Chapter 4: Technology and Operations Management
- What are the advantages and disadvantages from the service provider’s (jeweler’s)
perspective of using “design your own ring” 3D/CAD technology at the retail store
level? What are the risks from the customer’s viewpoint? - Research jewelry retail store software programs and summarize their capabilities in
terms of customer relationship management, accounting, point of sale, inventory
management, payment systems, and customer loyalty programs. Provide
references.
Chapter 5: Goods and Service Design - Hudson Jeweler’s current layout design includes the CAD system and television
screen in the front room of the jewelry store. Walk-in customers enjoy seeing
jewelry designs rotate on the television screen. Customers have little privacy as they
co-design and discuss their custom-designed jewelry in the front room. Other
customers in the store can listen to the conversation, and sometimes stand right
behind them. Evaluate the following three-store design and layout remodeling
options by answering questions (a) to (c). See the case study for break-even details.
(I) Keep the Current Layout
Fixed Cost = $5,000 based on CAD square footage to total store square footage.
Variable Cost = $0.20 cents per customer visit ($2,620/year divided by 13,104 visits/year) to
update CAD software, insurance, maintenance, and employee CAD training.
(II) Move Current CAD into a Single New Private Design Room
Fixed Cost = $12,000 to build a new CAD design room inside store and move current CAD
system to the new room and furnish.
Variable Cost = $0.24 cents per visit ($3,145/13,104) to update CAD software, insurance,
maintenance, and employee CAD training, and room stero speaker and music, fire sprinkler
maintenance, and lighting in the design room.
Option II frees up 49 square feet of store space for one additional front room jewelry display
case but decreases the space for comfortable leather chairs by one-half, so there would be
space for only one chair plus the wine rack. Fourteen square feet of extra display space
12
*This case was prepared by Dr. David A. Collier, Eminent Scholar, Alico Chair in Operations Management,
Lutgert College of Business, Florida Gulf Coast University, Fort Myers, Florida. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise, without the permission of Mr. Collier. Copyright @
January, 2015, Fort Myers, Florida.
would be available in the store. Based on last year’s revenue, each square foot of jewelry
display space generated $30,090.
(III) Do Option II Plus Build a Second CAD Design Room & Buy a Second CAD System
Fixed Cost = $27,000 to build two new CAD design rooms inside the store and move current
CAD system into one new room, and buy a second new CAD system and install in the
second room.
Variable Cost = $0.38 cents per visit ($4,980/13,104) to update two CAD software,
insurance, maintenance, and employee CAD training, and two room stero speakers and
music, two fire sprinklers maintenance, and lighting in the two design rooms.
Option III frees up 49 square feet of store space for one additional front room jewelry display
case but eliminates the space for the wine rack or any comfortable leather chair(s). The
space currently dedicated to the wine rack and two leather chairs plus the CAD system, desk,
and chair located in the front room is now two private CAD design rooms.
(a) Use economic analysis to evaluate these three options.
(b) What are the economic and non-economic advantages and disadvantages of each of the
three options?
(c) What is your final recommendation to Mr. Hudson? Justify. Explain.
- Define (a) the servicescape for Hudson Jewelers using the three dimensions as
subheadings, and (b) the nature of Hudson Jewelers’ service encounters. - Propose a “service guarantee” for Hudson Jewelers. What exactly will you
guarantee? Should it be explicit in writing or simply an implicit, non-written
guarantee, or is it better not to do it at all? Explain and justify your logic.
Chapter 6: Supply Chain Decisions - Explain whether the global diamond supply chain a push or pull system, and
whether the global diamond supply chain is an efficient or responsive system for
make-to-order and make-to-stock jewelry. Provide examples to justify your
reasoning. - Research the extent of vertical integration in the global (seven-stage) diamond
supply chain? Provide examples of forward and backward integration and the
extent to which this is practiced in today’s value chain? In this industry, what is the
impact of vertical integration?
13
*This case was prepared by Dr. David A. Collier, Eminent Scholar, Alico Chair in Operations Management,
Lutgert College of Business, Florida Gulf Coast University, Fort Myers, Florida. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise, without the permission of Mr. Collier. Copyright @
January, 2015, Fort Myers, Florida.
