INTRODUCTION

Two students are planning to start a cookie business with the name Kirsten's Cookie Company in
their on-campus apartment to cater to starving students late at night within the campus. The
objective is to provide fresh baked cookies which are customised to the needs of the buyers. The
entire process includes -

INGREDIENTS : Dough, Chocolate chips, M&M's, Chopped Heath bars, Coconut, Walnut and
Raisins.

EQUIPMENTS : 1 Oven, 1 Food Processor( mixing bowl), Cookie trays and Spoons.

PRODUCTION PROCESS :
 Add ingredients as per requirement
 Mix ingredients
 Spoon out the cookie dough into the tray
 Put the tray inside the oven
 Let it bake
 Take it out of the oven
 Let it cool
 Take the cookies out of the tray
 Pack it for delivery

COST :
Variable cost includes - cost of ingredients (Rs.60/dozen)
cost of packing box (Rs.10/each)
Cost of electricity is taken care of by the landlord of the apartment

PROCESS FLOW CHART

A1 B2 B1

C1 B3

C2 D1

F1 E1

F2

F3

E2

G1
DELIVERY
Material type flow process chart

Activities Distance Time

taken

Bowl Washing *
Add Ingredients *
Mixing Ingredients * -- 6
Ingredients check *
Dish up cookies * 2
Take cookies in the * -- --
oven
Put cookies in the * -- --
oven
Set up thermostat * -- 1
& timer
Backing the * -- 9
cookies
Remove from oven * --

Inspection of * --
cookies
Keep to cool down * -- 5
Packaging the * -- 2
cookies
Accepting the * -- 1
payment
Delivery * --
Total 26

ANALYSIS OF THE BUSINESS PROCESS OF KIRSTEN COOKIES:

Since the business process is Made-to-order type the baking process and style depends upon the
customer preferences. In order to maximize its productivity the process has to be carried out in
most cost effective way consuming less time. Therefore the resources have to utilize in a
effective way. It can be determined by analyzing the baking process used for the preparation of a
single order which is as follows:

Process involved Time taken (min) Cumulative time(min)

Washing and Mixing 6 6

Dish up Cookie Tray 2 8

Oven Set up 1 9

Baking Oven 9 18

Removing the tray 0 18

Cooling 5 23

Packaging 2 25

Collecting Money 1 26
TOTAL TIME TAKEN FOR PREPARATION OF A SINGLE ORDER OF 1 DOZEN IS
= 26 MINUTES

The resources required for different orders would be different depending on the type of orders.
Therefore two orders can be prepared simultaneously which would minimize the time required
for the second order. It would no more require twice as much as time as for the first order. It can
be done in the following way:

Time taken for preparation of a single order can be divided into 3 parts:

Pre baking Baking Post baking

8 minutes 10 minutes 8 minutes

Therefore if someone can get the tray ready for the second order while the first order is in the
oven for baking, it would save 8 minutes of time for the subsequent orders. Because when the
first order is already in process in baking, the pre baking session for the second order will take
place for 8 minutes, thus these 8 minutes have been saved. But it has to undergo both baking and
post-baking sessions taking 18 (10+8) minutes.

Therefore total time required for the second order while the first order is in
progress

=(18 – 8)

=10 minutes

In fact subsequent orders will take 10 minutes each for preparation. Therefore time taken for the
preparation of ' additional x' orders of 1 dozen would be:

(26 + 10x) minutes

Thus if business is carried out for maximum of 4 hours (i.e. 240 minutes) the maximum no. of
orders Kirsten Cookies can take in 1 day would be:

X = 1 + [(240-26) ÷ 10]

= 1 + 21 (approx.)

= 22 (approx.)

ESTIMATION OF PRICE AND PROFIT

Cost of ingredients (per dozen) = Rs. 60

Cost of packaging [paper box] (per dozen) = Rs. 10

Labour cost (profit) (per dozen) = Rs. 2

Total price (per dozen) = Rs. 72

Total price in 1 day for maximum 22 orders (72 x 22) = Rs. 1584

Total cost in 1 day for maximum 22 orders (70 x 22) = Rs. 1540

Therefore total Profit in 1 day for maximum 22 orders = Rs. 44

Here it can be stated that price of Rs.72 for 1 dozen cookies would be a bit higher for the
students as customers. So, minimizing the cost and price should be the objective of the business
for a stable growth.

PROBLEMS OF KIRSTEN COOKIES:

1. Capacity constraints: They have only one OVEN, the number of which cannot be
increased as there is not enough space for accommodation as well as their Budget is
limited.
2. Budget: As they are students, their budget is limited. They cannot afford to buy new
equipment for their business and also cannot afford any extra expenditure.
3. Price : As the business is Made-to-order making cookies fresh and hot, they cannot
compromise on the quality and price cannot be increased ABNORMALLY as the
customers are basically students from the campus.
4. Make- to-order: Business is fully dependent on the Cookie’s demand based on
customer preference only. They can produce only when they receive orders. Moreover
items produced cannot be standardized.
5. Time constraints: They have maximum of 4 hours (8pm-12pm) for their business as
they themselves are students and they work only in the night hours.
RECOMMENDATION

Cost Reduction:

 Firstly it would be more feasible to buy Brown Paper Packets which cost only
Rs.2/each, instead of cookie boxes which cost a sum of Rs.10/each. This would
reduce our cost by Rs.8.
 The Brown paper packets should be of a standard size which can carry upto a
dozen cookies each.

Time Reduction:

 The actual dishing up time for the cookie tray was 2 mins, which can be reduced
to 1 min by efficiency of work.
 The packaging time can also be reduced from 2 min to 1 min because it takes
lesser time to pack it in a paper packet rather than a box.

ESTIMATION OF PRICE AND PROFIT AFTER RECOMMENDATION

Cost of ingredients (per dozen) = Rs. 60

Cost of packaging [paper box] (per dozen) = Rs. 2

Labour cost (profit) (per dozen) = Rs. 3

Total price (per dozen) = Rs. 65

Total price in 1 day for maximum 22 orders (65 x 22) = Rs. 1430

Total cost in 1 day for maximum 22 orders (62 x 22) = Rs. 1364

Therefore total Profit in 1 day for maximum 22 orders = Rs. 66

As they are saving 2 min in both the above process, therefore they are getting a total of 44 min
extra in a day for maximum 22 orders.

Therefore they can utilize these 44 extra min in producing 4 more orders. Therefore
maximum number of orders that can be taken in a day becomes = 22+4 = 26 orders

Profit gained in 1 order = Rs. 3

profit gained in 4 order = Rs. 12
 Therefore total profit per day for 26 orders = 66 + 12 =Rs. 78.

CONCLUSION

Thus by reducing the material cost and time we can state that this business would be profitable to
carry on. And also they can attract more students to buy their cookies as the price of cookies will
be reduced to Rs.65.