The objective of Kristens Cookie Company is to provide customized fresh baked cookies to students late at night.

It is a very simple business that in order to produce the output, cookies, requires very little input, which corresponds to the few ingredients needed to make the cookies, the kitchen supplies needed to cook them, and the labor provided by the two girls. This business has to implement a number of rules in order to set the parameters for the clients to be able to order correctly. First of all, the clients should know that there is no baking unless an order is placed, so impulsive buying is not allowed. Second of all, there is a minimum order of 12 cookies for a badge to be cooked. And third of all, orders can only be made in badges of 12. As we can see in the Original Diagram Flow Chart the expected manufacturing lead-time that would take the roommates to complete a rush order for one dozen cookies, would be 26 minutes. We decided to take into consideration for this Flow Chart only one dozen cookies per order, since they depend on the customer preferences and they want to utilize the resources efficiently. As calculated from the chart, the time to complete a rush order for two and three-dozen cookies, will take 36 and 46 minutes respectively. We can observe that there is a 10-minute increase in the production process when an extra dozen cookies is made. This corresponds to the same 10 minutes needed to place the tray in the oven and to cook the cookies, so we can conclude that because we only have one oven, there is a bottleneck in this particular step of the production process. It is impossible to calculate exactly the number of orders that can be delivered per night because the production depends entirely on the individual demands and this is unpredictable. However, based in the assumption that they only produce in badges of 12 cookies, we can calculate the number of orders they could get if they produce only 1, 2, or 3 dozens throughout the night. In the case they stick to producing only badges of 12 cookies, they would only be able to produce 9 in the 4 hours that the business is running. Following the same logic, only 6 badges of 24 cookies and 5 badges of 36 cookies could be produced. Furthermore, in order to fulfill the production requirements, the roommates would need to have at least one electric mixer and 3 baking trays. If the girls would be given more material to work with, not only trays and mixers but also at least one more oven, they could have most certainly increased their production and reduced their delivery time. In order for the girls to be able to maximize their productivity, they should ideally have for each electric mixer, 1 oven that can hold 3 baking trays at the same time. Having an oven of these characteristics would allow the girls to bake up to 36 cookies at a time, which is the maximum number of cookies that you can get from a mix. If we were in the girls position, we would be ready to invest a substantial amount in replacing the oven that we currently have for a slightly bigger one that could of course fit in the kitchen and that could hold the 3 trays. This would eliminate the problem of having to rent extra space for the extra oven and of having to outsource a part of the production. This being said, we would only consider changing the oven for a bigger one after having substantially studied the ordering pattern of the clients or in other words, what are the most frequent badges ordered by the clients. If the tendency is to receive orders of either 24 or 36 cookies, then it would prove profitable and interesting to change the oven, but in the contrary if clients tend to order only badges of 12, having a bigger oven would not benefit the business at all and would end up resulting in a wasted investment. Moreover, we found there to be some idle time and a bottleneck in the already existing production process so that is why we considered making some changes to it in order to maximize the efficiency of the process by reducing the manufacturing lead-time. We introduced two main changes as illustrated by the flow charts below; the first one was to separate the tasks of mixing and washing, and the second was to have the two girls spoon the cookies at the same time when badges of more than 12 cookies are being made.

With the implementation of these changes, the girls would be able to increase the maximum number of badges that they can bake per night. Previously, they could only make 9 badges of 12 cookies in 4 hours, 6 of 24, and 5 of 36, whereas now, they can make 10 badges of 12, 7 of 24, and 5 of 36. We can see how two small changes have allowed the girls to manage their time and resources better thus allowing them to be more profitable in the end. However, if a much bigger change was to be made to the business and the production process such as reducing labor by half, the effects on time, productivity, and profitability would be

different depending on how many dozens are being made. When making badges of 12 cookies, having one less person would neither affect productivity nor would increase time, as only one person is needed for the process. On the other hand, when making badges of 24 or 36 cookies, the situation changes as there are steps in which two people have to work simultaneously in order to make the process flow correctly. In this case, the production process would be slowed down, and thus, delivery time would increase and the capacity of the business would be reduced as not as many cookies can be produced. With respect to the delivery time, as seen in the flow charts above, baking badges of 12 cookies take 24 minutes, 34 minutes for those of 24, and finally 44 minutes for those of 36. There needs to be a safety margin for timing in case something in the production goes wrong or in case there is a rush order suddenly. Therefore we estimate the delivery time to be 35, 45 and 55 minutes respectively. We allow ourselves a margin of 11 more minutes because it is the time that takes for the oven to run. At this stage, after a couple of runs, we are able to estimate the volume of orders and capacity of the business. Judging from this, we then have to be conscious of the potential growth of the business, and thus, be prepared not only in terms of having enough supply available to be able to fulfill the orders, but also, to have the adequate facilities. Moreover, judging from experience and seeing how demanding it is to always bake cookies upon request, it could be interesting to consider changing the business idea and start selling standardized cookies, as opposed to one of a kind cookies made for each customer. The fact that now the cookies sold are standard implies that the baking is not made upon request but on the contrary, is made on a regular basis throughout the night. This not only allows us to bake badges of 36 cookies all the time, which is our most profitable situation, but also eliminates any idle time that might happen in between orders. Eliminating the exclusivity associated with the cookies would not harm the business because clients would now value the fact that they could receive their order instantly as opposed as having to wait 35, 45 or even 55 minutes. In addition to these advantages, making standardized cookies is also cost reducing because not so many ingredients need to be in stock as we are the ones who choose the flavor of the cookies. As we based most of the report on the new and improved production process our prices are going to be set according to the times and the processes presented in the flow charts above. Taking into account that the cookies are sold at night, the time and labor needed to make them, and the cost of the inputs, we decided that the price for each dozen of cookies will be 18. However, discounts and special prices will be offered when students order badges of 36 cookies of the same flavor. The discounted price then would be 40 for a badge of 36 cookies of the same flavor and 32 for a badge of 24. If the students were to order a badge of 36 cookies but of 3 different flavors for example, the priced charged would be 18 per badge, as if they would order 3 individual badges of 12 cookies. The reasoning behind the discount prices is to encourage consumption of badges of 36, which is the most efficient quantity to make at once. There is another occasion when special prices will be offered, that is when we have a rush order that needs to be completed with priority. Because the production of the rest of the orders needs to be paused, a penalty fee is applied and prices would then rise to 27 for a badge of 12 cookies, 48 for 24 and 60 for 36.