BJMP2033 Production and Operation Management

1.0 Introduction

1.1 Company Background

Myth Cupcake is a cupcakery, located in a bustling area in Peneng, opened the

shop in year 2000. We wanted to bring wonderful delicacy of cupcakes and to remind

us of some of the simple pleasures in life.  Myth Cupcake offers four flavors daily,

including ten varieties that are available each day, two until seven seasonal flavors

per month, and three flavors on rotation throughout the week.  Each cupcake is

made from scratch each morning from the freshest ingredients. Our cupcakes are

shaped by adversity, guided by value, and driven by passion. Each cupcake is

frosted by hand and given its own unique garnish on top, making each cupcake a

work of art to appreciate and delicious to eat.

Myth Cupcake found by Delise and Leigh. They are quite opposite in personality,

kind of like chocolate and vanilla. Delise, has an extensive background in Nutrition,

holds an MBA, and besides is a fantastic baker.  Leigh has a background in fashion,

interior design and business management. She adds her creative flair to give the

cupcakes and the shop its unique signature.  Both ladies mix their talents to give

Myth Cupcake the best homemade designer cupcakes.

2.0 Company Profile

2.1 Objectives

Myth Cupcake consistent dedication to excellence has created a new industry for

cupcakes, and a new perception for cupcakery business.

The Myth Cupcake culture has provided a sense of belonging. While many say

the world is too huge and too wide for us to change alone, but we can play a small

part to make the world a better place to live in by being responsible for our own

actions and by making our every day choices for the good of the community and

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BJMP2033 Production and Operation Management

environment. But it’s formed by practicing a standard system in the company in our

day in day out works, every task that we do, every problem that we solved, and every

product that we produced, hoping one day doing the right thing will be an automatic

reaction.

2.2 Vision

Our vision is simple. We focus to put a smile on the world, one person at a time.

We vision are not idealists, we just believe the power of a smile. To that end, we

strive to make your day by ensuring the quality of our cupcakes and service are of

the highest standards and each experience you have with Myth Cupcake puts a

smile on your face. We are committed to consistently serving the highest quality

cupcakes and outstanding service in a vibrant store atmosphere.

2.3 Mission

Myth Cupcake aspires to giving back to our communities. We also play important

role to contribute to the environment by keep the environment clean and society by

helping the unfortunate category.

Other than that, we also aim to build partnerships that are based on integrity and

trust. We provide the best support to our business partners to ensure our and their

dreams and vision come true.

Moreover, we also commit to excellence. We share challenges and harvests with

our staffs through their high commitment and cooperation.

Further, we also belief in people and effort to change lives. We provide our staffs

an ideal income and healthy environment to help them to build a standard and quality

living.

We also are fostering a culture of joy and passion throughout our company. Our

company always organizes a workers trip to foster the relationship between peer.

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2.4 Business Partner Profile

3.0 Logo

3.1 Logo Description

At the top is our Myth Cupcake logo. In this logo, the black circle represents our

vision which is putting a smile on our customers’ face. We wanted to gather all

people joy through the cupcakes.

Other hand, the variety of cupcakes on the head means our complete products

range. We produce lots variety of cupcakes to our customers. So they have much

more choices

3.2 Motto

We summarized our motto in a word “C.H.A.R.M.I.N.G”, with each of the letters

defines the values and belief we upload to deliver.

i. Cleanliness

Food safety is our priority. This is because food is prepared by our

associates, so we stressed to have the highest personal and workplace

hygiene standard and practice.

ii. Hospitality

We go to extraordinary lengths to satisfy and delight our customers. We want

to meet or exceed their expectation on every cupcakes shopping trip. We

know that by doing so we turn customers into advocated for our business.

