Kristens Cookie Company free essay sample

Case Report  : Kristen’s Cookie Company (A1) [pic] Key Questions 1. To know the time it will take us to fill a rush order, we have to know how many dozens the rush order requires. If it is only one dozen, we need 6 minutes for the washing and mixing steps, 2 minutes for the spooning, 10 minutes for the whole baking, 5 minutes to cooling down, 2 minutes for the packing and 1 minute for the payment. That is to say  : 26 minutes. If we consider the order requires N dozens  : we always need the first 8 minutes to do the washing and mixing steps and the spooning. That is why , for a 2 dozens order, the discount can be up to $ 0,068xC and for a 3 dozens order, the discount can be up to $ 0,078xC. To determine the exact price, we have to choose the cost of our labour. Let’s pick $10 per hour to make calculations easier. The maximum discount should then be $0,68 for a 2 dozens order and $0,78 for a 3 dozens order. We will write a custom essay sample on Kristens Cookie Company or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It will of course take us longer to fill the 2 (or 3) dozens order because our oven can only bake 1 dozen at a time. 5. During the whole process, we can see we are not always using the mixer  : one electric mixer is enough. On the contrary, there is a lack of trays (because the mixer can prepare pastry for a 3 dozens order in one operation)  :3 trays are needed at least. 6. During the whole process, we can see the oven keeps working almost all the time when the mixer has a lot of time being idle  : we are wasting time when waiting for the oven. That is why having only one oven is a bottleneck. Therefore it will be great to add an oven. If we rent it, we have to know up to how much we will be ready to pay. For N orders, we need 16 + 10xN minutes to fill them. We would need only 16 + 7xN minutes with 2 ovens. We save 3 minutes time for each order. Let’s assume we win $10 per dozen. The original profit is $60 per hour (60/10 x $10). It could be $85,7 per hour (60/7 x $10) with another oven. With this, we can decide the higher price we will be willing to pay for the renting is $25,7 per hour. Problems for Further Thought 1. If we consider I am doing everything, it means my valuable time becomes 12 minutes (sum of the 2 valuable times found in Question 3) which exeeds the time of baking one dozen cookies  : I myself become the new bottleneck. If the order is a 2 or 3 dozens order with the same flavor, my valuable time becomes either 17 or 22 minutes and that is quick enough because the baking time remains either 20 or 30 minutes. If there are enough orders, I can do it alone but it is not a such brillant idea if there are not so many orders. 2. If we look at the process, there is no need to stop the baking of the previous dozen when the rush order arrives. The time that rush order will delay is only at most 1 minute and we will be able to finish the previous order on time  ! That is why I do not think we should set up a special rate. 3. I will just have to look to my order board and see when I will finish my own job and become idle. The time we can promise the delivery should be that time + 26 minutes. The safety margin for timing should be 8 minutes because the worth possibility is  : I have just begun to wash the mixer and the rush order arrives. The time I need to accomplish it before doing the previous order again is 8 (6 + 2) minutes. 4. We could think about getting more raw materials at a lower cost and eventually with a better quality. We could also use advertisement to make the cookies business more attractive. If this is a success, we should think about having new ovens, new trays and hiring peolpe. We could think about a delivery system which would be optional but which would be very convenient for people living far away from the room we use to prepare the cookies. 5. If we choose this new way of producing cookies, we loose what we first decided  : to make unique, fresh cookies  ! The business will then be defined by low prices and not by quality and fresh products because we would make the cookies before receiving the order. The order taking process will change  : clients do not need to send a mail or to phone us, they just come and ask for what they want. They just have to make the order a little bit earlier when they ask for a huge amount of cookies. We should make special rates (discount) for people who give order earlier and perhaps set a system of different times  : when you make your order between 8 pm and 10 pm, you pay more for example. People asking for special flavors should also pay something more. Kristens Cookie Company free essay sample A discount could be given for orders of two and three dozen cookies. Larger orders will reduce the amount of time Kristen needs to spend in the mixing part of the process. However, all other costs are the same. The savings may not be that significant, but if Kristen wants to offer the promotion, especially at the beginning stage of her business when she is trying to attract new customers, we offer the discount rates below, based on the amount of labor put into the process. However, we also note that the entire flow time for two dozen cookies is 36 minutes (which is the same as if we had 2 different orders, assuming orders were in queue), and for three dozen it is 46. This because of the oven bottleneck. In fact, she may actually want to discourage larger orders at an early stage of her business, so that more new customers can try (and fall in love with) her cookies. We will write a custom essay sample on Kristens Cookie Company or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page If Kristen gets a second oven (or determines that all she needs is a second oven rack), then it would be more beneficial to offer the discount rate, because then her hourly capacity would be 60/10 x 2 = 12 dozen cookies versus the 10 dozen per hour capacity she currently has. b) The table below presents our proposed discount structure, while maintaining a 15% profit margin. One-dozen order Gantt chart Figure 4: Two-dozen order Gantt chart Figure 5: Three-dozen order Gantt chart 5. How many electric mixers and baking trays will you need? Based on a scenario of consecutive 3-dozen orders (ref. ollowing Gantt chart): a) An examination of our Gantt chart shows that we can operate with one electric mixer. b) In order to fulfill with minimal delay of later orders, three trays are required. However, if a second oven is added, Kristen will need more trays again, and the mixer will become the bottleneck resource. After a second oven is added, the mixer becomes the bottleneck. 6. 