Operations Management in Kristens Cooki Company - Assignment Example

 Operations Management: Kristen’s Cooki Company Case Study 1 The length of time required to fill a rush order With two roommates on the job, and with their duties already fixed, a rush order for one dozen cookies will take 26 minutes, for two dozen cookies will take 35 minutes, and for three dozen cookies will take 44 minutes. The breakdown of the time involved is as follows: preparing the mix in a bowl and food processor (whether for one, two or three dozen cookies, to be baked in batches of 12 at a time) takes 6 minutes, and spooning the mix into a tray takes 2 minutes. Putting the cookies in the oven, and setting the thermostat and timer takes 1 minute, baking the batch of 12 cookies takes 9 minutes, followed by cooling them for 5 minutes, packing them in a box in 2 minutes, and accepting payment in 1 minute. Thus, one batch of cookies takes 26 minutes. If the order has been placed for 2 dozen (2 batches) of cookies, it will take an additional 9 minutes. This is because while the first batch is baking, the first student would spoon the prepared mix into a second tray, ready to bake. With thermostat and timer already in place, the second batch will require 9 minutes to bake + 5 minutes to cool + 2 minutes to pack in a box. Payment for two dozen cookies will accepted in the same1 minute as an order for only one dozen cookies (already accounted for). However, the time taken for the two batches overlap. Hence, to make a total of two batches, for the second batch, 2 minutes out of 9 minutes of baking time will be left after the 1st batch is packed and ready. Thus 2 minutes baking time + 5 minutes cooling + 2 minutes packing takes an additional 9 minutes, after the first batch is packed and ready. Therefore, total time required to fill a rush order for 2 dozen cookies would be 35 minutes. To fill an order for three dozen cookies, the tray in which the mix is spooned in to make 12 cookies, will be ready to bake while the second batch is getting baked. Once the second batch is taken out of the oven, the third batch will be placed inside for baking. It will take only 9 minutes for baking because of timer and thermostat already set. Thus 9 minutes baking time + 5 minutes cooling time + 2 minutes packing time takes a total of 16 minutes. Payment time of 1 minute is already accounted for. However, the time taken for the three batches overlap. Hence, to make a total of three batches, for the third batch, 2 minutes of baking time will be left out of the 9 minutes for baking, after the 2nd batch is packed and ready. Thus 2 minutes baking time + 5 minutes cooling + 2 minutes packing takes an additional 9 minutes, after the second batch is packed and ready. Thus, 44 minutes total will be required to fill an order for 3 dozen cookies. 2 The number of orders that can be filled in one night, assuming that the business is open four hours each night Four hours is equal to 240 minutes. During this time, a total of 26 dozen cookies can be prepared, whether the order placed is for one, two, three or more dozens. According to Roy L. Nersesian, “a manager controls the flow between and among the various stages of manufacturing to minimize inventory” (Nersesian 104). Thus, making the components, or the cookie mix in this case, in small batches is better for matching product flow to demand. In the final product, small batches reduce time for the mix to be prepared (for one, two, or three batches at one time). Further, as long as small batches do not convert nonbottlenecks into bottlenecks, small batches are also beneficial in reducing inventory of stocks and supplies, as well as operating expense. Moreover, conventional business wisdom ensures that the machines (in this case the oven) and labor (of the two students) are kept busy. This is possible when the business is sized for average demand; and it also minimizes the capital investment. 3 Time spent by each of the two roommates to fill each order For each order, the first student will spend 8 minutes, while the roommate will also spend 8 minutes (excluding the baking time of 9 minutes). 4 Selling cookies by the dozen, because baking trays can hold exactly one dozen cookies, whether any discount should be given for people who order two dozen, three dozen or more cookies. If so, the amount of discount. Whether it will take longer to fill a two-dozen cookie order, than a one-dozen cookie order While it will take 26 minutes to fill a one dozen cookie order, it will take 35 minutes to fill a two dozen cookie order, as detailed under question no.1 above. According to Nersesian (81), “a price discount for greater-volume purchases may not impact production costs”. Estimating labor charges at the rate of $0.50 per dozen cookies, the total cost charged will be $1.20 per dozen ($0.60 cost of ingredients for one dozen + $0.10 cost of the box per one dozen cookies + $0.50 labor charges). For every extra dozen in the same order, a discount of $0.10 can be offered up to 5 dozen cookies, and a discount of $0.20 offered for more than five dozen cookies. The initial price being reasonable, customers will not expect too deep a discount, state Serguei Netessine and Christopher S. Tang. Moreover, production in small batches with fast replenishments (Netessine and Tang 372), and the offer of freshly baked cookies also increases the possibility of customers accepting to pay at the full rate quoted by the entrepreneurs. 5 The number of food processors and baking trays required The aim is to produce small batches of one dozen each, to provide freshly baked cookies for each new customer. Hence, the one food processor in use, appears to be sufficient, as it can provide mix for up to three dozen cookies. Secondly, the number of total trays required would be three, as they can be repeatedly used in a smooth cycle. 6 Any changes in production plans that will allow one to make better cookies or more cookies in less time, or at lower cost The flow of products is constrained by bottlenecks that restrict system performance. Bottlenecks can be removed, or their capacity expanded by minimizing downtime and the number of defects. “Downtime for maintenance restricts the effective output of a bottleneck, while defects wastefully consume bottleneck capacity”, states Nersesian (104). Outsourcing or subcontracting are effective strategies for expanding bottleneck capacity. In this case study, renting another oven would help to reduce the extra 2 minutes of baking time for each batch, while both students are free from their tasks. Charging $1.20 per dozen cookies, the two students would make a profit of $0.50 per batch. Working at maximum capacity, using only one oven they would make a profit of about $13/ - every night. Hence, the amount that the students would be willing to pay to rent another oven would be at the rate of around $5/ - per week. This will help them to increase their production capacity, and consequently to optimize profits in the same duration of preparing cookies for four hours every night. ----------------------------------------- Works Cited Nersesian, Roy L. Trends and tools for Operations Management: An updated guide for executives and managers. Westport, CT: Quorum Books, 2000. Netessine, Serguei and Christopher S. Tang. Consumer-driven demand and operations management models: A systematic study of information-technology-enabled sales mechanisms. New York: Springer, 2009. Read More