Far Eastern University

Nicanor Reyes St, Sampaloc, Manila,

1008 Metro Manila
Institute of Accounts, Business and Finance

IMPROVEMENT PLAN OF NEILLETEA

Group Members:
Alfonso, Khaila Mae
Antonio, Alleina B.
Benosa, Lara Jane T.
De Castro, Ianvandrei Y.
Eugenio, John Carlo D.R.
Sultan, Farhan

May 2021
 TABLE OF CONTENTS

I. Introduction
I. 1 Company’s Profile
II. Production Operation Process
II. 1 Value-added process
II. 2 Sustainability
III. Competitiveness, Strategy and Productivity
III. 1 Competitiveness
III. 2 Strategy
III. 3 Productivity
IV. Forecasting
IV. 1 Forecasting Techniques
V. Product and Service Design
V. 1 Quality Function Development (House of Quality)
VI. Capacity Planning for Products and Services
VI. 1 Efficiency and Utilization
VI. 2 Cost-volume analysis
VI. 3 Break-even analysis
VII. Process Selection and Facility Layout
VII. 1 Process selection
VII. 2 Facility layout
VII. 3 Process layout
VIII. Design of Work System
VIII. 1 Job design
VIII. 2 Work measurement
IX. Location Planning and Analysis
IX. 1 Location decision
IX. 2 Evaluating location alternatives
X. Recommendations
XI. References
XII. Students Profile
I. Introduction

This era came with the influx of trendy food and instagrammable food and drink

shots that lure many goers. Added by the hype on social media, many consumables

became popular. Many entrepreneurs saw this as an opportunity to innovate and

introduce their products to the market. As such, the business aspirants took this as an

opportunity to introduce the Neilletea Milk Tea. It aims to offer various extravaganza

featuring the milk teas as the flagship of the shop.

The rapid influx of food businesses came with the adventurous appetite of many

Filipinos and their propensity to have a good time with their friends and special someone

while having drinks at hand. Neilletea's Milk teas are an ideal drink, especially when

customers want to have a chill stroll in the park or even at the mall. They can enjoy the

finest brew at the most affordable price while enjoying every sip with fun boba pearls.

One of the shop goals is to deliver satisfactory service wherein customers can

enjoy their teas at their choice. Whether consumed at the shop, for take-out, or even for

deliveries, the Neilletea's Milk Tea shop shall always put the customer's satisfaction as

the shop's primary concern. Through this, the shop builds customer loyalty by providing

quality products at a very affordable price. This shop will value customer perception by

offering various flavors that customers can try and sugar levels according to their taste.

Upon stepping foot at the shop, the customers shall feel every crew's warm welcome and

accommodation.

Having a sound and profitable operations for more than a year already, Neilletea's

Milk Tea Shop continues to gear itself towards better improvement to maintain its

competitive market share. It ensures that the shop keeps up with the market trends and
that the wants and needs of customers are always heard and given the utmost

importance.

Looking at a broader perspective, the shop has its doors open to various

opportunities, such as the possibility of establishing branches and opening franchises to

other locations. In this way, Neilletea Milk Tea can serve more milk tea lovers alike. This

will enable the milk tea shop to help other cravers near the area by delivering delicious

and quality milk tea at their convenience. After all, the customers' well-being is always the

primary concern since day one.

The shop continues to serve its customers at a very safe and accommodating

place equipped with furnished facilities and adequately ventilated areas, especially with

the threat of the Covid-19. The shop's facility and the way of handling the products are

especially recalibrated to secure safety and that the rules and protocols of the authorities

and duly observed. Customers' comfort and the satisfaction of their cravings for milk tea

will always be taken care of by the shop's management. Moreover, despite its top

customer service, the shop still maintains and ensures plenty of room for improvement,

and those suggestions are always welcomed and highly appreciated.

II. Production Operation Process

One of the main factors considered to operate a business is the production and

operation needed to make products and services. The process is a never-ending cycle in

a business to make a high-quality product that helps the business be more organized to

fulfill the expectations and satisfaction of the consumers.