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iii. Acknowledgement

We recognize everything staffs make. We appreciate that everyone in Myth

Cupcake and their contribution. Our success is dependent upon the collective

energy and intelligence of all of staffs. We create a work environment where

motivated staffs to succeed to their highest potential and rewards results.

iv. Responsibility & Integrity

We responsible to our firm success and failure. We celebrate success and

see failure as opportunities for growth. We uphold good work ethics by

respecting ourselves for being punctual and diligent. Besides, we also make

contribution to the environment and society.

v. Maintenance

Maintenance ensuring our production process keeps working. We train all our

staffs, so they can be better skilled. Further, we also develop process which

can improve products quality and reduce production and administrative cost.

vi. Innovation

We are cupcakes revolutionaries. We dare to creatively different and produce

cupcakes that none has been before.

vii. Nature- Friendly

We respect our environment and recycle, reuse, and reduce our waste

wherever and whenever we can.

viii. Greatness

We produce the best that we can. We have great standard to sell the highest

quality products we possibly can. We define quality by evaluating the

ingredients, freshness, safety, taste, nutritive value, and appearance of all of

our products we carry.

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BJMP2033 Production and Operation Management

3.3 Slogan

Our slogan is celebrate the simple wonders of life.

We hope to bring a cupcake that brings smile on everyone after taste it.

Customers will always have a happy and joy mood after enjoy our cupcakes.

4.0 Organization Structure

4.1 Job Description

i. Chief Executive Officer (CEO)

Name: Cheryl Tan Say Er

Position Purpose:

CEO is head of operating. She is in charge and accountable for all the

operations in the firm. She is the representative and decision maker in the

firm.

Responsibilities:

Responsible for making strategic plans and setting business

objectives.

Evaluates the profitability of the various plans.

Skills and Specifications:

She has exceptional leadership as she motivates and led the firm.

She has mind and quick decision-making abilities.

She has good communication and networking skills and interacts with

other people.

Education and Qualification:

The CEO is at the highest position in the corporate ladder and so only highly

experienced people are given this job. She starts with an MBA degree and

gradually works her way up.

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ii. Administration and Finance Manager

Name: Goh Mei Yik

Position Purpose:

Administration and finance manager responsible for overall management of

Myth Cupcake include the financial risks. She implements all major decisions

and administrative tasks. In addition, she also responsible for planning

finances, keeping records, and making financial reports.

Responsibilities:

Managing administrative responsibilities and dividing them into

departments in order to maximize efficiency and productivity at a short

period of time.

Interpret financial information.

Monitoring cash flows and predict future financial trends.

Developing management mechanism to minimize the financial risks.

Managing the firm’s budgets.

Skills and Specifications:

Good communication skills

An analytical mind

Attention to detail

Education and Qualification:

Admin and finance manager has degree in Business Administrative, degree

in Financial Management and MBA.

iii. Human Resource (HR) Manager

Name: Lau Yih Shing

Position Purpose:

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BJMP2033 Production and Operation Management

HR manager entails providing practical, consistent, and proactive support,

direction and advice on HR procedure, policy, best practice, employment

rewards, benefits, and legislation. She performs human resources

management works relating to hiring, recruitment, training, compensation,

promotion, termination, career development, or retirement.

Responsibilities:

Organizing and conducting employee testing and recruitment

programs.

Receiving employee complaints and resolve them.

Skills and Specifications:

Ability to influence and persuade senior management level.

Pragmatic problem-solving skills.

Education and Qualification:

She has Bachelor’s degree in Human Resource Administration.

iv. Marketing and Business Development Manager

Name: Wong Pei Shan

Position Purpose:

Marketing manager is developing, establishing and maintaining marketing

strategies to achieve the objectives of an organization. She manages

effectively the advertising, promotional and marketing activities of the

company. She also evaluates market conditions, customer research,

competitors’ data and implements the changes in marketing plan as required.

Responsibilities:

Developing price strategies upon balancing customer satisfaction and

firm objectives.

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BJMP2033 Production and Operation Management

Formulating, directing and coordinating marketing policies and

activities to promote services and products.

Using sales strategic planning and forecasting to ensure profitability

and sale of lines, products, or services, supervising market trends and

analyzing business developments.

