Key Questions to Answer Before You Launch the Business Q1: How long will it take you to fill

a rush order? It depends on the number of dozens that the rush order requires. Assume that the order requires x dozen(s of orders! then the time of fi""in# that order is ($%&$'x minutes (assume that this order requires on"y one f"a(or . )irst"y we consider the situation of a $ dozen order. *he a"" steps + washin# and mixin# in#redients (%min ! spoonin# the coo,ies (-min ! puttin# the coo,ies in the o(en and settin# the o(en ($min ! coo"in# down the coo,ies (.min ! pac,in# them (-min ! and fina""y accept the payment ($min + wi"" ta,e %&-&$&/&.&-&$0-% minutes. 1econd"y! we consider the situation of a -dozens order (seen in the 2antt chart fo""owed . 3hen I finished spoonin# the first dozen of coo,ies! at the end of min%! my roommate can start his wor,. And when ba,in# the second dozen! he can start coo"in# the first dozen and pac, them. Assume we accept the payment after the coo,ies can be de"i(ered! the tota" time of fi"" the order wi"" be 4% min. )ina""y we accept the mode" and consider the situation of an x dozen(s order! we can easi"y conc"ude that the tota" time is $%&$'x minutes. 2antt chart of fi""in# a order of - dozens of coo,ies($min for $ ce""

Q2: How many orders can you fill in a night, assuming you are open four hours each night? 3hen ba,in# the coo,ies! my roommate wi"" sti"" be free for - min durin# which he can accept more orders. *o maximize orders to fi"" in 5 hours! we assume that there are enou#h orders and a"" of the orders require $ dozen coo,ies of a same f"a(or. 1et the number of orders we can fi"" to be 6. Accordin# to the resu"t #ained in Question $! we can say $%&$'67058%'! so we can #et 6(max 0--. Q3: How much of your own and your roommates valua le time will it take to fill each order?!ssume the order re"uires 1 do#en$ )or me! the steps of washin#! mixin# and spoonin# are done by myse"f. 1o my (a"uab"e time for $ order is %&-09(min )or my roommate! the steps of settin# the o(en! remo(in# coo,ies from the o(en! pac,in# them and acceptin# the payment are done by him. 1o his (a"uab"e time for $ order is $&'&-&$05(min Q%: &ecause your aking trays can hold e'actly one do#en cookies, you will produce and sell cookies y the do#en$ (hould you give any discount for people who order two do#en cookies, three do#en cookies, or more? )f so, how much? *ill it take you any longer to fill a two+do#en cookie order than a one+do#en cookie order? As the costs of in#redients and boxes of each dozen of coo,ies are the same no mater you choose to buy $! - or 4 dozens per order! what rea""y differs is the cost of time. )rom Q4 has we ha(e that for one dozen order! tota" (a"uab"e time is % (wash :mix & -(tray fi""in# & $ (prepare ba,e & -(pac, & $ (payment 0 $- min. )or two dozen order! *ota" (a"uab"e time is % (wash :mix & ;-(tray fi""in# & $ (prepare ba,e & -(pac, < 8 - & $ (payment 0 $= min. )or three dozen order! *ota" (a"uab"e time is % (wash :mix & ; -(tray fi""in# & $ (prepare ba,e & -(pac, < 8 4 & $ (payment 0 -min. Assume the cost of our time is >! so the cost per dozen wou"d be? '.-''@ AA. $ dozen order '.$5-@AA..- dozen order '.$--@AA..4 dozen order ItBs ob(ious that the cost of - or 4 dozen order is "ess than the one dozen order. 1o we shou"d #i(e a discount for peop"e who order more coo,ies. )or - dozen order! the discount can be up to '.'%9> cheaper per dozen. )or 4 dozen order! the discount can be up to '.'=9> cheaper per dozen. *o decide the price per dozen! we set the (a"ue of our "abor to be I6C.$''Dhour per person. 1o the discount shou"d be I6C.%.9 for a -E dozen order! and I6C.=.9 for a 4Edozen order.

