atw223 operations management - canon eos: quantitative & qualitative analysis on product &...

Quantitative &Qualitative Analysis on Products & Services

By

Chuah Wen Xu 107675 012-497 7355Goh Chong Mun 107686 016-428 5055Khoo Khay Xiang 107698 016-491 1665Zhang Haibo 109609 012-589 2486

http://atw223om-canon.blogspot.com

http://atw223om-canon.blogspot.com/

Outlines1. Introduction2. Statement of Problems3. Product Design4. Quality Management & International

Standard5. Location Decisions6. Forecasting Demand7. Conclusion

1.0 Introduction

1.1 Corporate Profile1.2 Canon’s Corporate Philosophy of Kyosei1.3 Canon’s Business1.4 Corporate Activities1.5 Canon: Efforts for Tomorrow1.6 Canon Technology

1.1 Corporate ProfileInfo Description

Company Name Canon Inc.

Founded August 10, 1937

Headquarters 30-2, Shimomaruko 3-chome, Ohta-ku, Tokyo 146-8501, Japan.

Phone (81) 3-3758-2111

Chairman & CEO Fujio Mitarai

President & COO Tsuneji Uchida

Common Stock 174, 762 million yen (As of December 31, 2009)

Number of Employees 25, 683 (As of December 31, 2009)

1.1 Corporate ProfileInfo Description

Net SalesNon-Consolidated 2, 025, 546 million yen (2009)

Consolidated 3, 209, 201 million yen (2009)

Net IncomeNon-Consolidated 80, 778 million yen (2009)

Consolidated 131, 647 million yen (2009)

Ordinary Profit 142, 684 million yen (2009)

1.2 Philosophy of Kyosei• Concise definition:-

“Living and working together for the common good.”

• Canon’s definition:-“All people, regardless of race religion or culture, harmoniously living and working together into the future.”

1.2 Philosophy of Kyosei• Canon’s Goal:-

To contribute to global prosperity and the well-being of mankind, which will lead to continuing growth and bring the world closer to achieving kyosei.

1.3 Canon’s Business

Canon’s Business

Consumer Business Unit

Office Business Unit

Industry and Others Business

Unit


• DSLR• Compact Digital Cameras• Lens for DSLR• Digital Camcorders• Multifunction Inkjet Printers• Inkjet Printers• Compact Photo Printers• LCD Projectors• Image Scanners• Network Cameras• Broadcast Equipment

Consumer Business Unit


• Office Network Multifunction Devices• Laser Printers• Laser Multifunction Devices• Solutions Software• Toner Cartridges• Digital Production Systems• Large-Format Inkjet Printers

Office Business Unit


Industry & Others Business Unit

• LCD Lithography Systems• Semiconductor lithography Systems• Ophthalmic Equipment• Digital Radiography Systems• Document Scanners• Handy Terminals• Color Label / Card Printers• Personal Information Products• Components• Die Bonders• Vacuum Thin-Film Deposition Equipment• Organic LED Panel Manufacturing Equipment

1.4 Corporate ActivitiesCorporate Activities

Research, Development & Design

Procurement, Production, Distribution

Sales & Marketing, Post-Purchase Services

Environment, Quality

Social and Cultural Support Activities

1.5 Canon: Efforts for Tomorrow

Canon: Efforts for Tomorrow

Image-RUNNER

ADVANCE

WWF-Canon Polar

Bear Tracker

Printing Solutions

IT Reforms

Green Volunteer

Action

1.6 Canon Technology

2.0 Statement of Problems

2.0 Statement of Problems• Inaccuracy of the forecasting sales demand.• The responsibility to improve the quality of the

products and customer services.• The ability to compete of Canon on quality

management control need to be enhance.• The expending in the demand allowed Canon to

expand the current distribution center. Hence, the location strategies will be another problem faced currently.

3.0 Product Design

3.1 Goods and Services Selection3.2 Generating New Products3.3 Defining A Product3.4 Service Design3.5 Decision Tree

3.1 Goods and Services Selection• Focuses on product design in term of its function

and layout.• Low cost strategy with high quality and gain

profit.• Keeping up with the trends and the latest

technology & innovations.

3.1 Goods and Services Selection• Life cycle – Introduction– Growth– Maturity– Declines

3.1 Goods and Services SelectionSa

les,

Cos

t & P

rofit

.

