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# Key Questions to Answer Before You Launch the Business Q1: How long will it take you to fill

a rush order? It depends on the number of dozens that the rush order requires. Assume that the order requires x dozen(s of orders! then the time of fi""in# that order is (\$%&\$'x minutes (assume that this order requires on"y one f"a(or . )irst"y we consider the situation of a \$ dozen order. *he a"" steps + washin# and mixin# in#redients (%min ! spoonin# the coo,ies (-min ! puttin# the coo,ies in the o(en and settin# the o(en (\$min ! coo"in# down the coo,ies (.min ! pac,in# them (-min ! and fina""y accept the payment (\$min + wi"" ta,e %&-&\$&/&.&-&\$0-% minutes. 1econd"y! we consider the situation of a -dozens order (seen in the 2antt chart fo""owed . 3hen I finished spoonin# the first dozen of coo,ies! at the end of min%! my roommate can start his wor,. And when ba,in# the second dozen! he can start coo"in# the first dozen and pac, them. Assume we accept the payment after the coo,ies can be de"i(ered! the tota" time of fi"" the order wi"" be 4% min. )ina""y we accept the mode" and consider the situation of an x dozen(s order! we can easi"y conc"ude that the tota" time is \$%&\$'x minutes. 2antt chart of fi""in# a order of - dozens of coo,ies(\$min for \$ ce""

Q2: How many orders can you fill in a night, assuming you are open four hours each night? 3hen ba,in# the coo,ies! my roommate wi"" sti"" be free for - min durin# which he can accept more orders. *o maximize orders to fi"" in 5 hours! we assume that there are enou#h orders and a"" of the orders require \$ dozen coo,ies of a same f"a(or. 1et the number of orders we can fi"" to be 6. Accordin# to the resu"t #ained in Question \$! we can say \$%&\$'67058%'! so we can #et 6(max 0--. Q3: How much of your own and your roommates valua le time will it take to fill each order?!ssume the order re"uires 1 do#en\$ )or me! the steps of washin#! mixin# and spoonin# are done by myse"f. 1o my (a"uab"e time for \$ order is %&-09(min )or my roommate! the steps of settin# the o(en! remo(in# coo,ies from the o(en! pac,in# them and acceptin# the payment are done by him. 1o his (a"uab"e time for \$ order is \$&'&-&\$05(min Q%: &ecause your aking trays can hold e'actly one do#en cookies, you will produce and sell cookies y the do#en\$ (hould you give any discount for people who order two do#en cookies, three do#en cookies, or more? )f so, how much? *ill it take you any longer to fill a two+do#en cookie order than a one+do#en cookie order? As the costs of in#redients and boxes of each dozen of coo,ies are the same no mater you choose to buy \$! - or 4 dozens per order! what rea""y differs is the cost of time. )rom Q4 has we ha(e that for one dozen order! tota" (a"uab"e time is % (wash :mix & -(tray fi""in# & \$ (prepare ba,e & -(pac, & \$ (payment 0 \$- min. )or two dozen order! *ota" (a"uab"e time is % (wash :mix & ;-(tray fi""in# & \$ (prepare ba,e & -(pac, < 8 - & \$ (payment 0 \$= min. )or three dozen order! *ota" (a"uab"e time is % (wash :mix & ; -(tray fi""in# & \$ (prepare ba,e & -(pac, < 8 4 & \$ (payment 0 -min. Assume the cost of our time is >! so the cost per dozen wou"d be? '.-''@ AA. \$ dozen order '.\$5-@AA..- dozen order '.\$--@AA..4 dozen order ItBs ob(ious that the cost of - or 4 dozen order is "ess than the one dozen order. 1o we shou"d #i(e a discount for peop"e who order more coo,ies. )or - dozen order! the discount can be up to '.'%9> cheaper per dozen. )or 4 dozen order! the discount can be up to '.'=9> cheaper per dozen. *o decide the price per dozen! we set the (a"ue of our "abor to be I6C.\$''Dhour per person. 1o the discount shou"d be I6C.%.9 for a -E dozen order! and I6C.=.9 for a 4Edozen order.

