1.) Introduction 2
2.) Process Analysis 2
3.) Process Flow at National Cranberry Cooperative 4
4.) Installing a Light Grading System 5
5.) Decreasing the truck waiting time 6
6.) Bag pack or Bulk Pack 8
7.) Conclusions 9
1.) Introduction
This case analysis looks at the two primary problems at the receiving plant no. 1 (RP 1) faced by National Cranberry Cooperative during the cranberry harvesting period, viz. 1) too much waiting period for trucks before they unload berries at the RP1 and 2) too much overtime costs. There is also a secondary problem regarding grading of process berries. Half of the berries graded top quality are actually not top quality and do not deserve extra premiums paid on the top quality berries.
2.) Process Analysis
We start by making a process flow diagram for the flow of berries at RP1 from the moment berries arrive at the RP1 in trucks to the moment they leave in RP1 after being bag packed, bulk loaded into trucks or loaded into bulk tins.
The capacities of the various processes are based on the assumptions or data as shown below:
Dumping Capacity
Number of Kiwanee Dumpers = 5
Average time taken by truck to load the berries onto Kiwanee Dumpers = 7.5 minutes
(Maximum being 10 and minimum being 5 minutes)
Average weight of berries in a truck = 75 bbls.
Dumping Capacity = 5 * 75 * 60 / 7.5 = 3000 bbls/hr.
Holding Bin Capacities
Bin No. 1-16 can hold dry berries only up to 250 bbls per bin.
Total capacity of bin numbered 1-16 = 250*16 = 4000 bbls
Bin No. 17-24 can hold dry/wet berries up to 250 bbls per bin
Total capacity of bin numbered 17-24 = 250*8 = 2000 bbls.
Bin No. 25-27 can hold wet berries up to 400 bbls per bin
Total capacity of bin numbered 25-27 = 400*3 = 1200 bbls.
De-stoning Capacity
No. of de-stoning units = 3
Capacity of each unit = 1500 bbls/hr
Total de-stoning capacity = 4500 bbls/hr
De-chaffing Capacity
No. of de-chaffing units = 3
Capacity of each unit = 1500 bbls/hr
Total de-chaffing capacity = 4500 bbls/hr
Jumbo Separator and Bailey Mill Lines
No. of separator units = 3
Average capacity of each unit = 400 bbls/hr
Total separator capacity = 1200 bbls/hr
Bagging Station Capacity
Maximum output per day = 8000
Working hours = 12hrs.
Capacity = 8000/12 = 667 bbls per day
Bulk Bin Loading Capacity
No. of loaders for bulk bin loading = 4
Capacity of each loader = 200 bbls/day
Total bulk bin loading capacity = 4 * 200 = 800 bbls per day.
Bulk Truck Loading Capacity
No. of loaders of bulk trucks = 2
Capacity of each loader =1000 bbls/hr
Total Capacity Bulk Truck loading Capacity = 2000 bbls/hr
3.) Process Flow at National Cranberry Cooperative
The bottleneck for wet berries is the drying process with a capacity ranging from 450-600 bbls/hr depending upon whether the wet berries are to be finally bagged or bulk frozen.
For dry berries the bottleneck will be the separator operation with a capacity ranging from 600-1200 bbls/hr. depending upon whether the separators are being used for separating dry berries alone or both wet and dry berries.
4.) Installing a Light Grading System
As given, out of a total of 4,50,000 bbls of berries graded as top quality only half were top quality and deserved the 50 cent per bbl premium. The light grading system which would accurately grade the berries would save 4,50,000*0.5/2 = $1,12,500 per season at one time investment of $10,000 and recurring cost of hiring a skilled operator at $10,000 (assumed)..This would lead to a substantial saving. But another fact needs to be considered that this is a cooperative organization. Although installing a light grading system would lead to increase in the margins of the receiving plant 1 but would be loss for the cooperative as a whole as money instead of being paid to farmers would go to worker who is hired. But status quo can also not be maintained as it leads to wrong distribution of benefits to farmers with a lower quality crop. An alternate solution can to be stricter in the manual grading process and increasing the variety of shade cards so that berries can be rightly classified. One more category in between 2A and 3 can also made having a lesser premium than quality 3. But the various other implications of this step should be taken into account like increased final processing cost and resentment from the farmers.
5.) Decreasing the truck waiting time
The main problem that the receiving plant is facing is that the trucks have to wait a lot particularly in the peak season before they can unload the berries. This cope up with the problem the cooperative installed an additional Kiwanee Dumper last year (i.e. 1969) but that didn't help in solving the problem.
We first analyze the average truck waiting time for the next year with present capacities and assuming 70% to be wet berries and rest dry.