Skills and Specifications:

Extensive knowledge in every aspect of marketing strategies.

Strong understanding of market, customer and requirements.

Ability to develops, and implements strategic programs and tactics.

Education and Qualification:

She has Degree in marketing.

v. Production Manager

Name: Norlizawati Rusli

Position Purpose:

Production manager is an individual who plans, coordinates, organizes, and

controls production in cupcakery. Her main responsibilities are to ensure the

efficient production is of right quantity, quality, and cost.

Responsibilities:

Planning, scheduling and monitor production activities and

supervising the production process.

Making sure the good quality production of products on time.

Taking decision on operating unit’s layout, size and range of service

or product to deliver and design and arrangement of work processes.

Skills and Specifications:

Ability to grasp complex concepts easily.

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BJMP2033 Production and Operation Management

Excellent planning, negotiating, and organizing skills.

Ability to operate in a systematic and logical manner.

Education and Qualification:

She has Degree in food science and Degree in business management.

vi. Head of Chef

Name: Farah Inani Mior Muhd

Position Purpose:

As a head of chef, she in charge with the duty of overseeing all kitchen

operations in cupcakery and manage all kitchen staff.

Responsibilities:

Determines the frequency which the menu is to be change.

Supervision of all kitchen staff.

Plans the menus.

Skills and Specifications:

She has a creative and innovative mind.

Education and Qualification:

She has degree in food and beverage management.

4.2 Organization Chart

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BJMP2033 Production and Operation Management

5.0 Production System

5.1 Operation Strategy

Myth Cupcake applies lean production system in our production process. Lean

production is a variation on the theme of efficiency based on optimizing flow, it is a

present-day instance of the recurring theme in human history toward increasing

efficiency, decreasing waste, and using empirical methods to decide what matters,

rather than uncritically accepting pre-existing ideas.

Firstly, we design a simple manufacturing system. A fundamental principle of lean

manufacturing is demand-based flow manufacturing. Our inventory is only pulled

through each production center when it is needed to meet a customer’s order. The

benefits of this goal are decreased cycle time, less inventory, increased productivity,

and increased capital equipment utilization.

Secondly, we make sure that there is always room for improvement. The core of lean

is founded on the concept of continuous product and process improvement and the

elimination of non-value added activities. We improving the flow of material through

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BJMP2033 Production and Operation Management

new ideal system layouts at the customer's required rate would reduce waste in

material movement and inventory.

Lastly, we continuously improve our product and production process. A continuous

improvement mindset is essential to reach a company's goals. We make research

and development of our products and process continuously quarterly.

6.0 Production Process Planning

6.1 Supply Chain Management

Supply management in Myth Cupcake is integrated approach from customer buying

to raw material procurement. Below shown the supply chain management in Myth

Cupcake:

a. Procurement

Procurement is the acquisition of goods or commodities by a company,

organization, institution, or a person. The best way to procure is purchase of

goods from suppliers at the lowest possible cost by letting the suppliers

compete with each other to the expenses of the buyer.

Myth Cupcake source raw materials such as flour, milk, baking powder,

eggs, butter, vanilla and chocolate extract, sugar and other ingredients from

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Jo Baking Ingredients Sdn Bhd. This is because Jo Baking Ingredients Sdn

Bhd provides us the lowest price, the best quality materials, and delivery on

time services.

b. Production

After source the materials from Jo Baking Ingredients Sdn Bhd,

production process is starting. Production is an outline of firm that shows the

act of making products (goods and services).There are several steps in

produce cupcakes.

First and foremost, preheat the oven to temperature designated in recipe.

Line cupcake pans with paper liners. After that, combine flour, sugar, baking

powder, and salt in a large mixing bowl.  Add shortening, milk, and desirable

flavor.  Beat for 1 minute on medium speed.  Scrape side of bowl with a

spatula. Next, add eggs to the mixture.  Beat for 1 minute on medium speed. 

