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Submitted by nauxiy on March 16, 2008
Category: Business
Words: 3881 | Pages: 16
Views: 126
Popularity Rank: 79,989
Average Member Grade: N/A (Add a Comment / Grade this Paper)
Contents Page
1.0 PRELIMINARY FORMULATION 3
1.1 PROBLEMS IDENTIFIED: 3
1.3 ASSUMPTIONS 3
2.0 MODEL DESCRIPTION 4
3.0 MODEL SOLUTION 5
4.0 PROFITABILITY 5
4.1 SETTING SELLING PRICE 5
4.2 DISCOUNTS FOR ORDERS IN BULK 6
5.0 RATES FOR RUSH ORDER 9
5.1 SCENARIO 1: LOST IN OPERATIONAL EFFICIENCY 9
5.2 SCENARIO 2: LOST DUE TO INABILITY TO MEET CURRENT ORDER 10
6.0 ORDER FUNCTION: PROMISE OF DELIVERY 11
6.1 CONDITION 1: TOTAL NUMBER OF ORDERS 11
5.2 CONDITION 2: TIME LATEST WIP HAS SPENT IN THE FOOD PROCESSOR 12
5.3 SUSTAINABLE DELIVERY OF THE 1 HOUR PROMISE 13
7.0 OPERATIONAL EFFICIENCY 14
7.1 NUMBER OF EQUIPMENT TO BUY & IDENTIFICATION OF BOTTLENECK 14
8.0 CONCLUSION 15
Kristen’s Cookie Company
1.0 Preliminary Formulation
1.1 Problems identified:
Kristen’s Cookie Company (KCC) concept is a novel idea, one which correctly identifies students’ needs and wants. Its freshly baked concept sets it apart from other competitors. Furthermore, one attractive feature of the business concept is its low capital requirement and hence fast payback time period. Although the production process has been firmed, KCC has to answer three key issues:
1) Profitability: How profitable would KCC be? That would mean answering the question of setting the selling price. Consideration will be given to setting a competitive price similar to that of store-bought cookies. Setting too high a price would lower demand whilst setting too low a price would damper profitability of KCC. To correctly identify the selling price, we will conduct a market survey to find out expected demand and use cost accounting method such that KCC would be able to recoup its variable costs. We will also consider the selling prices when orders come in bulk (2,3 batches of 1 dozen) and for crash priority orders.
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