 A. Value Chain Analysis

Value chain analysis is a model for the changing market demand that visualizes

the business activities to see how the company can create a competitive advantage over

its perimeter competitors. The concept of this model is the process of converting raw

materials to products. Neilletea is a business milk tea shop based in Sta Cruz, Laguna,

that wants to provide a high-quality product. The shop operates independently to give

consumers satisfaction, which offers a customer-friendly price for their consumers.

● Inbound Logistics

It refers to the receive, storage, and distribution of raw resources during the

production process. Here supplier relationships play an essential role, and firms

may undertake thousands of activities in producing goods or services (Lynch,

 A. 2021). Neilletea is one of the milk tea shops in Sta Cruz, Laguna, which

operates independently to provide consumers’ satisfaction.

● Operations

The Neilletea is a small store located at the marketplace of Sta Cruz,

Laguna. It is a family business that the family members are the employees and

owners of the shop. The business’s target markets are the Millennials and

Boomers because most of the customers included in that generation prefer the

taste of their product. It aims to branch to nearby towns.

● Outbound Logistics

According to M. Garcia (2019), it is a process of storing, transporting, and

distributing goods to customers. The business starts getting the customer’s

orders, processing the product, and serving what they have ordered. This

process helps the business to run smoothly and satisfy its customers.

● Marketing Sales

Today’s food industry has become highly diversified, and the demand for

the market food is never off-track because it considers a necessity of a person.

Milk Tea is one of the trendy foods for millennials and boomers to use as a

refreshing drink for any time of the day. Business competitors have different

kinds of approaches to increase their sales to get along with them. One of the

strategies to encourage customers is through social media platforms by posting

 photos of the store full of people and feedback of the customers, and there are

certain times that they give promos if you buy.

● Service

Neilletea has a competitive edge among other milk tea stores in Sta Cruz,

Laguna, because they are the only milk tea store with delivery. The goal service

of the business to provide to its customers is to fulfill its needs and wants by

serving them the highest standard of quality tea and different kinds of flavors

of milk tea. The ambiance of the store is making the customers feel more

welcome. Even though the employees are their family members, they have to

undergo training on communicating with their customers and how they will

perform the service.

B. Issues for Business Operations

● Innovating

Innovation is one of the essential things that a business should have.

According to Purcell (2021), this growing need for growth and change also

presents numerous opportunities for businesses. Companies would be able to

remain profitable when they do embrace change and innovation. Seeing as

NielleTea is a family business and a small enterprise, it will be more difficult for

them to innovate to compete. The company has limited resources and does not

have a vast network compared to other milk tea businesses. Given that the type of

business NielleTea has a plethora of competitors, innovation for them is more

challenging. SMEs are also frequently unaware of the close relationship between
business innovation and business survival and growth or are unsure how to

engage in innovation (OECD Ministerial Conference, 2018).

● Economic Conditions

Gordon, J. (2020) describes economic conditions as the current state of a

country's or location's economy. Economic conditions provide essential

information to investors and businesses. They examine economic conditions to

determine whether they are experiencing an increase in sales or a more profitable

position. Although the Philippines' economy is expected to show a good trend

rebound in 2021, the Philippines’ economy’s near-term outlookmarketAsen dulled

by a sharply rising wave of new COVID-19 cases since mid-March 2021 (IHS

Markit, 2021). It is tougher for the business to deliver the needs of its consumers

due to ever-shifting community quarantine protocols. Especially in the food and

beverage industry, there are numerous safety measures to follow when preparing

and distributing goods to customers.

● Balancing Growth and Quality Problems

Whether it is a service or a product, a company must make sacrifices in

order to grow. This could mean not being able to handle every customer

relationship. It is usually that level of personal involvement and attention to detail

that propels a company to success. As a result, many small business owners

become enslaved to these habits, to the detriment of the company's growth

(Beattie, 2020). Businesses cannot maintain and improve their products and
 services when their business starts to grow or expand. So NielleTea needs to have

an appropriate strong plan and system for this kind of occurrence.

