Kirstens Cookies Harvard Case Study Solution

Kirsten cookies Overview

Two students are planning to start a cookie business called Kirsten Cookie Company located in a room on campus dorms catering to students studying late at night. The goal is to make money by producing cookies at an affordable price that are custom made to state and freshly baked.

The landlord pays for the electricity and the students already have mixers and cookie pans that hold 12 , so there is no need to buy any equipment. Therefore, the inputs into the cookies would be are (a) their time (b) cookie dough and flavors .60 cents per doz. (c) boxes .10cents per box. The students hope to run the operation for a maximum of 4 hours per night, using the oven in the room which can bake a maximum of 12 cookies at a time. The order process is 100% accurate computerized system so no time will be wasted in receiving the orders. For the purposes of this case I have called the first roommate identified as "you" in the case as 'Roommate K' and the other roommate as 'Roommate B'.

Kirsten cookies would need to find out a number of things in order determine, the selling price, how many orders should be accepted, how many raw materials should be purchased and stored for opening inventory for the 4 hour period and how many orders should be accepted in an hour to ensure customer satisfaction and realistic delivery.

Analysis of the Business process:

The baking process for the cookies is relatively standard but since the business concept is made to the customer's order the mixing of ingredients would be the only change based on customer preference. In analysing the case there are a number of variables that are to be considered. Firstly, the operation will only be open for four hours per day, if this was done in a single stage process the Throughput Rate would be as illustrated above and take 26 minutes total process time to produce 1 order of 12 cookies (Assuming that no other cookies were in process previously to hold up the order). However this is not a practical approach, if the team are hoping to maximize sales and efficiency they need to work with a multiple process and have orders made simultaneously .

If two orders were made simultaneously this would maximise the time required for the second order and not require twice the time as the first order. This can be achieved by having roommate -K prepare the second batch of cookies and spoon them on trays while the first order is in the oven. The fact that the baking takes 10 minutes (longer than other tasks) it will cause a bottleneck and waiting period because any cookies spooned for a second batch will have to sit and wait for the oven to complete baking the first batch before they can be placed in the oven to bake. This would save 8 mins (mixing/ spooning) on the second batch on the process, thus the second batch in a simultaneous order would take:

In reviewing the efficiency of the human process it appears that Room-mate (K) is occupied for a total of 8 minutes while the room mate is occupied for 4 minutes in the process. This translates to Roommate (K) working 80% of the time and being idle 20% of the time, while her roommate will be working 60% of the time while working 40% of the time on simultaneous orders.

Tasks in Process Minutes Rm-mate (K) mins utilized Rm-mate mins utilized

Washing / Mixing & Spooning 8 8

Placing & Baking oven 10

Take out cooling 5 1

Packing & payment 3 3

Through-put: 26 Mins => 8 4

8/10 mins 4/10 mins

Utilize => 80% 40%

Idle => 20% 60%

Considering that the oven holds a maximum of 1 dozen cookies to bake any person ordering two dozen will take 36 minutes (26 minutes for initial dozen + 10 mins for 2nd dozen). Considering that the oven holds a maximum of 1 dozen cookies to bake any person ordering two dozen will take 36 minutes (26 minutes for initial dozen + 10 mins for 2nd dozen).

While volume discounts could be considered for reduced delivery time, the efficiency experienced would only be in the mixing and spooning because the 2nd batch would have to wait for the 1st dozen to be baked before it is input. In my opinion the decrease is not significant enough to warrant a discount as we do not know what the roommates are paying themselves for labour and labour is the most significant decrease.

Efficiency could be achieved by mixing more than one batch at the same time (if they are the same flavour) however, once again the operation is limited by the fact that the oven can only bake 12 cookies at a time. The possibility of adding another oven could be considered, however the limitations are (a) there is no physical space to accommodate another oven (b) If there was another oven introduced it would increase the baking capacity, however, overall output per day is determined by the slowest station therefore the impact of adding an oven creates a new bottle neck, because the other two stations can only produce a maximum output of 28 - 30 dozen per day in