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Solution to Kristen's Cookie Company (A)

Before answering specific questions, it is useful to make a diagram of the overall


process:

Wash Bowl, Mix Ingredients Fill Tray


Order Resource: Self Resource: Roommate
Entry Capacity: 3 Capacity: 1
Cycle Time: 6 minutes Cycle Time: 2 minutes

Start Oven
Resource: Roommate, Oven
Capacity: 1
Cycle Time: 1 minute

Bake
Resource: Oven
Capacity: 1
Cycle Time: 9 minutes

Cool Remove
Resource: none Resource: Roommate
Capacity: 1 Capacity: 1
Cycle Time: 5 minutes Cycle Time: 0 minutes

Pack, Collect Money


Resource: Roommate
Capacity: 1
Cycle Time: 3 minutes

Note that in this diagram, activities are arranged in columns to indicate which
resources are being used. Inside each activity symbol are written the capacity (in
dozens of cookies) and the cycle time (in minutes).
1. How long will it take for you to fill a rush order?
Assuming this order is for one dozen cookies, we will need to do the following:
Activity Resource Cycle Time Start Time Finish Time
Order Entry E-mail 0 minutes 00:00 00:00
Wash Bowl, Mix Self 6 minutes 00:00 06:00
Fill Tray Self 2 minutes 06:00 08:00
Prepare Oven Roommate 1 minute 08:00 09:00
Bake Oven 9 minutes 09:00 18:00
Remove Roommate 0 minutes 18:00 18:00
Cool None 5 minutes 18:00 23:00
Pack, Collect Money Roommate 3 minutes 23:00 26:00
Therefore, the minimum time to fill an order is 26 minutes. We can illustrate the
sequence of events with a Gantt chart:

Competitive Advantage from Operations 2 Professor Juran


2. How many orders can you fill in a night, assuming you are open four hours
each night?
Here is a Gantt chart for two batches of one dozen cookies each. It doesn't take
twice as long to produce two batches as it does to produce one batch, because
you can start mixing the second batch without having to wait for the whole first-
batch process to be completed (you can start washing out the bowl as soon as
you finish filling the tray). It is possible to produce two batches in 36 minutes.

In general, a formula for the number of minutes to produce n one-dozen batches


is given by this expression:

16  10n

3. How much of your own and your roommate's valuable time will it take to fill
each order?
For yourself:
Activity Cycle Time
Wash Bowl, Mix 6 minutes
Fill Tray 2 minutes
Total 8 minutes
For your roommate:
Activity Cycle Time
Prepare Oven 1 minute
Remove 0 minutes
Pack, Collect Money 3 minutes
Total 4 minutes
This is assuming all orders are for one dozen cookies.

Competitive Advantage from Operations 3 Professor Juran


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 any longer to fill a two-dozen cookie order than a one-dozen cookie
order?
First, let's consider costs. The cost of ingredients and the box are the same, no
matter how many dozen you bake. So the only resource that might differ with
the size of the batch is labor.
One Dozen
Activity Resource Cycle Time Start Time Finish Time
Order Entry E-mail 0 minutes 00:00 00:00
Wash Bowl, Mix Self 6 minutes 00:00 06:00
Fill Tray Self 2 minutes 06:00 08:00
Prepare Oven Roommate 1 minute 08:00 09:00
Bake Oven 9 minutes 09:00 18:00
Remove Roommate 0 minutes 18:00 18:00
Cool None 5 minutes 18:00 23:00
Pack, Collect Money Roommate 3 minutes 23:00 26:00

Self 8
Roommate 4
Total Labor Minutes 12

Two Dozen
Activity Resource Cycle Time Start Time Finish Time
Order Entry E-mail 0 minutes 00:00 00:00
Wash Bowl, Mix Self 6 minutes 00:00 06:00
Fill Tray 1 Self 2 minutes 06:00 08:00
Fill Tray 2 Self 2 minutes 08:00 10:00
Prepare Oven 1 Roommate 1 minute 08:00 09:00
Bake 1 Oven 9 minutes 09:00 18:00
Remove 1 Roommate 0 minutes 18:00 18:00
Cool 1 None 5 minutes 18:00 23:00
Prepare Oven 2 Roommate 1 minute 18:00 19:00
Bake 2 Oven 9 minutes 19:00 28:00
Remove 2 Roommate 0 minutes 28:00 28:00
Cool 2 None 5 minutes 28:00 33:00
Pack 1 Roommate 2 minutes 23:00 25:00
Pack 2 Roommate 2 minutes 33:00 35:00
Collect Money Roommate 1 minute 35:00 36:00

