Case Bottling

Topics: Costs, Part-time, Cost Pages: 9 (1910 words) Published: February 23, 2011
Problem Statement:

The main problem in this case “Bottling at Creemore Springs Brewery” is that will the cleaning of the bottles change to be in the house cleaning or maintain its current method of cleaning with a contractor. Having Thompson and Fuller responsible for the decision to be made, which have to be a strategic one or it will effect the long term profitability and success of the company. They have to make the company be more productive and efficient.

Problems/Sub problems/Issues:

There are two kinds of aspects in this case, one is the current cleaning process and the other is the new cleaning process.

The current processes of cleaning the bottles have been done fairly well. The Creemore Spring drivers have to pick the bottles, drop them off and re-pick them up again. Creemore Spring had been forced to recheck the bottles due to the fact that some were not up to their high quality standard. Other bottles would come back chipped or even broken, which would cost the company an extra $1000 a year for replacement bottles. However it have been an inefficient one where the drivers had to make some trips to drop the current empty bottles off since they had reached their maximum level of empty bottles and pick up the previous ones. Sometimes there would be no cleaned bottles to be picked up where the driver have to go back ones again to pick up the bottles at a later date. Causing a slack of bottles and down on time, and extra shipping cost which the company had estimated a cost of $15,000 a year.

The new cleaning process which is in the house cleaning is an issue for Thompson and Fuller have to be well decided. They have to know if they would want to purchase new equipment or purchase older and less expensive equipment. Purchasing the new equipment which would have obvious technology advantages, but they are unsure as to whether the new equipment would last longer compared to the older equipment. The extra expenses that would come with the new equipment have to be considered, which is estimated to be an additional $2.15 for water, $2.23 for electricity and $4.60 for gas for every hour that it runs. The maintenance cost for the equipment and the additional labor cost have to be considered too. The current process of disposing and removing Creemore’s water costs them $35 per cubic meter effluent with their older machines. Purchasing the newer equipment would provide them with an access to use their municipal sewer system which would cost them $6 per cubic meter, which would save them some money on yearly basis.


Current Production line:

Step: 1 Step: 2 Step: 3 Pick up bottles Drop of Bottles Pick up Bottles

The current production line that’s used by Creemore is simple. The company picks up the empty bottles from the business that sell their product and brings them back to their warehouse. When they reach their maximum capacity of empty bottles they would take it to their cleaning contractor to have them cleaned and sterilized to be reused. Finally when the bottles would have been cleaned a driver would revisit the cleaning contractor to pick the cleaned bottles up and bring them back to the brewery to be refilled and sold.

Calculations (Estimated):

- Number of bottles to be cleaned and reused:
2,200,000 * 0.75 = 1,650,000

- Cost to clean the bottles yearly:
1,650,000 * $0.08 = $132,000

- Cost of shipping the bottles to the cleaner:

- Cost of replacement of bottles:

- Total cost per year for the current bottles:
$132,000 + $15,000 + $1000= $148,000

- Cost of bottles to be cleaned per year:
1,650,000 * $148,000=

In-House Production Line:

Step: 1 Step: 2 Step: 3 Workers load...
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