Reference no: EM131508200

Kristen's Cookie Company (A)

You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apartment. The company will provide fresh cookies to starving students late at night. You need to evaluate the preliminary design for the company's production process to figure out many variables, including what prices to charge, whether you will be able to make a profit, and how many orders to accept.

Key Questions to Answer Before You Launch the Business

To launch the business, you need to set prices and rules for accepting orders. Some issues will only be resolved after you get started and try out different ways of producing the cookies. Before you start, however, you at least want a preliminary plan, with as much as possible specified, so that you can do a careful calculation of how much time you will have to devote to this business each night, and how much money you can expect to make. For example, when you conduct a market survey to determine the likely demand, you will want to specify exactly what your order policies will be. Therefore, answering the following operational questions should help you:

1. How long will it take you to fill a rush order?

2. How many orders can you fill in a night, assuming you are open four hours each night?

3. How much of your own and your roommate's valuable time will it take to fill each order?

4. Because your baking trays can hold exactly one dozen cookies, you will produce and sell cookies by the dozen. Should you give any discount for people who order two dozen cookies, three dozen cookies, or more? If so, how much? Will it take you any longer to fill a two-dozen cookie order than a one-dozen cookie order?

5. How many food processors and baking trays will you need?

6. Are there any changes you can make in your production plans that will allow you to make better cookies or more cookies in less time or at lower cost? For example, is there a bottleneck operation in your production process that you can expand cheaply? What is the effect of adding another oven? How much would you be willing to pay to rent an additional oven?

Problems for Further Thought

1. What happens if you are trying to do this by yourself without a roommate?

2. Should you offer special rates for rush orders? Suppose you have just put a tray of cookies into the oven and someone calls up with a "crash priority" order for a dozen cookies of a different flavor. Can you fill the priority order while still fulfilling the order for the cookies that are already in the oven? If not, how much of a premium should you charge for filling the rush order?

3. When should you promise delivery? How can you look quickly at your order board (list of pending orders) and tell a caller when his or her order will be ready? How much of a safety margin for timing should you allow?

4. What other factors should you consider at this stage of planning your business?

5. Your product must be made to order because each order is potentially unique. If you decide to sell standard cookies instead, how should you change the production system? The order-taking process?

Attachment:- KristensCookies_A1.rar