________________________________________________________________________________________ The original case (HBS 9-686-094) has been prepared by Harvard Business School Professor Roger Bohn and revised by Dr. Song-Kyoo (Amang) Kim, Faculty of Business, Al Hosn University. All case materials are prepared solely for the purpose of class discussion. They are neither designed nor intended to illustrate the correct or incorrect management of problems or issues contained in the case. Copyright 2016, Dr. Amang (Song-Kyoo) Kim, Al Hosn University, Abu Dhabi, United Arab Emirates (http://www.alhosnu.ae). No part of this publication may be reproduced, stored in a retrieval system, used in a report or spreadsheet, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the consent of Dr. Kim. To order copies, interested parties must contact Dr. Kim ([email protected]), Al Hosn University, PO Box 38772, Abu Dhabi, UAE. FOR LIMITED DISTRIBUTION ONLY This case is undergoing classroom testing pending final clearance. Please return this copy to the Program Assistant or the Professor after the class session. KRISTEN'S COOKIE COMPANY (A2) Start with the key questions in the previous case and see how Production and Operations Management (POM) tools and words will help to answer them. For the initial analysis, assume all orders are for one dozen cookies (one tray). First, how long it will take to fill a rush order, assuming that no other cookies are currently in process? To figure out, you must calculate the amount of time it takes from the moment when the dozen cookies are packed into a box and the payment is received from the customer. Looking the process flow diagram (see Exhibit 1) and thinking about the production process will show you that this time, called the throughput time, is the sum of each the times for each of the production steps. For an order of one dozen cookies, which can be made on one tray, the throughput time is 6 minutes for mixing, plus 2 minutes to spoon out the cookie dough, plus 10 minutes for loading and baking, plus 5 minutes for cooling, plus 2 minutes for packing, plus 1 minutes for receiving payment, for a total of 26 minutes. Second, how man orders can you fill in a night (This information will help you set price and guess whether you will cover your fixed overhead cost). If it took 26 minutes to fill each order, that would mean that during the four-hour period of planned operation you could fill approximately nine production. However, the 26-minute throughput time is not the relevant number for calculating how many cookies you can make during a given interval. Instead, what you are looking for is the capacity of the process as a whole, which equals the capacity of the slowest stage. Therefore, look again at the process flow diagram (see Exhibit 1) to find the slowest stage. Consider only those order for a dozen cookies. The individual operations' KRISTEN'S COOKIE COMPANY (A2) 2 ___________________________________________________________________________ Al Hosn University, Abu Dhabi, UAE Copyright 2016 FOR LIMITED DISTRIBUTION ONLY This case is undergoing classroom testing pending final clearance. Please return this copy to the Program Assistant or the Professor after the class session. cycle time for order the size are 8 minutes for mixing and spooning the dough, 10 minutes for loading and baking, 5 minutes for cooling, 2 minutes for packing, and 1 minutes for receiving payment. The slowest step is backing, which takes 10 minutes (because the oven holds only one tray at a time). Therefore, the speed with which you can produce cookies is dependent upon the cycle time for baking, the bottleneck operation. You can produce, at best, one tray of cookies every 10 minutes. When you are running flat out, one tray full of cookies will pop off the end of your production line every 10 minutes. This 10 minutes is therefore cycle time for the whole system. The system cycle time is always the same as the cycle time for the bottleneck operations. Your cookie-producing capacity is therefore one dozen cookies every 10 minutes of six dozen cookies per hour (the capacity of a process is the inverse of its cycle time). In a four-hour night, if you have enough order to keep you busy, you can hope to produce 24 dozen cookies. However, some time will be needed for start-up and shutdown. The first dozen cannot start until 8 minutes after you open; the last dozen must come out of the oven eight minutes before you close. So if you must be open for precisely four hours, you can bake only 22 dozen. In most processes, the usual concern is with the steady-state capacity, without working about start-up and shutdown. This is possible because in most factories work can be left partially completed overnight. Sequencing and Resource Conflicts How long does it take to fill a two-tray order? The second dozen will go into the bottleneck 10 minutes after in the first dozen, so it will finish 10 minutes after the first dozen. Orders for more than three dozen identical cookies require two mixing steps because the bowl 1 holds only enough for three dozen but you can start mixing the fourth dozen while third is still in the oven, so throughput time increasing by only 10 minutes. Improving the System How can this system be improved? One goal would be to increase your total production capacity per night. This would allow you to better cover expenditures such as the fixed costs of going into business and of marketing. To do this you have to increase the cookie-making capacity. That means improving the bottleneck operation, which this instance is the baking stage. An obvious improvement is to provide the two ovens, each capable of holding one tray. That will double the capacity of the bottleneck baking process from 6 dozen cookies per hour to 12 dozen cookies per hour. On your process flow diagram, you would draw the two baking machines in KRISTEN'S COOKIE COMPANY (A2) 3 ___________________________________________________________________________ Al Hosn University, Abu Dhabi, UAE Copyright 2016 FOR LIMITED DISTRIBUTION ONLY This case is undergoing classroom testing pending final clearance. Please return this copy to the Program Assistant or the Professor after the class session. parallel, each with cycle time of 10 minutes and a capacity of 6 dozen per hour (see Exhibit 2). If you increase the capacity of the bottleneck operation is this way, what happens to the capacity of the system as a whole? At best, you might expect it to be double but, it would not be double in this example, because the bottleneck shifts to the mixing operation if the order size is one dozen cookies. Mixing still takes 8 minutes per order, but you can start baking a new order every five minutes. However, if your orders were for 3 dozen cookies at a time, then the capacity of the mixing stage would be 3 dozen cookies every 12 minutes or 15 dozen per hour. Therefore, the baking stage with its capacity of 12 dozen cookies per hours would again be the bottleneck and would set the capacity for the system as a whole. Another improvement would be to balance the line better. At present, the process steps take very different time. This would be an important consideration if you could not use your workers' idle time. KRISTEN'S COOKIE COMPANY (A2) 4 ___________________________________________________________________________ Al Hosn University, Abu Dhabi, UAE Copyright 2016 FOR LIMITED DISTRIBUTION ONLY This case is undergoing classroom testing pending final clearance. Please return this copy to the Program Assistant or the Professor after the class session. [Exhibit 1: Process Flow Diagram: One Order for One Dozen] (Source: Case Writer) KRISTEN'S COOKIE COMPANY (A2) 5 ___________________________________________________________________________ Al Hosn University, Abu Dhabi, UAE Copyright 2016 FOR LIMITED DISTRIBUTION ONLY This case is undergoing classroom testing pending final clearance. Please return this copy to the Program Assistant or the Professor after the class session. [Exhibit 2: Process Flow Diagram: One Order for One Dozen] (Source: Case Writer)