III. Competitiveness, Strategy and Productivity

A. COMPETITIVE ADVANTAGE

Quality

Quality is essential in a business, and quality is not just about offering a product or

service that exceeds the standard. Still, it is also about the reputation you gain to deliver

a customer’s experience above and beyond consistently. The quality of the products you

offer to your consumers helps the business maintain customer satisfaction and loyalty. It

builds a reputation for quality by gaining accreditation with a recognized quality standard.

Neilletea assures its customers to give them the best quality milk tea in town, so they

choose a well-known supplier and distributor that supplies the best quality powdered

flavors for milk tea and cups.

Cost of Operation

It is often referred to as operating cost, which is the money it takes to run a

business. These are the day-to-day business expenses required to keep the lights on and

have the staff necessary to sell and fulfill customer’s needs; also, the cost of operation

includes buying or making the product and service of the business. The Neilletea store

owned by Faller’s has different suppliers regarding its cups and flavored powdered milk
tea. The monthly cost of operation of the business, including the supplies of raw materials,

is ₱10,368 and ₱124,416 per year.

Agility

The future is unpredictable, and with the world and its technology changing even

faster, it is creating more significant uncertainty to the needs and requirements.

Businesses that embrace agile can adapt more quickly, delivering little and often testing

the environment and remaining customer-focused. The Neilletea store has been

operating for more than a year now, and through those months have passed, the business

already has experiences handling the business industry changes. Neilletea considers

their competitors' product prices to encourage the consumers to appreciate their

affordable and quality products.

B. STRATEGY

Quality-Based Strategy

Quality is the most crucial factor in gaining consumer loyalty in a business. When

it comes to quality, it refers not only to the product but also to the service provided by the

enterprise. But since Nielletea is a young firm, it is easier for them to communicate and

interact with their customers. It gives them the advantage of being able to respond

immediately to the recommendations of its customers. In addition, it can improve its

products and services in a short period. Consequently, providing good quality service and

product to its clients.

 Time-Based Strategy

According to csus.edu, a Time-based strategy reduces the amount of time

required to complete tasks. It involves the planning, product and service design,

processing the product, delivering the goods, and responding to the customer’s needs.

Given that Nielletea is a family business wherein its employees are also members of the

family, it has the leverage of reducing the time it takes to plan or make business decisions.

Since they can discuss it at any time of day and because they all share the same goal. It

was also mentioned earlier that Nielletea has the benefit of interacting with its customers,

enabling it to respond to their needs or complaints immediately.

C. PRODUCTIVITY

Labor Productivity

Increased labor productivity in the industry drives economic growth. It signifies that

industry either manages to produce more goods and services based on the available

resources or produces more goods and services with fewer resources. Labor productivity

affects opportunity, working conditions of the business, and higher profit. It is an essential

factor in economics since it has a massive impact on the standard of living.

The given data of the performance of the employees of NEILLETEA for six weeks.

WEEK CREW SIZE ACCOMMODATED

CUSTOMER

1 2 40
2 2 38

3 3 42

4 3 45

5 3 42

6 2 44

Labor Productivity= Accommodated Customer/ Crew Size

40
Labor Productivity = 2

= 20

WEEK CREW SIZE ACCOMMODATED LABOR

CUSTOMER PRODUCTIVITY

1 2 40 20

2 2 38 19

3 3 42 14

4 3 45 15
5 3 42 14

6 2 44 22

The crew of two (2) is best in providing services such as servicing the customers

to provide the best quality of taste of the product depending on their preferences.

Multifactor Productivity

Multifactor productivity measures the economic performances by comparing the

output to input to produce an efficient production. It involves labor, materiality, capital,

and services. It is a measure of productivity used to indicate all the resources of the rate

of return in an industry (Apostolides, 2008).

