The cycle time and through put time of the first order is 27 minutes which means that in case of rush order, it would take 27 minutes to deliver. The cycle time after first order comes out to be 10 minutes (time between completion of successive orders). Now suppose if we are open 4 hours every night, what is the maximum number of orders that we can fill? There can be multiple scenarios of operation but here to calculate maximum number of orders I assume that customers are placing one dozen customized orders and we accept those orders which we can deliver within an hour. Also, I am assuming we need one electric mixer and two trays as it will not create hurdle in smooth running of our operation. Number of orders in first hour = (60-27)/10 +1 = 4.3 Number of orders in next 3 hours = (3 x 60)/10 = 18 Total Number of orders = 4.3 + 18 = 22.3 22 ≃ The gantt chart for the above scenario is shown in exhibit 1. We can see from the chart that after first order the cycle time becomes constant at 10 minutes. On the other hand, the throughput time is increasing by 9 minutes after every order. It was 27 minutes for first order, 36 minutes for second order and 45 minutes for the third order. If we talk about the idle time, it is 15 minutes for first order, 24 minutes for second and 33 minutes for third. Thus increasing by 9 minutes same as the throughput time. Direct labor content in every order is 12 minutes, as mentioned above that it takes 8 minutes of my time and 4 minutes of my roommates. Page 2 of 7
Labor Utilization which equals to direct labor content divided by total available labor time. In this scenario, labor utilization for first order is 12/27 which almost equals to 0.3%. For second and third order it is 12/36 and 12/45 which comes out to be 0.22% and 0.18% respectively. What price should we charge for a dozen of cookies? Price can be calculated by adding the cost of ingredients, the cost of the box and allocated value of opportunity cost for our time. Suppose we have to forego a part time
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