After learning that custom-made invitations are of high demand for weddings, holidays, parties, and corporate functions, you and Amy decide to launch your own company out of the two-bedroom apartment. The companys name will be CreativeInvitations.com and it will produce customized, hand-made invitations for busy customers at a reasonable rate. Your research indicates the market rate for your product is $10-25 per invitation. Since your business is just starting, you plan on charging around $10 per invitation and require a minimum of 5 invitations per order. In the following, as you build your business plan, assume that all orders will come in quantities of 5 invitations, but also consider how your business plan will be affected if orders come in larger amounts.

Several factors will set you apart from standard invitations. First, the client will have a chance to customize the design and message of the invitations via a website. Second, beautiful calligraphy handwriting will be utilized for all parts of the invitations. The invitations will be fully personalized. This means that while the details of an invitation will be the same, the name and address information will be personalized for each recipient. Third, the handwritten invitations will be beautifully decorated with a combination of ribbons, bows, and motifs. Finally, to ensure complete satisfaction, the finished order will be mailed back to the client, who will have a chance to review the final product before simply putting on a stamp and sending the already addressed invitations to the intended recipients.

You and your best friend will be making these invitations part-time, in addition to your full-time jobs. Therefore the hours available to work on the invitations are 7-11 p.m. Monday-Thursday and 9 a.m.-1 p.m. Saturday. Sunday you have allocated to resting and preparing for the following week.

Set-up and Production Process

Creating artistic calligraphy invitations requires special talent, but the process itself is fairly simple.

The ordering is to be done by the client through a website. The first step is for the client to log in to CreativeInvitations.com. The client then uploads a list of recipients and their addresses. Next, the occasion and background are selected based on one of the over 100 designs Amy has already created. This step is followed by the client providing the message that will be on all the invitations. Finally, the decorations that will be attached to the card are chosen.

Both of you are computer savvy, but neither has ever built a website and therefore you asked your computer science major friend Keller to create one based on your specific needs. Keller lives in Brooklyn, NY, but says he would have no problem creating the site from his apartment over a two-week period and has asked for $1,000 to get everything up and running. Keller says that he can provide technical assistance afterward to maintain the site for $25 a month.

Other than the website, you and your friend already own all the capital equipment needed to get started: one high-quality laser jet printer, a laptop, 4 high-quality ink calligraphy pens, and scissors. The variable costs include the price of printer/pen ink ($1 per ten invitations), decorations ($1 per each), high-quality card paper ($1 per ten), luxury envelopes ($1 per ten), all other costs ($.5 per invitation), and of course your time.

A thorough assessment of the process, which spells out how long each of the steps will take, follows. The first step involves preparing your workspace. You and Amy have a very cozy apartment, but it is very small, and the only a workspace table is in the heavily utilized dining room. This means that each time that work on the invitations begins or ends the working area has to be cleaned, which requires 5 minutes of each persons time. The next step involves Amy booting up her computer, which takes approximately 5 minutes, and logging in to the website, which takes an additional 2 minutes because time is needed to upload all the orders.

Once the information is uploaded production can begin. It takes Amy 1 minute in total to access each order, download the clients address, and fill out the return envelope in which the invitations will be sent back to the client for review. In the next step, Amy initializes printing of the cards with the customer selected background; it takes 1 minute for each card to print and dry.

After the printing is done, you begin calligraphy writing. The writing time varies based on the customers request, but averages out to approximately 4 minutes per card. The invitation card then has to dry for 3 minutes before your roommate can begin attaching customer-specified decorations (ribbons, bows, and motifs) to the card, a process which takes 2 minutes.

While the card is drying, you start working on addressing the envelope for that specific recipient. It takes you 2 minutes to locate the appropriate address on the website and to fill out the address information by hand. Finally, it takes 3 minutes for the heavy ink on the envelope to dry.

After the personalized card and envelope are completed and the ink is dry, it takes Amy .5 minutes to stuff each card into the matching envelope. Eventually all five invitations are placed in the return envelope, which takes additional .5 minutes. The same process is repeated for all of the invitation orders that are done in one evening.

Every morning, while heading to your full-time job, all the orders completed the day before are mailed back to the clients. The stamp fee is $1 per order, and the mailbox is conveniently located on your way to work.

What is the variable profit per week?

Who is the bottleneck in this process? You or Amy?

What is the cycle time of this process?

After how many minutes will the first order of five invitations be competed? Note, this is asking WHEN the order will be done, not how many minutes in total are spent on the five invitations

In a typical 4-hour span, how many orders of 5 invitations each do you expect to complete? Remember there is a 5 minute cleanup process at the end of the four-hour period