case study

1. Kristin’s Cookie Company
Production process and analysis

2. Production Process
The production process refers to the stages (phases) required to
complete product, from the idea to the final master copy.

3. How to improve the production process
Additional resources can be tasked to boost the capacity
of any bottleneck.
The efficiency of the bottleneck activity itself can be
improved, perhaps by using more efficient machines or
working methods.
Alternative process flows can be developed to route
work around the bottleneck. This will increase the
overall capacity of the process by effectively providing a
parallel flow.

4. Activities which do not add value can be minimized or removed
Redesign the product itself to improve the efficiency.

5. Process Analysis
Define the individual steps in the process, the inputs into
them, and the outputs they produce
Construct a process flow diagram to demonstrate how the
steps are related and how the inputs flow through the
process
Determine the capacity, efficiency and other properties of
the various steps
Identify any bottlenecks where a step has a lower capacity
than all other steps in its sequence
Decide what should be done to maximize the value of the
process

6. Introduction
Kristen’s Cookie Company Mission Statement:
Born from a hunger to feed the student body and the craving brain…
This presentation will evaluate the preliminary design for the Company’s
production process to make policy and pricing decisions, equipment
needed, how many orders can be accepted.

7. Kristen and her roommate have planned the Kristen’s Cookie Company
(KCC) as a joint venture to create and operate a successful business
operated in a college campus apartment, with potential to grow in the
future. The core competency is providing made-to-order fresh cookies
after standard business operating hours.
Ingredient cost per dozen .60 dollar and box price .10 dollar ,They receive
order through e.mail,and steps involve to make the cookies are ;
Case

8. Order and Reply (Roommate) 0 minutes
Wash and Mix (kristen) 6 minutes
Spooning 2 minutes
Heat Oven
1 minutes
Baking (Oven)
9 minutes
Hold
Cooling 5 minutes
Pack/Collect Money 3 minutes

9. Q#1. How long will it take to
fill a rush order?
It take a 26 min to fill a rush order

12. Q#2. How many orders can you fill in a night (4 hours)?
• Operating time = 240 minutes
(4 hours)
• 22 dozen cookies in 4 hours

14. 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 or more dozen? If so,
how much? Will it take you any longer to fill a two-dozen order than a one-dozen order?
• All costs of ingredients and boxes for each dozen are the same. With that
said, total valuable time is 6 (wash and mix) + 2 (spooning) + 1 (set timer
on oven) + 2 (packing time) + 1 (process payment) = 12 minutes. For a
two dozen order, total time is 6 + 2 + 1 + 2 x 2 + 1 = 17 minutes. For a
three dozen order, total time is 6 + 2 + 1 + 2 x 3 + 1 = 22 minutes.

15. We can also solve this problem by calculating labor
costs
• Let’s assume $10 per hour
• = $0.16667 per minute
# Cookies in
Batch
Minutes Cost Cost per
Dozen
Potential
Discount
1 dozen 12 2.00 2.00 0
2 dozen 17 2.83 1.41 0.59

16. • Perhaps offering a 10% - 20% discount (or set dollar amount)
• on orders of two dozen and above is an option

17. Question # 3
How much of your own and your roommate’s valuable time will it take to fill each order?
Answer
Kristen
Activity Cycle time
Wash,mix,spoon 6+2
total 8

18. Roommate
Activity Cycle time
Heat oven remove cookies + Pack
& collect money 1+0+3
Total 4

19. Question # 5
How many food processor and baking trays
will you need?

20. The food processor is idle for a long time
during the production process, so only one
is needed. Because the processor can only
contain 3 dozen of ingredients , during the
whole process, at least 3 trays are needed

21. Question#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?
• Is there a Bootleneck operation in your production process
that you can expand cheaply?

22. Answer
• The production plan can be changed by adding an additional oven..
Process flow diagram with 2 ovens:
Mix &
spoon
Load &
bake
Cool
Load &
bake
Pack & pay

23. Conti…..
• Bottleneck:
The bottleneck is the oven, which means there is no point in
looking at expanding the capacity of any other resource unless the
operations Baking capacity is expanded first.

24. Question#7
• What is the effect of adding another oven?
Ans: If we had 2 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 various stages in our
process…

26. Question#8
• How much would you be willing to pay to rent an additional oven?
Ans: To decide how much we would be willing to pay for another oven
,we would have to do some complicated analysis including:
What the distribution of orders would look like.
How many for 1dozen,how many for 2 dozen….

27. Cont….
Present value analysis
• Then we could project the increase in revenue.
• And perform some present value analysis on the
incremental improvement in our revenue.

28. Recommendations for improvement
Increase total production capacity per night
Purchase or rent an additional oven.
• Increase capacity of the bottleneck.
• Increase cookie making capacity.
Purchase several additional baking trays.
• These items are inexpensive
• Buying more ensures they are never a binding constraint.

29. Cont….
Decrease total time spent in activity
Premixing in advance:
Eliminates the mixing steps for these cookies.
work_in_process inventory would eliminate mixing step for those cookies
and thus increase capacity to 12 dozen per hour.
Require immediate payment
Payment through paypall,or similar service to eliminate the ending ‘collect
payment’’ phase.