Kristen

Figure 1: Default Process Flow Diagram

1. Do we accept a rush order needed in 30 minutes?

Our assumptions for accepting a rush order are:

Ð'* The System has 1 Mixer, 3 baking trays and 1 Oven.

Ð'* All the orders, including rush order, would be for 1 dozen cookies.

Ð'* We would not stop the orders already being processed.

Ð'* A rush order would be given first priority to start using the mixer and oven ahead of orders already in progress.

Without incurring any additional cost, we can accept a rush order needed in 30 minutes only if we had five or less orders in the queue and the mixer would come available in the next four minutes. To meet the condition of delivering within 30 minutes, three orders can be at the stage of waiting for the mixer and we can have two orders in the system with one order done with the mixing and spooning and waiting for the oven. If the mixer is not available within the first four minutes after a rush order arrives the total time for the rush order would exceed 30 minutes. This occurs because the time it takes to get an order into the oven is the determining factor as to whether the order is completed on time. The total flow time is 26 minutes from start to earliest delivery, so if the mixer is not available in the next four minutes the order cannot be completed on time. The maximum time required to complete a rush order is 34 minutes.

If we decide to incur wastage due to a rush order, we can accept a rush order at any time. The pricing of the rush order would have to cover not only the cost of lost materials, but also cover the cost of any loss of customers that result from not being able to meet the 60 minute guarantee. The cost of a rush order can be priced to include the value of a coupon or discount awarded to another customer whose order was not completed in 60 minutes due to the rush order.

2. Profit maximizing conditions based on different demands

Maximizing profits requires that the least amount of resources be devoted to achieving the required throughput to meet the expected demand. A demand for fifteen or twenty orders does not require any change to the cookie production process. With the default condition of 1 oven, two workers, two trays, and one mixer the system has an hourly capacity of 6 orders, and a total four hour capacity of 24 orders, disregarding the 8 minute adjustments at the beginning and end of the process. The constraint in this configuration is the oven processing time per order. Each order takes ten minutes to be processed by the oven, which results in a capacity of 6 orders per hour.

If the demand is less than or equal to 20, the system can be optimized by using only one worker, one mixer, one oven, and two trays. The limiting factor in this system is the worker, whose processing time is 12 minutes per order. Therefore, the capacity of the system is 5 orders per hour and 20 orders in 4 hours.

If the demand is between 20 and 25 orders per night, we can maximize profits by using the default condition of two workers, one mixer, two trays, and one oven.

Once the nightly demand reaches 25 orders an additional oven is required to increase the capacity of the system. An additional oven increases the oven capacity of the system from 6 orders per hour to 12 orders per hour. This increase changes the minimum capacity of the system from 6 orders per hour to 6.32 orders per hour. This constraint is caused by the number of cookie trays in the system. It takes a tray 19 minutes