Cups of Milk Tea Produced (month of January): 1,350

Price: ₱58/22oz cup

Labor Input: 192 hours

Cost of Labor: ₱27/hour

Cost of Materials: ₱ 54,000

Cost of Overhead: 1x labor cost

 𝑶𝒖𝒕𝒑𝒖𝒕
Multifactor Productivity = 𝑳𝒂𝒃𝒐𝒓 + 𝑴𝒂𝒕𝒆𝒓𝒊𝒂𝒍 + 𝑶𝒗𝒆𝒓𝒉𝒆𝒂𝒅

𝟏,𝟑𝟓𝟎 𝒙 𝟓𝟖 𝒑𝒆𝒓 𝟐𝟐𝒐𝒛 𝒄𝒖𝒑

= (𝟏𝟗𝟐𝒉𝒓𝒔 𝒙 𝟐𝟕 𝒑𝒆𝒓 𝒉𝒐𝒖𝒓)+𝟓𝟒,𝟎𝟎𝟎+(𝟏(𝟏𝟗𝟐𝒉𝒓𝒔 𝒙 𝟐𝟕 𝒑𝒆𝒓 𝒉𝒐𝒖𝒓))

= 1.2164

IV. Forecasting

Forecasting is used by businesses to help them build business strategies.

Financial and operational decisions are made based on economic situations and an

uncertain future. Businesses rely on business forecasting to strategize production,

funding, and other strategies (Beattie, 2020). Every action, every process businesses

have undertaken has been supported by some form of forecasting. Companies

concentrate their efforts on predicting outcomes to develop successful long-term

strategies (Landau, 2018). It is a company's method of emerging strategies that will help

it become more financially efficient.

A. Linear Trend Equation

According to Knowledge Brief, linear trends exhibit consistent, straight-line

increases or decreases in which the trend-line can move up or down, and the angle can

be steep or shallow. The concept describes the goals and applications of linear trend

forecasting and appropriately used the critical components required for its

implementation.

Formula:

𝑭𝒕 = 𝒂 + 𝒃𝒕
 Ft= Forecast to period t

a= Value of Ft at t=0

b= Slope of the line

t= Specified number of time period from t=0

𝑛𝛴𝑡𝑦 − 𝛴𝑡𝛴𝑦 𝛴𝑦 − 𝑏𝛴𝑡

𝑏= 𝑎=
𝑛𝛴𝑡 2 − (𝛴𝑡)2 𝑛

Month (t) Sales (y) (thousands) ty t2

January (1) 78.30 78.30 1.00

February (2) 76.56 153.12 4.00

March (3) 84.10 252.30 9.00

April (4) 89.90 359.60 16.00

May (5) 96.512 482.56 25.00

June (6) 101.50 609.00 36.00

July (7) 103.24 722.68 49.00

August (8) 95.70 765.60 64.00

September (9) 88.45 796.05 81.00

 October (10) 81.20 812.00 100.00

November (11) 75.98 835.78 121.00

December (12) 84.39 1012.68 144.00

∑78 ∑1055.83 ∑6879.67 ∑650.00

● The Highlighted months, which are March to July, is the season of summer that shows an

increase in sales of Nielletea.

12(6879.67) − 78(1055.83)
𝑏= 2 = 0.12
12(650) − (78)

1055.83 − 0.12 (78)

𝑎= = 87.22
12

F13= 87.22 + 0.12(13) = 88.75 (thousand)

F14= 87.22 + 0.12(14) = 88.87 (thousand)

F15= 87.22 + 0.12(15) = 88.98 (thousand)

F16= 87.22 + 0.12(16) = 88.10 (thousand)

F17= 87.22 + 0.12(17) = 88.22 (thousand)

F18= 87.22 + 0.12(18) = 88.33 (thousand)

 B. Seasonality

A seasonality forecast, when appropriately used, can reduce business costs while

increasing bottom-line profitability. Seasonal variation can influence business decisions

ranging from inventory levels to staffing initiatives. Seasonality forecasting methods can

help business professionals analyze stock prices and economic trends (Morrow, 2020).

