Kristin’s Cookie CompanyProduction process and analysis

Production Process

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

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.

Activities which do not add value can be minimized or removed

Redesign the product itself to improve the efficiency.

Process AnalysisDefine the individual steps in the process, the inputs into

them, and the outputs they produceConstruct 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

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.

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

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

Q#1. How long will it take to fill a rush

order?It take a 26 min to fill a rush order

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

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.

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

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

Question # 3

How much of your own and your roommate’s valuable time will it take to fill each order?AnswerKristen

Activity Cycle time

Wash,mix,spoon 6+2

total 8

RoommateActivity Cycle time

Heat oven remove cookies + Pack & collect money 1+0+3

Total 4

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

The food processor is idle for a long timeduring 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

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?

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

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.

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…

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….

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.

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.

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.