OPERATIONS MANAGEMENT CASE STUDY Read the following case stud ca!efull and answe! all the "uestions #elow$
%OME&STY'E COO(IES The Co)*an
The baking company is located in a small town in New York State. The bakery is run by two brothers. The company employs fewer than 200 people, mainly blue-collar workers, and the atmosphere is informal. The P!oduct
The companys only product is soft cookies, of which it makes o!er "0 !arieties. #arger companies, such as Nabisco, Sunshine, and $eebler, ha!e traditionally produced biscuit cookies, in which most of the water has been baked out, resulting in crisp cookies. The cookies ha!e no additi!es or preser!ati!es. The high %uality of the cookies has enabled the company to de!elop a strong market niche for its product. The Custo)e!s
The cookies are sold in con!enience stores and supermarkets throughout New York, &onnecticut, and New 'ersey. The company markets its cookies as (good food()no additi!es or preser!ati!es) and this appeals to a health-conscious segment of the market. *any customers are o!er +" years of age, and prefer a cookie that is soft and not too sweet. arents with young children also buy the cookies. The P!oduction P!ocess
The company has two continuous band o!ens that it uses to bake the cookies. The production process is called a batch processing system. t begins as soon as management gets orders from distributors. These orders are used to schedule production. t the start of each shift, a list of the cookies to be made that day is deli!ered to the person in charge of mi/ing. That person checks a mast master er list, list, which which indic indicat ates es the the ingre ingredie dient ntss need needed ed for for each each type type of cooki cookie, e, and and ente enters rs that that information into the computer. The computer then determines the amount of each ingredient needed, according to the %uantity of cookies ordered, and relays that information to storage silos located outsid outsidee the the plant plant wher wheree the the main main ingre ingredi dien ents ts flou flourr, sugar sugar,, and and cake cake flour flour11 are are store stored. d. The The ingredients are automatically sent to giant mi/ing machines where the ingredients are combined with proper amounts of eggs, water, and fla!ourings. fter the ingredients ha!e been mi/ed, the batter is poured into a cutting machine where it is i s cut into indi!idual i ndi!idual cookies. The cookies are then dropped onto a con!eyor belt and transported through one of two o!ens. illed cookies, such as apple, date, and raspberry, re%uire an additional step for filling and folding. The no filled cookies are cut on a diagonal rather than round. The diagonal-cut cookies re%uire less space than straight-cut cookies, and the result is a higher le!el of producti!ity. n addition, the company recently increased the length of each o!en by 2" feet, which also increased the rate of production. s the cookies emerge from the o!ens, they are fed onto spiral cooling racks 20 feet high and 3 feet wide. s the cookies come off the cooling racks, workers place the cookies into bo/es manually,
remo!ing any broken or deformed cookies in the process. The bo/es are then wrapped, sealed, and labelled automatically. In+ento!
*ost cookies are loaded immediately onto trucks and shipped to distributors. small percentage is stored temporarily in the companys warehouse, but they must be shipped shortly because of their limited shelf life. 4ther in!entory includes indi!idual cookie bo/es, shipping bo/es, labels, and cellophane for wrapping. #abels are reordered fre%uently, in small batches, because 5 label re%uirements are sub6ect to change, and the company does not want to get stuck with labels it cant use. The bulk silos are refilled two or three times a week, depending on how %uickly supplies are used. &ookies are baked in a se%uence that minimi7es downtime for cleaning. or instance, light-coloured cookies e.g., chocolate chip1 are baked before dark-coloured cookies e.g., fudge1, and oatmeal cookies are baked before oatmeal raisin cookies. This permits the company to a!oid ha!ing to clean the processing e%uipment e!ery time a different type of cookie is produced. "ualit
The bakery prides itself on the %uality of its cookies. &ookies are sampled randomly by a %uality control inspector as they come off the line to assure that their taste and consistency are satisfactory, and that they ha!e been baked to the proper degree. lso, workers on the line are responsible for remo!ing defecti!e cookies when they spot them. The company has also installed an 8-ray machine on the line that can detect small bits of metal filings that may ha!e gotten into cookies during the production process. The use of automatic e%uipment for transporting raw materials and mi/ing batter has made it easier to maintain a sterile process. Sc!a*
The bakery is run !ery efficiently and has minimal amounts of scrap. or e/ample, if a batch is mi/ed improperly, it is sold for dog food. 9roken cookies are used in the oatmeal cookies. These practices reduce the cost of ingredients and sa!e on waste disposal costs. The company also uses heat reclamation: The heat that escapes from the two o!ens is captured and used to boil the water that supplies the heat to the building. lso, the use of automation in the mi/ing process has resulted in a reduction in waste compared with the manual methods used pre!iously. New P!oducts
deas for new products come from customers, employees, and obser!ations of competitors products. New ideas are first e/amined to determine whether the cookies can be made with e/isting e%uipment. f so, a sample run is made to determine the cost and time re%uirements. f the results are satisfactory, marketing tests are conducted to see if there is a demand for the product. Potential I)*!o+e)ents
There are a number of areas of potential impro!ement at the bakery. 4ne possibility would be to automate packing the cookies into bo/es. lthough labour costs are not high, automating the process might sa!e some money and increase efficiency. So far, the owners ha!e resisted making this change because they feel an obligation to the community to employ the 30 women who now do the bo/ing manually. nother possible impro!ement would be to use suppliers who are located closer to the plant. That would reduce deli!ery lead times and transportation costs, but the owners are not con!inced that local suppliers could pro!ide the same good %uality. 4ther opportunities ha!e
been proposed in recent years, but the owners re6ected them because they feared that the %uality of the product might suffer. "uestions
;. marks= 2. the
9riefly describe the cookie production process.
<20
>hat are two ways that the company has increased producti!ity? >hy did increasing length of the o!ens result in a faster output rate? <;" marks=
3. 5o you think that the company is making the right decision by not automating the packing of cookies? @/plain your reasoning. >hat obligation does a company ha!e to its employees in a situation such as this? >hat obligation does it ha!e to the community? s the si7e of the town a factor? >ould it make a difference if the company was located in a large city? s the si7e of the company a factor? >hat if it were a much larger company? <20 marks= +. >hat factors cause the company to carry minimal amounts of certain in!entories? >hat benefits result from this policy? <;" marks= ". in a
s a consumer, what things do you consider in 6udging the %uality of cookies you buy supermarket? <;0 marks=
A. >hat ad!antages and what limitations stem from the companys not using preser!ati!es in cookies? <;" marks= B.
9riefly describe the companyCs strategy.
<" marks= ,Total )a!-s .//0
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