Introduction Maturity DeclineGrowth

Cost ofDevelopment

& ManufactureSales Revenue

Time

Cash flowLoss

Profit

3.2 Generating New Products• Economic change• Sociological and demographic chart• Technological change• Changes in– Market practice– Professional standards– Suppliers and distributors

3.3 Defining A Product

Entry Level Cameras

Semi-Professional Cameras Premium Cameras Professional

Cameras

EOS 300D EOS D30 EOS 7D EOS-1DEOS 350D EOS D60 EOS 5D EOS-1DsEOS 400D EOS 10D EOS 5D Mark II EOS-1D Mark IIEOS 450D EOS 20D EOS-1Ds Mark IIEOS 500D EOS 20Da EOS-1D Mark II NEOS 550D EOS 40D EOS-1D Mark IIIEOS 600D EOS 50D EOS-1Ds Mark III

EOS 1000D EOS 60D EOS-1D Mark IVEOS 1100D

List of the Canon EOS Production


List of the Canon EOS Lens

3.4 Product Design• 4 techniques to reduce costs and enhance the

service offering:-– Delaying customization– Modularizing– Automating– Designing for the ‘Moment of Truth’.

3.4 Product Design• To provide a better solution for customer, Canon

provides:-– Customer Service website– Hotline Services– Company Website

3.5 Decision Tree• A Decision Trees consists of 3 types of nodes:-– Decision nodes – commonly represented by squares– Chance nodes – represented by circles– End nodes – represented by triangles

• In order to focus on single production to maintain for the sales, we decide to cut off some of the current product lines. To choose whether which product will be remains in the market, we choose to calculate the profit via decision trees.

3.5 Decision Tree• Fixed cost: RM1,000,000

(RM)

Selling UnitsSelling Price Manufacturing Cost

EOS 450D 1,500 1,000 10,000EOS 550D 2,500 1,800 10,000

Probability

High Sales Low SalesEOS 450D 0.07 0.93EOS 550D 0.84 0.16

3.5 Decision Tree

EOS 450D

High Sales0.07

0.93Low Sales

EOS 550DHigh Sales

0.84

Low Sales0.16

Selling Units: 700unitsRevenues RM 1,050,000Mgf Cost RM 700,000Fixed Cost RM 1,000,000

-RM 650,000

Selling Units: 9,300unitsRevenues RM 13,950,000Mgf Cost RM 9,300,000Fixed Cost RM 1,000,000

RM 3,650,000


RM 4,880,000


RM 120,000

RM 5,000,000

RM 3,000,000

3.5 Decision Tree• Profit from EOS 550D: RM5, 000, 000.• Profit from EOS 450D: RM3, 000, 000.• Therefore, the production of EOS 450D will stop and

more effort will be put on EOS 550D.

4.0 Quality Management & International Standard

4.1 Quality and Strategy4.2 International Quality Standards4.3 Total Quality Management

4.1 Quality and Strategy• Quality: -– The ability of a product or service to meet customer

needs and it affects the entire organization from supplier to customer and from product design to maintenance.

4.1 Quality and Strategy• Canon’s Training Plans:-

– Foundation & Professional Development and service skills.– Management and Leadership Program to enhance qualities and

management skills of supervisory and managerial staff.– Technical Training Program to enhance technical and service

skills.– Product and System Training Program to build up product

knowledge of the sales, marketing and support staff.

4.2 International Quality Standards

4.2 International Quality Standards• ISO 14001 is a series of environmental

management standards that contain 5 core elements:-– Environmental management– Auditing– Performance– Evaluation– Labeling– Life cycle assessment

4.2 International Quality Standards• Advantages of ISO 14001:-– Positive public image and reduced exposure to

liability;– Good systematic approach to pollution prevention

through the minimization of ecological impact of products and activities;

– Compliance with regulatory requirements and opportunities for competitive advantages;

– Reduction in need for multiple audits.

4.2 International Quality Standards• ISO 9000 indicate that the product and service

are high quality and competitive.• Certify that Canon is international oriented

company.• Supported by national standards bodies from

more than 150 countries.

4.2 International Quality Standards• Canon was awarded the winner for “The 3rd Asia

Pacific Super Excellent Brand-ELITE AWARD” for being a top leadership branding.

4.3 Total Quality Management• An integrative philosophy of management for a

quality emphasis that encompasses the entire company, from supplier to customer.

• Canon committed through continuous improvement in the availability and distribution of the products and services.

• Canon implemented Continuous Improvement Process (CPI) to enhance its products,services or processes.

4.3 Total Quality Management• Canon believes that communicating with

employees will positively affects job satisfaction and benefits the bottom line.

• Canon meets customers’ needs and expectations by applying total staff management.

• 3 major types of teams that applied:-– Steering Committees;– Problem-Solving Teams;– Self-Managed Teams.

