In three parts
Kensington Bakery (KB) was started by Kelvin and Bridget in 2010, after Bridget finished her
BSc in Food Science and Kelvin finished his BE in Mechanical and Manufacturing Engineering.
KB is famous for its superb cakes that come in two basic flavours, vanilla and chocolate, and
finished in its award-winning icing designs. They manufacture and sell to three customer
segments: walk-in customers, bespoke (customised) orders and the catering industry,
specifically upmarket cafes, hotels, restaurants, airlines and function venues. Their cakes are
not cheap ($32 for a standard, with basic icing and couverture and bespoke ones start at $55
and go from there).
KB operates a cake processing line that incorporates an oven-based baking process of the
cake itself and an automated 3D printing process that produces the decoration. The process
of making a cake consists of the following activities:
1. The ingredients need to be assembled and mixed (flour, egg, butter, sugar, flavouring
and water). This is called the “Recipe Preparation” stage, and the two basic recipes
are vanilla and chocolate for the base, and a corresponding mixture for the icing and
couverture (in other words, they have to match). This process is not performed on
the production line but needs to be completed before the assembly and cooking
process, by the same operator that runs the entire line. In addition, the icing,
couverture and cream mixture also needs to be prepared and this is done at the
same time as the basic cake batter.
2. The (previously prepared) batter is poured into cake moulds and these enter the
baking oven. The baking process takes 35minutes. The oven is large and has a
capacity of up to 18 cakes at a time, even though a batch size of 10 is usual (there are
reasons for this). Once a batch has been baked, it is removed from the oven and the
oven needs 10 minutes to cool and a further UNIF(5,10) minutes to clean. After
cleaning, the oven is free for the next batch (external or internal to be processed).
3. The cakes are automatically conveyed out of the oven after the oven has cooled and
the entire batch is assigned to one of the two cake decorators (this makes it much
easier to load a single decorator with the icing and couverture mixture). This
decorator will have been programmed to perform the required decoration pattern.
KB has invested in two 3D SCARA robot decorators. The printing process depends on
what the customer wants. For standard cakes (the ones ordered by the catering
industry for instance), decorating requires 8 minutes (this is constant), whereas
bespoke cakes (for instance an upmarket café may want its cakes customised in
order to set it apart from other cafes) take UNIF(8,12) minutes and the bespoke
cakes (especially wedding cakes) take UNIF(15,25) minutes to decorate.
4. After a batch (of one or more cakes) has been completed, the cake(s) are removed
and moved to a (single) packer and subsequently to a refrigerated cupboard.
Bespoke orders are packed differently in higher quality decorated cartons, where
customers can choose out of 3 different designs. It takes 5minutes to change the
carton style on the packer.
5. During the packing operation, which is manual (EXPO(0.5)min per cake) the operator
cannot be involved in any other tasks. After packing, the operator cleans the
decorator(s) that have been used for the last batch (UNIF(15,20)).
The Manufacturing Operation
The manufacturing business operates 7 days per week (and 8 hours per day – ideally).
Overtime may be permitted if necessary, to finish the days production of orders, but for the
time being Kelvin and Bridget have been working the extra hours themselves in order to
finish production. They employ two operators, one works full time (Monday-Friday, an 8-
hour shift) and the other operator works part time (Saturday – Sunday, also an 8 hour shift).
Both operators are paid $25 per hour plus on-costs of 40% ($10 per hour).
The manufacturing operation can be described as a ‘hybrid batch operation’, consisting of
two main inventory strategies: Manufacture to stock and manufacture to order. There are
two types of order that are generated: ‘Inventory Orders’, which are internal orders for
standard cakes that will be refrigerated and stored in inventory for sale to the catering
industry; “Bespoke Orders” that are externally generated for customised cakes. For
example, the manufacture of standard cakes (these are not bespoke, but consist of a plain
layer of icing and couverture) that are available for off-the-shelf as well as bulk purchasing
are produced to inventory and are stored in large refrigerators until sold. These
refrigerators are costly to operate and occupy a lot of space in the factory and therefore
there is an inventory holding cost associated with storing these cakes.
For cakes that are produced to inventory, the ordering process is an entirely internal one, in
order to maintain refrigerator stock levels and to meet steady demand. Bespoke or external
orders get priority over the steadier production of inventory orders. The reason for that is
that bespoke cakes attract a very large premium in price over the standard cakes and KB
wants to be able to satisfy all its customers in as short a time as possible.
Operating Procedure
Under the current standard operating procedures (SOPs) when an order arrives it is queued
either as an inventory order (internal) or as a bespoke order (external). External orders will
get priority over internal ones.