7. Are there any changes you can make in your production plans that will allow you to make better cookies or more cookies in less time or at lower cost? For example, is there a bottleneck operation in your production process that you can expand cheaply? What is the effect of adding another oven? How much would you be willing to pay to rent an additional oven? In the previous questions, we were already assuming the addition of a two more trays, because it became clear from the Gantt chart drawn in class that the tray would be the first bottleneck to tackle. Trays are a low-cost one-time purchase, so that one is a no-brainer for Kristen. Without the trays, she will have to wait an additional five minutes between orders, due to the cooling time. The addition of extra trays means she can more fully utilize the oven. After the addition of the extra trays, the oven becomes the new bottleneck. As was discussed in our answer to question 4, increasing baking capacity will increase Kristen’s total hourly capacity by two dozen cookies, or two orders. Questions for further thought Note: For the purposes of the following questions, we have assumed the purchase of extra trays, as it is a low, one-time fixed cost that will help us operate our business more efficiently. 1) Assuming that we still have only one oven, and now no roommate, the bottleneck shifts from the loading and baking activity to our time. The cycle time increases from 10 minutes to 12 minutes (because now we have to also do the loading, packing, and paying parts of the batch). But if we have an order for two dozen of the same cookie type, the order time changes again. Now we will be able to do the washing/mixing step for two dozen at the same time (6 minutes), have to spoon each dozen (2 minutes x 2 = 4 minutes), load each dozen (1 minute x 2 = 2 minutes), pack each dozen (2 minutes x 2 = 4 minutes), and take care of the payment (1 minute). This order, then, for two dozen of the same kind of cookie, becomes 17 minutes. Likewise, for three dozen of the same type of cookie, takes 6 + 2(3) + 1(3) + 2(3) + 1 = 22 minutes. 2) Based on the Gantt chart, and class discussion, we know that the maximum time it would take if a rush order came in would be 26 + 10 = 36 minutes (this is if there is another order directly ahead of it). It is not worth taking out cookies that are already in the oven, because this would only affect delivery time by at most 10 minutes. However, it may be worth it to offer a premium rate for an order if there are several orders in the queue, and someone wants to get their cookies sooner. In this case, because a rush order will potentially push all orders in the queue back by 16 minutes (8 minutes mixing/spooning + 10 minutes baking – 2 minutes for when we can start the next mixing/spooning), I do want to charge a premium. I figure that because fulfilling the rush order delays other orders by 26. 7% of an hour, I will charge them at least that much more for the privilege. I also want to discourage people from requesting too many rush orders, so I may want to actually charge a bit more. After the company is up and running, and I have a better idea of the demand, I may adjust the price. I will have to limit the number of rush orders I take based on the number of orders in the queue. For instance, I can’t promise my other customers that they will get their cookies in under an hour if I also agree to fulfill more than two rush orders. 3) If the order board is laid out like a Gantt chart, it will be easy to look at it and tell the customer what time to expect delivery. Basically, look at when the oven will be finished with the last order, subtract 8 minutes (this is when you would start washing/mixing), then add 26 minutes (the entire flow time for a batch of a dozen cookies). Or, more simply, look at when the oven becomes available and add 18 minutes. But if we want to be able to take rush orders should they come in, we should allow a 10 minute safety margin (related to the oven bottleneck), and thus tell the customer that delivery time will be 28 minutes after the oven becomes available. 4) We need to think first of all about whether or not we need special permissions/licenses to sell food from out of our apartment. If we don’t address these legalities, we need to be prepared to deal with consequences if we get in trouble! Second of all, we need to think about the demand for late night cookies in our area. Considering that Boston is a large college town, full of many students up late at night and craving snacks, demand may be quite high, as long as people know about the business. Which brings us to the issue of marketing—how will we promote our business and let people know about our competitive advantages (fresh, custom-made, and fast cookies)? We have to decide on a price for our cookies—what will make it worth our while, yet still be an attractive price for students? Can we offer a one-price-fits-all deal, or should we charge per special ingredient? Will running the business affect our studying? We probably still want to pass our classes, and though each order only requires about 10 minutes of active time, constantly switching between tasks may prove difficult. How much inventory do we need to maintain on hand? What will we do if we get too many orders in a night? Will we turn new customers away or work overtime? Will we get really fat from eating leftovers and cookie batter? Does this mean we’ll have to increase our time at the gym, taking even more time away from our studies? ) If we decide to sell standard cookies, we can do the mixing for three dozen cookies at a time, but spooning, loading/baking, cooling, packing, and paying will take the same amount of time. However, if we invest in some extra mixing bowls, we can keep mix on hand (in the refrigerator, assuming ample space), and then bake the cookies to order, so that they are still very fresh. We could also make a few varieties of cookies for customers to choose from. Because we are now talking about changing our model, we may want to also change how we sell cookies to the customers. Do we want to offer mixed dozens (say 4 of each of 3 types of cookies)? Do we want to sell per cookie rather than per dozen? Do we offer discounts for large purchases? Also, if we are mixing batter before getting orders (in order to more efficiently use our time for spooning and baking), and we have leftovers at the end of the night, will we still use it tomorrow? Will it taste as fresh? Or, if we bake off cookies at the beginning of the night (rather than when orders are taken), what will we do with leftover cookies? Offer them for a special rate early the next night? This may be problematic because they will not be nearly as fresh, and may diminish our brand. We may also want to think about labor. If I (Kristen), am doing all the mixing and spooning, but my roommate is doing the loading/baking, packing/paying, can we work in shifts so that I just work at the beginning of the night, and she works toward the end? Can my roommate be trained to do the spooning part of the process, so that I can be totally hands off after making batter? This would free up a lot of our time, so that each of us is essentially â€Å"on call† for less of the night. On the other hand, if we don’t care about our time, but want to maximize profits, then mixing beforehand will give us a much larger window during which to sell fresh-baked cookies.