IKEA's operations are very large and purpose-built. They feature very large car parks and are located close to major motorway intersections. In fact, everything about the design of IKEA's operations encourage high volume of throughput. This high volume means that many of the fixed costs of running the IKEA operation such as local taxes, administrative costs and some energy costs are spread over a high volume of individual sales transactions. This reduces the overall cost of making a sale, part of IKEAs strategy of offering good value for money.

LEGO operations are required by marketing to produce 19 billion LEGO elements per year. This specification means that LEGO will employ a highly automated, large scale production process which will reduce the average cost per element. Large scale production uses extensive computerisation (computer aided manufacturing (CAM) which requires greater complexities in the production process).

Now, consider if LEGO was only required to produce 10 000 elements a year. The smaller volume (quantity) would have massive implications for for transformed resources (smaller order quantities, smaller storage of inputs on site) and massive implications for transforming resources ( the number of factories, the extent of automation, the extent of storage required for finished pieces)

Higher volume specs in this case typically result in lower average cost of production, but increased complexity in the production process

HIGH VARIETY OF PRODUCTS BUT LOW VARIETY OF SERVICE The variety of products sold in IKEA store is relatively large compared with many furniture retail operations. For example, it includes small items such as glassware and kitchenware as well as very large items such as sofas, tables and shelving systems. Modular design of some products such as shelving systems allows variety to be extended even further from a few basic component parts. These components can be assembled together (by the customers) in different ways to offer an almost infinite variety of combinations.

However, as far as the variety of service is concerned it is relatively narrow. Most products are sold in cartons, customers are left to make decisions by themselves without interference from sales staff (though advice is available if requested) and even when ordering special products the order is taken down by staff in a standardized form. The check-out operation, where customers pay for the goods, is also highly standardized with everyone going through exactly the same sequence of activities. Even delivery to the customers home is largely a matter of the customer carrying the goods themselves in their own cars (though a delivery service is also available).

40 flavours, in multiple sizes (150 ml, 458 ml and tubs in store for scooping) dairy and non dairy versions, ice-cream cakes as well, selling to retailers like Woolworths and their own Ben & Jerry's stores, in 35 countries around the world.

Operations have to make the diverse range of ice-cream, store the ice-cream and deliver the ice-cream around the world. This results in higher costs in order to wash the production lines out to swap flavours, complexity to address different ingredients and packaging requirements- leading to an increase in average cost of production com[ared to producing the same volume levels of only one flavour.

HIGH VARIATION OF DEMAND BUT PREDICTABLE - Weekends and public holidays are much busier than working week days, therefore variation is relatively high. However, from IKEAs experience, demand is relatively predictable. Because of this predictability they can plan to have more staff available at busy periods.

50% annual sales occur in the Christmas period and stock must be available across the world with the right sets in the right markets.

Lego will have to store large quantities of products to then release to retailers for the Christmas season. Production schedules expand, with additional purchases of transformed resources., in order to meet demand.

In 2015, LEGO factories were running at maximum capacity however, they were unable to meet global demand warning retailers as early as October that they would not be able to deliver new orders before Christmas as a result of the unexpectedly high demand following LEGO movie and tie in with Star Wars and The Avengers.

Low Visibility- In many instances the only point at which interaction takes place between customer and service staff is at the point of payment. In effect, the customer is 'trained' to perform much of the value adding part of the service themselves. Clearly, this cuts down the costs of the transaction as far as IKEA is concerned. These savings can then be passed on to the customer.