Production and Operations Management

ProProduction and Operations Management

Kelvin Lester

Strayer University

The Business Enterprise – BUS 508

Dr. Vanessa Graham

May 12, 2011

1.      Analyze Marathon’s product process and determine which phase is open to the greatest number of efficiency improvements. Explain your rationale

Marathon could improve their efficiency by reducing the amount of time it takes for crude oil to travel between LOOP, the refineries and the terminals. Marathon could also be more efficient by increasing their storage capacity.

It takes an average of 25-34 days from the time crude oil is off loaded at LOOP, converted into gasoline and transported to terminals (Marathon Petroleum, 2011). The majority of the 25-34 days include travel time within the pipelines. Marathon needs to reduce this time. Marathon could reduce this time by expanding their current pipeline capacity. If Marathon can’t expand their current pipelines to handle more capacity, they could invest in building wider pipelines with more travel capacity. Although building new pipelines may be expensive and challenging, the return on investment would be worth it. If Marathon concludes that building new pipelines are not logical, they could invest in purchasing tanker ships. These tanker ships could be used to help speed up the time it takes crude oil and gasoline to reach their desired destinations. Expanding the pipeline capacity or purchasing tanker ships would definitely save time and increase production.

Marathon could be more efficient when it comes to storing crude oil and gasoline. If Marathon capacity increases due to expanding their pipelines or buying tanker ship to process more crude oil and gas, they will need more storage space. Marathon could build new storage terminals or reconstruct their existing storage terminals to accommodate this growth. Being able to meet consumers demand is very important. In case of a natural disaster or war, Marathon would have access to their storage supply of...