Scrape bowl again.  Beat on high speed for 1 minute 30 seconds until well

mixed. Then spoon cupcake batter into paper liners until 1/2 to 2/3 full. Leave

a little room at the top for expansion and be careful not to overfill.

Next step is bake for 20 to 25 minutes or until toothpick inserted in center

comes out clean. After that, prepare icing and place sprinkles in a small bowl.

Then, remove cupcakes from oven and allow them to cool 5 minutes in pans

then remove and place on wire racks to cool completely. Once cupcakes are

completely cooled, frost with favorite frosting recipe or decorate the cupcakes

with sprinkles.

Then, check the quality of the cupcakes. If there are no defects, packing

process was start. Next, place the packing cupcakes to boxes to distribute to

schools. Finally, transport the cupcakes to schools and outlet.

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c. Logistics

Logistics is the management of the flow of goods, information and other

resources in a repair cycle between the point of origin and the point of

consumption in order to meet the requirements of customers. The Myth

Cupcake logistics ensure that machine and workstation is being fed with the

right product in the right quantity and quality at the right time. We not concern

the transportation, but to streamline and control the flow through value-adding

processes and eliminate non value adding. Logistics help us to achieve

customer response and capital efficiency.

d. Distribution Channel

Distribution is the process of moving a product from its manufacturing

source to its customers. While channel of distribution comprises a set of

institutions which perform all of the activities utilized to move a product and its

title from production to consumption.

In Myth Cupcake, there are two distribute channel. First is direct selling.

We distributed the ready cupcakes to our outlet. We direct selling to our end

customers. There are not intermediaries between us and our customers.

Other than that, some seasonal occasion and festival, such as company

annual dinner, Chinese New Year, and so on, we also receive huge amount

of order from corporate.

Besides, we also retail to school. We sell the finish cupcakes to schools’

canteen. From school, the students and teachers buy from the seller.

6.2 Production Technology

Nowadays, to fulfill our huge demand from our outlet, we change to use the

automatic production line, with original design, compact structure and high

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BJMP2033 Production and Operation Management

automatic, is developed on the basis of Japanese technology. All our working

procedures that start from mixing until end of packing can be accomplished at the

short time. The machine increases our production efficiency and effectiveness by

speed up the process and accuracy measure each of cupcakes size and weight.

6.3 Financial Analysis And Planning

6.3.1 Modal

Myth Cupcake starts as a partnership business with a total capital

RM60000, which contribute by Delise and Leigh with RM30000 each

person.

Fixed asset

Item Cost (RM) Quantity Amount (RM)Breaking machine 5300 1 5300Seasoning machine 4900 1 4900Stir-frying machine 2500 1 2500Forming machine FH-500 1300 1 1300Cooling machine 2600 1 2600Refrigerator 1300 2 2600Van 4000 1 4000Oven 1000 4 4000Display rack bread 400 10 4000Total amount 31200

6.3.2 Fixed cost

Staff cost per month

Position Cost (RM) Number of Staff (Person)

Amount (RM)

Chief Executive Officer (CEO) 3000 1 3000Admin and Finance Manager 2000 1 2000Human Resource Manager 2000 1 2000Marketing and Business Development Manager

2000 1 2000

Production Manager 2000 1 2000Head of Chef 2000 1 2000Baker 1800 2 3600Sales Personnel 800 4 3200

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BJMP2033 Production and Operation Management

Total amount 14 19800

Operating cost per month

Category Amount (RM)Rent 1000Electricity 100Gas 100Insurance 100Miscellaneous 50Repair & Maintenance 50Depreciation 130Telephone 60Office supplies 70Cleaning supplies 50Total amount 1710

6.3.3 Variable cost for produce bread

Raw material for produce 12 Chocolate Cupcakes

No Ingredients Price (RM)1 Flour 1.002 Sugar 0.203 Baking powder 0.054 Salt 0.055 Baking soda 0.106 Shortening 0.207 Water 0.208 Eggs 0.909 Milk 0.50

