MBALN670 – Supply Chain Management

 Provide a comprehensive explanation of the essential concepts of SCM and explain to what extent SCM is applicable to a service operation such as CII. 

2. Evaluate how partnering with some of the suppliers could benefit CII. What issues should CII consider when developing partnerships? 3. Purchasing, a major function in SCM, is critical in the cruise line industry. Critique the potential conflicts of interest or ethical issues facing the purchasing function. 

CRUISE INTERNATIONAL, INC.

A VIRTUAL SERVICE CASE

Operations Management, 4e
Reid, Sanders

An Overview of Cruise International, Inc.

Cruise International has been in business for more than two decades. The organization competes in all
aspects of the cruise industry. They provide cruises with small ships (fewer than 500 passengers), medium
ships (between 500 and 1,500 passengers), and large ships (over 1,500 passengers), as well as several
different luxury levels.

Cruise International, Inc. currently uses the following port cities for embarkation and disembarkation.

Amsterdam, Holland
Auckland, New Zealand
Barcelona, Spain
Beijing, China
Buenos Aires, Argentina
Cape Liberty, Bayonne, New Jersey
Ensenada, Mexico
Ft. Lauderdale, Florida
Harwich, England
Hong Kong, China
Honolulu, Oahu, Hawaii
Los Angeles, California
Miami, Florida

Rome, Italy
San Diego, California
San Francisco, California
San Juan, Puerto Rico
Seattle, Washington
Seward, Alaska
Singapore
Southampton, England
Stockholm, Sweden
Sydney, Australia
Valparaiso, Chile
Vancouver, British Columbia
Venice, Italy

Corporate headquarters for Cruise International, Inc. are located in Miami, Florida.

The cruise ships used by CII have a number of departments and services. The Administration basically handles the
paper work during the cruise. The Deck and Engine members are responsible for the operation and maintenance of
the ship. Entertainment Services provide the onboard entertainment. Food and Beverage Services are responsible
for dining and drinking aboard the ship. The Hotel function is responsible for the staterooms for guests and crew.
Housekeeping cleans the public areas of the ship as well as the staterooms. Information Technology is responsible
for the operation and maintenance of all areas of the cruise ship’s onboard computer system. The Cruise Staff is
responsible for maintaining guest relations.

Clicking on the underlined department allows you to find out more about the department or simply go to the Cruise
International, Inc. Departments and Services Page.

The descriptions of job positions were taken from http://www.cruiseservices.co.uk and
http://www.cruiseshipjobs.biz.

http://www.cruiseservices.co.uk/

http://www.cruiseshipjobs.biz/cruise_ship_job_descriptions_positions_on_cruise_ships_employment_opportunities

CRUISE INTERNATIONAL, INC.

A VIRTUAL SERVICE CASE

Operations Management, 4e
Reid, Sanders

The following virtual service case has been developed as an
interactive supplement to the Reid & Sanders Operations
Management textbook. The case requires you, the student, to
assume the role of an intern working for Cruise International,
Inc. (CII). Cruise International operates cruise ships globally.
During your internship you will be working at corporate
headquarters on both strategic and tactical issues as well as on
board one or more of our cruise ships. While Cruise
International is a fictional company, much of the data used with
regard to the cruise industry is real. There has been some
manipulation of the data to include Cruise International as part
of the industry. Much of the data has been adapted from an annual report done by the Cruise Lines
International Association, Inc. The style and format of this virtual case draws heavily from the previous
Virtual Company Consulting Case developed by Ted Helmer of Theodore Helmer and Associates, Inc. and
Jon Ozmun of Northern Arizona University.

An Overview of the Cruise Industry

In 2006, the size of the worldwide cruise market was approximately 12 million passengers. Of those 12
million passengers, 10 million passengers embarked on cruise voyages from ports in North America. The
U.S. cruise passengers, representing approximately 78% of the worldwide cruise passengers, have about 9
million passenger embarkations.

The total economic impact of the cruise lines, passengers, and their U.S. suppliers reached $35.7 billion
according to a study done by the Business Research and Economic Advisors (BREA). In the BREA report,
it shows the following U.S. industries that most benefited from the cruise industry.

 Professional & Technical Services $4.0 billion

 Nondurable Goods Manufacturing $4.8 billion

 Travel Services $3.9 billion

 Financial Services $2.3 billion

 Airline Transportation $2.1 billion

 Wholesale Trade $1.8 billion

Direct spending of the cruise lines and their passengers on goods and services produced in the United
States in 2006 was $17.6 billion. This spending resulted in 348,000 U.S. jobs paying $14.7 billion in wages.

