QUESTION ONE $[50]$

Read the following case study and answer the questions that follow:

THE COMPANY

The Lew$-$ Mark Baking Company is located in a small town in a western New York State.

The bakery is run by two brothers, Lew and Mark, who formed the company after they

purchased an Archway Cookie franchise. With exclusive rights in New York and New

Jersey, it is the largest Archway franchise. The company employs fewer than $200$ people,

mainly blue $-$ collar workers, and the atmosphere is informal.

THE PRODUCT

The company$$s only product is soft biscuits of which it makes over $50$ varieties. Larger

companies, such as Nabisco, Sunshine, and Keebler, have traditionally produced biscuits, in

which most of the water has been baked out, resulting in crisp biscuits. Archway biscuits

have no additives or preservatives. The high quality of the biscuits has enabled the

company to develop a strong market niche for its products.

THE CUSTOMERS

The biscuits are sold in convenience stores and supermarkets throughout New York and

New Jersey. Archway markets its biscuits as $$A good food$-$ no additives or preservatives $-$

and this appeals to a health $-$ conscious segment of the market. Many customers are over

$45$ years of age, and prefer a biscuit that is soft and not too sweet. Parents with young

children also buy the biscuits.

The company has two continuous band ovens that it uses to bake the biscuits. 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 biscuits 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 biscuit, and enters that information into the computer. The computer then determines

the amount of each ingredient needed, according to the quantity of biscuits 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 flavourings. After the ingredients have been mixed, the batter is poured into a cutting

machine where it is cut into individual biscuits. The biscuits are then dropped onto a

continuous band $[$conveyor belt$]$ and transported through one of two ovens. Filled biscuits

such as apple, date, raspberry, require an additional step for filling and folding.

The non$-$filled biscuits are cut on a diagonal rather than straight. The diagonal $-$ cut biscuits

require less space than straight$-$ cut biscuits, and the result is a higher level of productivity.

In addition, the company recently increased the length of each oven by $25$ feet, which also

increased the rate of production. As the biscuits emerge from the ovens, they are fed onto

spiral cooling racks $20$ feet high and $3$ feet wide. As the biscuits come off the cooling rack,

workers place the biscuits into boxes manually, removing any broken or deformed biscuits in

the process. The boxes are then wrapped, sealed, and labelled automatically.

INVENTORY

Most biscuits 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 biscuit boxes,

shipping boxes, labels, and cellophane for wrapping. Labels are recorded frequently, in

small batches, because the Government label requirements are subject to change, and the

company does not want to get stuck with labels it cannot use. The bulk silos are refilled two

or three times a week, depending on how quickly supplies are used.

Biscuits are baked in a sequence that minimises downtime for cleaning. For instance, light $-$

coloured biscuits $[$e$.$g$.$ chocolate chip$]$ are baked before dark $-$ coloured biscuits $[$fudge$],$ and

oatmeal biscuits are baked before oatmeal raisin biscuits. This permits the company to

avoid having to clean the processing equipment every time a different type of cookie is

produced.

QUALITY

The bakery prides itself on the quality of its biscuits. Biscuits 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, the workers on

the line are responsible for removing defective biscuits when they spot them. The company

has also installed an X $-$ ray machine on the line that can detect small bits of metal filings

that may have gotten into biscuits 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.

SCRAP

The bakery is run very efficiently and has minimal amounts