National Cranberry Cooperative Case Study

1. How might transport vehicles be utilized more effectively? Should crews be scheduled differently on peak days?
 More crews should be scheduled in the bagging station during peak days
 The fourth bagging station should be utilized during peak hours (instead of just three of the four being used at a given time)
 An additional 2,667 bbls per 12-hour period could be processed with these changes
At receiving plant no. 1 (RP1), trucks would arrive randomly throughout the day, with a random amount of berries, anywhere from 20 to 400 bbls. In order to utilize transport vehicles more effectively, there should be crews scheduled differently on peak days. It only takes 5 to 10 minutes to unload a truck into a Kiwanne dumper, but the backup would occur when the holding bins were full, causing drivers to have waits up to 3 hours.
The backup is not occurring in receiving, so now additional crews are necessary at that station. All feed conveyors are in use during peak times so no new crews need to be added there. However, there seems to be a backup occurring in the bagging station. Instead of keeping the fourth bagging machine as a spare, they should add another five-member team to operate the fourth bagging machine during peak hours. This would result in an additional 2,667 bbls per 12-hour period, or a total of 10,667 bbls per 12-hour period. The additional crews and adding of a bagging station would reduce the number of berries that need to be in holding, and cut down on wait time for the transport trucks.
Calculations:
8,000 bbls/3 bagging machines = 2,667 bbls per machine per 12-hour period
4 bagging machines times 2,667 bbls per machine = 10,667 bbls per 12-hour period
10,667 bbls per 12- hour period means 21,333 bbls per 24-hour period
2. Would the installation of a berry grader positively impact the farmers’ income or the cooperative’s?
 The installation of a berry grader positively impacts the cooperative’s income, while negatively impacting the farmers’ income
 Currently, the cooperative is overpaying the farmers’ by $112,500 per year due to the fact that half of the No. 3 berries should actually be graded No. 2B
The installation of a berry grader would positively impact the cooperative’s income, while negatively impacting the farmers’ income. With the current system, 450,000 bbls. of berries are paid a premium of 50 cents per bbl, yet when the berries are used only about half of them are actually considered No. 3’s (berries with the best color). So basically, the cooperative is paying a premium on 225,000 bbls. more than it should be, and that worked out to about $112,500 in 1970. It would cost the cooperative $10,000 to install a berry grader, plus the cost of another full-time skilled operator, but it would still impact their income greatly. The farmers’ would probably prefer that the cooperative continue to grade the color using pictures as a guide, because they are being paid a 50 cent premium on about half of their No. 3 berries that should actually be considered No. 2B.
Calculations:
450,000 bbls. divided by 50% equals 225,000 bbls.
225,000 bbls. at 50 cent each is equal to $112,500 per year
Fixed cost: $10,000 for installation of berry grader
3. What is the impact of installing one new dryer? Two new dryers?
 Each additional dryer will increase the amount of water-harvested berries that can be processed by 200 bbls. per hour for berries loaded to bulk trucks, and 150 bbls. per hour for berries to be bagged
 The cooperative should install one new dryer in order to meet the increase in water-harvested berries from 58% to 70%
The impact of installing one new dryer would be an additional 200 bbls. per hour for berries that are to be loaded into bulk trucks, or 150 bbls. per hour for berries that will be bagged. Installing two new dryers would allow the plant to dry an additional 400 bbls. per hour for berries to be loaded into bulk trucks, or 300 bbls. per hour for berries that will be bagged. Since the percentage of water-harvested berries will increase to 70% from 58% the prior year, the cooperative should install one new dryer at $25,000. With one new dryer, the cooperative can process 33% more wet berries than with just 3 dryers, and that will be able to handle the 12% increase in the percentage of water-harvested berries.
Calculations:
3 dryers times 200 bbls. equals 600 bbls
3 dryers times 150 bbls. equals 450 bbls.
200bbls./600bbls. equals 33%
150 bbls./450 bbls. equals 33%
4. What is the purpose of the storage bins? Why do storage bins need to be converted? How many should be converted?
 The storage bins are used to hold berries between receiving and destining and dechaffing
 There will be more water-harvested berries in the next year, so some of the dry barrels need to be converted to wet barrels.
 A total of 19 (out of 27) wet barrels are needed, since there are currently only 11 barrels that can be used for water-harvested berries that means that 8 of them will need to be converted
The purpose of the storage bins is to hold the berries between receiving and destining and dechaffing. Some of the storage bins are for dry berries, a handful of storage bins can be used for either wet or dry berries, and a few of the holding bins are for wet berries only. Currently, only 11 bins could be used for wet berries, but the percentage of wet berries will increase from 58% to 70% in the next year. This increase is why some of the dry berry holding bins need to be converted to be able to hold dry or water-harvested berries. It will cost $5,000 per bin to convert.
Since only 41% of the barrels can currently be used for water-harvested berries, a certain number will need to be converted to be able to handle the increase in water-harvest berries in the next year. There are a total of 27 holding barrels, so at least 70% of them must be able to hold water-harvested berries, or a total of 19 of the 27 barrels. That means that 8 of the dry holding barrels need to be converted to wet or dry barrels. At a cost of $5,000 per barrel, that will cost the cooperative $40,000, but it will be worth it to be able to handle all of the deliveries and cut down on idle time in the following year.
Calculations:
16 dry barrels, 8 wet/dry barrels, 3 wet barrels
11 out of 27 barrels means that currently 41% can handle wet berries
70% of the 27 total barrels is 19 barrels total that have to hold wet berries
19 barrels (wet barrels needed) minus 11 wet barrels already in use equals 8 to be converted