In 2006, the top ten U.S. cruise port cities, ranked by number of embarkations, were Miami, Port Canaveral,
Port Everglades, Galveston, Los Angeles, New York, Tampa, Long Beach, Seattle, and Honolulu. Florida
remains the center of the U.S. cruising industry, accounting for almost 56% of the embarkations. California’s
cruise ports represented nearly 14% of all U.S. embarkations. Texas is the highest growth market. New
York increased embarkations to 536,000 with the opening of the Brooklyn Cruise Terminal. U.S. ports of call
had approximately five million cruise ship visits in 2006. Most of the visits were to Alaska, Hawaii, and Key
West.

Following are some fast facts about the cruise industry.

 On average, a 2000-passenger cruise ship with 950 crew members generates approximately
$322,700 in offshore spending in a U.S. homeport city.

 Approximately 40% of embarking cruise ship passengers stay one or more nights in a port city
either before or after the cruise. Each of these visitors spends an average of $289 per visit on retail,
dining, local transit, and lodging.

 According to the Cruise Lines International Association (CLIA), the industry has had an average
annual growth rate of 8.5% per annum.

 The cruise industry is relatively young. Since 1980, over 100 million passengers have taken a deep-
water cruise. Of this number, almost 60% have done their cruise within the past ten years.

 The market potential is large. More than 50 million North Americans expressed an intent to cruise
within three years. Of those, 31 million expressed a strong intent to cruise within three years. At this
point in time, only 17% of the U.S. population has ever cruised.

 The industry continues to add new destination ports, new ship design concepts, new onboard
and/or onshore activities, new cruise themes, and new cruise lengths to reflect the changing
vacation patterns of today’s market.

 The cruise experience consistently exceeds passengers’ expectations. Cruising consistently
receives top marks.

 Cruising allows passengers to sample destination areas to which passengers may return for a
future vacation.

 The North American cruise market is strong across all 50 states and Canada.

Assignment 1 – MBALN670 – Supply Chain Management

Assignment Brief:

Prior to attempting the assignment questions please read the following

material:

 Welcome to Cruise International

 Overview of Cruise International

 Mission Statement which includes:

o Cruise Data
• North American Passenger Capacity
• Cruise Destination Data

• Cruise Destination Data (Seasonalized)
• Average Length of Cruise Data

• Length of Cruise Demand Data
• Average Capacity Utilization

Quality Survey Data
• Billing Errors Data
• Guest Survey Data

• Housekeeping Stateroom

• Cleaning Data

o Housekeeping Work Sampling Data
Hours Required to Accomplish Routine Maintenance Tasks

Cost Reports Processing Time Chart

 Departments

 Guest’s Survey Form
 Activities for Telemedicine System Implementation

 Embarkation Process

Guidelines for assignment
 This is an individual assignment
 Ground your answer in relevant theory
 Plagiarism and reproduction of someone else’s work as your own will be

penalized
 Make use of references, where appropriate – Use Harvard or APA referencing

method.
 Late submission implies a deduction of 10 marks per day
 Structural elements should include an introduction, main body, and a conclusion
 Weight – 50%

 All of the following questions are to be attempted.

 Maximum word count: 2000 words

 Type of assignment: Essay

 Start / Finish : Week 2

Learning Outcome Assessed: 1,2,3

CHAPTER 4: Supply Chain Management at Cruise International, Inc.

Bob Bristol, your boss at Cruise International, Inc., just called to tell you that he was

impressed with your progress thus far in familiarizing yourself with operations at CII-

both the strategic details pertaining to its mission, competitive priorities, etc. and the

specific details concerning its services and processes. He tells you that, with all the

buzz about supply chain management (SCM) that you hear these days, CII is actively

interested in exploring how different SCM concepts and techniques could be used in

their operations. Maintaining an adequate, assured supply of a variety of mechanical

equipment, entertainment equipment, retail merchandise, food products, and supplies

for maintaining the ship is critical to CII. Meghan Willoughby, Chief Purser aboard the

Friendly Seas I, has a couple of specific assignments that you will work on later. But for

now, Meghan would like a concise research report for the top management team

addressing SCM issues relevant to CII.

“Leila Jensen liked your write-up on the CII service package and delivery system.

Meghan Willoughby wants you to prepare a similar report addressing SCM issues

relevant to CII. Senior Administrators at CII are actively involved in exploring how SCM

concepts and techniques could be adopted in their operations. Prepare a concise report

addressing the specific questions that Meghan has put together for you. I look forward

to receiving your report, which I am sure will provide insight for SC applications at CII.”

1. Provide a comprehensive explanation of the essential concepts of SCM

and explain to what extent SCM is applicable to a service operation

such as CII.