Q,: How many -ood processor and aking trays will you need? As the 2antt chart shown! the )ood @rocesso is id"e for a "on# time durin# the process! so on"y one )ood @rocessor is needed. Because the e"ectric mixer can on"y contain 4 dozens of in#redients! durin# the who"e process! 4 trays are needed at "east. Q.: !re there any changes you can make in your production plans that will allow you to make etter cookies or more cookies in less time or at lower cost? -or e'ample, is there a ottleneck operation in your production process that you can e'pand cheaply? *hat is the effect of adding another oven? How much would you e willing to pay to rent an additional oven? Accordin# to the 2antt chart! we can see that durin# the process! the o(en a"most ,eep wor,in# a"" the time whi"e the e"ectric mixer has a "ot of time bein# id"e. *hat means some time is wasted in waitin# the o(enBs ba,in# Fob and this is ob(ious"y a bott"e nec,. If we rent another o(en for one dozen orders?*ime of one o(en?$%&$'8n*ime of two o(ens?$%&=8n1o for each order! it sa(es three minutes than pre(ious. If itBs a two or three dozen order! it wi"" sa(e more than that. Assume our profit per dozen is @ and considerin# the one dozen orders. 1o the ori#ina" profit per hour is%'D$'8@ 0 %.''@*he two o(ensB cost per dozen is?%'D= 8 @ 0 9..=@1o the hi#hest price of rentin# an o(en we can accept is -..=@ per hour! that is! when @ is set to I6C.$'! I6C.-..=Dh. @rob"ems for )urther *hou#ht Q1: *hat happens if you are trying to do this y yourself without your roommate? If IBm doin# this by myse"f! the situation wi"" be different. Because a"" the steps of washin#! mixin#! spoonin#! settin# the o(en! remo(in# coo,ies! pac,in# the coo,ies and acceptin# the payment ha(e to be done by myse"f! my (a"uab"e time of a one dozen coo,ies becomes 9&50$-(min ! which exceeds $' minutes! the time of one circ"e of ba,in# one dozen coo,ies! so I become the bott"enec,! instead of the o(en. 3hen the order contains - dozens of same f"a(or coo,ies! because the washin# and mixin# step of the - dozen coo,ies can be done to#ether! my (a"uab"e time for this order becomes %&-8-&-8$&-8-&$0$=min! "ess than $'8-0-'min. If the order requires 4 dozens! my (a"uab"e time becomes --min. And if there are enou#h orders! the f"ow can be expressed by the 2antt chart fo""owed?chart of fi""in# enou#h orders of $ dozen of coo,ies($min for $ ce""

Q2: (hould you offer special rates for rush orders? (uppose you have /ust put a tray of cookies into the oven and someone calls up with a 0crash priority1 order for a do#en cookies of a different flavor$ 2an out fill the priority order while still fulfilling the order for the cookies that are already in the oven? )f not, how much of a premium should you charge for filling the rush order? As the 2antt chart abo(e shows! there is no need to stop ba,in# of the pre(ious coo,ie. *he time that rush order wi"" de"ay is on"y at most $ minute. And the pre(ious order can be finished on time. 1o we donBt need to offer specia" rates. Q3: *hen should you promise delivery? How can you look "uickly at your order oard 3list of pending orders4 and tell a caller when his or her order will e ready? How much of a safety margin for timing should you allow? 3e can Fust "oo, at the order board and see when I wi"" finish my own Fob and become id"e. *hen the finishin# time wi"" be that time p"us -% minutes. At that time we can promise de"i(ery. *he safety mar#in for timin# is 9 minutes in case of a rush order. Assume that you Fust be#in the wash process and then a rush order comes! you ha(e to stop it and do the rush order. *he pre(ious order wi"" be de"ayed for at most 9 minutes to wait for you comp"ete the wash and tray process of the rush order. *hat time is %&- 0 9 min.

Q%: *hat other factors should you consider at this stage of planning your usiness? *he factors that I shou"d consider at the sta#e of p"annin# my business are? Gost? how to #et cheaper raw materia"s with #ood qua"ityH Iar,et? wi"" this business attracti(e to my potentia" customersH Jow attracti(eH 3hy peop"e buy my coo,ies! or why notH 1hou"d I! or how to ma,e some ad(ertisements to attract more customersH Juman capita"? do I need to hire some peop"eH @roduct? how to desi#n better coo,iesH 1er(ices? can I pro(ide some other ser(ices! for examp"e! de"i(er coo,ies to the customersB dormitoryH @otentia" accidents? how to hand"e an accidentH )or examp"e! if we ba,e a wron# taste for the consumer! what sha"" we do thenH Ce#u"ations? is there any re#u"ation put on a"" the thin#s I wi"" be doin#H Q,: 5our product must e made to order ecause each order is potentially uni"ue$ )f you decide to sell standard cookies instead, how should you change the production system? 6he order+taking process? At the be#innin#! my products are specia" because the coo,ies are comp"ete"y fresh. If we se"" standard coo,ies! the (a"ueE added products of my company wi"" chan#e. Iy coo,ies are specia" because of the "ow price and #ood qua"ity. 3e can ba,e the coo,ies before recei(in# the order! instead of ma,in# the product one by one accordin# to each unique requirement. And the orderEta,in# process a"so needs to chan#e. *he consumers donBt need to te"ephone in their orders and wait for pic,up. *hey can come to my apartment direct"y to buy it. If someone needs a "ar#e sum of coo,ies! they need to ma,e the order a "itt"e ear"ier. A deposit is required.