated center of gravity based solely
on geographic coordinates. However, it's essential to consider additional factors like transportation
infrastructure, costs, availability of resources, and any specific operational requirements before
making a final decision. While the Center of Gravity Method provides a geographic reference point, it
should be used in conjunction with other relevant criteria to make a well-informed decision for plant
location in Production and Operations Management.

43 | P a g e
P. INVENTORY MANAGEMENT
The most applicable inventory management model in beverage industry is Fixed-Order
Quantity Model (EOQ).
Why the EOQ model is often suitable for the beverage industry:
1. Stable Demand for Popular Products: Many beverage products, especially well-
established brands, have relatively stable and predictable demand patterns. The EOQ
model is particularly effective in scenarios where demand remains relatively constant.
2. Optimizing Ordering and Holding Costs: The beverage industry often deals with
products that have holding costs (warehousing, refrigeration, insurance) and ordering
costs (processing paperwork, transportation) associated with inventory management.
The EOQ model aims to balance these costs to minimize the total cost of holding and
ordering inventory, which is crucial for profit optimization.
3. Minimizing Wastage and Stockouts: For perishable beverages, such as fresh juices,
optimizing inventory levels is critical to minimize wastage due to product expiration or
stockouts due to inadequate stock. The EOQ model helps ensure that you have the
right amount of stock to meet customer demand without overstocking.
4. Reduction in Stocking Costs: By calculating the EOQ, companies can determine the
optimal order quantity for their beverages. This reduces the need for excessive storage
space and the associated costs, which can be significant in the beverage industry.
5. Simplicity and Practicality: The EOQ model is relatively straightforward to implement
and can provide tangible benefits with minimal complexity. This makes it an attractive
choice for many beverage companies, particularly smaller and medium-sized
businesses.
6. Cost Control and Profit Maximization: In the beverage industry, where margins can be
tight, effectively managing inventory costs can directly impact profitability. The EOQ
model helps in minimizing expenses and maximizing profit.

EXAMPLE:
Assumptions:
Annual demand for Sparkling water = 50,000 cases (each case contains 24 bottles)
Cost of placing an order (S) = Rs.200 per order
Holding cost per case per year (H) = Rs.4 per case
Cost per case of bottled water (C) = Rs.10 per case

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Calculation using the formula:
2𝐷𝑆
EOQ = √ 𝐻
2∗50000∗200
=√ 4

=√5000000
=2236 cases
So, the Economic Order Quantity (EOQ) for the Sparkling water in this example is
approximately 2,236 cases. This means that the optimal order quantity to minimize total
inventory costs is approximately 2,236 cases per order.

To optimize inventory management:

• The company should place orders for 2,236 cases of Sparkling water each time they
need to replenish their stock.
• Continuously monitor inventory levels and place orders when the stock reaches the
reorder point.
• This EOQ value minimizes the total cost of ordering and holding inventory for bottled
water.
REORDER POINT
The Reorder Point (ROP) inventory management model is indeed applicable in the
beverage industry, and it can be highly effective for managing inventory, particularly for
beverages. The ROP model is used to determine when to reorder products to avoid
stockouts while minimizing excess inventory.
Here are suitable reasons for its applicability in the beverage industry:

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 1. Demand Variability: Beverage companies often face fluctuating demand, particularly
for seasonal products or during promotions. The ROP model accounts for demand
variability by considering both average demand and safety stock, ensuring that
products are available when demand unexpectedly spikes.
2. Perishable Products: In the case of perishable beverages or those with limited shelf
life, maintaining the right level of inventory is crucial. The ROP model allows
companies to set reorder points that consider product shelf life and lead times to avoid
wastage while meeting customer demand.
3. Lead Time Variability: The beverage industry can have variations in lead times due to
supply chain complexities, such as transportation delays or production scheduling.
ROP can factor in these lead time variations, helping to prevent stockouts during longer
lead times.
4. Inventory Costs: Holding excessive inventory can be expensive in terms of storage,
refrigeration, and insurance costs. ROP helps companies strike a balance between
maintaining enough inventory to meet customer demand and minimizing holding
costs.
5. Ease of Implementation: The ROP model is relatively easy to implement and
understand. Beverage companies of various sizes and resource levels can use it
effectively without extensive data or computational requirements.
6. Quality Control: Beverage companies place a strong emphasis on product quality. ROP
allows for better quality control as products can be inspected thoroughly when
received, ensuring they meet the necessary standards before being placed into
inventory.
7. Safety Stock Management: ROP inherently includes safety stock, which provides a
buffer against demand variability and supply chain disruptions. This is especially
important in an industry where product availability is critical.
EXAMPLE:
Assumptions:
• Average daily demand for Sparkling water = 200 cases
• Lead time (the time it takes to receive an order once placed) = 7 days
𝐴𝑛𝑛𝑢𝑎𝑙 𝑑𝑒𝑚𝑎𝑛𝑑
Demand per day = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟

50000
= 365

=137 cases

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Calculation using the formula:
ROP= (𝑑𝑒𝑚𝑎𝑛𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦) ∗ (𝑙𝑒𝑎𝑑𝑡𝑖𝑚𝑒 𝑝𝑒𝑟 𝑑𝑎𝑦)
=137 ∗ 7
= 959
= 959 cases
So, the reorder point for sparkling water is 959 cases. This means that when the inventory
level reaches 959 cases, it is time to place an order to replenish stock.
By using the reorder point model, the beverage distributor can ensure that they have
enough stock on hand to meet customer demand during the lead time and minimize the
risk of stockouts. It provides a practical approach to maintaining optimal inventory levels
in the industry.

Q. BREAK-EVEN ANALYSIS

Contribution per unit = Selling price per unit - variable cost per unit

Break-even point= Fixed cost /Contribution per unit /(P-VC)

● FC= Fixed cost

● VC= Variable cost

● P= Average price per unit

Fixed Cost: Rs. Wages and Salaries 2,50,000 Electricity 1,50,000 Water Consumption 50,000 Repairs
and Maintenance 1,00,000 Depreciation 20,000 Rent 80,000 Interest on Loan 10,000 Marketing and
Advertisement 40,000 Total 7,00,000 Variable cost: Raw material Rs. 9 per unit Packaging Rs. 1 per
unit Total Rs. 1

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 FIXED COST: RS.

WAGES & SALARIES 3,00,000

REPAIRS & MAINTENANCE 1,75,000

ELECTRICITY 95,000

RENT 75,000

ADVERTISEMENT AND MARKETING 50,000

WATER CONSUMPTION 45,000

DEPRECIATION 30,000

INTEREST ON LOANS 15,000

TOTAL 7,85,000

VARIABLE COSTS:

Rs. 12 per unit

RAW MATERIAL:

PACKAGING: Rs.3 per unit

TOTAL Rs.15 per unit

• Weighted Average Selling price of 1 Bottle of Sparkling Water is Rs. 110.71

• To achieve the break-even analysis, we need to sell 8200 units every month at a price point of Rs.
110.71 (Average).

• To achieve break-even, we will need to run at = 8200 / 27000 * 100 = 30.37 % capacity.

(Capacity of the 5th Month is taken into consideration)

(* Weighted Average is taken in the ratio of 4:2:1.)