𝑨𝒄𝒕𝒖𝒂𝒍 𝑺𝒂𝒍𝒆𝒔
Formula: 𝑫𝒆𝒔𝒆𝒂𝒔𝒐𝒏𝒂𝒍𝒊𝒛𝒆𝒅 𝒇𝒊𝒈𝒖𝒓𝒆 =
𝑺𝒆𝒂𝒔𝒐𝒏𝒂𝒍 𝑰𝒏𝒅𝒆𝒙

𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝒕𝒉𝒆 𝑺𝒆𝒂𝒔𝒐𝒏

𝑺𝒆𝒂𝒔𝒐𝒏𝒂𝒍 𝑰𝒏𝒅𝒆𝒙 =
𝑺𝒆𝒂𝒔𝒐𝒏𝒂𝒍 𝒂𝒗𝒆𝒓𝒂𝒈𝒆

Seasonal Deseasonalized
Quarter Quarter sales Average
Index Sales (figure)

January 78,300

1 February 76,560 238,960 79,653.33 0.905295539 216,329.42

March 84,100

April 89,900

2 May 96,512 287,9 95,970.67 1.090749286 314,039.81

12

June 101,500

3 July 103,240 287,390 95,796.67 1.088771699 312,902.10

 August 95,700

September 88,450

October 81,200

4 November 75,980 241,570 80,523.33 0.915183476 221,080.87

December 84,390

OVERALL AVERAGE 87,986.00

● SI1 = 0.91 means that the season is 0.91 times the average season.

● SI2 = 1.09 means that the season is 1.09 times the average season. The

season is 9% above the seasonal average).

● SI3 = 1.09 means that the season is 1.09 times the average season.

● SI4 = 0.92 means that the season is 0.92 times the average season.

V. Product and Service Design

The House of Quality represents product requirements, customer requirements,

satisfaction requirements, producing products, and relationship matrix regarding

designing. Also, it ascertains its weakness, moderate and vigorous parts of Neilletea that

need to be indicated.

The customer requirements are:

 a. Cleanliness of the area

b. Excellent customer services

c. Service time of the shop

d. Good Taste

The satisfaction requirements are:

a. Affordable price

b. Convenient and accessible

c. Suggestions and Complaints are accommodated

d. High-quality product

HOUSE OF QUALITY FOR NEILLETEA

Weak relationship

Moderate relationship

Strong relationship

Legend 1 = low, 5 = high

 Good quality of products and providing good services are some duties of a

business to satisfy their customers. The above matrix, indicating the affordable price and

high-quality product has a strong relationship with good taste. On the other hand, the

suggestions and complaints being accommodated have a strong relationship in excellent

customer services. The relationship of having affordable price and high-quality product

portrays that their customers are satisfied since they can get the product at a very

affordable price and easily measure the quality base on its price. Moreover, those

suggestions and complaints depict how excellent a business with regards to its customer

services. Business owners need to know and get feedback from their customers to

improve their operations and services. As well as, they would know how other things
might affect their business. The affordable price has a moderate relationship with the

cleanliness of the area because it is essential to maintain the neatness and orderliness

of the area, making sure that each guest is comfortable that boosts the value of the

business. The moderate relationship between the convenient and accessible place to a

service time of the shop easily gives a customer hassle-free satisfaction since the area is

convenient to everyone; therefore, customers can save time to find the shop. However, it

shows that the convenient and accessible place has a weak relationship from its good

taste because customers tend to know how good the quality of the product is, not only

how convenient it is. Moreover, the high-quality product has a weak relationship between

the cleanliness of the shop’s area and service time since they can know its quality based

on tasting the product, not on thinking how clean and how long their service time. On the

other hand, it proves that the high-quality product has a moderate relationship to excellent

customer service because they can get suggestions or feedback from their customers

that help them improve their customer service.

