Cookies Case

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Kristen’s Cookies

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Examples of a Process in Service Companies

Processing an insurance claim for an accident.

Admitting a patient to a hospital.

Performing the 30,000-mile maintenance on a car.

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Concepts
This case will familiarize you with the following concepts:
PROCESS FLOW DIAGRAM THROUGHPUT TIME FOR AN ACTIVITY THROUGHPUT TIME FOR THE PROCESS CAPACITY OF AN ACTIVITY CYCLE TIME OF AN ACTIVITY BOTTLENECK CAPACITY OF THE PROCESS CYCLE TIME OF THE PROCESS UTILIZATION OF A RESOURCE GANTT CHART PROCESS INCREASING THE CAPACITY OF A PROCESS 3

Process Flow Diagram for Kristen’s Cookies

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Question 1
Assume that Kristen’s most important customer has just submitted an order for one dozen cookies, and that she wants to give the highest priority to this order. How long will it take to fill this order?

The time required to fill the “rush order” is: Process’s Throughput Time = NOTE: The answer of __ assumes that there no cookies in the oven, or, if there are cookies in the oven, the remaining baking time is at most 8 minutes. If cookies are in the oven and have a baking time in excess of 8 minutes, then, if the cookies are not removed from the oven, the time required to fill the “rush order” increases above __. 5

Question 2
Assuming that Kristen’s Cookie Company is open for four hours each night, how many orders can be filled each night?

Which activity is the process’s bottleneck? The process’s bottleneck is

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Question 2 (continued)
Assuming that Kristen’s Cookie Company is open for four hours each night, how many orders can be filled each night?

Once it is “up and running”, what is the process’s hourly capacity?

The process’s hourly capacity equals

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Question 2 (continued)
Assuming that Kristen’s Cookie Company is open for four hours each night, how many orders can be filled each night?

If we stood at the end of the process, and, if the process were continually busy, how much time would elapse between the completion of successive units (in this case, successive dozens of cookies? The answer is known as the process’s cycle time. Because the process’s hourly capacity is 6 dozen per hour, the process’s cycle time is 8

Question 2 (continued)
Assuming that Kristen’s Cookie Company is open for four hours each night, how many orders can be filled each night?

What is the process’s nightly capacity? The process’s nightly capacity equals

NOTE: 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 So, Kristen’s nightly capacity is actually __ dozen.

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Question 3
During each night, what percentage of time will Kristen be busy, and what percentage of time will Kristen’s roommate be busy? Recall that the process’s cycle time is 10 minutes.

KRISTEN

ROOMMATE

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Question 3 (continued)
From the previous slide, we know that Kristen will be idle 20% of the time, and her roommate will be idle 60% of the time. What can a worker do when he/she would otherwise be idle?

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Question 4
Assume that Kristen pays herself and her roommate $12 per hour. If Kristen and her roommate are not paid for idle time, what is the minimum amount Kristen should charge for one dozen cookies? If Kristen and her roommate are paid regardless of whether they are busy or idle, what is the minimum amount Kristen should charge for one dozen cookies? From the previous slide, recall that, in each 10minute cycle, Kristen and her roommate work a total of Kristen’s and the roommate’s wage is From the case, the materials cost per dozen is $0.60 for ingredients and $0.10 for the box, for a total of

$12/hr or $0.20 /min
Nightly capacity is

8 + 4 =12 minutes

24 dozen
LABOR IS A VARIABLE COST (not paid when idle)
MATERIALS $0.70 MATERIALS

$0.70

LABOR IS A FIXED COST (paid when idle)
$0.70

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