CASE: Biddy's Bakery (BB) Biddy's Bakery was founded by Elizabeth McDoogle in 1984. Nicknamed \"Biddy,\" Elizabeth started the home-style bakery in Cincinnati, Ohio, as an alternative to commercially available baked goods. The mission of Biddy's Bakery was to produce a variety of baked goods with old-fashioned style and taste. The goods produced included a variety of pies and cakes and were sold to the general public and local restaurants. The operation was initially started as a hobby by Elizabeth and a group of her friends. Many of the recipes they used had been passed down for generations in their families. The small production and sales facility was housed in a mixed commercial and residential area on the rst oor of \"Biddy's\" home. Elizabeth (\"Biddy\") and three of her friends worked in the facility from 6 a.m. to 2 p.m. making and selling the pies. The operation was arranged as a job shop with workstations set up to perform a variety of tasks as needed. Most of the customers placed advanced orders, and Biddy's Bakery took pride in accepting special requests. The bakery's specialty was the McDoogle pie, a rich chocolate confection in a cookie crust. Meeting Capacity Needs Initially sales were slow, and there were periods when the busi- ness operated at a loss. However, after a few years Biddy's Bakery began to attract a loyal customer following. Sales continued to grow slowly but steadily. In 1994 a rst oor storage area was ex- panded to accommodate the growing business. However, Biddy's Bakery quickly outgrew its current capacity. In May of 2000 Eliz- abeth decided to purchase the adjacent building and move the entire operation into the much larger facility. The new facility had considerably more capacity than needed, but the expectation was that business would continue to grow. Unfortunately, by the end of 2000 Elizabeth found that her sales expectations had not been met, and she was paying for a facility with unused space. Getting Management Advice Elizabeth knew that her operations methods, though traditional, were sound. A few years ago she had called upon a team of busi- ness students from a local university for advice as part of their course project. They had offered some suggestions but were most impressed with the efcient manner with which she ran her operation. Recalling this experience, she decided to contact the same university for another team of business students to help her with her predicament. After considerable analysis the team of business students came up with their plan: Biddy's Bakery should primarily focus on pro- duction of the McDoogle pie in large volumes, with major sales to go to a local grocery store. The team of business students discussed this option with a local grocery store chain that was pleased with the prospect. Under the agreement Biddy's Bakery would focus its production on the McDoogle pie, which would be delivered in set quantities to one store location twice a week. The volume of pies required would use up all of the current excess capacity and take away most of the capacity from production of other pies. Elizabeth was confused. The alternative being offered would solve her capacity problems, but it seemed that the business would be completely different, though she did not understand how or why. For the rst time in managing her business she did not know what to do. Case Questions 1. Explain the challenge Elizabeth faced in meeting her ca- pacity needs. What should she have considered before moving into the larger facility? 2. What is wrong with the proposal made by the team of business students? Why? 3. What type of operation does Biddy's Bakery currently have in place? What type of operation is needed to meet the pro- posal made by the team of business students? Explain the differ- ences between these two operations. 4. Elizabeth senses that the business would be different if she accepts the proposal but does not know how and why. Explain how it would be different. 5. What would you advise Elizabeth