Kristen's Cookies

Solution to Kristen's Cookie Company (A)

Before answering specific questions, it is useful to make a diagram of the overall process:

Order

Entry

Wash Bowl, Mix Ingredients

Resource: Self

Capacity: 3

Cycle Time: 6 minutes

Fill Tray

Resource: Roommate

Capacity: 1


Bake

Resource: Oven

Capacity: 1


Start Oven

Resource: Roommate, Oven

Capacity: 1

Cycle Time: 1 minute

Remove

Resource: Roommate

Capacity: 1


Cool

Resource: none

Capacity: 1


Pack, Collect Money

Resource: Roommate

Capacity: 1


Note that in this diagram, activities are arranged in columns to indicate which resources are being used. Inside each activity symbol are written the capacity (in dozens of cookies) and the cycle time (in minutes).

Competitive Advantage from Operations Professor Juran 2

1. How long will it take for you to fill a rush order?

Assuming this order is for one dozen cookies, we will need to do the following:

Activity Resource Cycle Time Start Time Finish Time

Order Entry E-mail 0 minutes 00:00 00:00 Wash Bowl, Mix Self 6 minutes 00:00 06:00

Fill Tray Self 2 minutes 06:00 08:00 Prepare Oven Roommate 1 minute 08:00 09:00

Bake Oven 9 minutes 09:00 18:00 Remove Roommate 0 minutes 18:00 18:00

Cool None 5 minutes 18:00 23:00 Pack, Collect Money Roommate 3 minutes 23:00 26:00

Therefore, the minimum time to fill an order is 26 minutes. We can illustrate the sequence of events with a Gantt chart:


2. How many orders can you fill in a night, assuming you are open four hours each night?

Here is a Gantt chart for two batches of one dozen cookies each. It doesn't take twice as long to produce two batches as it does to produce one batch, because you can start mixing the second batch without having to wait for the whole first-batch process to be completed (you can start washing out the bowl as soon as you finish filling the tray). It is possible to produce two batches in 36 minutes.

In general, a formula for the number of minutes to produce n one-dozen batches is given by this expression:

n1016

3. How much of your own and your roommate's valuable time will it take to fill each order?

For yourself:

Activity Cycle Time

Wash Bowl, Mix 6 minutes Fill Tray 2 minutes

Total 8 minutes

For your roommate:

Activity Cycle Time

Prepare Oven 1 minute Remove 0 minutes Pack, Collect Money 3 minutes

Total 4 minutes

This is assuming all orders are for one dozen cookies.


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 any longer to fill a two-dozen cookie order than a one-dozen cookie order?

First, let's consider costs. The cost of ingredients and the box are the same, no matter how many dozen you bake. So the only resource that might differ with the size of the batch is labor.

One Dozen



Fill Tray Self 2 minutes 06:00 08:00 Prepare Oven Roommate 1 minute 08:00 09:00

Bake Oven 9 minutes 09:00 18:00 Remove Roommate 0 minutes 18:00 18:00

Cool None 5 minutes 18:00 23:00 Pack, Collect Money Roommate 3 minutes 23:00 26:00

Self 8

Roommate 4

Total Labor Minutes 12

Two Dozen



Fill Tray 1 Self 2 minutes 06:00 08:00 Fill Tray 2 Self 2 minutes 08:00 10:00

Prepare Oven 1 Roommate 1 minute 08:00 09:00 Bake 1 Oven 9 minutes 09:00 18:00

Remove 1 Roommate 0 minutes 18:00 18:00 Cool 1 None 5 minutes 18:00 23:00


Remove 2 Roommate 0 minutes 28:00 28:00 Cool 2 None 5 minutes 28:00 33:00 Pack 1 Roommate 2 minutes 23:00 25:00 Pack 2 Roommate 2 minutes 33:00 35:00

Collect Money Roommate 1 minute 35:00 36:00

Self 10

Roommate 7



Three Dozen



Fill Tray 1 Self 2 minutes 06:00 08:00 Fill Tray 2 Self 2 minutes 08:00 10:00 Fill Tray 3 Self 2 minutes 06:00 08:00






Remove 3 Roommate 0 minutes 38:00 38:00 Cool 3 None 5 minutes 38:00 43:00 Pack 1 Roommate 2 minutes 23:00 25:00 Pack 2 Roommate 2 minutes 33:00 35:00 Pack 3 Roommate 2 minutes 43:00 45:00

Collect Money Roommate 1 minute 45:00 46:00

Self 12

Roommate 10


Let's assume your time is worth $12 per hour. Your labor costs would be:

# Cookies in Batch Minutes Cost Cost per Dozen

1 dozen 12 $2.40 $2.40

2 dozen 17 $3.40 $1.70

3 dozen 22 $4.40 $1.47

It looks like you could 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.

5. How many food processors and baking trays will you need?

The number of baking trays ought to equal the maximum number of trays you will be using at any one time. The highest volume production imaginable would be if we produced three-dozen orders continuously, a scenario depicted in this Gantt chart:


It's hard to read the activities along the left axis because they are jammed together, but the food processor is only used in the mixing stage, and we ought to be able to see that the processor is idle for long periods of time, and that the real bottleneck is the oven. Buying another food processor won't improve the productivity of the system at all.

There are only three kinds of activities that require a tray: filling the tray, baking (including preparing the oven), and cooling. The Gantt chart shows that we are using at most three trays in the filling activity at any given time (and in fact this is only because this particular plan calls for filling three trays in rapid succession, after which two of them sit waiting for an opportunity to get into the oven). There is never more than one tray in the oven at any given time, nor is there ever any more than one tray cooling. So we could certainly get by with five trays, and maybe four or even three if we adjust the mixing and filling part of the operation.

On the other hand, trays are cheap, and it would be a shame if we ever had to

keep the oven (the bottleneck) waiting for lack of a tray. It is reasonable to have "plenty" of trays on hand, whether that means five, or ten, or whatever.

6. 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 for an additional oven?


The bottleneck is the oven, which means there is no point in looking at expanding the capacity of any other resource unless the operation's baking capacity is expanded first.

If we had two ovens, we could make cookies faster. But how much faster?

This gets complicated, but we can think about it by looking at the capacities of the various stages in our process:

Stage Time Dozens per Hour

(1 Oven) Dozens per Hour

(2 Oven)

Wash Bowl, Mix, Fill Tray (yourself)

12 min. for 3 dozen 15 per hour 15 per hour

Prepare Oven & Bake (oven)

30 min. per 3 dozen 6 per hour 12 per hour

Prepare Oven, Pack, Collect Money (roommate)

10 min. per 3 dozen* 18 per hour 18 per hour

* all in one order

Even with the second oven, the oven stage will still be the bottleneck. To decide how much we would be willing to pay for another oven, we would have to do some more complicated analysis (including finding out what the distribution of orders would look like — how many for one dozen, how many for two dozen, etc.). Then we could project the increase in revenue and perform some present value analysis on the incremental improvement in our revenue.

Here is a Gantt chart for one two-dozen order:

Kristen's Cookies

Documents

Transcript of Kristen's Cookies