Neilletea milk tea shop provides a good quality of products making an edge over

its competitors to provide high-quality and good services in the food industry. However,

customers have different standards in terms of taste, price, and satisfaction; therefore,

owners are doing their best to accommodate all of the suggestions to attract more

customers and improve their day-to-day operations. In addition, Neilletea milk tea shops

make sure that they prioritize their customers' needs and desires; that’s why more people

are enjoying their services.

Some factors that need to consider why interrelationships and relationship matrix

needed to understand better are to know the customer’s preference and standards for the
quality of a product. Also, it provides some suggestions that will improve the excellent

performance of the business in terms of providing goods and services to their customers.

It helps the owners analyze and interpret what part of their services satisfy their customers

in operating and services.

VI. Capacity Planning for Products and Services

Capacity refers to the ability to achieve, store, or produce. For an entity, capacity

refers to the ability to generate production within a given time frame. Management

capacity is described in operations as the number of input resources available to create

relative output over time. (Juneja, n.d) As a result, it is incredibly beneficial in terms of

budget planning. It allows the business to see production levels and how the service must

be provided for the acceptable duration of the workers to satisfy demand and labor costs.

VI. 1 Efficiency and Utilization

Efficiency is usually measured as a ratio of actual output to projected output. It's a

method of generating multiple results from a single set of inputs. On the other hand,

utilization measures how effectively an entity utilizes its productive capacity (Kemp,

2018).

Design Capacity = 60 cups per day

Effective Capacity = 52 cups per day

Actual Output = 45 cups per day

𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
Efficiency = 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦
x 100
 45
=52 𝑥 100%

Efficiency = 86.54%

𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
Utilization = 𝐷𝑒𝑠𝑖𝑔𝑛 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦x 100

45
= 60x 100

Utilization = 75%

VI. 2 Cost-volume analysis

Cost Volume Benefit Analysis (CVP) examines the effect of varying levels of

volume and costs on operating profit. It calculates a break-even point for cost systems

with various revenue rates to assist managers in making short-term economic decisions

(Thakur, n.d)

01/31/2020 Total Per Cup

Sales (1,350 cups) January ₱78,300 ₱58 (22oz)

Variable Costs ₱54,000 ₱40

Contribution Margin Ratio 31%

Variable Expense Ratio 69%

Break-even Point 576

Contribution Margin ₱24,300 ₱18

Fixed Costs ₱10,368

Net Income 01/31/2020 13,932

The contribution margin ratio is the percentage difference between a company's

sales and variable costs. The amount of money available to pay fixed expenses is

represented by this ratio. (Lumen learning, n.d)

𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏
Contribution Margin Ratio = 𝑻𝒐𝒕𝒂𝒍 𝑺𝒂𝒍𝒆𝒔

24,300
= 78,300

= 31%

The variable cost ratio is a measure that compares the costs of rising output to the

higher sales that will be generated as a result of the increase. A variable cost ratio forecast

helps an organization look for the best balance between increased sales and increased

production costs. (Kenton, 2020)

 𝑻𝒐𝒕𝒂𝒍 𝑽𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝑪𝒐𝒔𝒕𝒔
Variable Expense Ratio = 𝑻𝒐𝒕𝒂𝒍 𝑺𝒂𝒍𝒆𝒔

𝟓𝟒,𝟎𝟎𝟎
= 78,300

= 69%

VI. 3 Break-even analysis

Break-even analysis involves measuring and analyzing an entity's margin of safety

based on collected sales and related costs. The study demonstrates how many profits

are needed to cover the cost of doing business (Hayes, 2021)

𝑻𝒐𝒕𝒂𝒍 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕

Break-even Point = 𝑪𝑴 𝒑𝒆𝒓 𝒖𝒏𝒊𝒕

10,368
= 18

= 576 cups of 22oz milk tea to break even

What if Analysis for target profit of ₱ 90,000 for one month,

Target Profit ₱ 90,000

Cups (22oz) 5,576

Margin of Safety 44,892

Degree of Operating Leverage (DOL) 1.74

 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 + 𝑻𝒂𝒓𝒈𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Cups 22oz Needed = 𝑪𝑴 𝒓𝒂𝒕𝒊𝒐