The production cycle consists of the following activities: An order arrives and waits in its
assigned queue and is released from the queue once the oven is free (after cleaning). The
operator assembles and mixes the required ingredients for the order (This takes
TRIA(10,15,20)minutes, while, at the same time, the oven is being preheated (very
important for consistency). The order size and batch size may be different, and this is often
the case. Historically (before KB invested in this new process line), as part of KB standard
operating procedures, the operators prefer a batch size of 10 cakes. There are practical
reasons for this. Firstly, since the decoration process takes time, a smaller batch size means
that the cakes stay fresher for longer and have less time to dry out, while waiting for the
icing and couverture process. Secondly, since demand averages 50 (standard) cakes per day,
a batch size of 10 seemed a manageable round number. It made sense. So, if KB generates
an order of 20, then the operator will split the order into two batches of 10. In order to save
time, and this also makes sense, KB prepares the ingredients in larger batches so that if the
next batch that comes through has the same ingredients as the previous one, it can bypass
the ‘Recipe Preparation’ stage and go straight into the ‘Oven Setup Process’. This saves a
substantial amount of time.
The batch is then prepared for baking by the operator who fills each cake tin with the
requisite mixture before placing each tin in the preheated oven (this setup or ‘make ready’
procedure takes UNIF(8,12)mins. The baking process takes CONST(35)mins after which the
operator waits for it to cool (CONST(10)mins) before cleaning it (UNIF(5,10)mins, the
automatic conveying of cakes out of the oven may be assumed to be instantaneous). Each
batch is then allocated to one of the two decorators (the operator programs the required
decorator into the controller of the process line at the start of every batch). Each cake is
then decorated and finished and moved out of the robot cell to be batched with all the other
cakes belonging to that production run. This is important from a food safety point of view,
in order to be able to trace the age of the cake (when it commenced and finished
processing) as well as identifying the ingredients and processing conditions during
manufacture. Once the batch has been assembled the batch is moved to a packer where
each cake is individually packed (this is a manual operation, performed by the operator)
before being moved to the refrigerators.
Customised (bespoke) orders, are not batched and made individually. One of the reasons
for this is that, because the oven is generally underutilised (viz. 5 batches of 10 cakes takes 5
x 35minutes to bake, which equates to less than 3hours out of an 8hour day), KB does not
mind running small batches in the oven. The other reason is that KB want to give their
customers the freshest cake possible, as their business has grown on the basis of word-ofmouth for their excellent quality.
Reliability and Maintenance
Even though the production line is relatively new, its reliability is not optimal. The oven is
not the problem, it is a fairly simple process. The problem lies with the decorators. They are
not as reliable as KB would like them to be. The decorator end-effectors (‘printing heads’)
are currently prone to jamming and clogging, at the rate of EXPO(160) cakes. Every time a
head clogs, the process has to stop, and the decorator needs to be emptied, cleaned and the
injector heads washed through before the decorator can be restarted. This process takes
EXPO(2) hours. It is possible to upgrade the decorators with a self-cleaning mechanism, at a
fairly substantial cost and this would possibly (?) improve the reliability so that a jam or clog
may only occur every EXPO(600) cakes or so. When a decorator jams, the icing and
couverture mixture needs to be made fresh and the old batch discarded. This process takes
Demand for KB product averages around 50 standard (non-customised) cakes per day (365
days p.a.), of which 40 are vanilla and 10 are chocolate and in order to simplify the
management of their inventory strategy, this split conveniently results in 5 baking
operations per day for standard cakes that will be refrigerated and supply local demand
(Kensington, Kingsford and Randwick).
In addition, KB also produces customised cakes, mostly to individual buyers for birthday
parties, weddings etc. These orders average EXPO(5) per day and in terms of order size, they
average DISC(0.6,1,0.9,2,1.0,3). The flavour distribution for these is similar to the standard
Internal (inventory orders) are usually generated the night before to be schedule for
production at the very start of the next day. External orders can come in at any time, but an
order for a bespoke cake that arrives after 1pm will not be commenced until the next day,
unless the line is idle, but this does not happen frequently.
Storage and Inventory
The refrigerators are expensive (temperature and humidity controlled), and cost the
company $24k and can hold 100 cakes in total. They are depreciated straight line over 10
years. On average, Kelvin estimates the occupancy rate at 40%. In addition, and this is a
major factor, spoilage cost has been estimated at $15 per cake per day for a standard cake
and even more for the bespoke ones. This is quite expensive, but there is a reason for this.
Since fresh cream is used, each cake has a limited shelf life in the refrigerator. Other costs
associated with storage include energy ($0.25 per cake per day), overheads (admin,
handling, tracking etc), $1 per cake per day.
The Issues
Kelvin and Bridget are finding that they are required to stay back late almost every single day
in order to finish production. A typical day for them is a start at 7am and a finish not before
10pm. Their operator starts his shift at 7 and finishes at 4pm (with a one-hour break).
