kristen's cookie company case study

• Harvard Business School →
• Faculty & Research →
• January 1986 (Revised July 2006)
• HBS Case Collection

Kristen's Cookie Company (A)

• Format: Print
• | Language: English

Related Work

• Faculty Research

Kristen's Cookie Company (A) (Abridged)

• Kristen's Cookie Company (A) (Abridged)  By: Roger E. Bohn and Janice H. Hammond

KRISTEN’S COOKIE COMPANY (A1) Case Solution & Answer

Home » Case Study Analysis Solutions » KRISTEN’S COOKIE COMPANY (A1)

KRISTEN’S COOKIE COMPANY (A1) Case Solution

Introduction

Kristen’s cookie company is an on campus venture planned by Kristen and her roommates. The idea behind the project is to feed freshly baked cookies to hungry college students late night. The team plans to make customized cookies using different ingredients as per students’ demands. To have a competitive edge over other cookie-makers, the team has decided to bake the cookies only after receiving the order so that the customers can have freshly baked hot cookies. As far as customization is concerned, buyers will have to specify about each ingredient in their telephone call. By doing so, students wouldn’t be going anywhere else as they would enjoy all the exotic and freshly baked cookies right in the campus, banishing the late night cookie cravings.

The campus email system will be used for accepting the orders and informing the buyers when the cookies are ready to be picked. The team mates have thoroughly conducted the plan of how they will proceed with the initial production as they have also divided the team to carry out different activities ranging from taking orders, baking it and finally accepting payments. Now the production process needs to be evaluated to come up with a strong business policy.

Time taken to fulfil a rush order

The time taken for each physical activity under the operations has been timed by the teammates. Initially, the buyer will order the cookies via email which will be extremely fast hence will be done within a minute. Then, Kristen will wash the electric mixer’s bowl and beaters from the previous order taking up to 6 minutes. One cookie tray can hold up to a dozen cookies at a time therefore after mixing up all the ingredients, the cookie mixture will be spooned on the cookie tray taking hardly 2 minutes and taking total time to eight minutes. The roommate will commence the procedure by switching on the oven for preheating which will take 1 minute to heat up. Then, the cookie tray will be pushed into the oven and will be baked in 9 minutes giving us the total baking time of 10 minutes. Due to the size of the electric oven, the roommate can put only one cookie tray into it, so it will take additional 10 minutes for the second dozen of cookies. After completion of 9 minutes of baking the roommate will take out the cookies from the oven and place it aside for cooling for 5 minutes. When the cookies are good to go, they will be packed in the box which will be completed in 2 minutes. Meanwhile, the roommate can email for the order to be picked up so, the final step is to accept the payment which takes about 1 minute. From the initial step to the payment acceptance it will take 26 minutes to fulfill a rush order. The calculation has been shown in exhibit 1

Orders per night

The first dozen of order will take up to 26 minutes. However, it only takes another ten minutes for second dozen to bake. Now the team has 4 hours per night hence the total time will be 240 minutes. The second batch of cookies will not take much time, the team can mix the ingredients for second batch meanwhile, and the first dozen cookies will be in oven. Furthermore, they won’t have to wash the utensils and electric mixer’s bowl all over again saving time. However, when packing the first order cookies, the other roommate can bake the second order cookies hence saving the time. To sum it up our second order will be done within 36 minutes and we can add 10 minutes each for new order. For instance, 3 rd order will be ready within 46 minutes and so on until we will reach 240 minutes and by that time we will be done with 22 orders. The exhibit 2 shows the tables for number of dozen cookies to be baked within 4 hours. The exhibit 3 shows the gang diagram assuming that we have received the second order.

Time taken per team member

As discussed earlier, the order receiving doesn’t take much time. Now for our first batch the total time required is 26 minutes. Out of those 26 minutes 9 minutes can be deducted for baking and 5 minutes can be taken off for cooling process. The teammates and I are now left with 12 minutes which will be divided amongst us. After the order is received it would be my job to mix the ingredients after washing out the electrical mixer’s bowl and beaters from the initial batch. This will be done within six minutes. After that I’ll be spooning the mixture of ingredient on the cookie pan which will only take 2 minutes to complete, taking my total time to 8 minutes out of the 12 minutes.

The roommates are left with 4 minutes so one of them will set the thermostat and the time taking up to just a minute. When the cookies are baked, one of them will take the cookie tray out of the hot oven and place it aside for cooling, which will all be completed under a minute hence, neglected for the calculations. But when the cookies are ready to go after cooling down, one roommate will pack the cookies and collecting the cash from the customer, taking up to 2 and 1 minute respectively. Therefore, the total time taken by the team mates is just 4 minutes which is half of my time. The different durations of time can be seen in exhibit 3.