As the wet berry processing would take lesser time if it bulk packed, we assume that during the peak season the wet berries are only bulk packed and dry berries are bag packed.
Assuming a berry arrival of 18,000 bbl in a day (7am to 7pm) in the peak season at a constant rate and , the average wet berry arrival rate would be (18000/12) * (70/100) = 1050 bbls per day and dry berry arrival rate would be 450 bbls per day.
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With the processing starting at 11 am , the holding bins will continue to be filled at this rate subject to the maximum capacities for wet berries (3200 bbls) and dry berries (4000 bbls). The bins capable of holding wet berries would be completely filled after 3200/1050 minutes after 7 am i.e. at 10:03 am and the trucks carrying wet berries would have to wait after that. The bins capable of holding dry berries would be filled unto 450*4 = 1800 bbls.
When the processing starts at 11 am the wet berry processing rate would be 600 bbls/ hr (since they are bulk packed) while arrival rate is still 1050 bbls/hr. The trucks carrying wet berries would continue to queue up to 7 pm.
Total qty of wet berries received at RP1 in a 12-hr shift = 18000*(70/100) = 12600 bbls
Qty received in 1st four hours (starting from 7.00am) = 1050*4 = 4200 bbls
From 11.00 am to 7.00 pm, 8*600 = 4800 bbls will be processed.
Unprocessed qty. = 12600 В– 4800 = 7800 bbls (which includes 3200 bbls in temporary bins). Amount left in trucks = 7800 В– 3200 = 4600 bbls.
The trucks will continue unloading up to 4600/600 minutes after 7 pm that is up to 2:40am. Unprocessed qty of 7800 bbls will require (7800 / 600) = 13 hrs over and above the 8 hr shift, for getting processed.
For peak season, if we start the processing of berries from 7.00 am itself, we can have additional 4 hrs, as compared to usual start time of 11.00 am. Wet berries will be accumulated at rate of 1050 (i.e. arrival rate) В– 600 (i.e. wet berries processing rate) = 450bbls/hr. For 12-hr shift of trucks depositing wet berries, we have total inventory of wet berries = 12*450 = 5400 bbls.
Again we will find the estimated total waiting time for all the trucks as follows:
Out of 5400 bbls, temporary bins will hold 3200 bbls and 2200 bbls will be present in trucks. Total waiting time for trucks = (2200/600) = 3 hr 40 min. While, unprocessed berries will require time = (5400/600) = 9hrs, after 7.00 pm.
Thus the truck waiting times has been reduced just by starting the processing at 7am instead of 11am.
Additional saving in time can be achieved if we add one dryer taking the truck drying capacity 800 bbls. per day.
Wet berries will be accumulated at rate of 1050 (i.e. arrival rate) В– 800 (i.e. wet berries processing rate) = 250bbls/hr. For 12-hr shift of trucks depositing wet berries, we have total inventory of wet berries = 12*250 = 3000 bbls and this can be accommodated in the holding bins. The truck waiting has been reduced to zero. This also has the advantage that the workers at the receiving crew will now be working only for 12 hrs as compared to 15hrs 40min with only three dryers and processing starting at 7am.
If we install one more dryer, it will help us in dealing with the uncertainties as the arrival of berries can be very erratic over the season and shoot unto 22000 per day. But the cost benefit of the second dryer should be analyzed.
Converting the bins for holding both dry and wet berries would help us cope with uncertainty in ratio of wet and dry berries arriving at a particular time. Converting the bins will lend more flexibility. And reduce waiting time further in the case that wet berries arrival more than expected 70% ratio.
6.) Bag pack or Bulk Pack
As given in the bag packing is costlier in terms of more packaging cost ($0.17/ bbl more), freezing cost and also in terms of using more of the drying capacity which is the bottleneck operation in the processing of wet berries.
So it appears that bag packing should not be used at all for wet berries. But there is capacity constraint on the capacity of bulk freezers ( maximum 409200 bbls per season).
The amount of berries to be processed in the 1971 is expected to same as in 1970 (610040 bbls) out of which 70% (about 4,27,000) will be wet and rest dry.
We propose that the dry berries should be bag packed both in the lean and the peak season subject to maximum of around 610040-409200 = 200840 bbls (this is almost equal to amount of dry berries we are expecting to receive next year.
If the wet berries need to be bag packed in case dry berries are not available or arrive in lesser quantities, the wet berries should be bag packed only in the lean period so that the drying capacity is maximum in peak season when the load on the dryer is 100%.
7.) Conclusions
From the above analysis we conclude that we should install at least one more dryer to reduce the truck waiting time, convert bins to hold both wet and dry berries. The light grading system should be avoided as far as possible and as far as possible stricter grading rules should be applied.