Kristens Cookie Company Case Study Analysis Group members:

Nisha - 67

Nilesh - 65

Zafar - 109

Zaki - 111
Ziyauddin - 117

Problems faced by Kristens Cookie Company:

1. Capacity constraints: They have only one OVEN, the number of which cannot be increased as there is not enough space for accommodation as well as their Budget is limited.

2. Budget: As they are students, their budget is limited. They cannot afford to buy new equipment for their business and also cannot afford any extra expenditure. 3. Price: As the business is Made-to-order making cookies fresh and hot, they cannot compromise on the quality and price cannot be increased ABNORMALLY as the customers are basically students from the campus. 4. Make- to-order: Business is fully dependent on the Cookies demand based on customer preference only. They can produce only when they receive orders. Moreover items produced cannot be standardized.

5. Time constraints: They have maximum of 4 hours (7.30pm-11.30pm) for their business as they themselves are students and they work only in the night hours.

Questions:
Q.1) How Long will it take to fill a rush order?
Activity Order Resource E-mail Cycle Time 0 min 6 min Start Time 00:00 00:00 End Time 00:00 06:00

Wash Bowl, Self Mix Fill Tray Self

2 min 1 min 9 min 0 min 5 min 3 min

06:00 08:00 09:00 18:00 18:00 23:00

08:00 09:00 18:00 18:00 23:00 26:00

Prepare Oven Roommate Bake Remove Cool Pack, Cash Oven Roommate None Roommate

Therefore, the minimum time to fulfill an order is 26 minutes.

These 26 minutes can be divided into three parts. Pre baking 8 min Baking 10 min Post Baking 8 min

The resources required for different orders would be different depending on the type of orders. Therefore two orders can be prepared simultaneously which would minimize the time required for the second order.

Q.2) How many orders can you fill in a night, assuming you are open four hours each night?

Activity Operational minutes Time for the initial order Balance minutes Time for subsequent orders Threshold orders in balance minutes Plus the initial order Total orders

Duration 240 min (26) min 214 min 10min/order 21.4 1 22 (approx.)

Q.3) How much of your own and roommates valuable time will it

take to fill each order?

Me 8 Minutes Roommate 4 Minutes per order (Pre-baking for me & post baking & delivery for my roommate)

Q.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 2 dozen cookies, 3 dozen cookies, or more? If so, how much? Will it take you any longer to fill a 2 dozen cookie order than a one dozen cookie order?
ESTIMATION OF PRICE AND PROFIT Title Cost of ingredients Cost of packaging [paper box] Labor cost (profit) Total price Total price in 1 day for maximum 22 orders (55 x 22) Total cost in 1 day for maximum 22 orders (35 x 22) Therefore total Profit in 1 day for maximum 22 orders (Assumption: 1$=INR50/-) Rates (per dozen) = Rs. 30 (per dozen) = Rs. 05 (per dozen) = Rs. 20 (per dozen) = Rs. 55 = Rs. 1210 = Rs. 770 = Rs. 440

We have taken 60% as a profit. We are also providing discounts on various sizes of orders because cookies are perishable product. Discounts Quantity (In dozen) 1 2 3 4 & More Amount 55 110 165 220 & so on Discount/Offer Coupon of 5 points Coupon of 5 points 2 9% (*) 5% (#)

a) Customer Reward Programme: On each of the purchases made up to 2 dozens [i.e. only on 1 or 2 dozen(s)] a coupon will be provided per dozen of the cookies purchased. The coupons will have validity for 1 year only. Rewards:Points 50 75 100 150 300 Rewards Ball Pen Key Chain Coffee Mug Tee Shirt Goodie Bag

b) 9% discount (*) for the purchase of 3 dozen (discount will be calculated on the price of 3rd dozen) c) 5% discount (*) for the purchase of 4 dozen& more (discount will be calculated of billing amount) (*) --- Discounts are available only on the same category of cookies

Q5) How many food processors and baking trays will you need?
3 tray with one food processor (One in oven 2 tray ready with the mixture)

Q6)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? For example, is there a bottleneck operation in your production process that you can expand cheaply? What is the effect of adding another oven? How much would you be willing to pay for an additional oven?
Bottleneck for the operation is the oven

In order to function efficiently we will have to see that the oven is totally occupied i.e. the totally capacity is utilized. Adding another oven will only increase the cost In addition it will also need more labor

Problems for further thought

Q1) What happens if you are trying to do this by yourself without a roommate?
If I am trying to do this by myself without a roommate, then it will require 12 minutes to complete an order after the first order is completed which requires 26 minutes.

Q2) 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 still 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?
I will accept the rush order only when there are not many orders piled up. A premium would be charged on the rush order of Rs 20/- i.e. now the price for a dozen would be Rs 75/- dozen. (Profit margin would be doubled)

Q3) When should you promise delivery? How you can look quickly your order board (list of pending orders) and tell a caller when his or her order will be ready? How much of a safety margin for timing should you allow?
For the 1st order 30 minutes (25mins/process, 1 min/payment acceptance, 4 mins/ buffer time) From the 2nd order onwards20mins (9+5mins/process, 3mins /packing & order acceptance, 3mins/ buffer time)

Q4) What other factors should you consider at this stage of planning your business?
Expand the business Focus on client servicing by taking regular customer feedbacks Unique ingredients, cookie shapes or decoration Tie-ups with canteens and other cafeterias located in the vicinity Spread the word- People need to know that we have a cookie business by: Direct marketing through email and cold calling Marketing through social networking sites Passing out business cards and attending networking events

Q5) Your product must be made to order because each order is potentially unique. If you decide to sell standard cookies instead, how should you change the production system? The order-taking process? Selling standard cookies will reduce are constraint of preparing the initial mixture We will utilize the full capacity of the bowl which is 3 dozens In addition to that we will keep our oven functioning continuously which will help us save time and in taking more orders. The cost of the ingredients will also come down.