KRISTEN’S COOKIE COMPANY

Q1) How long will it take you to fill a rush order?

Total time for one dozen cookies:

 Wash and mix ingredients: 6 minutes

 Spoon dough onto the tray: 2 minutes
 Set oven and bake: 10 minutes (1 minute to set oven + 9 minutes baking) Cool
cookies: 5 minutes
 Cool cookies: 5 minutes
 Pack and accept payment: 3 minutes (2 minutes packing + 1 minute payment)

Total time for one dozen cookies:

6 + 2 + 10 + 5 + 3 = 26 minutes

So, filling a rush order for one dozen cookies will take 26 minutes (assuming no other
orders in the queue).

Q2) How many orders can you fill in a night, assuming you are open for 4 hours?

 One dozen cookies take: 26 minutes.

 Time available: 4 hours = 240 minutes.

If the oven can only handle one tray at a time, each batch of a dozen cookies takes 26
minutes.

 Maximum batches = 240 ÷ 26 ≈ 9 batches

Thus, you can fill a maximum of 9 orders (one dozen per order) in one night with a single
oven.

Q3: How much of your own and your roommate’s valuable time will it take to fill each
order? Assume the order requires 1 dozen

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  For Kristen, the steps of washing, mixing and spooning are done by himself. So, his
valuable time for 1 order is 6+2=8(min)

 For his roommate, the steps of setting the oven, removing cookies from the oven,
packing them and accepting the payment are done by him. So, his valuable time for 1
order is 1+0+2+1=4(min)

Q4: 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 you
any longer to fill a two-dozen cookie order than a one-dozen cookie order?
If people order 1+ dozen orders of the same ingredients, then they can be given discount as
we can save time by mixing only once. (Mixer has capacity of 3 dozen).

Task One dozen Two dozen Three dozen

Mixing and Spooning 8 min 10 min 12 min

Oven setting and timer on 1 min 2 min 3 min

Packing & Payment 3 min 5 min 7 min

Total 12 minutes 17 minutes 22 minutes

Orders Labor Cost Variable Total Cost Cost/Dozen Discount ($)

($) Costs ($) ($)

1 dozen 2 (Assumed) 0.7 2.70 2.700 0

2 dozen 2.83 1.4 4.23 2.115 0.585

3 dozen 3.67 2.1 5.77 1.923 0.777

From the factors derived above we can give 5-10% discount for orders of 2/3 Dozen.

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Q5 Estimating Production Capacity

Scenario 1: Using One Electric Mixer and One Baking Tray

 Mixing Time: The mixer can prepare up to 3 dozen cookies in one batch, but let’s
assume you're processing one dozen cookies at a time. It will still take 6 minutes to
mix the dough.
 Baking Time: With only one baking tray, you will need to wait for 10 minutes for
one dozen cookies to bake before you can place the next batch.

Thus, with one mixer and one tray, the process for one dozen cookies will take 6 (mixing)
+ 10 (baking) = 16 minutes per dozen.

Scenario 2: Using One Electric Mixer and Two Baking Trays

 Mixing Time: You can mix dough for up to 3 dozen cookies, but you're still bound
by the oven's capacity to bake one tray at a time.
 Baking Time: While the first tray bakes for 10 minutes, you can spoon the next tray.
Therefore, the second dozen will be ready to bake immediately after the first dozen
is done.

This setup allows you to continuously bake cookies with minimal idle time, reducing
delays. The time saved between batches increases efficiency.

Scenario 3: Using Two Electric Mixers and Multiple Baking Trays

 Mixing Capacity: If you add another mixer, you can prepare dough for up to 6
dozen cookies simultaneously (with two mixers, each handling 3 dozen cookies).
 Baking Time: The limitation remains the oven’s ability to bake one tray (one dozen
cookies) at a time unless you also add another oven.In this scenario, adding more
mixers won’t significantly improve productivity unless you also increase the
number of ovens.

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Electric Mixer Cost:

Let’s assume the cost of a high-capacity electric mixer is $200. Since one mixer can handle
up to 3 dozen cookies at a time, you only need one mixer unless you plan to increase
capacity significantly or have multiple ovens.

