National Cranberry Cooperative Case

Topics: Cost-benefit analysis, 5th millennium, Cost Pages: 5 (1665 words) Published: July 8, 2009
In the current scenario, the major bottlenecks in the system are the drying units for wet berries and the berry separation lines. While the drying units’ capacity can be increased by purchasing additional units, the throughput of the system will still be limited by the limitation of the separation lines. If the average rate of inflow of berries is 1500bbl/hr, then with the effective separation capacity of 1200bbl/hr, the plant will incur a backlog of 300bbl/hr. If the shift start times stay as it is, and the processing divisions start four hours after the receiving division, the truckers toward the end of the day will have to wait, since the cumulative backlog caused by processing will exhaust the bin storage capacity. The wait times for the truckers can be reduced by converting some of the dry bins to wet bins. However, this measure will not completely eliminate the trucker wait times. The best solution is to acquire one additional drying unit and advancing 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 capacity in the bins, even without converting the bins. The truckers will not have to wait to offload the berries. The accumulated backlog of berries can be processed in approximately 3.75 hours after the end of scheduled 12 working hours. With the new expected ratio of wet to dry berries (7:3), not adding an additional drying unit will require the plant to work 9 extra hours to eliminate the backlog. The cost benefit of adding the additional drying unit and advancing the shift start time are higher than the cost benefit of other options considered. THE COMPANY

The Receiving Plant I (RPI) of National Cranberry Cooperative (NCC) processes both wet and dry cranberries in a highly mechanized process involving 400 workers during peak season. The processed berries are sold in bulk and bags. PROBLEM STATEMENT

NCC is currently wrestling with both runaway overtime costs as well as long waiting time for delivery trucks. PROCESS FLOW
The process flow diagram is attached as Exhibit A

From Figure E in the case
Delivery begins at 7 AM
Processing begins at 11 AM
Average Truck per day20/ hour
Average load per truck75 bbl
Average load per hour1500 bbl
Expected split between dry and wet typesDry -30% Wet- 70%

Cranberries Delivered
Color 134460
Color 2401080
Color 31398480
Total Pounds1834020
Total No. of trucks243
Time Interval729
Average Truck per day243/12 = 20 per hour

Plant capacity and demand
Average Receiving per hour (bbls)45010501500
Accumulated berries during 4 hour period (bbls)180042006000 Maximum bin storage capacity (bbls)400032007200
Excess/ Shortage (bbls)2200-10001200

Destone/ Dechaff/Dry
Maximum Destoning capacity 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)0-450-450
Quality GradingCombined for Dry & Wet
Average Separator line capacity per hour(bbls) (3x400)1200 Average receiving by separator line (600 wet + 450 dry)1050 Average receivings when there 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, about 1000 more than the capacity of wet storage bin. This is the first bottleneck in the system which would cause morning queues of the delivery trucks. This shortage could be...
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