Kelvin and Bridget, who also operate the other side of the business, i.e. pie manufacturing,
also start at 7am. Even though both work until 10pm, they are able to stagger some breaks
in the late afternoon/early evening when both of them are not required to be present at the
same time. But it still makes for a very long day.
They have decided to call you in as consultants in order to advise them on how to make the
cake process run more efficiently and quicker so that they do not have to habitually work
these long hours.
They have given you a completely ‘free hand’ in terms of investigating all possible avenues
you can think of in order to speed the process up and improve its performance generally.
Needless to say, some operational parameters are fixed, and that includes the time to bake
the cake, the times to decorate them and the capacity of the oven. Whereas it is possible to
purchase a new oven line, this would likely be prohibitively expensive and possibly
necessitate a change of premises, which they do not foresee themselves contemplating at
this time.
Kelvin believes that there are many un-explored opportunities in terms of operating
procedures (batching for instance), and being a little smarter in terms of which decorator to
send a batch of cakes to (shortest queue for instance – currently that decision is made at
random by the operator at the time the batch is sent into the oven), perhaps even
decoupling the decorators from the oven and giving each greater autonomy in terms of
accepting individual cakes (this may involve some additional handling hardware and
programming but Kelvin does not think this would be excessive).
Even though they have an operator on each shift, Kelvin would also like to know how he and
Bridget can best integrate themselves into the operation and where their input (time) can
make the biggest impact in terms of efficiency and productivity.
Kelvin would like to know how ‘efficient’ you can make the line. Maybe KB can squeeze
even more productivity out of this line and in less time than they are currently getting and
this would directly translate into extra sales, and increasing the level of bespoke sales seems
especially attractive. Kelvin believes he can sell more.
As part of your initial progress report to KB (Part 1 of your report), you will need to
demonstrate your understanding of the current process from a technical as well as
operational point of view as well as identified some major issues (and not just the ones that
Kelvin and Bridget are aware of). And to make certain that KB knows it is getting value for
money and that you have already generated some interesting ideas that you intend to test in
your simulation model.
Part 1: The Issue Analysis (Week 3, Friday midnight)
a) Prepare a flowchart of how the production system operates. This flow chart should
be properly annotated with critical information so that anyone who is not familiar
with the process can understand how this process works. Lengthy text is not
required – be comprehensive and concise!
b) Include in your report an initial “back-of-the-envelope” analysis of the productivity of
the process line based on the data provided by KB. Can you provide a rough idea of
what a typical day looks like for KB? Can they finish all their orders in a shift? Where
do you think the problems lie?
c) Define the scope of the study and the desired outcome from the simulation study
you intend to undertake. Your scope should include the following (even though you
will not know many of the details yet):
• A comprehensive issue analysis. What are the problems, what are the
opportunities? What solutions are you interested in pursuing? And how will
you prove these (analysis and data?).
• Development of a verified and validated base case in order to establish and
confirm the current performance of the line and identify key factors
(technical, operational etc) that you think may have an impact on
performance and that you may want to test (you do not have to develop this
model yet but you need to include this as part of your scope) – this will be a
major part of Submission Part 2.
d) Finally, document your work as a professional progress report. This will form a part of
your final submission.
Part 2: The Base Case (Week 7, Friday midnight)
a) Establish the “base-case” model.
b) Develop a simulation model of the operation, using Arena and include key
performance information on your screen (queues, state, units processed, orders
wasted etc).
c) Specify and establish all required data structures and arrays to be used by Arena.
d) Specify the reports and logs that the model will write out (to a text file) and explain
how you will use these as part of the analysis.
e) Verify and validate your model, its operations and the behaviour of key input and
process variables, and that the model performs as intended. Demonstrate that you
have analysed this data in Minitab.
f) Continue developing your issue analysis that you started in Part 1. Incorporate into
your model the structure, variables and rules you will experiment with in your final
submission. You will not have to produce any results for your improvements at this
stage, but the model should be prepared.
g) Document the work performed as part of this stage and prepare the second progress
Part 3: Your Recommendations: A Written Report (Week 10, Friday midnight)
a) Using your verified and validated model (from Part 2) analyse the different scenarios
that you have identified as part of your solution, based on continuing your issue
analysis in Part 2. Design the simulation experiments, specifying the number of
replications, replication length, warm-up periods etc., in order to ‘optimise’ the
performance of the process in terms of:
• Operational improvements to the line
• Technical improvements to the line
• Commercial opportunities that Kelvin should pursue.
b) Perform sensitivity analyses on key process variables. These will include variables
that management may want to investigate further in relation to improved
maintenance and operational strategies.
c) Establish appropriate confidence intervals for your results.
d) Test your hypotheses. Are your results statistically significantly different (from doing
nothing?). Rank your solutions in order of importance in terms of benefit and results.
e) Prepare a final professional report of the entire simulation study.

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