Case Scenario:
The company will provide fresh cookies to starving students late at night. You need to evaluate the preliminary design for the company's production process.
Business Concept:
Your idea is to bake fresh cookies to order, using any combination of ingredients that the buyer wants. The cookies will be ready for pick-up at your apartment within an hour. Several factors set you apart from the competition. Your cookies are completely fresh. You will not bake any cookies before receiving the order. The buyer will be getting cookies hot out of the oven. You will have a variety of ingredients available to add to basic dough (raisins, chocolate chips, M&M's, etc). Buyers will telephone in their orders and specify which of the ingredients they want in their cookies. You guarantee completely fresh cookies. In short, you will have the freshest, most exotic cookies anywhere, available right on campus.
Production Process:
Baking cookies is simple: mix all of the ingredients in a food processor, spoon out the cookie dough onto a tray, put the cookies into the oven, bake them, take the cookies out of the oven, let the cookies to cool, and finally take them off of the tray and carefully pack them in a box. You and your roommate already own the necessary capital equipment: one food processor, cookie trays and spoons. Your apartment has a small oven that will hold one tray at a time. Your landlord pays for all of the electricity. The variable costs, are the cost of the ingredients (estimated to be $0.50 per dozen), the cost of the box in which the cookies are packed (estimated to be $0.15 per box, each box holds one dozen) and your time (assume rate of $9 per hour).
A detailed examination of the production process, which specifies how long each of the steps takes, follows. The first step is to take the order, your roommate has figured out how to do this with 100% accuracy. In fact your roommate has used the campus computing facilities to completely automate the order process. Therefore, we will ignore this step in the analysis.
You and your roommate have timed the necessary physical operations. The first physical production step is to wash out the mixing bowl from the previous batch add all of the ingredients and mix them in your food processor. The mixing bowls hold up to 3-dozen cookies. You then spoon out up to one dozen cookies at a time onto a cookie tray. These activities take six minutes for washing and mixing regardless of the number of cookies in the batch. That is to mix enough for 3-dozen takes the same six minutes as 1-dozen. However, the spooning out the cookies onto the tray takes two minutes per tray.
The next step, performed by your roommate is to put the cookies in the oven, set the thermostat & timer and start the baking process. The total time for the associated baking activities is ten minutes. Note that because the oven only holds one tray, a second dozen takes an additional ten minutes to bake.
Your roommate also performs the last steps of the process by removing the cookies from the oven and putting them aside to cool for five minutes and taking them off of the tray and carefully packing them in a box and accepting payment. The time to remove the cookies is negligible but must be done promptly. It takes two minutes to pack each dozen and about one minute to accept payment for the order. This is the process for producing cookies by the dozen in the Great Cookie Company.
As an experienced baker knows just a few simplifications were made in the actual production process. For example, the first batch of cookies for the night requires preheating the oven. However, such complexities will be put aside for now.
Questions that require to be addressed:
Q1. Create a cross-functional process map of the cookie making process using Microsoft Excel. On the process flow diagram identify the following:
- Identify all Activities
- Identify Tasks, Decision Points and Work-In-Process inventories (use the appropriate symbol to identify the activities).
- Assign a time to each activity.
-All text can be inserted into the diagram via the insert text option.
- For each line on your flow chart - make sure all of the activity boxes are aligned. Use the align object feature under the drawing toolbar.
- Use the fill feature to distinguish between tasks, decision points and WIP. Fill in all tasks as light blue, decision points as yellow, and WIP as light green.
Q2. How long will it take to get the first order through the system, assuming that no other cookies are in process?
Q3. What is the maximum number of orders can you fill in a night (one four-hour shift), assuming that you are open for four hours each night?
Q4. Which operation is the bottleneck? Explain why this operation is the bottleneck.
Q5. Based on the information in the case - Suggest and defend a price to charge your customers for a dozen cookies.
Q6. You have been presented the opportunity to buy another oven that is exactly the same as the one in the apartment at a cost of $1000. Using the price you set in part g and the price information for the case - how long would it take to payback the new oven?