Supply Chain and Operation

Case: Joez Ice Cream

The Business Model:

Joe is a very motivated young man from Miami who has worked as a dispatcher for a home food delivery company in Miami (food delivery companies include GrubHub, Uebereats, Lieferando, EasyO – which even delivers to your beach chair!)

Food deliverers serve the general consumer market, providing an online food ordering service to customers that do not have the time, capacity or inclination to cook for themselves. These companies also serve customers who wish to order food from restaurants which do not operate their own online ordering service. The food delivery services typically attract busy young professionals and working families who have less time to prepare and cook meals. The largest demographic for online food ordering services are reported to be technologically engaged consumers aged between 30 and 49.

Although in his senior year at high school, Joe has a natural flair for business, and, after his stint as a dispatcher, he realizes that there are a LOT of people ready to pay a high premium for quality meals which arrive promptly. He has also done some internet research to better understand the rapid proliferation of food and grocery delivery – particularly for the generation just entering the workforce. He feels strongly that there will be huge growth and opportunities for new businesses!

Source: https://www.prnewswire.com/news-releases/third-party-food-delivery-market-poised-for-explosive-growth-300606417.html

Now, Joe is not in a position to start a food delivery company himself, but he sees how he can already participate on a smaller scale by offering a customizable product which he can produce to order. In contrast to restaurants, he will produce his product only for the food delivery companies. Working as a dispatcher it was easy to see a glaring gap in the food selections offered today. Joe is ready to take advantage of this gap and has decided to offer….

!!

Joe has planned his model carefully and has decided that he does not want to get involved in actually producing the ice cream itself (this would involve sourcing milk, eggs, sugar and additives, pasteurizing, homogenizing….), but sees a huge potential for customization, even if he just uses vanilla ice cream as his base product.

(Just for interest: for more information on the critical situation of the vanilla supply chain see

https://www.bbc.co.uk/news/resources/idt-sh/madagascar_vanillla

https://www.cookinglight.com/news/vanilla-shortage-worldwide-madagascar )

His plan is to source a large stock of vanilla ice cream plus a large variety of “Mixers,” for example, M&Ms, nuts, granola, gummy bears…even caramel popcorn!).

Source: https://icahr.org/the-history-of-ice cream-toppings-bar-ice cream-toppings-bar/ice cream-party-topping-bar-the-crafting-chicks-ice cream-toppings-bar/

Operations at Joez:

Joe can save costs by running his business from his parent’s garage (following the lead of other famous garage-based start-ups), but this does have some space limitations. For the vanilla ice cream stock, his parents have a large freezer in the basement – as well as there is a grocery store down the street for emergency replenishment. But forecasting the demand for Mixers will be more difficult and, some of them would go soggy if they were pre-mixed and stored. So his business model will be “Make-to-Order.”

Joe has the investment from his mom and dad in some basic equipment – namely bowls, a blender, packing boxes, and, importantly, a small flash freezer which will deep freeze small portions (1 cup at a time) to very low temperatures, which means that the ice cream can be delivered and arrive still frozen! The customers will place their orders via the food delivery website and specify which of the “Mixers” they want in their ice cream, and then Joe and Sue will get to work and produced customized, individual cups of ice cream

Customers can call in and place their orders and the process for a cup of ice cream with one “Mixer” of choice is as follows:

1) First an operator has to take the order (2 min per order), no matter how many cups are ordered. (Note: all orders will be for the same type of mixer.)

2) Then the operator must mix the vanilla ice cream with the requested mixer (5 minutes for up to 3 cups, as the mixing bowl can hold maximum 3 cups of ice cream).

3) Then the operator must spoon the ice cream into individual cups (1 min per cup).

4) Then the flash freezer will deep freeze the cups of ice cream individually (10 min per cup), as it is small and can only do one cup at a time. (Note: the loading time for the blending and flash freezing can be ignored.)

5) The automatic sealer will then seal each cup with a plastic seal (2 min per cup).

6) Then the operator has to pack the order for delivery in a holder with some insulation (3 min per cup).

7) Then the operator has to receive the payment for the order (2 min per order).

The total flow time for an empty process for an order of 1 cup of ice cream is:

2 + 5 + 1 + 10 + 2 + 3 + 2 = 25 min.

Workforce Considerations

Joe has no constraints on any of his process inputs, but he realizes that it would be very helpful to have an assistant….his little 15-year-old sister, Sue, could help out! Sue is not thrilled about working for her brother, but, still, working is working, and she will earn some pocket money. She also is good at math, which he has a feeling might come in handy as his operations increases.

Joe divides the work as follows, which gives him 4 “Resources”: Sue, Joe, the Freezer, and the Sealer:

Resource	Process Step	Time (min)
Joe	Take Order	2	per order
Joe	Mix Ice Cream and Mixer (M&Ms, granola, etc.)	5	max 3 cups
Joe	Spoon into Cups	1	per cup
Freezer	Flash Freeze	10	per cup
Sealer	Automatic Cup Seal	2	per cup
Sue	Pack	3	per cup
Sue	Receive Payment	2	per order
Total Empty Process	25	min

· Take Order/Receive Payment: The time for taking the order and receiving payment is done per order (not per cup of ice cream).

· Mix Ice Cream and Mixer: He has a bowl big enough for 3 cups of ice cream at a time.

· The loading time for any of the steps (for example, loading the freezer) is negligible.

· There are enough paper cups and boxes for packing, plenty of ice cream and plenty of mixers on hand (not input-constrained).

1

For example, for a 1 cup order,

Sue will

1) pack the order (3 min),

2) receive the payment (2 min)

Total = 3 + 2 = 5 min

Joe will perform the following

1) take the order (2 min),

2) Mix Ice Cream and Mixer (5 min)

3) Spoon into Cups (1 min)

Total = 2 + 5 + 1 = 8 min

Capacity Analysis

Joe is certain that this will be highly successful – especially in Miami, where the weather is hot! He realizes that he will be capacity-constrained; that is, he will have a constant stream of orders coming in during operation hours and can only work as fast as his bottleneck resource. He wonders how to analyze his process to get a better idea of his capacity vs the order size. Plus, his sister is not so excited, so he might have to run the process by himself. He asks Sue to take a look at the operations and do a capacity analysis for Question 3 only:

Q3) Labor Considerations: Order Size = 1 cup, 1 worker only

Assumptions:

· Assume process is capacity (not demand) constrained. This means there is plenty of demand and your bottleneck needs to be working all the time.

· Assume orders come in at regular intervals and all process times are exact (no variability).

· Consider Order Processing as part of the process.

· Orders are always for the same type of Mixer.

· Note: the packing is per cup, not per order.

Q3) Labor Considerations: Order Size = 1 cup, 1 worker only

12 points

What would happen if Joe took over the entire show? Perform the calculations for this situation for an order size of 1 cup of ice cream with only Joe working.

a. Find the bottleneck and calculate the process capacity (in orders/hour) for this situation.

Q3: Order Size = 1 cup, 1 worker only
Resource	m (number of resources)	p (min)	Capacity = m/p *60min/hr (orders/hour)
Joe	1
Flash Freezer	1
Sealer	1

b. What is the production cycle time?

c. Calculate direct labor content (in minutes), the total idle time (in minutes), and the average labor utilization (%) for this situation.

d. Construct a Gantt chart for orders of 1 cup of ice cream. The chart should show 3 orders in the system. Use this to show your bottleneck is working full time!

6