5.0 Location Decisions

5.1 Factors That Affect Location Decisions5.2 Methods of Evaluation Location Alternatives5.3 Service Location Strategy

5.1 Factors That Affect The Location Decisions

Country

• Political View• Economical

Factor• Cultural• Labor• Flexibility

Region / Community

• Corporate Desires

• Attractiveness of Region

• Labor Availability of Region

• Cost of Utilities• Land Cost

Site

• Site Size and Cost

• Transportation System

• Zoning Restriction

5.1 Factors That Affect The Location Decisions• Labor productivity• Exchange Rates and Currency Risks• Cost – Intangible Costs & Tangible Costs• Political Risk, Values & Culture• Proximity– Markets– Distribution Centre– Suppliers

5.2 Methods of Evaluation Location Alternatives

Factor Rating Method

• Factors that will be use in the evaluation:-– Availability of Skilled Labor;– Availability of Raw Materials;– Availability of Transportation;– Proximity To The Firm’s Markets.



Key Success Factor Weight

Scores Weighted Scores

WM - NR

WM - CR

WM – SR EM WM -

NRWM -

CRWM -

SR EM

Availability of skilled labor 0.35 80 80 75 60 28.00 28.00 26.25 21.00

Availability of raw materials 0.15 70 75 70 50 10.50 11.25 10.50 7.50

Availability of transportation 0.25 55 60 55 70 13.75 15.00 13.75 17.50

Proximity to the firm's markets 0.25 70 70 65 45 17.50 17.50 16.25 11.25

Totals 1.00 69.75 71.75 66.75 57.25



• WM – NR : West Malaysia – Northern Region• WM – CR : West Malaysia – Central Region• WM – SR : West Malaysia – South Region• EM : East Malaysia


Break-Even Analysis

• Used to determine how much sales volume of the business needs to start making a profit.

• Fixed Costs: costs that are same regardless of how many items those business sell.

• Variable Costs: recurring costs that absorb with each unit that sell.


Break-Even AnalysisFixed Costs for:-

West Malaysia – Northern Region : RM 80,000West Malaysia – Central Region : RM 100,000West Malaysia – Southern Region : RM 90,000East Malaysia : RM 70,000

Variable Costs per units for:-

West Malaysia – Northern Region : RM 8West Malaysia – Central Region : RM 5West Malaysia – Southern Region : RM 10East Malaysia : RM 20


Break-Even Analysis

RM

Fixed Cost

Variable Cost / units

Total Cost / 1000 units

Total Cost / 2000 Units

Total Cost / 3000 units

WM – NR 80,000 7 87,000 94,000 101,000

WM – CR 82,000 5 87,000 92,000 97,000

WM – SR 90,000 6 96,000 102,000 108,000

EM 65,000 13 78,000 91,000 104,000


Break-Even Analysis

0 1,000 2,000 3,00060,00065,00070,00075,00080,00085,00090,00095,000

100,000105,000110,000

Break-Even Analysis

WM - NR WM - CR WM - SR EM


Break-Even AnalysisFor WM – NR, M (Gradient) = 7.Y = 7X + 80,000 - (1) For WM – CR, M (Gradient) = 5.Y = 5X + 82,000 - (2) For WM – SR, M (Gradient) = 6.Y = 6X + 90,000 - (3) For EM, M (Gradient) = 13.Y = 13X + 65,000 - (4)

For intercept (1) & (2),7X + 80,000 = 5X + 82,0002X = 2,000X = 1,000 For intercept (1) & (4),7X + 80,000 = 13X + 65,0006X = 15,000X = 2,500 For intercept (2) & (4),5X + 82,000 = 13X + 65,0008X = 17,000X = 2,125


Break-Even Analysis

• Therefore, for the most suitable location for the production less than 1,000 units, the best location is East Malaysia;

• For the most suitable location for the production more than 2,000 units, the best location is West Malaysia – Central Region.


Center-of-Gravity Method

• Used to determine the location of a single distribution center that will minimize distribution costs.

• Due to Canon planned to move to another distribution center. We are looking for a more suitable location.



Name Weighted, QCoordinate

N E

Canon Distribution Centre 3.084336 101.576608

Penang Branch 800 5.416233 100.320864

Ipoh Branch 1000 4.607197 101.081756

Melacca Branch 700 2.184842 102.259439

Johor Bahru Branch 850 1.529233 103.792886

Kuantan Branch 600 3.828050 103.336161

Kuching Branch 700 1.550897 110.356019

Kota Kinabalu Branch 700 5.985331 116.077981



Name Weighted, QCoordinate

N E

KLCC Concept Store 600 3.158108 101.712664

Mid Valley Megamall Concept Store 650 3.119428 101.677400

Sunway Pyramid Concept Store 750 3.072150 101.608956

Pavilion Concept Store 650 3.148308 101.713056

1 Utama Concept Store 800 3.149603 101.615539

e @ Curve Concept Store 500 3.158576 101.610695



• Center of Gravity (3.41006307, 103.568322) • We had created a map for Canon Distribution Center,

Branches & Concept Stores at http://bit.ly/canonmmap.

http://bit.ly/canonmmap



Current Locations of Canon Distribution, Branch Offices & Lifestyle Concept Stores in Malaysia.



