Armaghan Ahmed 09/16/2015

Assignment 1
Kristens Cookie Company
Q.1 The steps required for a rush order include:
Washing + Mixing (6 minutes)
Spooning (2 minutes)
Oven setup + Baking (10 minutes)
Cooling of cookies (5 minutes)
Packing (2 minutes)
Payment (1 minute)
Thus, total time for a rush order of a dozen cookies = 26 minutes
Q.2 For each 2nd and 3rd batch of cookies, the washing + mixing step (6 minutes)
can be removed. Also, assuming we have unlimited trays, we can assume that the
spooning can happen simultaneously while the first cookies are still in the oven.
Thus, in the next 18 minutes in which our roommate is involved, in the heating +
cooling, we can spoon potentially 2 further batches of cookies (limited by cookie
dough versus actual time or number of trays). Thus, the time taken for each 3
dozen batches of cookies = 26+18+18 = 62 minutes. In 230 minutes, we will thus
have completed 11 complete batches of cookies.
Q.3
Personal time: 8 minutes
Mixing + Washing = 6 minutes
Spooning = 2 minutes
Roommates time: 4 minutes
Oven setup = 1 minute
Packing = 2 minutes
Payment = 1 minute
Q.4
We should offer discounts to people ordering 2 and 3 dozen cookies. Since, cooking
a second and/or third batch simultaneously allows us to save 9 minutes of our time,
we should offer a discount less than or equal to 9/26 of the price we charge for the
2nd and/or 3rd batch of cookies.
Q.5
You will need 3 trays and 1 mixer. The trays and mixer should be in a 3:1 ratio. Thus,
if we decide to invest in 2 mixers, we should have at least 6 trays.
Q.6

Armaghan Ahmed 09/16/2015

Assignment 1
The primary bottleneck in the process is caused by the presence of one oven as
having a 2nd oven could potentially allow us to start a 2nd batch almost
simultaneously as the 1st one (assuming our roommate does the spooning on the 2 nd
batch). In terms of what we should be willing to pay to rent an additional oven, we
should think in terms of the additional cookie batches it can produce (assuming that
we are only constrained by supply versus demand) Having an additional oven allows
you to produce two batches of cookies simultaneously. However, once the third
batch is being produced (assuming we still only have one mixer), one of the ovens
will now have to sit idle. Therefore, overall having a second oven is only allowing us
to 18 minutes out of 62 minutes and/or get an additional batch in our 3-batch
cookie scenario. This translates into roughly an additional extra 4 full batches (in
220 minutes) for a total of 15 batches. Assuming, production cost per batch of $.6 +
$.1 = $ 0.7 per dozen cookies. In addition, since me and my roommate spend
roughly 12 minutes on this and assuming, we value our time at at least $10 per
hour, we can assume (12/60)*10 = $2 of salary cost per individual batch.
Thus, total cost per one batch = $2.7.
Now, assuming one of the batch of cookies retails for $10, we make a profit of $102.7= $7.3 per batch. In one night, we stand to make an additional $29.2 from the
extra oven. For a 20-day working month, we stand to then make an additional $584.
Thus, the maximum price we should be willing to rent for an extra oven is $584. A
more realistic number would be less than half or even a quarter of this number as
our assumption of infinite demand for our cookies is rather unrealistic.