Discount on cookies

To determine about the labor cost, the calculated time for first order is 12 minutes. Now, for the second order, the time to mix ingredients will be the same for first three orders hence, 1+6+2*(2+1+2) =17 min will be the time for 2 nd batch of dozen cookies. For the three orders, going with the same process, the time taken will be 1+6+3*(2+1+2) = 22 minutes. Taking assumptions for the labor cost, it can be said that per hour labor cost is $15; with the assumptions, the cost for first dozen can be calculated as: (12 minutes/60)*15=$3 for 2 orders 3((17 minutes/60)*15)/2=$2.1 and for three orders ((22 minutes/60)*15)/3=$1.8, this shows that with increasing order, the labor cost is decreasing. After adding up the ingredient cost, the total average cost can be calculated by dividing the total cost with the order size. The discount can be given after the first order with diminishing cost. However, due to additional six minutes in mixing the cookies for the four orders, the total time has increased, resulting in increased labor cost and a declining total average cost but at a diminishing rate.

After analyzing the calculations it can be said that, discount can be given on 2 and 3 orders. The discount has been given as per the decline in average total cost. When in the second order cost has declined by almost half, the discounted price will be $18 and $$28.80 for the 3 rd order, which would have been $36. The calculations for the discounted prices are shown in exhibit 4.

Electric mixers and baking trays requirements

The oven used by the roommates is the major bottleneck as it cannot hold more than one tray at a time. The team can process maximum three dozen orders at maximum capacity. The food processor can be handful for the long-term and only one is required. Also, the productivity will  have no positive effect if another mixer is added. As far as trays are concerned, the business will be in need to have at least 5 trays. As one tray would be in the oven and one of them would be put aside for cooling, the team would need three more tray to spoon the material on to the trays. This will quicken up the process. Therefore, it is recommended to invest in more trays rather than oven and electric mixer.

Changes in production plan

In our business, the oven can take up to just one tray at a time making it a bottleneck. Brining changes to another tool or utensil will be of no use if the team doesn’t improve its baking capacity. Therefore, it is sensible to invest in an additional oven which can bring changes in the production plan. As per the assumptions, a dozen cookies are prepared in the first order. The team can process the second order when a roommate is busy making the first batch of cookies. Adding another oven to the production process will boost the cookie making capacity and more cookies would be baked in less amount of time. The initial change would be on the cycle time and it would be 5 minutes. Furthermore, the cycle time will reach 8 minutes when spooning the mixture and preparing the ingredients or the complete mixing process will add three more minutes. With the increased in the cycle time our number of orders will be increased to 27 order. To get the new order number, first order duration will be deducted from total number of minutes. The result will be divided by the new cycle time, 8 and their result will be added by 1 to get the total order quantity of 27.75 orders or 27 order to be precise. The calculation has been shown in exhibit 5

As per the rent is concerned, it is discussed that the oven cycle time would be 5 minutes. The labor and material cost for first order is $2 and $0.7 respectively. The rent can be calculated by multiplying cycle time (5 minutes) with sum of total cost for 1 st order………

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.

Related Case Solutions:

LOOK FOR A FREE CASE STUDY SOLUTION

Brought to you by:

Kristen's Cookie Co. (A)

By: Roger E. Bohn

The student is starting his or her own business, baking make-to-order cookies. Basic times of each operation are laid out and the student is asked to determine the consequences for the operating…

• Length: 3 page(s)
• Publication Date: Jan 21, 1986
• Discipline: Operations Management
• Product #: 686093-PDF-ENG

What's included:

• Same page, Teaching Note
• Same page, Educator Copy

$4.95 per student

degree granting course

$8.95 per student

non-degree granting course

Get access to this material, plus much more with a free Educator Account:

• Access to world-famous HBS cases
• Up to 60% off materials for your students
• Resources for teaching online
• Tips and reviews from other Educators

Already registered? Sign in

• Student Registration
• Non-Academic Registration
• Included Materials

The student is starting his or her own business, baking make-to-order cookies. Basic times of each operation are laid out and the student is asked to determine the consequences for the operating system. Serves as an exercise and review of concepts such as capacity, bottlenecks, and throughput times. Students should be able to make several useful suggestions for improving the system. The case ends with a series of open-ended questions.

Jan 21, 1986 (Revised: Jul 13, 2006)

Discipline:

Operations Management

Harvard Business School

686093-PDF-ENG

We use cookies to understand how you use our site and to improve your experience, including personalizing content. Learn More . By continuing to use our site, you accept our use of cookies and revised Privacy Policy .