 Cost of one mixer: $200.

Baking Tray Cost:

Baking trays are relatively inexpensive, so adding more trays to optimize your production
process is a low-cost, high-benefit option.

Let’s assume each tray costs $10.

 Cost of two trays: $10 × 2 = $20.

 Cost of three trays: $10 × 3 = $30.

Given that you can start spooning dough onto a second tray while the first is baking, having
at least two trays is ideal for smooth production. More trays allow for continuous
production without delays, especially during busy periods.

Electric Mixers:

 One electric mixer is sufficient for your current setup, as it can handle up to 3
dozen cookies in one batch, far exceeding the oven’s capacity to bake cookies one
tray at a time.
 Cost: $200 for one mixer.

Baking Trays:

 At least two baking trays are recommended to ensure continuous production.

More trays would allow you to prepare multiple batches and reduce idle time while
cookies are baking.
 Cost: $20 for two trays, but you may want to invest in 3-4 trays ($30-$40) if demand
increases.

Total Equipment Cost for Optimal Production:

 Electric Mixer (1): $200

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  Baking Trays (2): $20
 Total Cost: $220

Adding more baking trays (e.g., 3 or 4 trays) would increase this cost by $10-$20, but the
electric mixer is the primary equipment cost, and you only need one unless you plan to
significantly expand your operation.

Conclusion

 One electric mixer is sufficient for your current operation, and the cost is $200.
 You should invest in at least two baking trays for smooth production, with a cost
of around $20-$40 depending on how many trays you want.
 Total equipment cost for one mixer and two trays would be $220.

Q6.) Assessing the Effect of Adding Another Oven

 Increased Baking Capacity: A second oven would allow you to bake two trays (two
dozen cookies) simultaneously, effectively doubling your baking capacity.
 Reduced Time for Larger Orders: Baking time for two dozen cookies would
decrease from 20 minutes (with one oven) to 10 minutes (with two ovens). This
would result in faster order fulfillment and increased output.

Calculating Potential Increase in Capacity and Revenue

Current Capacity (One Oven):

 One-Dozen Orders: Each order takes 26 minutes, allowing approximately 9 orders

(9 dozen) per night.
 Two-Dozen Orders: Each order takes 40 minutes, allowing for 6 orders (12
dozen) per night.

With Two Ovens:

 Two-Dozen Orders: Total order time reduces to 30 minutes, enabling 8 orders (16
dozen) per night.

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Estimating Costs Involved

Variable Costs per Dozen:

 Ingredients: $0.60 per dozen.

 Box: $0.10 per dozen.
 Total Variable Cost per Dozen: $0.70.

Total Variable Costs per Night:

 With One Oven (12 dozen): $8.40.

 With Two Ovens (16 dozen): $11.20.
 Incremental Variable Cost: $2.80.

Labor Costs:

 Your Time: Mixing and spooning takes 10 minutes per order.

o One oven: 60 minutes per night (6 orders).
o Two ovens: 80 minutes per night (8 orders).
 Roommate’s Time: Packing and payment takes 5 minutes per order.
o One oven: 30 minutes per night (6 orders).
o Two ovens: 40 minutes per night (8 orders).

Determining How Much to Pay for an Additional Oven

Revenue Calculation:

 Selling Price per Dozen: $4.00.

 Revenue with One Oven (12 dozen): $48.00.
 Revenue with Two Ovens (16 dozen): $64.00.
 Incremental Revenue: $16.00.

Incremental Profit:

 Incremental Revenue: $16.00.

 Incremental Variable Costs: $2.80.
 Incremental Labor Costs: $5.00 (based on your time valued at $10/hour).
 Incremental Profit: $8.20.

Thus, you can afford to pay up to $8.20 per night for renting an additional oven, as this is
the incremental profit generated by its use.

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Exploring Other Potential Improvements

Adding Baking Trays:

 Cost: Baking trays are inexpensive (approximately $10 each). Adding extra trays
allows you to prepare the next batch while the first is baking, minimizing idle time.

Streamlining Process Steps:

 Reduce Spooning Time: Invest in a cookie dough scooper to speed up spooning.

 Reduce Packing Time: Preassemble boxes or use faster packaging methods.

