The Product: The Company’s only product is soft cookies, of which it makes over 50 varieties. Larger companies such as Nabisco, Sunshine and Keebler, have traditionally produced biscuit cookies, in which most of the waster has been baked out, resulting in crisp cookies. The cookies have no additives or preservatives. The high quality of the cookies has enabled the Company to develop a strong market niche for its product. The Customers: The cookies are sold in convenience stores and supermarkets throughout New York, Connecticut and New Jersey. The Company markets its cookies as “good food” – no additives or preservatives – and this appeals to health-conscious segment of the market. Many customers are over 45 years of age, and prefer a cookie that is soft and not too sweet. Parents with young children also buy the cookies. The Production Process: The Company has two continuous band ovens that it uses to bake the cookies. The production process is called a batch processing system. It begins as soon as management gets orders from distributors. These orders are used to schedule production. At the start of each shift, a list of the cookies to be made that day is delivered to the person in charge of mixing. That person checks a master list, which indicates the ingredients needed for each type of cookie and enters that information into the computer. The computer then determines the amount of each ingredient needed, according to the quantity of cookies ordered and relays that information to storage silos located outside the plant where the main ingredients (flour, sugar and cake flour) are stored. The ingredients are automatically sent to giant mixing machines where the ingredients are combined with proper amounts of eggs, water and flavorings. After the ingredients have been mixed, the batter is poured into a cutting machine where it is cut into individual cookies. The cookies are then dropped onto a conveyor belt and transported through one of 2 ovens. Filled cookies such as apple, date and raspberry, require an additional step for filling and folding. Inventory: Most cookies are loaded immediately onto trucks and shipped to distributors. A small percentage is stored temporarily in the company’s warehouse, but they must be shipped shortly because of their limited shelf life. Other inventory includes individual cookie boxes, shipping boxes, labels and cellophane for wrapping. Labels are reordered frequently, in small batches, because FDA label requirements are subject to change, and the company does not want to get stuck with labels it can’t use. The bulk silos are refilled two or three times a week, depending on how quickly supplies are used. Quality: The bakery prides itself on the quality of its cookies. Cookies are sampled randomly by a quality control inspector as they come off the line to assure that their taste and consistency are satisfactory, and that they have been baked to the proper degree. Also, workers on the line are responsible for removing defective cookies when they spot them. The Company has also installed an X-ray machine on the line that can detect small bits of metal fillings that may have gotten into cookies during the production process. The use of automatic equipment for transporting raw materials and mixing batter has made it easier to maintain a sterile process. New Products: Ideas for new products come from customers, employees, and observations of competitors’ products. New ideas are fist examined to determine whether the cookies can be made with existing equipment. If so, a sample run is made to determine the cost and time requirements. If the results are satisfactory, marketing tests are concluded to see if there is a demand for the product. Potential Improvements: There are a number of areas of potential improvement at the bakery. One possibility would be to automate packing the cookies into boxes. Although labor costs are not high, automating the process might save some money and increase efficiency. So far, the owners have resisted making this change because they feel an obligation to the community to employ the 30 women who now do the boxing manually. Another possible improvement would be to use suppliers who are located closer to the plant. That would reduce delivery lead times and transportation costs, but the owners are not convinced that local suppliers could provide the same good quality. Other opportunities have been proposed in recent years, but the owners rejected them because they feared that the quality of the product might suffer. Questions: 5. What factors cause the company to carry minimal amounts of certain inventories? What benefits result from this policy? 6. Explain whether the company is making the right decision of not automating the packing of cookies because of its obligation to the community of employing 30 women. Weigh the pros and cons of this decision.
The Product:
The Company’s only product is soft cookies, of which it makes over 50 varieties. Larger companies such as Nabisco, Sunshine and Keebler, have traditionally produced biscuit cookies, in which most of the waster has been baked out, resulting in crisp cookies. The cookies have no additives or preservatives. The high quality of the cookies has enabled the Company to develop a strong market niche for its product.
The Customers:
The cookies are sold in convenience stores and supermarkets throughout New York, Connecticut and New Jersey. The Company markets its cookies as “good food” – no additives or preservatives – and this appeals to health-conscious segment of the market. Many customers are over 45 years of age, and prefer a cookie that is soft and not too sweet. Parents with young children also buy the cookies.
The Production Process:
The Company has two continuous band ovens that it uses to bake the cookies. The production process is called a batch processing system. It begins as soon as management gets orders from distributors. These orders are used to schedule production. At the start of each shift, a list of the cookies to be made that day is delivered to the person in charge of mixing. That person checks a master list, which indicates the ingredients needed for each type of cookie and enters that information into the computer. The computer then determines the amount of each ingredient needed, according to the quantity of cookies ordered and relays that information to storage silos located outside the plant where the main ingredients (flour, sugar and cake flour) are stored. The ingredients are automatically sent to giant mixing machines where the ingredients are combined with proper amounts of eggs, water and flavorings. After the ingredients have been mixed, the batter is poured into a cutting machine where it is cut into individual cookies. The cookies are then dropped onto a conveyor belt and transported through one of 2 ovens. Filled cookies such as apple, date and raspberry, require an additional step for filling and folding.
Inventory:
Most cookies are loaded immediately onto trucks and shipped to distributors. A small percentage is stored temporarily in the company’s warehouse, but they must be shipped shortly because of their limited shelf life. Other inventory includes individual cookie boxes, shipping boxes, labels and cellophane for wrapping. Labels are reordered frequently, in small batches, because FDA label requirements are subject to change, and the company does not want to get stuck with labels it can’t use. The bulk silos are refilled two or three times a week, depending on how quickly supplies are used.
Quality:
The bakery prides itself on the quality of its cookies. Cookies are sampled randomly by a quality control inspector as they come off the line to assure that their taste and consistency are satisfactory, and that they have been baked to the proper degree. Also, workers on the line are responsible for removing defective cookies when they spot them. The Company has also installed an X-ray machine on the line that can detect small bits of metal fillings that may have gotten into cookies during the production process. The use of automatic equipment for transporting raw materials and mixing batter has made it easier to maintain a sterile process.
New Products:
Ideas for new products come from customers, employees, and observations of competitors’ products. New ideas are fist examined to determine whether the cookies can be made with existing equipment. If so, a sample run is made to determine the cost and time requirements. If the results are satisfactory, marketing tests are concluded to see if there is a demand for the product.
Potential Improvements:
There are a number of areas of potential improvement at the bakery. One possibility would be to automate packing the cookies into boxes. Although labor costs are not high, automating the process might save some money and increase efficiency. So far, the owners have resisted making this change because they feel an obligation to the community to employ the 30 women who now do the boxing manually. Another possible improvement would be to use suppliers who are located closer to the plant. That would reduce delivery lead times and transportation costs, but the owners are not convinced that local suppliers could provide the same good quality. Other opportunities have been proposed in recent years, but the owners rejected them because they feared that the quality of the product might suffer.
Questions:
5. What factors cause the company to carry minimal amounts of certain inventories? What benefits result from this policy?
6. Explain whether the company is making the right decision of not automating the packing of cookies because of its obligation to the community of employing 30 women. Weigh the pros and cons of this decision.
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