Operations Management: Kristen’s Cookie Company

1 – How long will it take you to fill an order?
Total time, taken for a 1 dozen order is 26 minutes as per the below table.

Activity involved
Cycle time
Cumulative time

Order entry
0 minute
0 minute

Washing & mixing
6 minutes
6 minutes

Spooning
2 minutes
8 minutes

Oven set up
1 minute
9 minutes

Bake cookies
9 minutes
18 minutes

Remove cookies
0 minute
18 minutes

Cool cookies
5 minutes
23 minutes

Pack cookies
2 minutes
25 minutes

Accept payment
1 minute
26 minutes

2 – How many orders can you fill in a night, assuming you are open four hours each night?
Time taken for preparation of a single order can be divided into 3 parts: Therefore if the tray is ready for the second-order (pre-baking process) while the first order is in the oven for baking, it would save 8 minutes for every subsequent order.
When the first order is in process in baking, the pre-baking session for the second-order will take place for 8 minutes, thus these 8 minutes have been saved. Every order has to undergo both baking and post-baking processes taking 18 (10+8) minutes. But when the first order is in post-baking session (taking 8 minutes) then during the 8 minutes second order can be baked saving 8 minutes. 2 minutes will be consumed by second-order only as the baking process in total takes 10 minutes. Then the post-baking process of the second-order will take 8 minutes more. So the second order in total takes 10 (8+2) minutes extra.
Now when the second order is in baking then third-order can be prepared for the pre-baking process thus saving 8 minutes again. As second-order is in the post-baking process for 8 minutes, then third-order can be baked thus saving 8 minutes. 2 minutes extra will be consumed by the third order for the baking process. 8 minutes will be consumed than for the post-baking process. So the third order will take 10 minutes extra for total processing. Therefore every subsequent order will take 10 minutes only for the complete process. Therefore time taken for the preparation of ‘additional x’ orders of 1 dozen would be (26 + 10x) minutes.
Thus if the business operates for a maximum of 4 hours (i. e. 240 minutes) the maximum no: of orders, Kristen Cookie Company can take in 1 day would be 22 dozens as per the table below. So from the above table, it is clear that after the first dozen every subsequent dozen will take 10 minutes only. So 22 dozens taking a total of 236 minutes can be prepared in 4 hours of business.
3 – How much of your own and your roommate’s valuable time will it take to fill each order?
For my roommate time taken to fill each order is:- For me first dozen will take time as per below:- For second & third dozen, time taken will be 2 minutes only as mixing one for the first dozen will be available also. For the fourth dozen, the time taken will be again 8 minutes. This trend will continue for every 3rd order after the first order of one dozen.
4 – Because your baking trays can hold exactly one dozen cookies, you will produce and sell cookies by the dozen. Should you give any discount for people who order two dozen cookies, three dozen cookies, or more? If so, how much? Will it take you any longer to fill a two-dozen cookies order than one–dozen cookies order?
For 1 dozen order time taken:

Self – 8 minutes.
Roommate – 4 minutes.
Total – 12 minutes.

For a 2 dozen order time taken:- Self – 6(washing & mixing) + 4(spooning 2 times) = 10 minutes Roommate – 2 minutes (Oven set up 2 times) + 4 minutes (Pack cookies 2 times) + 1 minute (accept payment) = 7 minutes Total – 17 minutes.
For a 3 dozen order time taken:- Self – 6(washing & mixing) + 6(spooning 3 times) = 12 minutes Roommate – 3 minutes (Oven set up 3 times) + 6 minutes (Pack cookies 3 times) + 1 minute (accept payment) = 10 minutes Total – 22 minutes.
Let us assume that labor cost is $15 per hour for self & roommate.

Order size
Total minutes
Cost/minute
Cost for order
Cost per dozen
Material cost
Potential discount

1 dozen
12
$15/60 = $0. 25
12 * 0. 25 = $3
$3
$0. 70
0

2 dozen
17
$0. 25
17*0. 25 = $4. 25
$2. 125
$0. 70
3 – (2. 125+0. 70) = $0. 275

3 dozen
22
$0. 25
22*0. 25 = $5. 50
$1. 833
$0. 70
3 – (1. 833+0. 70) = $0. 467

As we observe, we can afford to give a discount for two- and three-dozen orders. A two-dozen order doesn’t cost twice as much as a one-dozen order and a three-dozen order cost much less than thrice a one-dozen order.
5 – How many food processors and baking trays will you need?
The food processor is idle for a long time in the process so only 1 is required. As it can contain at least 3 dozens of ingredients during the whole process we should have at least 3 trays as each tray handles 1 dozen of the ingredients.
6 – Are there any changes you can make in the production plans that will allow you to make better cookies or more cookies in less time or at a 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?
Producing more no of cookies is dependent upon the baking activity which is the bottleneck operation in the production process. If we install one more oven two dozen cookies will be ready in 28 mins only which is 8 mins less than 36 mins previously.

