National Cranberry Cooperative

Your assignment is to develop a process flow diagram for NCC and use it to analyze the fruit processing operation at Receiving Plant #1. The purpose of the assignment is to provide an exercise in using process flow analysis to both diagnose an operating problem and analyze various options for solving the problem. Read the case and answer the questions below in an executive summary. Attach a process flow diagram and a supporting calculations spreadsheet to your report. Draw a process flow diagram showing the major process steps, storage and flows. Indicate the capacity at each of the process steps. You should assume: a. b. c. d. e. 16,400 barrels per day is the average of deliveries over the 20 peak days from 9/20-10/9. Each truck carries 75 barrels on average. Trucks arrive uniformly over a 12-hour period starting at 7am and ending at 7pm. There is one shift of receiving personnel of 15 employees. The plant starts operating at 7am and has two shifts with the following personnel per shift: a. 1 person for destoning, dechaffing and drying b. 15 persons for the milling portion of the separating process c. 1 control room operator. f. Trucks carry either wet berries or dry berries but not both and there are separate lines for trucks carrying wet berries and dry berries. g. Each days harvest consists of 80% wet berries and 20% dry berries. h. Due to new technology, each dryer now has increased its capacity by 12.5% to 225 barrels per hour. i. Separator capacity cannot be increased. j. Only consider the receiving and processing departments up to and including the Bailey mills. Ignore the packaging and shipping departments. k. Ignore the statement in the case about the size of the crew after 11pm. All required receiving workers must be present until all trucks have dumped their berries and all required processing workers must be present when the plant is operating.

Process flow can be found after the responses to the 6 questions.

1. Make a list of all workstations and determine the capacity of each in barrels per hour. Which operation (or operations) is the bottleneck? Bottlenecks Wet berry Drying station Dry berry none Wet and dry berry Jumbo separator and Baileys Mills

Please see workbook sheets Capacity and Utilization for calculations.

2. Determine how long the receiving department must stay open to unload all of the berries. Also determine how long the processing department must stay open to process berries received in a day. The receiving and processing departments each schedule their own workers. Receivers can leave after the last truck unloads its berries into the bins. Processors can leave after the last berries are separated and run through the Bailey mills.

Receiving dept - Wet berries Because the drying capacity is only 675 bbls per hour and there are 1093 bbls of wet berries being delivered per hour, 418 bbls of wet berries are backed up uniformly per hour, i.e. 1093 675. Over a 12-hour period this translates to 5016 bbls of wet berries being backed up, i.e. 418 * 12 hours. With there being a dumping capacity of 2400 bbls available per hour, the receiving dept needs to be open an additional 2.09 hours for all wet berries to be processed through the receiving personnel totaling 14.09 hours. With the 2.09 additional hours the receiving dept will need to stay through 9:06pm for the trucks to complete their dumping of wet berries. Processing dept Wet berries During a peak day, the avg delivery per day is 16,400 barrels. 80% of these barrels are wet berries, i.e. 13,120 bbls. Because the drying capacity is only 675 bbls per hour for wet berries, it will take approx. 19.44 hours for all wet berries to be processed, i.e. 13,120/675. The processing dept will need to work an additional 3.44 hours. Thus, the processing dept will need to stay until 2:26am for all wet berries to be processed through the processing dept. 3. For the 20 peak days, and considering a 5 day week, how many hours of overtime are there in the receiving department? 6.09 hours per day, i.e 14.09 hours 8 hours; or alternatively 30.45 hours per week, i.e. 6.09 hours per day * 5 days How many hours in the processing department? 3.44 hours per day. There are 2 shifts of processing personnel that work a total of 16 hours thus the 3.44hours per day, i.e. 19.44 hours 16 hours (accounting for 2 shifts); or alternatively 17.2 hours per week (3.44 hours per day * 5 days). How many in total? 9.53 hours per day (6.09 hours per day (receiving) + 3.44 hours per day (processing)) or alternatively 47.65 hours per week, i.e. 9.53 hours per day * 5 days. Please see Overtime & berry grade class. worksheet for calculations. 4. The average hourly rate of overtime pay for full year and seasonal workers taken together is $15.75 per hour. What is the total overtime pay for receivers, processors and in total for the peak season? Receivers 6.09 hrs per day * $15.75 per hour * 15 receivers * 20 days = $28,775.25 Processors 3.44 hrs per day * $15.75 per hour * 17 processors * 20 days = $18,421.20 Total for peak season $28,775.25 + $18,421.20 = $47,196.45

