Group 7
Global Supply Chain
01/15/2019
Global Supply Chain
Kristen’s Cookie Company
Group 7: Patrick Sell, Reed Cawthon, Siyu Lu, Ruili Ou
Overview of the Case:
This case is about Kristen, her roommate, and the cookie company they wish to start. Their business
concept is very simple: receive orders, bake cookies to order, box them, and then hand them over to their
customers. The production process follows their business concept in its simplicity as well. They already
have all of their capital equipment, professional-grade electric mixer, cookie trays, and spoons, and are
incurring only material variable costs. The landlord is incurring the electric bill, which could become
somewhat of an issue if the business grows to be too large. The cost of the ingredients is a measly $0.60
per dozen cookies and the cost of the box they are packed in is $0.10 per box. The process takes place as
follows: the roommate receives an email with the order and prints the order taking up one minute. Then
Kristen places the specified ingredients into the electric mixer, mixes it (6 minutes), and then spoons the
mixed ingredients onto a tray (2 minutes). The roommate then places the cookies inside of the oven and
bakes them for ten minutes. The roommate removes the cookies from the oven and sets them aside to cool
for five minutes. Once they have cooled down, the roommate packs them in a box and accepts payment for
the cookies. This process takes three minutes total, one for payment and two for boxing.
Questions
1) How long will it take you to fill a rush order?
We calculated that a rush order would take us 27 minutes. For our business we would not accept rush
orders, typically, due to the simplicity of the business model and problems that would arise from having
orders jump the line. Our calculations were under the assumption that this order was prioritized, and all
hands were on deck for this specific order, so we accounted for all of the steps outlined in the Overview
of the Case above and added them up accordingly. Please refer to Appendix A for a visualization.
2) How many orders can you fill in a night, assuming you are open four hours each night?
We calculated that we could do a maximum of twenty-two orders in four hours. These calculations are
based upon the assumptions that each order is one dozen of a different type of cookie. In example, the
first order was for one dozen chocolate chip cookies and the next order was for one dozen M&M cookies.
We got to twenty-two by breaking things down into minutes. Four hours equals two hundred forty
minutes. We subtracted nineteen minutes from that two hundred forty because that is how long in the
process Kristen and her roommate would have to wait before being able to put the next dozen cookies into
the oven. Then we divided the two hundred twenty-one by the cooking time (10 minutes) to get 22.1
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Group 7
Global Supply Chain
01/15/2019
orders. However, in order to complete the last order, we need to account for the cooling time (5 minutes),
packaging (2 minutes), and payment processing (1 minute), which gives us a total of 8 minutes.
Therefore, we will be able to process 21 plus 1 orders of a dozen cookies. We operated under the
assumption, that the roommate packages and accepts payment for the previous order while the next order
is baking. That still leaves in a three-minute buffer for the employees.
3) How much of your own and your roommate’s valuable time will it take to fill each order?
We assumed our valuable time to be defined as active time for the individual. So, for Kristen it was eight
minutes per order, six from the mixing process and two from spooning the dough on the tray. The
roommates valuable time of four minutes comes from taking the orders (1 minute), packaging (2 minutes)
and accepting payment (1 minute).
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? If so, how much? Will it take you any longer to fill a two-dozen cookie order than
a one-dozen cookie order?
We believe that Kristen and her roommate should be giving discounts for larger orders; however, the
discount shouldn’t be for larger orders just for being large. We want them to discount their customers
based on the amount of money, in labor and time, the customers are saving Kristen and her roommate.
The only way for a customer to get the discount on larger orders is if they order multiple dozens of
cookies of the same type; otherwise, there is no benefit to Kristen and her roommate. We made a chart
displaying this exact sentiment and how we would structure these discounts. Please refer to Appendix B.
So, our price would be $5 per one dozen, $9 for two dozen (of the same type), and $13 for three dozen (of
the same type). Those discounts only go up to the third dozen because Kristen and her roommate would
still have to reset and use the mixer like it was a whole new order, and would thereby increase time and
labor.
5) How many food processors and baking trays will you need?
Since “food processors” was not a specified term in the actual case we are assuming it to mean mixers.
We do not need more than one mixer because it is not the bottleneck in the production process; the oven
is. As for trays, we believe that three trays are necessary because of the max order size. Now, if more
ovens were to be added then this answer would change accordingly with the number of ovens to be used.
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? 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 to rent an additional oven?
There are several changes that we believe Kristen and her roommate could make to adjust the timing of
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Group 7
Global Supply Chain
01/15/2019
the production plan and the quality of the cookies. In order to do things at a quicker pace, we thought
about adding in a fan to the cooling process. It would cut the cooling time in half and speed up the process
overall. It is a cheap improvement and one that does not require additional manpower. Also, the
ingredients could be improved to make higher quality cookies and thus charge a premium; however, they
could also lower the quality of the ingredients to make a cheaper product. We believe in the latter strategy
rather than the former since the business is being operated in a market saturated with students who are
always pursuing the lowest cost. This could further be accomplished by ordering in bulk and storing the
excess until it is needed. The combination of lower quality and ordering in bulk would enable Kristen and
her roommate to lower their prices to temptingly low levels for students. We also believe that the process
overall will be improved simply through practice. For example, the person spooning and mixing it will
get increasingly faster at it as their arms get stronger and more used to the motion. Same concept applies
to the packaging portion, the roommate will get faster and faster at placing the cookies into the boxes. The
addition of a second oven would have quite a domino effect on the production process. First of all, the
bottleneck would shift from being the baking portion to be the spooning/mixing and the cooling portions
respectively; however, with the fan solution, the bottleneck would be the spooning/mixing portion since it
is the use of valuable time. The new oven would also enable Kristen and her roommate to increase their
output to eight minutes per tray from ten minutes per tray. It simply shortens the bottleneck and enables
the crew to churn out twenty-seven orders per day instead of twenty-two. In order to calculate our
willingness to pay for renting an oven, we need to calculate the added benefit of adding a second oven.
Adding a second oven, while keeping the existing processes the same will decrease the bottleneck (oven)
from 10 minutes per dozen cookies to 8 minutes. Instead of 22 dozen cookies per day (assuming four
hours of baking), we could now make 27. The additional profit will be calculated using the following
formula = (new capacity-old capacity) ×#of selling days ×profit per dozen cookies. This translates to (2722) ×180×$2.3=$2,070. If renting an additional oven costs less than $2,070 per year or $11,5 per working
day (180), we should get an additional oven, given that there will be enough demand.
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Group 7
Global Supply Chain
01/15/2019
Appendix
Appendix A: Process flow chart for different orders of one dozen cookies- timeline
0
5
10
15
20
25
30
35
40
Order processing
Adding ingredients & mixing
Spooning
Baking
Cooling
Packaging
Payment processing
Adding ingredients & mixing (2)
Spooning (2)
Baking (2)
Cooling (2)
Packing (2)
Payment processing (2)
Appendix B: Cost and discount calculation
# of
Variable
dozen
Minutes
cost
cookies
1
$0,70
12
2
$1,40
17
3
$2,10
22
Labor Cost
($5/hour per
person)
$2,00
$2,83
$3,67
Total
cost
$2,70
$4,23
$5,77
Cost Suggested /
per
discounted
dozen
price
$2,70
$5,00
$2,12
$9,00
$1,92
$13,00
Profit Discount
per
for
dozen consumer
$2,30
0%
$2,38
10%
$2,41
13%
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