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Kristens Cookie Company

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Introduction

Submitted by - Sarbani Choudhari 118 Manu Priya 134 Mittal Mody 138 Devang Shah 147 Rohit Singh 151 Nirbhay Singhal 153 Kristen's Cookie Company 1. How long will it take you to fill a rush order? Process Flow Diagram: Assuming order is for one dozen of cookies, minimum time in which order can be fulfilled and money can be collected is simple addition of time taken to complete above sequential activities. Hence, time taken to fill a rush order would be: (6+2+1+9+0+5+2+1)26 minutes. 2. How many orders can you fill in a night, assuming you are open four hours each night? Critical Path Model(CPM): Making use of critical path model, we find that when cookies of batch 1 are made to cool down, roommate can make use of that spare time in putting second batch. Hence, CPM incorporates this precedence of activity as show above. From above diagram, we find that the minimum time to process 2 batches of 1 dozen cookies is 36 minutes. Using the same logic, we can generalize this in the form of formula for the number of minutes to produce n one dozen batches. This expression would be: No. of minutes required to produce n one-dozen batches=16+10n Time given=4 Hours=240 Minutes Hence, 240=16+10n n=22.4 or 22 batches of 1 dozen(approximately) 3. How much of your own and your roommate's valuable time will it take to fill each order? Assuming order is for one dozen of cookie: time taken by me=Time taken by (washing, mixing and spooning the tray activities)= 8 Minutes time taken by my roommate=Time taken by (setting timer, packing and collecting money activities)= (1+3)=4 Minutes Remaining 12 minutes out of 26 minutes is accounted by baking and cooling process. 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? ...read more.

Middle

Now if there are any further orders, then at a time only 2 orders can be processed as explained above. Thus we can say that if there are no more than 2 orders pending at same time, then the time taken by individual and time taken 2 people is same. But in case of more than two orders, it would be beneficial to take help from roommate. Also while working alone; there are chances of failure as many activities need to be performed single-handedly. Unless the person expertise the entire process, his failure rate would be high. *Assumptions - Swapping between the activities is not allowed. As in above case, when there is idle time of 5 minutes while cooling, then person could not do washing for 5 minutes, pack and receive payment for cookies and then continue with remaining 1 minute of washing. To consider worst case scenario, it is assumed that batch 1 and batch 2 are different types of cookies and requires washing and mixing step. 2. Should you offer special rates 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 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? The time taken to fill a rush order for the first dozen of cookies is 26 minutes. The subsequent dozens take 10 minutes each. In other words, the Set up time is 16 minutes and the Run time is 10 minutes. We simply cannot fill a crash priority order when a rush order is being manufactured because of the bottleneck of a single oven. In case of crash priority orders, we should consider the opportunity cost of the pending order and charge a premium accordingly for filling that crash priority order. ...read more.

Conclusion

Only WIP inventory(case 2) Only finished good inventory(case 3) Response time It would be least Would be more compared to case 1 and 3 It would be least Monitoring Requires the monitoring and control of both inventories, we also have to decide on maximum time for which goods can be stored and after that they have to be discarded. Would lead to maximum wastage if demand pattern is not forecasted accurately. Requires monitoring of WIP inventory. Ingredient mixture are perishable in nature and hence, can remain in stock for lesser time. Therefore wastage in this case is also more. Requires monitoring of Finished good inventory. Baked product are comparatively non-perishable and hence can be stored for longer time. Taking into account all pros and cons, case 3 seems to be attractive. But then higher accumulation of cookies in finished good inventory may compromise on quality and freshness. Therefore, threshold of 1 hour or less can be set based on demand forecast beyond which if cookies are retained in inventory has to be discarded. 3. Having considered above point, we need to change on policy of total number of orders based on what we have on inventory. 4. Now the problem arises from shift to new process is our loss of comparative advantage of customization. This can be regained by positioning our product at lower price and high quality. Standardization of process can lead to lower operating cost and hence we can reduce selling price to attract students. Secondly, inventory threshold time as explained in point 2 would still be making our cookies fresher than that of our rivals. We can take advantage of that in positioning the product. 5. There would also be change in policies of providing discount to customers. As there would be buffer or inventory to absorb the finished goods, then labor cost would be uniformly distributed in this case and hence discount in bulk order is not suggested. 1 Assuming all orders are one dozen order. 2 An important and practical assumption is different margin is set for different ingredients post their processing. ?? ?? ?? ?? ...read more.

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