Self 10
Roommate 7
Total Labor Minutes 17

Competitive Advantage from Operations 4 Professor Juran


Three Dozen
Activity Resource Cycle Time Start Time Finish Time
Order Entry E-mail 0 minutes 00:00 00:00
Wash Bowl, Mix Self 6 minutes 00:00 06:00
Fill Tray 1 Self 2 minutes 06:00 08:00
Fill Tray 2 Self 2 minutes 08:00 10:00
Fill Tray 3 Self 2 minutes 06:00 08:00
Prepare Oven 1 Roommate 1 minute 08:00 09:00
Bake 1 Oven 9 minutes 09:00 18:00
Remove 1 Roommate 0 minutes 18:00 18:00
Cool 1 None 5 minutes 18:00 23:00
Prepare Oven 2 Roommate 1 minute 18:00 19:00
Bake 2 Oven 9 minutes 19:00 28:00
Remove 2 Roommate 0 minutes 28:00 28:00
Cool 2 None 5 minutes 28:00 33:00
Prepare Oven 3 Roommate 1 minute 28:00 29:00
Bake 3 Oven 9 minutes 29:00 38:00
Remove 3 Roommate 0 minutes 38:00 38:00
Cool 3 None 5 minutes 38:00 43:00
Pack 1 Roommate 2 minutes 23:00 25:00
Pack 2 Roommate 2 minutes 33:00 35:00
Pack 3 Roommate 2 minutes 43:00 45:00
Collect Money Roommate 1 minute 45:00 46:00

Self 12
Roommate 10
Total Labor Minutes 22
Let's assume your time is worth $12 per hour. Your labor costs would be:
# Cookies in Batch Minutes Cost Cost per Dozen
1 dozen 12 $2.40 $2.40
2 dozen 17 $3.40 $1.70
3 dozen 22 $4.40 $1.47
It looks like you could afford to give a discount for two- and three-dozen orders.
A two-dozen order doesn't cost twice as much as a one-dozen order.

5. How many food processors and baking trays will you need?
The number of baking trays ought to equal the maximum number of trays you
will be using at any one time. The highest volume production imaginable would
be if we produced three-dozen orders continuously, a scenario depicted in this
Gantt chart:

Competitive Advantage from Operations 5 Professor Juran


It's hard to read the activities along the left axis because they are jammed
together, but the food processor is only used in the mixing stage, and we ought
to be able to see that the processor is idle for long periods of time, and that the
real bottleneck is the oven. Buying another food processor won't improve the
productivity of the system at all.
There are only three kinds of activities that require a tray: filling the tray, baking
(including preparing the oven), and cooling. The Gantt chart shows that we are
using at most three trays in the filling activity at any given time (and in fact this
is only because this particular plan calls for filling three trays in rapid succession,
after which two of them sit waiting for an opportunity to get into the oven).
There is never more than one tray in the oven at any given time, nor is there ever
any more than one tray cooling. So we could certainly get by with five trays, and
maybe four or even three if we adjust the mixing and filling part of the operation.
On the other hand, trays are cheap, and it would be a shame if we ever had to
keep the oven (the bottleneck) waiting for lack of a tray. It is reasonable to have
"plenty" of trays on hand, whether that means five, or ten, or whatever.

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 for an additional oven?

Competitive Advantage from Operations 6 Professor Juran


The bottleneck is the oven, which means there is no point in looking at
expanding the capacity of any other resource unless the operation's baking
capacity is expanded first.
If we had two ovens, we could make cookies faster. But how much faster?
This gets complicated, but we can think about it by looking at the capacities of
the various stages in our process:
Dozens per Hour Dozens per Hour
Stage Time (1 Oven) (2 Oven)
Wash Bowl, Mix, Fill Tray 12 min. for 3
(yourself) dozen 15 per hour 15 per hour
Prepare Oven & Bake 30 min. per 3
(oven) dozen 6 per hour 12 per hour
Prepare Oven, Pack, Collect Money 10 min. per 3
(roommate) dozen* 18 per hour 18 per hour
* all in one order

Even with the second oven, the oven stage will still be the bottleneck. To decide
how much we would be willing to pay for another oven, we would have to do
some more complicated analysis (including finding out what the distribution of
orders would look like — how many for one dozen, how many for two dozen,
etc.). Then we could project the increase in revenue and perform some present
value analysis on the incremental improvement in our revenue.
Here is a Gantt chart for one two-dozen order:

Competitive Advantage from Operations 7 Professor Juran

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