𝟏𝟎,𝟑𝟔𝟖 + 𝟗𝟎,𝟎𝟎𝟎
= 18

= 5,576 cups

The margin of safety is the decrease in revenue that can occur before a company

reaches its breakeven point. This reminds management of the risk of loss that a company

faces as a result of sales fluctuations (Accounting tools, 2021)

Margin Safety = Actual Sales – Break-even Sale

= ₱78,300 - 576 (58)

= 44,892

The degree of operating leverage (DOL) is a multiple that determines how much a

company's managing income changes in response to changes in revenue (Hayes, 2021).

𝑪𝒐𝒏𝒕𝒓𝒊𝒃𝒖𝒕𝒊𝒐𝒏 𝑴𝒂𝒓𝒈𝒊𝒏
Degree of Operating Leverage = 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆

24,300
= 13,932

= 1.74
VII. Process Selection and Facility Layout

VII. 1 Process selection

NEILLETEA business has two different suppliers; one of their suppliers is for the

main ingredients of the products, and the other supplier is for those inventory needed to

serve their products such as cups, straws, tissue, etc. NEILLETEA business is the one

who directly purchases goods and inventory to their supplier by going on site. The

selection of products depends on the quality of the main ingredients and a low-cost choice

for the inventory. The inventory materials used to serve their customers are not branded

materials but high quality for their ingredients to process their product.

VII. 2 Facility layout

The target market of their business is primarily millennials and boomers, in which

their business is located on the roadside along passing people and vehicles. NEILLETEA

can serve multiple customers, but it takes a bit of time to process and serve the product

because it is made after the order has been accepted. Their business sells 40-60 cups in

5 working hours 3 pm to 8 pm daily. For the waiting area, their business offers to sit with

a beautiful design and backgrounds that could be used for entertainment purposes of

their customers, such as taking pictures, site seeing, etc. In front of the store, it has a list

of products and their respective prices. Also, where the customer could take their order.

As much as possible, their business is well sanitized for their customer to be more

attracted and feel safe in the environment and the customer’s convenience and

satisfaction in the area.

NEILLETEA Floor Layout
 VII. 3 Process layout

NEILLETEA business key product for the process layout is indicated below on how

their business purchases its goods and materials needed in producing the product.

Their business uses this process layout to acquire high-quality products and cost-

wise materials that serve more efficiency and productivity.

After taking the order of the customer. They move into the preparation phase

wherein they mix and blend the ingredients and then proceed to adding toppings and

sealing cups. The vendors give courtesy through verbal after the order is completed.
The following are the three tasks included in the process layout of Neilletea. The cycle

time for the desired output 640 oz a day is 600 seconds per unit.

Task Task Time (in seconds)

A 300

B 180

C 120

TOTAL 600

A. Minimum cycle time = 120 seconds

Maximum cycle time = 300 seconds

Cycle time for the desired output 640 oz in 5 hours

5 hours = 5 x 60 x 60 = 18,000 seconds

VIII. Design of Work System

VIII. 1 Job design

According to Business Jargons, outlining the task, roles, commitments, skills,

procedures, and relationships needed to perform the specified set of functions is referred

to as job design. In other words, work design includes the task components and the

pattern of employee engagement, intending to meet both the organizational and social

needs of the jobholder. Moreover, the goal of a job design is to organize the work to

reduce employee boredom and discontent caused by the repetitive nature of the task.

Compensation

Kappel, 2018 defines compensation as the overall amount of cash and non-cash

payments you make to an employee in return for their services to the business. It is

usually one of the most expensive costs for companies with workers. The term

"compensation" refers to more than just an employee's daily pay. It also provides a wide

range of other salaries and benefits.

