Kristen’s Cookies Case Analysis
First, I want to make two assumptions for my latter analysis: 1) A single order consists of only a dozen of cookies, and 2) an order means the whole process starting from taking an order to the moment when the payment is accepted. (Activity Flow Chart see Appendix 1)
The equation of adding up the time each step will take is as followed:
Thus, the theoretical time to complete a rush order is 27 minutes. (Gantt Chart see Appendix 2)
If we calculate the capacity rate on an hourly basis, it is obvious that baking the cookies has the lowest capacity rate, which made it the bottleneck.
As a result, the latter steps have to wait until bakery is finished, and we cannot save time by just putting forward the former steps because, anyways, we have to wait for the oven which will be occupied for baking the previous order. (See appendix 3)
The capacity of the whole process equals 6 orders/hr. which could give us the maximum number of orders we can fill within a four-hour opening night:
We could fill 24 orders per night, assuming that we open for four hours and operating at the highest possible capacity rate. (See appendix 4)
When me and my roommate is preparing the cookies, not all of the activities have to be conducted by ourselves. For example, when the oven is doing the bakery, we are not occupied by anything. The time we can save from the whole process equals the 10 minutes from baking, and 5 minutes from waiting for cookies to cool down.
As a result, my valuable time is 8 minutes. (Mix and Spoon)
The valuable time of my roommate is 4 minutes: (Process order, Package, and Accept payment)
As the costs of the packing boxes and the ingredients are the same per dozen of cookies, and equipment such as spoon, tray and oven are evaluated as fixed costs, the only cost that varies with dozens is the time cost. (Different time costs are listed in Appendix 5)
If we calculate the cost of time per dozen for multiple times, we could find out that the orders with two dozens or three dozens of cookies have lower time cost per dozen than one-dozen orders do, and the cost per dozen of any number above three dozens all fall into the section between 21 and 22.
As a result, it could take me 23 minutes to finish an order consisting two dozens of cookies, four minutes shorter than the time I have to spend on filling one-dozen orders. Thus, we could give discounts for customers who ordered more than one dozen of cookies. Giving A as the value of cost of every minute, we could give percent off to two-dozen orders, and percent off to three-dozen orders.
As shown in Appendix 3, the bottleneck of the whole process is the baking step. So only one high-capacity professional-grade electric mixer and one spoon are enough...