The Process Flow chart of the Kristen’s Cookie Company is drawn in Fig-1: Gantt chart. Each cell in the diagram represents 1 minute to perform the sequenced activity.
(1). The time for filling a rush order is the throughput time of the process, i.e. the time for product starts being processed until the final delivery including the waiting time. For the Kristen’s cookie company-
Time taken for a rush order = Throughput time for each activity
= 6+2+1+9+5+2+1= 26 minutes for a dozen.
This has been shown in Fig-1.
(2). It is assumed that Kristen’s cookie opens four hour i.e. 240 minutes per night. The capacity of a process is defined by the following equation-
Activity | ...view middle of the document...
Time taken by roommate for 1 order = Time to perform activities 3(timer...), 6 (Pack), and 7(accept
payment) = 1 minute + 2 minute + 1 minute = 4 minutes.
(4). The cost of ingredients and the box are the same for every dozens of cookies. The only resource that might differ with the size of the batch is labor, if labor is not paid for idle time. As of Table-1.1 and 1.2, it is seemed that discount can be offered for two- and three-dozen orders. A two-dozen order doesn't cost twice as much as a one-dozen order. Around 15% discount can be possible depending on the demand. However, table-1.2 also showed that labor cost per dozen for the 4th dozen. So, it is wise to offer discount for not more than 3 dozen. Strictly speaking, It should not be good for Kristen’s to offer discount in such a market segment, since 2 or more students can order together to save money.
Yes. A two-dozen cookie order will take more time than a one-dozen cookie order due to process bottleneck for Oven.
(5). The highest volume of production will occur for an order of 3-dozen continuously. It is observed from Fig-1 that the electric mixer remain idle for a long time, while the real bottleneck is Oven. So, another mixer will not increase the process productivity. One mixer is enough with one oven.
The Gantt chart (Fig-1) shows that Kristen’s using all three trays all the time. So, 3 trays are sufficient for the process. Since, trays are cheaper, better to have plenty of trays on hand (e.g. five, ten..).
(6). The real bottleneck in the process is oven. So, the productivity of the process will not increase unless the capacity of the oven is increased. The process flow is shown in Fig-2 for 2 ovens. Since, adding another oven reduced the cycle time to 5 minutes, the nightly production has, thus, been increased to 43 dozens; almost an increase of 100% nightly capacity.
The oven will add value equivalent to price less of variable cost (extra labor cost) times the number of increased dozen. To maximize profit Kristen’s would be willing to pay for renting an oven per night up to the amount of value it added.
Problems for Further Thought
(1). The process capacity would be decreased (illustrated in Fig-3), because the process cycle time will increase to 12 minutes. As a result, Kristen’s will be considered as bottleneck of the process.
(2). It should not be profitable for the kristen’s company to fill a priority order while an order already in the oven, since taking out a tray from the oven will decrease the quality of cookies. And, at the extreme already in the process baking cookies may become wastage and thus, will increase cost of production.
However, in special cases Kristen’s can fill a rush order. But, she has to charge higher premium price, since such kind orders will take more than 35 minutes (9 minutes already elapsed for the existing order) for finishing the order.
(3). For the first order of the night should be promised to delivery...