Sunday, January 20, 2019
National Cranberry Cooperative Case
EXECUTIVE SUMMARY In the current scenario, the major chokepoints in the arrangement ar the drying units for idiotic berries and the berry breakup lines. While the drying units cogency apprise be accessiond by purchasing impartitional units, the throughput of the system bequeath still be limited by the limitation of the separation lines. If the bonnie consec localise of inflow of berries is 1500bbl/hr, then with the effective separation message of 1ccbbl/hr, the plant pull up stakes incur a backlog of 300bbl/hr.If the shift clams propagation stay as it is, and the processing divisions spark off four moments after(prenominal) the receiving division, the truckers toward the end of the solar twenty-four hour period will have to rest, since the cumulative backlog caused by processing will exhaust the bin storage skill. The holdup cadences for the truckers can be reduced by converting some of the dry bins to nettled bins. However, this measure will not completely e liminate the trucker wait times. The best solution is to acquire one spare drying unit and forward-moving the processing shift from 11AM to 8AM.The backlog per hour of 300bbl/hr (due to the separation unit), will be manageable by the available storage condenser in the bins, even without converting the bins. The truckers will not have to wait to off debauch the berries. The accumulate backlog of berries can be affect in approximately 3. 75 hours after the end of plan 12 working hours. With the new pass judgment ratio of rigorous to dry berries (73), not adding an superfluous drying unit will require the plant to work 9 extra hours to eliminate the backlog.The follow benefit of adding the special drying unit and advancing the shift start time ar higher than the follow benefit of other pickings considered. THE COMPANY The Receiving be I (RPI) of National Cranberry Cooperative (NCC) processes both rigorous and dry cranberries in a highly mechanized process involving 400 workers during peak gentle. The touch on berries are sold in bulk and bags. PROBLEM STATEMENT NCC is soon wrestling with both runaway overtime costs as substantially as long waiting time for delivery trucks. PROCESS fluxThe process flow diagram is attached as Exhibit A ANALYSIS From act E in the case Delivery begins at 7 AM Processing begins at 11 AM second- point Truck per day20/ hour Average load per truck75 bbl Average load per hour1500 bbl Expected split between dry and strong types ironical -30% Wet- 70% Cranberries Delivered Wet768600 Dry1065420 Color 134460 Color 2401080 Color 31398480 append Pounds1834020 Total No. of trucks243 clipping Interval729 Average Truck per day243/12 = 20 per hour Plant condenser and demand ReceivingDryWetTotal Average Receiving per hour (bbls)45010501500Accumulated berries during 4 hour plosive speech sound (bbls)180042006000 Maximum bin storage electrical faculty (bbls)400032007200 Excess/ Shortage (bbls)2200-10001200 Destone/ Decha ff/Dry Maximum Destoning aptitude per hour(bbls)450004500 Excess/ Short over average receiving rate per hour(bbls) for destoning 405004050 Maximum Deschaffing capacity per hour(bbls)150030004500 Excess/ Short over average receiving rate per hour(bbls) for deschaffing 105019503000 Maximum Drying Capacity per hour(bbls)0600600 Excess/Shortage over average receiving rate per hour(bbls) for drying (=600-1050)0-450-450Quality GradingCombined for Dry &038 Wet Average Separator line capacity per hour(bbls) (3&215400)1200 Average receiving by separator line (600 wet + 450 dry)1050 Average receivings when thither are no bottlenecks in the system1500 Excess/ Short over average receiving rate per hour(bbls)-300 1. While the receiving starts at 7. 00 am, the processing starts at 11. 00 am (from Figure E in the case). Accumulated wet berries till the plant starts (1100) is 4200 bbl, active 1000 more than the capacity of wet storage bin.This is the first bottleneck in the system which would cau se morning queues of the delivery trucks. This famine could be eliminated by converting some of the dry bins to wet bins. However, as will be seen, the downstream bottlenecks will still cause the converted bin capacity to be wanting. 2. There are two limitations on throughput for Receiving Plant 1. For wet cranberries, throughput is limited by the Dryer capacity to 600 bbl/hr. In damage of total throughput of RP1, the limitation is on separating capacity at 1200 bbl/hr.At the drying unit, the total processing rate of wet berries falls short of the arrival rate (1050 bbl/hr) by 450 bbl/hr. The solution is to either increase the overtime hours, purchase additional dryers or a combination of both. filling I No dryers are purchased and overtimes are added Total received per day (12 hrs)Accumulation till 7. 