Labor Allocation:

 Cross-Train Both of You: Cross-train you and your roommate to handle all tasks,
adding flexibility during peak periods.

Bulk Purchasing:

 Cost Savings: Buying ingredients in bulk can reduce per-unit costs.

Marketing Strategies:

 Increase Demand: Promote larger orders with discounts or introduce rush order
pricing to maximize revenue.

Final Recommendation

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Adding Another Oven:

 Adding another oven is beneficial if the rental cost is less than $8.20 per night, based
on the incremental profit calculation.
 Long-Term Investment: Consider purchasing an oven if demand remains
consistently high. If the oven costs $500, the payback period would be around 61
nights.

Alternative Solutions:

 If oven rental costs are too high, focus on other improvements such as adding
baking trays, reducing idle time, or adjusting labor allocation to boost efficiency
without significant capital investments.

Conclusion

 You can afford to pay up to $8.20 per night for an additional oven based on
increased capacity and profits.
 Ensure there is sufficient demand before investing in additional equipment.
Consider alternate solutions, such as process optimization and marketing strategies,
to maximize profitability with minimal capital outlay.

Problems for further thought :-

Q1. What happens when trying to work alone vs. With a roommate

In this scenario, you will be taking over all the tasks in the cookie production process. Let's
break down how this will impact your workflow, time, and efficiency.

Current Setup with Your Roommate:

Currently, you and your roommate divide the work as follows:

Your tasks:

Washing and mixing the ingredients: 6 minutes

Spooning the dough onto the tray: 2 minutes per dozen

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Your roommate's tasks:

Placing the tray in the oven and setting the timer: 1 minute

Baking the cookies: 9 minutes (automated, but the oven is limited to one tray at a time)

Removing the cookies and letting them cool: 5 minutes

Packing the cookies into a box: 2 minutes per dozen

Accepting payment from the customer: 1 minute

Scenario without Your Roommate:

If your roommate is not available, you will need to complete all the steps by yourself. Let's
break down the tasks and see how the total time changes when you’re handling everything
alone.

Step-by-Step Breakdown of Your Workflow (if you are alone):

Washing and Mixing the Ingredients:

You start by washing the bowl and mixing the ingredients, which takes 6 minutes. This step
doesn't change whether you're alone or working with a partner.

Spooning the Dough onto the Tray:

After mixing, you spoon the dough onto the tray, which takes 2 minutes for each dozen
cookies. This also doesn't change.

Placing the Tray in the Oven:

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Now, instead of your roommate placing the tray in the oven, you’ll do it yourself. This adds
1 minute to your task list. You’ll need to set the oven and the timer yourself.

Baking the Cookies:

While the cookies are baking for 9 minutes, you have some downtime because the baking
process is automated. During this time, you might be able to begin preparing the next batch
if you have another order. However, keep in mind that the oven can only bake one tray at a
time, so any additional orders will have to wait until the first tray is done.

Cooling the Cookies:

Once the cookies are done baking, they need to cool for 5 minutes. While they cool, you
could potentially be preparing the next order or performing other tasks, but you’ll need to
remember to come back and pack them promptly once they’re cool.

Packing the Cookies:

After the cookies have cooled, you will pack them into boxes yourself, which takes 2
minutes per dozen.

Accepting Payment:

You will also have to take time to accept payment from the customer, which takes 1
minute.

Impact on Total Time for One Dozen Cookies (if working alone):

Let’s now compare how long it will take you to complete all these steps when you’re doing
everything by yourself.

Washing and Mixing: 6 minutes

Spooning the Dough: 2 minutes

Placing the Tray in the Oven: 1 minute

Baking: 9 minutes (during which you can prepare for the next order if applicable)
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Cooling: 5 minutes

Packing: 2 minutes

Accepting Payment: 1 minute

Total Time for 1 Dozen Cookies (if working alone) = 26 minutes (same as with your
roommate).

However, this is misleading because:

The tasks have downtime (e.g., baking and cooling), and normally, your roommate would
be handling packing and payment while you focus on preparing the next batch. When
working alone, you’ll be switching between tasks, so you’ll lose this parallel efficiency.