Please see Overtime & berry grade class. worksheet for calculations. 5. What are the basic options for improving the operation? Option 1 install a light meter system for color grading As stated in the case, half of the 450,000 bbls were No. 3 berries and should have been paid the $1.50 premium. With installing the light meter system, this would save RP1 450,000 * $1.50/2 = $337,500 per season. Factoring in the one time cost of $40,000 to install the system and recurring cost in hiring a skilled operator @ $20.00 an hour or $41,600 annualized, i.e. $20 per hour * 40 hours per week * 52 weeks, (assumed as factory and seasonal workers are paid $15.75 per hour for overtime so their regular hourly rate is $10.50; the skilled labor to operate the system needs to be paid as much as the chief berry receiver thus assuming their hourly rate is almost double that of factory and seasonal workers) the cost savings is still substantial. However, we need to take into account the following An alternate solution to installing the light grading system could be to increase the number of variety shade cards for the manual grading process. For example, adding a category between 2B and 3 berries so that the berries can be accurately classified. However, this could have negative implications to farmers with lower quality berries such as resentment, farmers wanting to leave the cooperative, etc. Increasing the time it takes for trucks to dump the berries. Currently, it takes 7 to 8 minutes for a delivery truck to dump the berries, empty its contents and leave the platform. The case does not mention whether or not the installation of the light grading system will decrease the time it takes to dump the berries. As such, it is a fair assumption the light grading system can in fact increase the time to dump the berries where the receivers may need to stay later than they already are or need to during peak season to complete receiving the berries. In addition, with the increased time for dumping, this may lead to increased time and cost for processing. While the light grading system may lead to cost savings in better grade classification of the berries, the light grading system does not aid in increasing the wet berry processing time as the dryer capacity is still 675 bbls per hour. However, the cost savings incurred from installing the light grading system for better grading classification of berries $337,500 can be used in converting dry bins to wet bins or purchasing additional drying units.

Please see Overtime & berry grade class. worksheet for calculations. Option 2 Convert dry berry bins into wet berry bins The cost to convert dry to wet bin is $10,000 per bin. However, the current wet berry bin capacity is 3,200 bbls per hour with a utilization of 34.16% (less if you factor in the wet berry back up due to truck dumping capacity). Thus, converting dry berry bins to wet berry bins does not impact processing time in any way. Please see Utilization worksheet fro calculations. Option 3 Purchase additional dryers @ $60,000 per unit Purchasing 2 additional drying bins increasing total hourly capacity by 450 bbls per hour to 1,125 bbls per hour. This will be enough drying capacity for wet berry processing, i.e. 1093 bbls of wet berries can be dried by 1125 (5 dryers * 225 bbls per hour drying capacity) wet berry drying capacity translating to a utilization of 97.16%. However, in solving the wet berry dryer capacity bottleneck another bottleneck

appears Jumbo Separator and Bailey Mill capacity @ 1200 bbls per hour for wet and dry berries that are being conveyed @ 1366 bbls per hour. Please see Purchase 1 addl drying unit and Purchase 2 addl drying units for calculations 6. Determine which option(s) to pursue? I would recommend installing the light meter grading system and the purchase of 2 additional dryers. The st 1 year/seasons savings with not having to pay a premium No. 3 berries for 225,000 bbls minus the one time cost for the 2 additional dryers & installation of the light grade system and the recurring costs of the annual salary for skilled worker operator for the light grade system and the overtime the receiving personnel in working a 12 hour day is $117,000. The recurring savings for each season after implementing the light grade meter system and the 2 additional drying units is $277,000 per year/season. These savings can be used towards looking at technology enhancements in increasing the Jumbo Separator & Bailey Mills capacity. Also, with the bottleneck now being the Jumbo Separator & Bailey Mills the Receiving Plant may want to decrease its total operating hours from 7am to 11pm to 7am to 9pm as the plant only needs to operate 13.66 hours or 14 hours (16400 bbls per day / 1200 Jumbo separator and Bailey Mills capacity). In decreasing the number of hours for operation, the plant may incur additional savings with not having personnel on staff for 16 hours, utility savings with only being open for 14 hours etc. Also, the incurred savings may aid the receiving plant in right sizing the receiving personnel hours with the purchase of additional dryers or other equipment. Determine how many hours of overtime will be saved in receiving, processing and total using your recommendations. Then calculate the dollar savings from this reduction in overtime over the 20 day peak period. Overtime savings from receiving Purchase of 1 dryer - $257.51per day, $5,150.25 for 20 day peak season Purchase of 2 dryers - $921.06 per day, $18,421.20 for 20 day peak season

Overtime savings from processing Purchase of 1 dryer - $493.76 per day, $9,875.25 for 20 day peak season Purchase of 2 dryers - $921.06 per day, $18,421.20 for 20 day peak season

Total overtime savings from both receiving and processing Purchase of 1 dryer - $1,178.57 per day, $23,571.45 for 20 day peak season Purchase of 2 dryers - $1,414.82 per day, $28,296.45 for 20 day peak season

Total Savings from Installation of light grade system and drying units Total savings from 1 season - $117,000 nd Total savings from 2 season - $277,000
st

Please see worksheets Dryer Savings and Light Grade & Dryer savings for calculations Note: make one recommendation and calculate the savings. Then make a second recommendation and calculate the marginal savings from this. Keep adding recommendations until the cost of the

improvement is less than the marginal savings. For example, if you are suggesting the purchase of multiple quantities of an item, first suggest getting only one of those items and determine the savings. Then try a purchase of a second of those items and determine the marginal savings, etc. Also note that you should analyze flows of berries not amounts at hourly points in time. For example: 16,400 berries divided by 12 yields 1367 barrels of berries arriving per hour. 80% of this means that 1093 barrels of wet berries arrive per hour. Do not make an analysis that shows how many berries there are at 8am, how many at 9am, etc. All flows are uniform throughout the day. Do not forget that when you relieve one bottleneck, another pops up. Also consider the storage capacity for the wet and dry berries. There is no storage for berries inside the plant. Ignore startup and shutdown times and consider all movements between workstations as instantaneous. For example, consider the dryers as berries moving on a belt under a heater rather than something similar to clothes dryers. To keep calculations as simple as possible, you should assume no work in process berries in the plant. It is only necessary to analyze flows in barrels per hour.