Case analysis on Kristen Cookie Company(A)

Introduction

Two students are planning to start a cookie business with the name Kirsten's Cookie Company in their on-campus apartment to cater to starving students late at night within the campus. The objective is to provide fresh baked cookies which are customised to the needs of the buyers

What we ought to do..?

We have to evaluate the preliminary design for companys production process( Prices, profits, how many orders to accept)

Process Includes

INGREDIENTS : Dough, Chocolate chips, M&M's, Chopped Heath bars, Coconut, Walnut and Raisins. EQUIPMENTS : 1 Oven, 1 Food Processor( mixing bowl), Cookie trays and Spoons

Production Process
Add ingredients as per requirement

Mix ingredients Spoon out the cookie dough into the tray Put the tray inside the oven Let it bake Take it out of the oven Let it cool Take the cookies out of the tray Pack it for delivery

Cost Incurred during the process

Variable cost includes Cost of ingredients (Rs.60/dozen) Cost of packing box (Rs.10/each) Cost of electricity is taken care of by the landlord of the apartment

Flowchart

Process Flow Diagram

Analysis and Questions

Since the business process is Made-toorder type the baking process and style depends upon the customer preferences. In order to maximize its productivity the process has to be carried out in most cost effective way consuming less time. Therefore the resources have to utilize in a effective way

Question-1

It can be determined by analyzing the baking process used for the preparation of a single order which is as follows:

Total Time taken during the process

Question-2

As one order will take 26 minutes and if we have two orders ,it will reduce the production time. As someone can get the tray ready for the second order while the first order is in the oven for baking, it would save 8 minutes of time for the subsequent orders

Question-2

Because when the first order is already in process in baking, the pre baking session for the second order will take place for 8 minutes, thus these 8 minutes have been saved. But it has to undergo both baking and post-baking sessions taking 18 (10+8) minutes.

Question-2

Therefore total time required for the second order while the first order is in progress =(18 8) =10 minutes

Question-2:

In four hours they will be able to fill 22 orders, the process completes its first dozen after 26 minutes, and, thereafter, the process completes a dozen every 10 minutes. That is, process completes a dozen at the following times:

26, 36, 46, 56, , 216, 226, 236

Question-3

Kristen works 8 mins / batch or about 8x6 or 48 mins / hr = 80% Roommate works 4 mins / batch or about 24 mins / hr = 40%

Question-4

Cost of ingredients (per dozen) = Rs. 60 Cost of packaging [paper box] (per dozen) = Rs. 10 Labour cost (per dozen) = Rs. 5 Total cost (per dozen) = Rs. 75 Profit Margin= Rs. 2 Total Price= Rs. 77

Question-4

Total cost in 1 day for maximum 22 orders (75 x 22) = Rs. 1650 Total revenue in 1 day for maximum 22 orders (77 x 22) = Rs. 1694 Therefore total Profit in 1 day for maximum 22 orders = Rs. 44

Question-4

No, Discount should not be offered Yes, it will take longer to fill a two dozen cookie order then a one-dozen cookie order as our baking tray can maximum hold one dozen cookies. So, first order will take 26 minutes and second order will take 10 minutes.

Question:5

Question-5

As from the Gantt chart we can consider that in one hour we can take maximum 5 orders and 6th order will be incomplete. We can have one processor in which 6 processes will be completed in one hour and 2 baking trays where five process will be complete and sixth one will be incomplete

Question-6

Add a second oven into process

With the acquisition of the second oven, the processs hourly capacity increases from 6 to 12 dozen per hour. So, the processs nightly (4 hour) capacity increases from 24 to 48 dozen per night an increase of dozen per night.

First Alternate Solution

Instead of using Brown Bag which is costing around 10 per dozen , we can opt for paper bag which we assume that it will cost around Rs. 2 per dozen and it can hold up to two dozen .

So, we will again calculate profits Cost of ingredients (per dozen) = Rs. 60 Cost of packaging [paper box] (per dozen) = Rs. 2 Labour cost (per dozen) = Rs. 5 Total cost (per dozen) = Rs. 67 Selling Price=77

Total cost in 1 day for maximum 22 orders (67 x 22) = Rs. 1474 Total revenue in 1 day for maximum 22 orders (77 x 22) = Rs. 1694 Therefore total Profit in 1 day for maximum 22 orders = Rs. 220

Now let us consider that we will offer selling price of Rs. 70.(10% Discount) Then total revenue will be : 70*22=1540 Now, total profit for one day will be equal to:1540- 1474=Rs. 66

Hence, we can conclude that despite giving 10% Discount, we are earning a profit of Rs. 22

Second Alternate Solution

As dishing took two minutes and packing took two minute, what we can do is to reduce one minute in dishing and one minute in packing if we do it in efficient manner. Hence , we will be able to save two minutes in each order which makes it 44 minutes(22*2)=44

So, we can add four more process. Total process will be now 22+4=26,which will definitely increase profits.

Conclusion

By taking alternate solutions into considerations, they can easily earn profits by working efficiently and continue the present business for the time being because they are students and are earning sufficient revenues.