While you are waiting for cookies to cool or bake, you may not always be able to
immediately start on the next order because packing and accepting payment will occupy
you during these periods

In Conclusion, When You Work Alone:

Total time per order doesn't necessarily increase but becomes more challenging to manage
since you are handling everything yourself.

Lost efficiency from the inability to overlap tasks (mixing, packing, baking) means that your
maximum capacity decreases.

Nightly output decreases: Without your roommate, you may only be able to fill 6 to 7
orders per night instead of 9.

Greater fatigue: Doing all the work yourself can lead to more exhaustion, making the
business harder to sustain in the long term.

Q2. Should you offer special rates for rush orders?

Rush orders could disrupt the normal production process. If a rush order comes in when a
tray is already in the oven, you'd likely need to delay the current batch to prioritize the
rush order, which would lead to longer wait times for other customers. Therefore, offering
a rush order option should come with a price premium to compensate for the disruption
and lost efficiency. The premium could be based on the time disruption and extra effort
needed. For example, you could charge an additional 25-50% premium for rush orders

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Q3. When should you promise delivery? How can you look quickly at
your order board (list of pending orders) and tell a caller when his
or her order will be ready? How much of a safety margin for timing
should you allow?

For the first order of the day, the preparation time will take exactly 24
minutes. This includes 9 minutes of baking time, with preheating and
spooning tasks handled concurrently by our roommate. Under optimal
conditions, the cookies will be ready within this 24-minute window. However,
to account for any unforeseen delays, we will include a buffer of 10
minutes to ensure smooth operations and accommodate potential incoming
orders.

For additional dozens, the primary time constraint is the baking process,
which serves as the bottleneck at 10 minutes per batch. Tasks such as
mixing and spooning can be performed while the previous batch is baking,
with cooling and packaging handled by the roommate. Therefore, each
additional dozen will require only 10 extra minutes.

Our delivery commitment is structured as follows:

 First dozen: Delivery within 35 minutes (including a 10-minute buffer).

 Each subsequent dozen: An additional 10 minutes.

If there are pending orders already in the queue, the delivery time will be
adjusted by adding 10 minutes per extra dozen, along with the time
required to fulfil previous orders.

So, we will promise to deliver the first dozen within 35 minutes, with an
additional 10 minutes for each subsequent dozen. However, if there are
existing pending orders, the delivery time will be adjusted by adding 10
minutes per additional dozen, along with the time required to fulfil the prior
orders.

Q4. What other factors should you consider at this stage of planning your business?

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  Demand Forecasting: Estimating expected orders during peak hours and adjusting
capacity accordingly.
 Production Bottlenecks: The single oven limits production; consider investing in
additional equipment to avoid delays.
 Time Management: Determine how much time you and your roommate can
dedicate each night without overextending yourselves.
 Pricing Strategy: Ensure the price covers costs, including time and ingredients,
while remaining competitive for students.
 Marketing: Leverage word-of-mouth, campus flyers, and social media to highlight
freshness, customization, and convenience.
 Legal Considerations: Check campus policies and local regulations for running a
business out of an apartment.
 Scalability: Plan for future growth, possibly by hiring help or investing in more
equipment.

Q5. Your product must be made to order because each order is potentially unique. If
you decide to sell standard cookies instead, how should you change the production
system?

 Production: Shift to batch production, baking cookies in larger quantities in

advance to increase efficiency.
 Order-Taking: Simplify the process by offering a fixed selection of cookie varieties,
reducing customization time.
 Pricing: Adjust pricing based on volume, offering bulk discounts since production is
faster.
 Inventory: Implement a system to manage pre-baked cookies and ensure freshness,
with policies for unsold stock.
 Marketing: Focus on convenience, speed of service, and consistent quality rather
than customization.

GROUP NUMBER 8

SI NO. NAME OF THE TEAM MEMBER ROLL NUMBER

1 SRISHTI VERMA B2024046
2 UTTARAN BISWAS B2024052
3 CURREN R RAJESH B2024017
4 SATVIK NARANG B2024031

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5 SHREYAS PRABHU B2024044
6 ABHISHEK SINGH B2024003
7 ABHISHEK NANDGAVE I2024001

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