Chapter 7: Process Selection, Design, and Analysis
- Research the parts of the diamond value chain and then answer the following
question: How would you describe the type of process used for (a) exploration, (b)
diamond mining, (c) sorting and grading, (d) cutting and polishing centers, (e)
trading centers, (f) jewelry manufacturing, and (g) retail stores? You might want to
use the terminology of the product-process matrix and service positioning matrix,
for example. - Given the simplified process work activities shown in Case Exhibit 1.4, draw the
process flowchart, and then answer the following questions. You must allocate the
work content in Case Exhibit 1.4 to manufacturing, CAD, service, front room, and
back room to gain insights into where and how this work is accomplished.
a. For this process, what is the total time in minutes (or equivalent fraction of a
day) to create one woman’s codesigned wedding ring?
b. For this process, what is the total manufacturing time in minutes (or equivalent
fraction of a day) to create one woman’s codesigned wedding ring?
c. For this process, what is the total CAD time in minutes (or equivalent fraction of
a day) to create one woman’s codesigned wedding ring?
d. For this process, what is the total service (other than CAD) time in minutes (or
equivalent fraction of a day) to create one woman’s codesigned wedding ring?
e. For this process, what are the total front room and back room times in minutes
(or equivalent fraction of a day) to create one woman’s c-designed wedding ring?
f. What insights do you gain by evaluating the work content of this process and
answering questions (a) to (e)?
g. What is the maximum number of customers per hour that can be served for
Activity B (CAD Demo & Jewelry Concept) if two employees are in the store?
Assume each employee works at 100% utilization. - Write a job description for a new employee at this store.
- Assume that during Lilly’s and Lester’s last visit to the retail store everything was
as described in the case, except the final bill was not ready and Mr. Bill Hudson had
lost some of the paperwork documenting the price of the ring and diamonds. After a
45-minute wait, Lilly and Lester had figured out a final bill. What is the impact of
this “billing service upset” at the end of the customer’s buying experience? Is billing
a primary or peripheral process? - Design an ideal diamond-ring customer experience from beginning to end (i.e., make
a list of 10 to 20 steps in the job and process design). Explain what must happen and
what must not happen.
14
*This case was prepared by Dr. David A. Collier, Eminent Scholar, Alico Chair in Operations Management,
Lutgert College of Business, Florida Gulf Coast University, Fort Myers, Florida. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise, without the permission of Mr. Collier. Copyright @
January, 2015, Fort Myers, Florida.
Chapter 8: Facility and Work Design
- Design and draw the layout for your high-end jewelry store. Critique its strengths and
weaknesses. (Make use of concepts in Chapters 4, 5, 7 and 8.)
Chapter 9: Forecasting and Demand Planning - Given the seasonal nature of demand at Hudson Jewelers depicted in Case Exhibit
1.2, how would you forecast future demand for customer visits? What criteria will
you use to determine a “good” forecast? What methods would you use, and why?
What is your final recommendation with respect to a forecasting method?
Chapter 10: Capacity Management - Explain how capacity is measured at the following stages of the diamond value
chain: (a) mining, (b) cutting and polishing, (c) jewelry manufacturing for custom
and standard jewelry, and (d) the retail store? (There can be multiple measures so
make sure you define the unit of measure.)
Chapter 11: Managing Inventories - Research global supply and demand for diamonds and how it affects prices. What
role do “diamond reserves” (inventory) play in determining prices? Explain. What
do you think the demand-supply curves for diamonds looks like? Try to sketch it
out. - What are the detailed components of inventory holding costs in this situation?
What other factors might influence holding costs, such as security costs,
obsolescence costs, and others. What is your estimate of inventory carrying costs as
a percentage of item value? Explain your reasoning.
Chapter 12: Supply Chain Management and Logistics - Research short- and long-term risks in the global diamond supply chains and write
a short paper (maximum of 3 pages) defining what these risks are and how they are
mitigated by major diamond producing corporations. - Obtain the annual report of a major diamond producer such as DeBeers, ALROSA, Rio
Tinto, BHP Billiton, and perform a cash-to-cash conversion cycle analysis of their business.
What did you find out? Explain. Implications?
Chapter 13: Resource Management
15
*This case was prepared by Dr. David A. Collier, Eminent Scholar, Alico Chair in Operations Management,
Lutgert College of Business, Florida Gulf Coast University, Fort Myers, Florida. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording, or otherwise, without the permission of Mr. Collier. Copyright @
January, 2015, Fort Myers, Florida.
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