10 Vanilla 0.2011 Melted

unsweetened baking chocolate

0.20

Total amount 3.60

Raw material for produce 12 Bubblegum Pink Cupcakes

No Ingredients Price (RM)1 Flour 1.002 Sugar 0.203 Baking powder 0.05

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BJMP2033 Production and Operation Management

4 Salt 0.105 Shortening 0.206 Eggs 0.907 Vanilla/ chocolate 0.408 Milk 0.50

Total amount 3.60

Raw material for produce 12 Vanilla Cupcakes

No Ingredients Price (RM)1 Flour 1.002 Sugar 0.403 Baking powder 0.104 Salt 0.105 Shortening 0.206 Eggs 1.207 Vanilla 0.208 Milk 0.40

Total amount 3.60

Raw material for produce 12 Red Velvet Cupcakes

No Ingredients Price (RM)1 Flour 1.002 Sugar 0.203 Baking powder 0.054 Salt 0.105 Shortening 0.206 Eggs 0.907 Butter 0.508 Vanilla 0.209 Cream cheese 0.40

Total amount 3.60

6.3.4 Break-even analysis

Myth Cupcake produces four flavor products that are Chocolate Cupcake,

Red Velvet Cupcake, Vanilla Cupcake, and Orange Cupcake. Price of

each product is the same price that is RM1.20. So,

Price = RM1.20 per cupcake

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Fixed cost = Staff cost + operating cost

= RM 19800 + RM1710

= RM 21510

Variable cost = RM3.60 / 12

= RM0.30 per cupcake

Break-even point = Fixed cost / (Price – Variable cost)

= 21510 / (1.20 – 0.30)

= 23900 cupcakes

RM

21510

0 23900 Cupcakes Break-even point

As the graphically shown above, the intersection of these two lines is the break-

even point that is 23900 cupcakes. If demand is less than the break-even point,

Myth Cupcake will operate at a loss. But if demand more than the break-even

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Total cost line

Total revenue line

BJMP2033 Production and Operation Management

point, Myth Cupcake will be profitable. So, Myth Cupcake needs to sell more than

23900 cupcakes per month to make a profit.

6.4 Job Schedule, Product and Production Design And Operation

Daily Job Schedule

Time Description7.00am Staffs punch in card and prepare for working.7.30am Briefing by the supervisor.7.45am Check the inventory and make order if needed.8.00am - Start to distribute the cupcakes to school by lorry.

- Production process start.- Start selling the finish cupcakes in our outlets.

12.00 noon Rest hour.1.00pm Continue the production process.4.45pm Cleaning process.5.00pm Staffs punch out.

Product Design

As state in the beginning, Myth Cupcakes produce three flavors with ten varieties of

cupcakes daily. Our products also change seasonal with the different flavors, and

also on rotation throughout the week. Below are our daily cupcakes.

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Cupcakes menu

Everyday

Chocolate Vanilla Red Velvet Bubblegum PinkSpecials

Monday Tuesday Wednesday Thursday Friday Saturday SundayChocolate Coconut

Coconut Carrot Chocolate Banana

Chocolate Hazelnut

Coconut Carrot

Chocolate Mint

Lemon   Blossom

Chocolate Coconut

Chocolate PB Swirl

Chocolate PB Chip

Key Lime Chocolate Coconut

Cinnamon Maple Chocolate Hazelnut

Coconut Coconut Mint Cookies &

Creme

Lava Fudge

Honey Banana

Mocha Cookies & Creme

Key Lime Lava Fudge PB Fudge PB Fudge

Toffee Crunch

Salted Caramel

Lemon Berry

Pumpkin Spice

Lemon   Blossom

Salted Caramel

Strawberry

Seasonal Flavors

January February March April May JuneSalted

CaramelChocolate   Strawberry

Cookies & Creme

Cherry Blossom

Chocolate   PB Chip

Banana   Chocolate Chip

Toasted Marshmallow

Strawberry Irish Cream White Chocolate Raspberry

Mother's Day Cupcakes

Orange Blossom

Valentine's Cupcakes

St. Patrick's Cupcakes

Easter   Cupcakes

Memorial Day Cupcakes

Father's Day Cupcakes

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July August September October November DecemberBlueberry   Coffeecake