Current Locations of Canon Distribution, Branch Offices & Lifestyle Concept Stores in West-Malaysia.



Current Locations of Canon Distribution, Branch Offices & Lifestyle Concept Stores in West-Malaysia Central Region.

5.3 Service Location Strategy• Sites selection:-– Revenue focus

• Volume and Revenue• Physical Quality• Cost Determinants

– Technique• Factor Rating Method• Center-of-Gravity Method

– Assumption• The call center service

6.0 Forecasting Demand

6.1 Introduction of Forecasting6.2 Forecasting Approaches (Quantitative Methods)

6.2.1 Moving Averages6.2.2 Exponential Smoothing with

Trend Adjustment6.2.3 Linear Regression

6.1 Introduction of Forecasting• The art and science of predicting future events or

the process of making statement about events whose actual outcomes that have not yet been obtained.

• Involve taking historical data and projecting them into the future.

• Planning for both the short run and long run.

6.1 Introduction of Forecasting• Short-range Forecast:

Generally less than 3 months• Medium-range Forecast:

3 months – 3 years• Long-range Forecast:

More than 3 years

6.2 Forecasting ApproachesMoving Average

Month Actual Demand (in thousands units) 3-Month Moving Average Absolute

Deviation

1 9.8 #N/A #N/A2 8.6 #N/A #N/A3 8.8 #N/A #N/A4 9.4 9.07 0.335 10.1 8.93 1.176 9.7 9.43 0.277 10.2 9.73 0.478 10.0 10.00 09 9.6 9.97 0.37

10 9.8 9.93 0.1311 9.9 9.80 0.1012 9.8 9.77 0.03


1 2 3 4 5 6 7 8 9 10 11 120

2

4

6

8

10

12

Moving Average

ActualForecast

Data Point

Valu

e

6.2 Forecasting ApproachesExponential Smoothing with Trend Adjustment

• Smoothing Constant:-α = 0.2β = 0.3


Month Actual Demand( in thousands units)

Smoothed Forecast,

Smoothed Trend,

Forecast Including Trend,

1 9.8 8.50 1.00 9.502 8.6 9.56 1.02 10.583 8.8 10.18 0.90 11.084 9.4 10.62 0.76 11.385 10.1 10.98 0.64 11.626 9.7 11.32 0.55 11.877 10.2 11.44 0.42 11.868 10.0 11.53 0.32 11.859 9.6 11.48 0.21 11.69

10 9.8 11.27 0.08 11.3511 9.9 11.04 0.00 11.0412 9.8 10.81 0.00 10.81


1 2 3 4 5 6 7 8 9 10 11 120

2

4

6

8

10

12

14

FIT Actual DemandMonth

Sal

es D

eman

d in

thou

sand

uni

ts

6.2 Forecasting ApproachesLinear Regression• To study the relationship between price of product

(independent variable) and sales (dependent variable). • The form of Linear Regression equation:-

• Wherey = value of the dependent variablea = y-axis interceptb = slope of the regression linex = independent variable

6.2 Forecasting ApproachesLinear Regression

The slope b is computed by:

The y-intercept a is founded by:


Price of Products(RM), x Sales(RM in millions), y xy

2300 5.9 5,290,000 13,570

2450 5 6,002,500 12,250

2600 3.98 6,760,000 10,348

2800 3.71 7,840,000 10,388

3200 3.26 10,240,000 10,432

3400 2.43 11,560,000 8,262

3500 2.14 12,250,000 7,390

3750 1.53 14,062,500 5,737

24,000 27.95 74,005,000 78,377


Sales (in millions) = 11.29- 0.0026(price)


2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 40000

1

2

3

4

5

6

7

Relationship between Sales and Price of Product

Price(RM)

Sale

s(RM

in m

illio

ns)

7.0 Conclusion

7.0 Conclusion• Canon EOS has a various kind of products on the markets.• Once the product reach the declines in life cycle, new

product should be design and introduce.• Canon EOS has a good maintained-trend in terms of

quality for decades.• Getting a more suitable place for distribution center for

Canon allow the Canon to face the future increase in demand.

• Forecasting for sales allow the company predict for the demand in future.

THANK YOU!http://atw223om-canon.blogspot.com

http://atw223om-canon.blogspot.com/

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