Concerning basic pay, Peters (2021), the initial salary paid to an employee, without

any benefits, bonuses, or promotions, is known as base pay. It represents the amount of
money an employee is paid in return for their services. The hourly wage, weekly, monthly,

or annual salary of an employee are all examples of base pay. About NeilleTea, basic

income was determined for a specific job. Employees are paid 27 pesos per hour in cash

wages. Other benefits are based on an employee's commitment to the company's goals.

Behavioral Approach to job Design

Behavioral considerations such as competence, variety, task identification, task

importance, feedback process, and so on are all addressed in a behavioral approach.

The employee will be motivated, and it means that the above-mentioned behavioral

variables are evaluated and taken into account when designing jobs using this method.

Simple and Repetitive tasks in selling milk tea are essential in the growth of their

business. In particular, their productivity, maximizing their time management, and etc.

- Coordination and cooperative in making milk tea.

- Properly execution of shifting rest in the work

- Knowledge and competence with the job.

IX. Location Planning and Analysis

IX. 1 Location decision

Finding the right location is a predominant factor in running a successful

business. The reason being, it is where the business will be getting its target market and

also possibly attract talents. A business location also helps create an image since there

are always parts of a city that carry a reputation, whether it is a reputation for simple living

or luxurious extravagance (Luther, 2019). Furthermore, once the owner successfully

pinpoints the right location for their business, It can lead to higher profit and possibly faster

growth to their business development.

The location will be important in reaching out to the target market, preferably

in a busy environment, primarily when the business sells merchandise products such as

food like milk tea. The traffic is not the only thing to consider since the business also

needs to pay attention to the area's policy and cost of operation within the chosen

location.

NeilleTea chose a location that would be easily accessible to their target

market, such as the common market. Furthermore, the area has access to the right

amount of resources to make their price affordable for their target market.
Actual Location of NeilleTea
 IX. 2 Factors that affect location decisions

Financial and Accessibility

NeilleTea intends to sell merchandise and gain profit from its target market.

As part of the food industry, the problem they will be facing from selecting the location is

the number of possible competitors, pedestrian traffic, the public of nearby residents, and

the appeal of the structure. The most important thing is the pedestrian traffic, that’s why

you should know whether the street your business will be located on was frequently used

by passersby. Isolated roads would be detrimental to your business profit, so choosing a

spot is no easy job and could cost a lot.

Government

The rules and regulations within the place would be necessary when

opening a business. They will serve as a guide on how and where to place the business

since these rules and regulations give the government the power to shut down your

business when you violate it lawfully. Additionally, the authorities will cover the amount of

tax you will be paying, incentive, and location regulations.

X. Recommendations

In today's society, Milk Tea is one of the refreshing drinks of every Filipino and one

of the most trending products. It means that there were many opportunities for the

business and utilized its resources efficiently to help the business grow.

Santisima Cruz is a small barangay located in the Municipality of Santa Cruz

Province of Laguna. It has a population of 9,986, representing 8.49% of the total

population of the Municipality of Santa Cruz as stated on the 2015 Census of Philippine

Statistics Authority. The current location of the NeilleTea was accessible to its target

market, such as the common market. Hence, to continue to grow the business, we will be

proposing an improvement plan that NeilleTea can consider to increase its reach to the

customers and revenue.

As we see the current situation and performance of NEILLETEA business. Here is

a proposal of an improvement plan. A renovation and expansion would be a great factor

in achieving higher productivity rate and higher profit as it will improve its capability to

accommodate more customers, as well as to maximize the potential of their selected

location. Handmade sweets such as cakes, cupcakes, donuts, and etc. are also

recommended in maximizing their profit as it fits their business which is drinks and could

also be considered as a souvenir. Lastly, home delivery is recommended as an

advantage in this new situation wherein people tend not to go outside their home and it

also reaches people who tend to take orders online casually. Here is a proposed floor

layout indicated below.

Proposed Floor Layout
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XII. Students Profile