Case Report: Kristen’s Cookie Company

Case Report: Kristen’s Cookie Company

Key Questions

Question 1

Assuming that no other cookies are currently in the process, we conclude that it will take 26 minutes to fill a rush order (Figure 1). This time is equal to the flow time of the whole cookie-producing process.

If the rush order consisted in more than one dozen cookies, the filling time should be computed adding up the cycle time of the cooking-producing process. This time is always equal to the cycle time of the bottleneck, that is, the slowest operation in the process.

In this case the bottleneck is the bake stage. Thus, the system cycle time is 10 min per dozen cookies (Table 2). Last, for an order of n dozen cookies we have:

[pic 1]

In fact, the assumed hypothesis is too restrictive: a rush order can be filled in 26 minutes even while other cookies are baking in the oven if we make sure that the remaining baking time of the latter is 8 minutes or less. Otherwise, the rush order will take longer to be filled (up to 28 minutes).

Question 2

Supposing that the system is up and running from the beginning till the end, it completes its first dozen cookies after 26 minutes and, thereafter, it completes a new dozen every 10 minutes. Thus, to calculate the maximum number of orders that can be filled in 4 hours (240 minutes) we must solve the following inequality for the highest integer n:

[pic 2]

The result is n=22 dozen cookies, though the actual number of orders depends on their size. In that sense, it is important to note that the capacity of the system does not depend on the size of the orders. For instance, if we have to deal with an order of say two dozen cookies, all made with the same combination of ingredients, we can take advantage of the mixer capacity. The mixing stage will now take 10 minutes (6 minutes for mixing plus 4 minutes for spooning out the two trays). However, the limiting factor is still the baking stage, with its cycle time of 10 minutes per dozen cookies.

Question 3

The capacity of the bottleneck operation is much lower than the other operations (Table 2). In consequence, the rest of the operations will have a lot of idle time.

Assuming that the company has enough orders to keep them constantly busy, Kristen’s roommate has to work for 4 minutes and 6 minutes to spend on other activities during each 10-minute cycle of the oven. Kristen herself has either 8 minutes of work if it is the first tray of an order (6 minutes for mixing plus 2 minutes for spooning per tray) or only 2 minutes of work if she’s dealing with the second or third trays of a two-dozen or more cookie order (Table 3).

In that sense, Kristen could forecast her free time if a profile of expected order sizes was available. On the other hand, if the company has orders for fewer than 22 dozen cookies per night, the staff will have more idle time.

Question 4

To assess the possibility of giving discounts to our clients, we need to calculate the production cost of an order for different order sizes. The production cost is the cost of materials plus the cost of the labour time. The material cost is estimated to be fixed at $0.70/dozen cookies. On the contrary, the labour cost varies with the size of the order; to calculate it, a wage of $12 per hour of work is considered (for detailed calculations see Table 4). We conclude that we can definitely offer discounts, as unit costs go down:

Table 1. Discount vs. Order Size

Besides this, another important assumption is to consider the idle periods as non-paid time; the underlying idea here is that Kristen and her roommate can put their free time to some other productive use (like studying, for example). On the other hand, a more realistic scenario consists in orders being received irregularly and, consequently, gaps with no orders pending being created; in this case, idle time per unit of sales will be even higher.