Kristen's Cookie Company
Kristen’s Cookies - Key Issues
Product Differentiation/ Core Competencies n Product features n n n
variety/customization freshness convenience Low overhead Flexible labor - can study during idle time Location - access to targeted market
n
Competitive Advantages n n n
What are the bottlenecks? mix (6) spoon (2) load (1) bake(9)
cool (5)
pack (2)
pay (1)
Resource Activity You mix spoon Oven bake R-mate oven load packing payment
Time 6 min 2 min 10 min 1 min 2 min 1 min
1 Doz. 7.5 6 15
2 Doz. 12 6 17.14
3 Doz. 15 6 18
QUESTIONS: • Who is the bottleneck for 1 Doz. orders? • Who is the bottleneck for 2 Doz. orders? • Who is the bottleneck for 3 Doz. orders?
How should we price the cookies?
Order Size Labor per Order Labor per Dozen* $10/hr (flexible) $8/hr (inflexible)
1 Doz 12 min 12 min $2.00 $2.66
2 Doz 17 min 8.5 min $1.42 $2.66
3 Doz 22 min 7.3 min $1.22 $2.66
Flexible labor can be reallocated to other work when not needed for cookie baking. Therefore, we only incur an opportunity cost for the time that flexible labor is activated for cookies. Inflexible labor cannot be re-allocated. Thus, we must pay workers their hourly wage whether they are activated or not.
If our unit costs are lower when we make more than one dozen at a time, perhaps we should pass on the savings to the customers
What if we had another oven? load (1) bake(9)
mix (6)
spoon (2) load (1) bake(9)
cool (5)
pack (2)
pay (1)
Resource Activity You mix spoon Oven bake R-mate oven load packing payment
Time 6 min 2 min 10 min 1 min 2 min 1 min
1 Doz.
2 Doz.
3 Doz.
QUESTION: Who is the bottleneck for 1 Doz. orders?
How quickly can we fill an order?
# of trays 1 2 3 4 n TPT Labor time 26 min 12 36 min 17 46 min 22 56 min 33
Throughput time is important because it determines the minimum amount of time that is needed to respond to a customer order. However, the
Product Differentiation/ Core Competencies n Product features n n n
variety/customization freshness convenience Low overhead Flexible labor - can study during idle time Location - access to targeted market
n
Competitive Advantages n n n
What are the bottlenecks? mix (6) spoon (2) load (1) bake(9)
cool (5)
pack (2)
pay (1)
Resource Activity You mix spoon Oven bake R-mate oven load packing payment
Time 6 min 2 min 10 min 1 min 2 min 1 min
1 Doz. 7.5 6 15
2 Doz. 12 6 17.14
3 Doz. 15 6 18
QUESTIONS: • Who is the bottleneck for 1 Doz. orders? • Who is the bottleneck for 2 Doz. orders? • Who is the bottleneck for 3 Doz. orders?
How should we price the cookies?
Order Size Labor per Order Labor per Dozen* $10/hr (flexible) $8/hr (inflexible)
1 Doz 12 min 12 min $2.00 $2.66
2 Doz 17 min 8.5 min $1.42 $2.66
3 Doz 22 min 7.3 min $1.22 $2.66
Flexible labor can be reallocated to other work when not needed for cookie baking. Therefore, we only incur an opportunity cost for the time that flexible labor is activated for cookies. Inflexible labor cannot be re-allocated. Thus, we must pay workers their hourly wage whether they are activated or not.
If our unit costs are lower when we make more than one dozen at a time, perhaps we should pass on the savings to the customers
What if we had another oven? load (1) bake(9)
mix (6)
spoon (2) load (1) bake(9)
cool (5)
pack (2)
pay (1)
Resource Activity You mix spoon Oven bake R-mate oven load packing payment
Time 6 min 2 min 10 min 1 min 2 min 1 min
1 Doz.
2 Doz.
3 Doz.
QUESTION: Who is the bottleneck for 1 Doz. orders?
How quickly can we fill an order?
# of trays 1 2 3 4 n TPT Labor time 26 min 12 36 min 17 46 min 22 56 min 33
Throughput time is important because it determines the minimum amount of time that is needed to respond to a customer order. However, the