00 pm if processing start at 11. 00 amProcessing in a day (12 hrs)Additional hours reqd Additional overtime cost* per peak Peak placate (09/20 10/9) wet12x1050=126004200+8*450=78 00600&21512= 72009 hours for processingUSD 9*36*6*20= 38880 dry12x450=54001800 + 8*0=1800600&21512= 72000 hours (shortfall in wet berry processing capacity/processing speed) (12600-7200)/600= 9 hours * staff withdraw to be hired in shipping(15 workers for one additional hour), dechaffing (one worker), milling(15) and shipping units (20) ** overtime charges USD 6. 00 per worker per hour Thus dry berries are elegant in full trance there is considerable backlog in wet berries which will command 9 hours of overtime but still would not able to avoid truckers queues.If the some of the dry bins are converted to wet bins to maximize the wet capacity to close 5400 bbl, it will reduce the wait times for the truckers, but not completely eliminate it. As a result the receiving department will have to work over their scheduled 12 hour shift. Option II One dryer is purchased and overtimes are added Considering that the separator capacity is 1200 bbl/hour, we can at present add only one dry er line which will enhance the drying capacity to 800 bbl / hr. Let us consider a scenario where wet is processed at 800bbl/hr and dry at 400 per hour Total received per day (12 hrs)Accumulation till 7. 0 pm if processing starts at 11. 00 amAccumulation till 7. 00 pm if processing starts at 8. 00 amProcessing in a day (12 hrs)Additional hours reqd Additional overtime cost* per peak season (09/20 10/9) wet12x1050=126004200+8*350=70001050+8*250=3050800&21512= 96003. 75$ 810*20 days= $ 16200 dry12x450=54001800+8*50=2200450+8*50= 650400&21512= 48000. 00 (shortfall in processing capacity/processing speed) (12600-7200)/600= 9 hours * staff posit to be hired in shipping(15 workers for one additional hour), deschaffing (one worker), milling(15) and shipping units (20) ** overtime charges USD 6. 0 per worker per hour Thus dry berries are processed in full while there is considerable backlog in wet berries which will necessitate 3. 75 hours of overtime. If we continue to start the process ing shift at 11 am we wouldnt be able to avoid truckers queues because of shortage in bin capacity. However, we start the shift at 8. 00 am, this can be avoided to a large extent Option III No dryers are purchased and overtimes are added Let us consider another scenario in which wet is processed at 1000bbl/hr (i. e. two additional dryers) and dry at 200 per hour Total received per day (12 hrs)Accumulation till 7. 0 pm if processing starts at 11. 00 amAccumulation till 7. 00 pm if processing starts at 8. 00 amProcessing in a day (12 hrs)Additional hours reqd Additional overtime cost* per peak season (09/20 10/9) wet12x1050=126004200+8*50=46001050+8*50=14501000&21512= 120003. 0$ 648*20= $12960 dry12x450=54001800+8*250=3800450+8*250= 2450200&21512= 24000. 0 (shortfall in processing capacity/processing speed) (12600-7200)/600= 9 hours * staff need to be hired in shipping(15 workers for one additional hour), deschaffing (one worker), milling(15) and shipping units (20) ** overtime char ges USD 6. 0 per worker per hour EVALUATION OF LIGHT METER SYSTEM In 1980, 75 cent premium was paid per bbl on about 450,000 bbls of berries of which about 225,000 turned out to be not of high quality. This cost the caller-out $168,750. We presume that this is also the cost incurred by the lodge every(prenominal) year. Since the cost of installation is $20,000 plus hiring of a full time versatile operator. Cost of operator = $6. 50/hourx2000 hours per year=$13,000 per year Savings to the company excluding onetime cost of $20,000 = $155750 RECOMMENDATIONS 1.The company take to purchase one additional dryer cost of 40,000 else it would have to spend $38880/ year in additional overtime. Considering the capital cost and the overtime spent ($16200), the additional expenditure can thus be recouped in less than two years. The last option of two dryers would lead to only marginal savings in additional overtime ($3240/year) over the option of buying one dryer. 2. The processing of ber ries of berries should start at 8. 00 am instead of current 11. 00 am to prevent shortage of bin capacity. . The limitation in separation capacity is serious and measures need to be taken to overcome it. For this, either the capacity of the system needs to be added or the quality of berries needs to be improved so that the separation system can work at its peak capacity of 450bbl/hour/line. However, without further indications on the cost of additional separation units it is not possible to conduct cost-benefit analysis. 4. In view of the substantial cost savings, the company should buy the light meter system.