Cherry   Cheesecake

Caramel Apple

Maple Caramel Apple

Chocolate / White Chocolate   Peppermint

Strawberry Ginger Peach

Cinnamon Pumpkin Spice

Pumpkin Spice

Gingerbread  

4th of July Cupcakes

Labor Day Cupcakes

Halloween Cupcakes

Election Cupcakes

Chocolate   Egg Nog

Thanksgiving Cupcakes

Rudolph   Red VelvetSnowball   (coconut)

Christmas Cupcakes

New Year's Eve Cupcakes

Production Design (Flow Chart)

Unload raw material buy from Jo Baking Ingredients Sdn Bhd

Move to inspection station

Weight, inspect, and sort the material

Move to storage

Wait until needed

Move to kitchen

Preheat the oven

Line the cupcake pans

Mix the ingredients

Fill the cupcakes batter into paper lines

Move to oven

Prepare icing and sprinkles

Remove from oven

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Cooling the cupcakes

Frosting cupcakes

Inspection

Packing

Storing

Shipping to outlet and schools

Production Operation

7.0 Quality Management

Commercial cupcakes making is held strict by government guidelines regarding food

production. Further, consumer preferences compel cupcake producers to maintain a high

quality standard of appearance, texture, and flavor. Therefore, quality checks are performed

at each step of the production process. We employ a variety of taste tests, chemical

analyses, and visual observation to ensure quality.

For Myth Cupcake quality is about meeting the needs and expectations of customers.

Therefore before launched a new cupcakes, we make research about customers’ needs and

expectations from the perspective such as cupcakes’ appearance, delivery, reliability, price

and so on. We also apply quality management in controlling activities with the aim of

ensuring that cupcakes are meets the specifications. There are two main parts to quality

management that we considered which are quality assurance and quality control.

Quality assurance is about how Myth Cupcake design the way cupcakes is produced to

minimize the chances that output are defect. We focus on the product development stage.

The reason is if the processes to produce cupcakes are tightly controlled, then quality will be

built-in. This will make the production process much more reliable, so there will be less need

to inspect production output. We make inspection each of the cupcakes produce stage until

it become the finish goods.

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Quality control is the traditional way of managing quality. Other than inspect the products

during the development stage, we also concerned with checking the output that has been

done before its start to distribute to our stores. For example, we do lots of inspection, testing

and sampling during the production process.

Now, a modern form of quality management, name Total quality management (TQM) is

apply in our process. In essence, it is emphasizes all parts of Myth Cupcakes to

continuously improve in quality. We focus on two key objectives, which are 100% customer

satisfaction and zero defects. We prevent the defect during each of production stage.

Besides, we also aim to produce zero defect cupcakes. Furthermore, we concern the quality

not only at the production process, we also involve other department. We always employ

specialist to make research to continue improve our products and also process. Moreover,

we encourage employee involve in spotting the improvement opportunities for quality and

identifying quality problems.

8.0 Future Planning

Increasing health consciousness bodes well for the future of cupcakes. As the treat,

cupcakes have become popular as snack, buyers have become more discriminating in

rejecting Styrofoam/hockey puck products for those with better textures and flavors. The

range of designer flavors offers something for every taste, and of course, the consumer can

top cupcakes of choice with fruit, peanut butter, or other enhancements to make an even

more varied snack. In an age of energy, health, and time awareness, the cupcakes that

contain preservation and additive seem to have harvested its long history. Therefore, Myth

Cupcake also moves toward the healthy lifestyle by reducing the preservation and additive

in cupcakes producing. We substitute it by more healthier and natural material such as

pandan leaves substitute the artificial flavor to make cupcakes.

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