There are a total of eight stages in the production process to fulfill a rush order. The first step, after the initial order comes through via e-mail, consists of Kristen washing out the electric mixer’s bowl and beaters from the previous batch, adding the ingredients to the bowl, and turning on the mixer to mix the ingredients. This first step takes Kristen six minutes to complete. Secondly, Kristen must spoon the dough onto the cookie tray, which takes two minutes. Third, the roommate takes one minute to put the tray in oven. Fourth, the cookies bake in the oven for nine minutes. Fifth, the roommate removes the cookies, which takes negligible time. Sixth, the cookies must cool for five minutes. Seventh, the roommate takes two minutes to pack each dozen. The eighth and final step is collecting payment for the order. Therefore, it takes 26 minutes to fulfill a rush order of one-dozen. For a rush order of two-dozen, the second dozen is ready for the oven at 10 minutes, which creates a buffer since it has to wait until 18 minutes. Therefore it takes 36 minutes to fulfill a rush order of two-dozen and 46 minutes for an order of three-dozen.
2. How many orders can you fill in a night, assuming you are open four hours each night?
Assuming Kristen’s Cookie Company is open four hours each night, there are 240 minutes to fulfill as many orders as possible. It takes 26 minutes to fill one-dozen, 36 minutes for two-dozen, 46 minutes for three, etc. Given this, it would take 236 minutes to fill 22 orders in one night for orders of one-dozen. For two-dozen, they can fill 11 orders (given 22 divided by 2). Thus, they can fill seven orders of three-dozen (22 orders divided by 3).
3. How much of your own and your roommate’s valuable time will it take to fill each order?
There are eight steps in the process from start to finish of which stages 1, 2, 3, 7, and 8 require time from either Kristen or her roommate. For Kristen, Stage 1 is where she is cleaning and mixing the ingredients which takes 6 minutes. Stage 2 is where Kristen spoons the batter onto the trays, which takes her 2 minutes. Kristen’s total time is 8 minutes of work. Her roommate takes a total of 4 minutes to complete all of her work (putting the cookies in the oven, packing them, and collecting payment). Expanding to two-dozen orders, Kristen’s time will only increase to 10 minutes since washing the bowl takes only 6 minutes regardless of the size of the order. Therefore it will take Kristen 12 minutes for three-dozen. The roommate’s time will increase by 3 minutes for each additional dozen, as the process is still only one minute for accepting payment regardless of the size of the order. Her time would be 4 minutes, 7, minutes, and 10 minutes respectively.
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 or more dozen? If so, how much? Will it take you any longer to fill a two-dozen order than a one-dozen order?
The following is a breakdown if Kristen were to consider pricing each dozen differently or offer discounts per dozen.
Accounting: Kristen completes orders of 1, 2, or 3 dozen and prices each dozen differently as P1, P2, P3 respectively.
Revenue: 1 Dozen revenue: 22xP1 (P1 is consider the price per dozen)
2 dozen revenue: 2x11xP2= 22x P2 (P2 discounted price for 2 dozen)
3 Dozen revenue: 3x7xP3=21xP3 (P3 discounted price for 3 dozen)
Fixed Costs: Fixed costs per order, Ingredients $0.6 and boxes $0.1.
Using the abovementioned information the fixed costs would be:
1 Dozen: 22x0.7= $ 15.4
2 Dozen: 22x0.7= $15.4
3 Dozen: 21x0.7= $ 14.7
Variable costs: There are alternative methods to evaluate the variable costs of time spent by Kristen and her roommate. The first method is to simply say that they are open for 4 hours and that is their variable cost. The second method is to only count the minutes…