National Cranberry Cooperative

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National Cranberry Case Report

All Excellent Team

Summer 2012

Memo
By calculating implied utilization of every process, we found that the drying process for wet berries is a bottleneck ofRP1. Utilization of dryers is 180%!!! (comparing to 8~48% of other processes, it is so problematic). Because of this bottleneck, 480 bbls of wet cranberries are not processed per hour on an average “busy” day (17,280 bbls arrive over the 12-hour period). As a result, our temporary holding bins are full from 1:40pm to 11:16pm, the dumping process (=truck waiting) is kept going until 11:16pm, and RP1 shut-down time is delayed to 4:36am. This means, our company has to pay huge money for overtime and dumping cost. To solve this problem, I strongly recommend you to add one more dryer to drying process. We can save $61,819 overtime cost and $13,659 truck drivers’ waiting cost. However, the cost for installing a dryer is just $25,000. We can save $75,478! With one more dryer, we can shorten over time from 5.6hours to 0.2hours and truck waiting time reduced from 7.6hours to0.8hours. Because 0.2hours and 0.8hours are so small numbers, we did not calculate the case when we invest on adding two dryers. Just in case, we notify you that you do not need to consider new investment on bins conversion which cannot solve the problem of overtime cost and net cost saving is -$96,206. Even though it is not related to above bottleneck issue, investment on light meter system for color grading is quite reasonable. Last year, we pay $337,500more because of inaccurate classification. Installing light meter system costs just $40,000. We can save $297,500! To abbreviate, we recommend you to invest on one additional dryer and light meter system.

Supporting Analysis : Working process of process fruit side of RP1

Receiving Dumping Temporary Holding destoning dechaffing drying Separation

(1 for dry,
2 for wet
Berries)

(1 for dry,
2 for wet
Berries)

(dry berries only)

(dry berries only)

All 27 bins
(1-24=250bbls./
25-27=400bbls.)
1~16 dry berries only
17~24 dry or wet
25~27 wet berries only

All 27 bins
(1-24=250bbls./
25-27=400bbls.)
1~16 dry berries only
17~24 dry or wet
25~27 wet berries only

(wet berries
Only)

(wet berries
Only)

Full capacity
Of Separation
= 450*3
=1,350bbl/hr
Effective capacity of
Separation
= 400*3
= 1,200bbl/hr
Full capacity
Of Separation
= 450*3
=1,350bbl/hr
Effective capacity of
Separation
= 400*3
= 1,200bbl/hr
Full drying
Capacity for
Wet berries
= 200 * 3
= 600bbl/hr
Full drying
Capacity for
Wet berries
= 200 * 3
= 600bbl/hr
Full dechaffing
Capacity for
Both berries
= 1,500 * 3
= 4,500bbl/hr
Dry=1,500 bbl/hr
Wet=3,000 bbl/hr
Full dechaffing
Capacity for
Both berries
= 1,500 * 3
= 4,500bbl/hr
Dry=1,500 bbl/hr
Wet=3,000 bbl/hr
Full destoning Capacity for
Dry berries
= 1,500 * 3
= 4,500bbl/hr
Full destoning Capacity for
Dry berries
= 1,500 * 3
= 4,500bbl/hr
Full Capacity of Dumpers
=600*5
=3,000 bbl/hr
Full Capacity of Dumpers
=600*5
=3,000 bbl/hr
Average busy day
Delivery
=1,440 bbl/hr
Dry=360 bbl/hr
Wet=1,080 bbl/hr
Average busy day
Delivery
=1,440 bbl/hr
Dry=360 bbl/hr
Wet=1,080 bbl/hr
Full holding capacity for
Both berries=7,200 bbls.
Dry=4,000 bbls.
Wet= 3,200 bbls.
Full holding capacity for
Both berries=7,200 bbls.
Dry=4,000 bbls.
Wet= 3,200 bbls.

Causes of Delay

1. Calculation of Utilization: Rate in / Capacity
| Dumping| TemporaryHolding| Destoning| Dechaffing| Drying| Separation| Dry| 1,440/3,000= 48%| N/A| 360/4,500= 8%| 360/1,500= 24%| N/A| 1,440/1,200= 120%| Wet| | | N/A| 1,080/3,000= 36%| 1,080/600= 180%| |

2. Inventory Build-up Diagram

Analysis of Investments

Conclusions

According to the previous analysis, we could make a decision for investing on one dryer and light meter...
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