Kristen's Cookie Co. (A) (Abridged) Custom Case Solution & Analysis

Evidence Brief: Kristen Cookie Co. Operational Data

1. Financial Metrics

• Variable Cost per Dozen: 0.60 dollars for ingredients plus 0.10 dollars for the box. Total 0.70 dollars.
• Selling Price: Not explicitly stated in abridged text but implied as market competitive for custom cookies.
• Fixed Costs: Rent and electricity costs are mentioned as existing but not quantified.
• Capital Investment: Cost of a standard oven and mixing equipment.

2. Operational Facts

• Oven Capacity: One tray at a time. One tray equals one dozen cookies.
• Total Labor Time per Dozen: 8 minutes for Kristen and 9 minutes for Roommate.
• Total Lead Time for First Dozen: 26 minutes from start to finish.

3. Stakeholder Positions

• Kristen: Founder and primary mixer. Focused on quality and custom orders.
• Roommate: Partner in charge of baking, packing, and payment. Labor is the primary contribution.
• Customers: Students in the campus housing area. Demand is expected to be high during late-night hours.

4. Information Gaps

• Specific demand forecasts for various days of the week.
• Actual price sensitivity of the student demographic.
• Physical space limitations for adding more than one extra oven.
• Cost of electricity and incremental utility spikes from constant oven use.

Strategic Analysis: Throughput and Scaling

1. Core Strategic Question

• How can the business maximize hourly output to meet peak demand while maintaining the value proposition of warm, custom-made cookies?
• What is the optimal resource configuration to eliminate the primary manufacturing bottleneck?

2. Structural Analysis

Process analysis reveals the oven is the bottleneck. The oven cycle time is 10 minutes (1 minute loading plus 9 minutes baking). This limits the system to a maximum capacity of 6 dozen per hour, regardless of labor speed. Kristen spends 8 minutes per dozen, meaning she is idle for 2 minutes every cycle. The Roommate spends 9 minutes per dozen, including packing and payment, leaving 1 minute of idle time per cycle. The system is currently oven-constrained, not labor-constrained.

3. Strategic Options

Option One: Status Quo with Single Oven. Maintain current operations. This limits revenue to 6 dozen per hour. It requires minimal capital investment but fails to capitalize on peak demand periods where orders likely exceed 6 dozen per hour.

Option Two: Capacity Expansion via Second Oven. Purchase a second oven to allow staggered baking. This theoretically doubles throughput to 12 dozen per hour. This shifts the bottleneck from the oven to Kristen (mixing and dishing), who would then need 16 minutes of labor per 10-minute cycle, requiring a process redesign or additional mixer.

Option Three: Pre-mixing and Standardization. Mix common dough types in larger batches during off-peak hours. This reduces Kristen labor during the active order window. However, it compromises the custom-made brand promise and may impact cookie texture.

4. Preliminary Recommendation

Pursue Option Two. The marginal profit per dozen is high relative to ingredient costs. Doubling capacity via a second oven is the only path to significant revenue growth. To support this, Kristen must pre-dish cookies onto spare trays so the oven never sits empty. The investment in a second oven will be recovered quickly if demand exceeds 6 dozen per hour during peak windows.

Implementation Roadmap: Operational Execution

1. Critical Path

• Procure a second oven and additional baking trays immediately to ensure the oven is never the idle component.
• Redesign the workspace to allow for a circular flow from mixing to dishing to baking to cooling.
• Synchronize the mixing process so Kristen prepares the next batch while the previous two batches are in the ovens.
• Implement a digital order queue to manage customer expectations on delivery times during peak hours.

2. Key Constraints

• Physical Power Limits: Standard dorm rooms or apartments may not support two ovens running at high heat simultaneously without tripping breakers.
• Labor Fatigue: The roommate and Kristen must sustain high-intensity labor for several hours. Unlike the oven, human performance degrades over a long shift.

3. Risk-Adjusted Implementation Strategy

Phase one begins with a 4-hour pilot using the current setup to confirm demand levels. If orders consistently hit the 6-dozen cap within the first hour, the second oven must be purchased by day five. Phase two introduces a dedicated packing station for the roommate to reduce the 2-minute packing time. Contingency plans include a third labor resource for peak Friday and Saturday nights to handle payments and deliveries, allowing the Roommate to focus exclusively on the oven and cooling rack.

Executive Review and BLUF

1. BLUF

The business is currently limited by a 10-minute oven cycle, capping revenue at 6 dozen per hour. To scale, the company must purchase a second oven and transition to a staggered production model. This investment doubles capacity and shifts the bottleneck to labor, which can be managed through batch dishing and workstation optimization. Success depends on high-volume demand during narrow evening windows. Without the second oven, the business cannot meet its growth targets or achieve economies of scale.

2. Dangerous Assumption

The analysis assumes that demand is perfectly distributed throughout the operating hours. If demand is lumpy, even a second oven will sit idle during slow periods, while failing to clear the queue during extreme peaks. The assumption that students will wait for custom cookies remains untested at scale.

3. Unaddressed Risks

• Regulatory Risk: Operating a commercial food business from a residential kitchen often violates health codes and housing contracts. A single complaint could shut down the business instantly.
• Equipment Failure: With only one mixer and two ovens, a single mechanical failure halts the entire production line, leading to unfulfilled orders and brand damage.

4. Unconsidered Alternative

The team failed to consider a subscription or pre-order model. By requiring orders 24 hours in advance, Kristen could optimize the mixing and baking schedule during the day, reducing the stress of late-night operations and allowing for more efficient batching of similar cookie types.

5. Final Verdict

APPROVED FOR LEADERSHIP REVIEW