Q,: How many -ood processor and aking trays will you need? As the 2antt chart shown! the )ood @rocesso is id"e for a "on# time durin# the process! so on"y one )ood @rocessor is needed. Because the e"ectric mixer can on"y contain 4 dozens of in#redients! durin# the who"e process! 4 trays are needed at "east. Q.: !re there any changes you can make in your production plans that will allow you to make etter cookies or more cookies in less time or at lower cost? -or e'ample, is there a ottleneck operation in your production process that you can e'pand cheaply? *hat is the effect of adding another oven? How much would you e willing to pay to rent an additional oven? Accordin# to the 2antt chart! we can see that durin# the process! the o(en a"most ,eep wor,in# a"" the time whi"e the e"ectric mixer has a "ot of time bein# id"e. *hat means some time is wasted in waitin# the o(enBs ba,in# Fob and this is ob(ious"y a bott"e nec,. If we rent another o(en for one dozen orders?*ime of one o(en?\$%&\$'8n*ime of two o(ens?\$%&=8n1o for each order! it sa(es three minutes than pre(ious. If itBs a two or three dozen order! it wi"" sa(e more than that. Assume our profit per dozen is @ and considerin# the one dozen orders. 1o the ori#ina" profit per hour is%'D\$'8@ 0 %.''@*he two o(ensB cost per dozen is?%'D= 8 @ 0 9..=@1o the hi#hest price of rentin# an o(en we can accept is -..=@ per hour! that is! when @ is set to I6C.\$'! I6C.-..=Dh. @rob"ems for )urther *hou#ht Q1: *hat happens if you are trying to do this y yourself without your roommate? If IBm doin# this by myse"f! the situation wi"" be different. Because a"" the steps of washin#! mixin#! spoonin#! settin# the o(en! remo(in# coo,ies! pac,in# the coo,ies and acceptin# the payment ha(e to be done by myse"f! my (a"uab"e time of a one dozen coo,ies becomes 9&50\$-(min ! which exceeds \$' minutes! the time of one circ"e of ba,in# one dozen coo,ies! so I become the bott"enec,! instead of the o(en. 3hen the order contains - dozens of same f"a(or coo,ies! because the washin# and mixin# step of the - dozen coo,ies can be done to#ether! my (a"uab"e time for this order becomes %&-8-&-8\$&-8-&\$0\$=min! "ess than \$'8-0-'min. If the order requires 4 dozens! my (a"uab"e time becomes --min. And if there are enou#h orders! the f"ow can be expressed by the 2antt chart fo""owed?chart of fi""in# enou#h orders of \$ dozen of coo,ies(\$min for \$ ce""

Q2: (hould you offer special rates for rush orders? (uppose you have /ust put a tray of cookies into the oven and someone calls up with a 0crash priority1 order for a do#en cookies of a different flavor\$ 2an out fill the priority order while still fulfilling the order for the cookies that are already in the oven? )f not, how much of a premium should you charge for filling the rush order? As the 2antt chart abo(e shows! there is no need to stop ba,in# of the pre(ious coo,ie. *he time that rush order wi"" de"ay is on"y at most \$ minute. And the pre(ious order can be finished on time. 1o we donBt need to offer specia" rates. Q3: *hen should you promise delivery? How can you look "uickly at your order oard 3list of pending orders4 and tell a caller when his or her order will e ready? How much of a safety margin for timing should you allow? 3e can Fust "oo, at the order board and see when I wi"" finish my own Fob and become id"e. *hen the finishin# time wi"" be that time p"us -% minutes. At that time we can promise de"i(ery. *he safety mar#in for timin# is 9 minutes in case of a rush order. Assume that you Fust be#in the wash process and then a rush order comes! you ha(e to stop it and do the rush order. *he pre(ious order wi"" be de"ayed for at most 9 minutes to wait for you comp"ete the wash and tray process of the rush order. *hat time is %&- 0 9 min.