Process
Cycle time
Start time
End time
Dozen

Washing; mixing
6
0
6
1

Spooning
2
6
8
1

Oven set up
1
8
9
1

Bake cookies (oven 1)
9
9
18
2

Spooning
2
8
10
2

Oven 2 set up
1
10
11

Bake cookies (oven 2)
9
11
20
1

Cool cookies
5
18
23
1

Pack cookies
2
23
25
2

Cool cookies
5
20
25
2

Pack cookies
2
25
27

Accept payment
1
27
28

Similarly, for 3 dozens, the time reduces to 36 mins which is 10 mins less than the previous time:

Process
Cycle time
Start time
End time
Dozen

Washing; mixing
6
0
6
1

Spooning
2
6
8
1

Oven set up
1
8
9
1

Bake cookies (oven 1)
9
9
18
2

Spooning
2
8
10
2

Oven 2 set up
1
10
11
2

Bake cookies (oven 2)
9
11
20
1

Cool cookies
5
18
23
1

Pack cookies
2
23
25
 –

Cool cookies
5
20
25
2

Pack cookies
2
25
27
3

Spooning
2
10
12
3

Oven 1set up
1
18
19
3

Bake cookies(oven 1)
9
19
28
3

Cool cookies
5
28
33
3

Pack cookies
2
33
35
 –

Accept payment
1
35
36
 –

Further number 4 dozens will just take 38 minutes. So in terms of cost, we can pay that much for the oven per day which is less than or equal to profit on dozens of cookies that can be made in 4 hours (assuming the business is run for 4 hours only).
7 – What happens if you are trying to do this by yourself without a roommate?
We have assumed that there is only 1 tray; the order for 2nd dozen is of the same variety as the 1st dozen.

Activity
Cycle time
Start time
End time

Order entry
0 minute
00:00
00:00

Washing; mixing
6 minutes
06:00
06:00

Spooning (Dozen 1)
2 minutes
06:00
08:00

Oven set up (Dozen 1)
1 minute
08:00
09:00

Bake cookies (Dozen 1)
9 minutes
09:00
18:00

Remove cookies (Dozen 1)
0 minute
18:00
18:00

Cool cookies (Dozen 1)
5 minutes
18:00
23:00

Pack cookies (Dozen 1)
2 minutes
26:00
28:00

Spooning (Dozen 2)
2 minutes
23:00
25:00

Oven set up (Dozen 2)
1 minute
25:00
26:00

Bake cookies (Dozen 2)
9 minutes
26:00
35:00

Remove cookies (Dozen 2)
0 minute
35:00
35:00

Cool cookies (Dozen 2)
5 minutes
35:00
40:00

Pack cookies (Dozen 2)
2 minutes
40:00
42:00

Accept payment
1 minute
42:00
43:00

So we can see that the total time required for preparing 2 dozens has increased if all the activities have to be done by me only.
8 – Should you offer a special rate for rush orders? Suppose you have just put a tray of cookies into the oven and someone calls up with a “crash priority” order for a dozen cookies of a different flavor. Can you fill the priority order while still fulfilling the order for the cookies that are already in the oven? If not, how much of a premium should you charge for filling the rush order?

When the priority order is received, the current order is already in the oven. By the time the current order cookies are baked in the oven, the washing, mixing, and spooning operations can be performed for a priority order. Post which, there will be an idle time of up to 1 minute for priority order before the oven setup and baking process starts.
For the remaining process, there will be no idle time for a priority order. By the time the priority order cookies are baked in the oven, the previous order will be ready.
Thus, if a priority order comes when a tray for a current order is already in the oven, the priority order can be filled still fulfilling the current order with a maximum delay time of 1 minute for a priority order.
No premium should be charged as the process does not affect the previous order.

9 – When should you promise delivery? How can you look quickly at your order board (list of pending orders) and tells a caller when his or her order will be ready? How much of a safety margin for timing should you allow?
For Priority Orders:

The safety margin should be based upon the time required for the prebaking process. This is because if order received during the baking or post-baking process, would not need that operation to be stopped intermittently.
Thus if an order is received during the washing and mixing process, the process will require to be stopped in between.
The prebaking process takes 8 minutes to complete. Thus the maximum margin should be 8 minutes for normal orders in such cases. So the previous order would be delayed by a maximum of 8 minutes.

10 – What other factors should you consider at this stage of planning your business?

Competitors’ strengths and weaknesses.
Potential customers’ likes and tastes.
Regulations involved.
Financing the budgets.
Cost-effectiveness of the business proposition.
Further investment is required.
Ways to get cheaper materials.
Extra labor required or not 11 – Your product must be made to order because each order is potentially unique. If you decide to sell standard cookies instead, how should you change the production system?

The order-taking process?

Now the cookies can be sold with the USP of being low price and good quality.
We can bake the cookies before receiving the order and stock it, instead of making the product one by one according to each unique requirement.
The order-taking process also needs to change. The consumers don’t need to use the mail service to place the orders and wait for pickup. They can come to the room directly to buy it.
If someone needs a large sum of cookies, they can inform or order a little earlier.
We can have our own cookies menu.

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