Kristen’s Cookie Company

Scott Kiriazis
Section 4
2/7/2015

Kristen’s Cookie Company

Executive Summary

        Kristen’s Cookie Company (KCC) is ready to launch their on-campus business.  They will have the apartment open for business every day except for Sunday from 9 PM – 1 AM.  KCC should start their launch with a maximum of 6 ingredient options for their cookies.  As they get more comfortable with their demand forecasting and inventory management they can add ingredients to the menu.  Since one oven does not produce enough cookies per day, KCC should invest in another oven and electric mixer.  This has the opportunity of doubling output and profit for the company.  As demand increases KCC can also look into extending store hours.

Introduction

        Kristen’s Cookie Company is an on-campus cookie company that is operated out of two roommate’s apartment.  The roommates are looking to launch their business in the near future.  KCC guarantees fresh cookies right out of the oven and ready for pickup within an hour.  Customers can choose from multiple ingredients including chocolate chips, M&M’s, chopped heath bars, coconut, walnuts, and raisins.  The owners already own the required capital equipment for the business which includes an electric mixer, cookie trays, and spoons.  They also have one small oven that can hold one cookie tray at a time.  Their ingredients for the cookies run for about $0.60/dozen, while the boxes cost $0.10 a piece and hold a dozen cookies.  Another variable cost is their labor time.

Key Problem

Orders are taken through the campus email, running automatically through their personal computer.  After mapping out the process, they have estimated that it takes 26 minutes from the time an order is placed to complete the order and accept the payment.  I believe KCC’s biggest bottleneck is only having one oven.  Baking the cookies in the oven is the longest step in the process (9 minutes).  They will also lose crucial business if the oven ever breaks down.

Related Issues
        One of the most difficult things for a new company to deal with is forecasting.  This is especially difficult for a company like KCC that offers numerous ingredients on their cookies.  KCC will have to determine how much inventory to hold for each ingredient, and then they must find the room to store these ingredients in the apartment.  The demand forecast will have an effect on how many orders they are able to take on and how much more equipment is needed to satisfy demand.
        Lastly, this company is limited to how much it can grow based on its capacity, human capital, and store hours.  If KCC launches and becomes a success, they will have a huge problem satisfying demand given their current circumstance.  One oven, two employees, and nightly hours will not bring in the revenue that is needed to sustain a successful company.