CASE: KRISTEN'S COOKIE COMPANY (A) You and your roommate are preparing to start Kristen's Cookie Company in your on-campus apurtment. The company will provide fresh cookies to starving students late at night. You need to evalu- ate the preliminary design for the company's production process to figure out many variables, including what prices to charge, whether you will be able to make a profit, and how many orders to accept. BUSINESS CONCEPT Your idea is to bake fresh cookies to order. using any combination of ingredients that the buyer wants. The cookies will be ready for pickup at your apartment within an hour. Several factors will set you apart from competing products such as store-bought cookies. First, your cookies will be completely fresh. You will not bake any cookies before receiving the order; therefore, the buyer will be getting cookies that are literally hot out of the oven. Second, like Steve's Ice Cream, you will have a variety of ingredients available to add to the basic dough, including chocolate chips, M&M's, chopped Heath bars, coconut, walnuts, and raisins. Buyers will telephone in their orders and specify which of these ingredients they want in their cookies. You guarantee completely fresh cookies. In short, you will have the freshest, most exotic cook- ies anywhere, available right on campus. THE PRODUCTION PROCESS Baking cookies is simple: mix all the ingredients in a food proces- sor; spoon out the cookie dough onto a tray; put the cookies into the oven; bake them; take the tray of cookies out of the oven; let the cookies cool; and, finally, take the cookies off the tray and carefully pack them in a box. You and your roommate already own all the necessary capital equipment: one food processor, cookie trays, and spoons. Your apartment has a small oven that will hold one tray at a time. Your landlord pays for all the electricity. The variable costs, therefore, are merely the cost of the ingredients (estimated to be $0.60/dozen), the cost of the box in which the cookies are packed (S0.10 per box; each box holds a dozen cookies), and your time (what value do you place on your time?). A detailed examination of the production process, which speci- fies how long each of the steps will take, follows. The first step is to take an order, which your roommate has figured out how to do quickly and with 100 percent accuracy. (Actually, you and your roommate devised a method using the campus electronic mail system to accept orders and to inform customers when their orders. will be ready for pickup. Because this runs automatically on your personal computer, it does not take any of your time.) Therefore, this step will be ignored in further analysis. You and your roommate have timed the necessary physical opera- tions. The first physical production step is to wash out the mixing bowl from the previous batch, add all of the ingredients, and mix them in your food processor. The mixing bowls hold ingredients for up to 3 dozen cookies. You then dish up the cookies, one dozen at a time, onto a cookie tray. These activities take six minutes for the washing and mixing steps, regardless of how many cookies are being made in the batch. That is, to mix enough dough and ingredients for two dozen cookies takes the same six minutes as one dozen cookies. However, dishing up the cookies onto the tray takes two minutes per tray. The next step, performed by your roommate, is to put the cook- ies in the oven and set the thermostat and timer, which takes about one minute. The cookies bake for the next nine minutes. So total baking time is 10 minutes, during the first minute of which your roommate is busy setting the oven. Because the oven holds only one tray, a second dozen takes an additional 10 minutes to bake. Your roommate also performs the last steps of the process by first removing the cookies from the oven and putting them aside to cool for 5 minutes, then carefully packing them in a box and accepting payment. Removing the cookies from the oven takes only a negligible amount of time, but it must be done promptly. It takes two minutes to pack each dozen and about one minute to accept payment for the order. That is the process for producing cookies by the dozen in Kristen's Cookie Company. As experienced bakers know, a few simplifications were made in the actual cookie production process. For example, the first batch of cookies for the night requires pre- heating the oven. However, such complexities will be put aside for now. Begin your analysis by developing a process flow diagram of the cookie-making process.