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R. JOB SEQUENCING

FIRST-COME-FIRST-SERVED
JOBS (in
order of PROCESSING DUE DATE (days FLOW TIME
arrival) TIME (days) hence) (days)
A 6 7 6
B 8 10 14
C 2 5 16
D 5 9 21
In the context of first-come, first-served (FCFS) job sequencing, jobs are processed in the order of their
arrival, without regard to their processing times or due dates. In this analysis, it's evident that job A,
being the first to arrive, is also the first to be processed, with a processing time of 6 days. Job B, the
second to arrive, follows, taking 8 days for processing. Job C arrives third but has a short processing
time of 2 days, allowing it to be completed quickly. Job D, the final arrival, requires 5 days for
processing. As a result of the FCFS sequence, the flow time, which is the time from arrival to
completion, accumulates as follows: Job A has a flow time of 6 days, Job B has 14 days, Job C has 16
days, and Job D has 21 days. While FCFS is straightforward and easy to implement, it may not always
optimize flow time or meet due dates effectively. In this case, Job D has the longest flow time,
indicating a delay in completing it, which can impact overall job scheduling efficiency. Job sequencing
methods that consider job characteristics like processing times and due dates may offer better
solutions in terms of minimizing flow time and ensuring on-time deliveries.

SHORTEST OPERATING TIME

JOBS (in order PROCESSING DUE DATE FLOW TIME

of arrival) TIME (days) (days hence) (days)
C 2 5 2
D 5 9 7
A 6 7 13
B 8 10 21

The shortest operating time sequence is observed as C, D, A, and B. By following this sequence, we can
minimize the overall operating time, ensuring that each job is processed and completed as quickly as
possible. Job C with a processing time of 2 days is executed first, and its flow time matches its
processing time, indicating that it is completed on its due date. Job D follows, taking 5 days for
processing, and it is completed 2 days ahead of its due date, reducing the overall lead time. However,
job A, which has a processing time of 6 days, experiences a slight delay in completion, extending the
flow time to 13 days. Finally, job B, with the longest processing time of 8 days, is executed last,
concluding with a flow time of 21 days, the maximum allowable due date. This sequencing minimizes
operating time while adhering to due dates, which is vital for efficient production and operations
management.

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LAST COME FIRST SERVED

JOBS (in order PROCESSING DUE DATE FLOW TIME

of arrival) TIME (days) (days hence) (days)
D 5 9 5
C 2 5 7
B 8 10 15
A 6 7 21
In the "Last Come First Served" (LCFS) job sequencing approach, the most recently arrived job is
processed first. Analyzing the provided data, we observe that Job D, the last to arrive, is processed
before any other job. Its processing time is 5 days, and its due date is 9 days hence. Consequently, Job
D has a flow time of 5 days, which is equal to its processing time. The LCFS approach prioritizes the
latest job's completion, which may result in situations where earlier jobs with shorter due dates, such
as Job C and Job A in this case, experience delays. While LCFS may be straightforward to implement, it
doesn't necessarily optimize overall job completion or minimize tardiness. In this scenario, Job B, with
a longer processing time but a later due date, sees a flow time of 15 days, illustrating the potential
drawbacks of using LCFS in job sequencing.

EARLIEST DUE DATE FIRST

JOBS (in order PROCESSING DUE DATE FLOW TIME

of arrival) TIME (days) (days hence) (days)
C 2 5 2
A 6 7 8
D 5 9 13
B 8 10 21

In the context of job scheduling, the "Earliest Due Date First" (EDDF) algorithm prioritizes tasks based
on their due dates, with the job having the earliest due date being processed first. In this case, the
jobs are labeled as C, A, D, and B, and each job has its respective processing time, due date, and flow
time. When using the EDDF algorithm, the primary objective is to minimize the number of late jobs
by prioritizing those with the closest due dates.

Analyzing the provided data, job A has the earliest due date of 7 days hence, followed by job C with a
due date of 5 days. These two jobs, C and A, are processed in that order, resulting in a total flow time
of 10 days for both jobs combined. Job D, with a due date of 9 days, follows next, and it completes
processing in 13 days, slightly exceeding its due date. Finally, job B is processed with a due date of 10
days, resulting in a total flow time of 21 days.

The EDDF approach successfully minimizes the lateness of jobs by completing the jobs with the
earliest due dates first. However, it may not always optimize other factors like resource utilization or
minimizing the total processing time. Therefore, while EDDF is effective for on-time delivery, it may
not always be the most efficient scheduling method for all scenarios.

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