2. Evaluate how partnering with some of the suppliers could benefit CII.

What issues should CII consider when developing partnerships?

3. Purchasing, a major function in SCM, is critical in the cruise line

industry. Critique the potential conflicts of interest or ethical issues

facing the purchasing function.

CRUISE INTERNATIONAL, INC.

A VIRTUAL SERVICE CASE

Operations Management, 4e
Reid, Sanders

Mission Statement

We are committed to serving our customers, both the guests
and travel agents who book and support our cruises. Every
service we provide must be of the highest quality whether it be
shipboard or shore side.

We constantly seek improvement and innovation as we strive to
reduce costs in order to maintain reasonable fares, further
enhancing the value of our service. All bookings are serviced
promptly and accurately with the highest respect and courtesy.
We recognize that our suppliers and distributors must have an
opportunity to make a fair profit.

Cruise International, Inc. is concerned about our staff, the men
and women who work with us, whether shipboard or shore side.
All employees are provided with clean, orderly, and safe
working conditions. Each employee is treated with respect and
recognized for his/her effort. Cruise International is committed to
providing competent management.

Our ultimate responsibility is to our parent company and its
stockholders. Our business must make a reasonable profit.

Data and Charts
Cruise Data
•

North American Passenger Capacity

•

Cruise Destination Data

•

Cruise Destination Data (Seasonalized)

•

Average Length of Cruise

Data
•

Length of Cruise Demand Data

•

Average Capacity Utilization

Quality Survey Data
•

Billing Errors Data

•

Guest Survey Data

• Housekeeping Stateroom Cleaning

Data

Work Sampling Data Hours Required to
Accomplish
Routine Maintenance Tasks

Cost Reports Processing Time Chart

Activities for Telemedicine System
Implementation

CRUISE DATA

North American Passenger Capacity

Individual Cruise Line Detail at Year-End 2009

Cruise Line

No. of Lower Berths No. of Ships

Carnival Cruise Lines 47,908 21
Celebrity Cruises 14,762 9
Costa Cruise Lines 17,265 10
Cruise International, Inc. 13,120 12
Crystal Cruises 2,014 2
Cunard Line, Ltd. 4.411 2
Disney Cruise Line 3,508 2
Holland America Line 16,929 12
MSC Cruises USA 9,073 7
Norwegian Coastal Voyages 5,923 13
Norwegian Cruise Line 20,950 11

Oceania Cruises, Inc. 2,052 3
Orient Lines, Inc. 845 1
Princess Cruises 28,800 14
Regent Seven Seas Cruises 2,410 5
Royal Caribbean International 45,570 20
Seabourn Cruise Lines 624 3
Silversea Cruises 1,356 4
Swan Hellenic 360 1
Windstar Cruises 604 3
Total 234,077 155

Cruise Destination Data

Cruise Destination Data (Seasonalized)

Average Length of Cruise

Length of Cruise Demand Data

Average Capacity Utilization

QUALITY SURVEY DATA

Billing Errors Data

Cruise Number

Number of
Defective Bills

1 47
2 45
3 59
4 50
5 74
6 71
7 65
8 49
9 26

10 29
11 32
12 35
13 48
14 46
15 51
16 64
17 52
18 44
19 46
20 51
21 45

Total 1029

Guest Survey Data

Cruise
Number

Number of
Outstanding
Responses

1 14
2 13
3 15
4 14
5 18
6 10
7 26
8 8
9 17

10 12
11 13
12 14

13 17
14 11
15 8

Total 210

Housekeeping Stateroom Data

Day
Number of

Defects
1 108
2 104
3 94
4 105
5 88
6 150
7 85
8 98
9 145

10 95
11 105
12 65
13 77
14 82
15 90
16 98
17 116
18 113
19 88
20 94

Total 2000

Housekeeping Work Sampling Data

Activity Number of times observed
Cleaning stateroom 144
Delivering room service 12
Removing room service dishes 17
Arranging laundry/dry cleaning service 13
Delivering clean garments 22
Evening turndown service 70
Assisting guests 20
Preparing for crew show 10
Other activity 20

Unavailable for observation 38

Hours Required to Accomplish Routine Maintenance Tasks

Cost Reports Processing Time Chart

Cost Reports Process Time (minutes)
Report Review Time Data Entry Time
Specialty Restaurant I 12 10
Specialty Restaurant II 14 16
Wine I 17 18
Wine II 20 22
Wine III 12 15
Bar Service I 10 15
Bar Service II 25 32
Bar Service III 22 28
Bar Service IV 16 20

Shore Excursions 30 35
Gift Shops 24 30
Salon/Spa 18 25