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ASSUMPTIONS: 1) There is a cost associated with trucks waiting to be unloaded and it is $5 per hour. 2) When required, for overtime we have considered full-year employees working.
Inventory
396
11 11.67
Time
Dry Berries: Entering Rate = 3000/11 = 272.72 bbls/hr If wet berries are consumed at rate of 600 bbls/hr then (1200-600)bbls/hr of capacity in miller is free Hence there is no Requirement of any additional Capacity. ANALYSIS ON DRYERS TO BE PROCURED Time taken for manufacturing wet berries = 600/hour Total time taken to manufacture wet berries = 7000/600 = 11.67 hrs 4 DRYERS (Speed = 4*200 = 800 bbls/hr) Total time for dryers = 7,000/800 = 8.75 hrs Milling: total time = 10,000/1200 = 8.33 hrs Assuming that workers are paid = 1.5 * 6.5 $/hr = 9.75 $/hr Reduction of 2.92 hrs/day, results in = 28.47 $/day Payback time = 40,000/ (28.47 * 30) = 46.83 months 5 DRYERS (Speed = 5*200 = 1000 bbls/hr) Total time for dryers = 7,000/1,000 = 7
Milling: total time = 8.33 hours Reduction of 3.34 hrs/day, results in = 32.56 $/day Payback time = 80,000/ (32.56 * 30) = 81.98 months Therefore, the optimum strategy will be to procure one new dryer. NUMBER DRYERS 3 4 5 OF DRYING TIME 11.67 8.75 7 MILLING TIME 8.33 8.33 8.33 REDUCTION FROM 3 DRYERS 0 2.92 3.34 PAY BACK MONTHS 46.8 81.9 IN
SAVING OF TRUCK WAITING TIME (with 1 extra dryer): Truck waiting time for 3 dryers: 0 hr Truck waiting time for 4 dryers: 0 hr BIN CONVERSION REQUIREMENT: No dry bins need to be converted to dry/wet bins SCHEDULING OF WORKFORCE AND ANOTHER SHIFT: Here the overtime is so minimal, that addition of another shift is not required.
Inventory
3900 3200
9.03
11
12.67
17.5
Time
Dry berries are entering at rate = 4500/11 = 409bbls/hr Since 600 bbls/hr of mining is free, there is no accumulation of dry berries in holding tanks. ANALYSIS ON DRYERS TO BE PROCURED Time taken for manufacturing wet berries = 600/hour Total time taken to manufacture wet berries = 10500/600 = 17.5 hrs 4 DRYERS (Speed = 4*200 = 800 bbls/hr) Total time for dryers = 10500/800 = 13.125 hrs Milling: total time = 15000/1200 = 12.5 hrs Assuming that workers are paid = 1.5 * 6.5 $/hr = 9.75 $/hr Reduction of 4.375 hrs/day, results in = 42.66 $/day Payback time = 40,000/ (42.66 * 30) = 31.25 months 5 DRYERS (Speed = 5*200 = 1000 bbls/hr) Total time for dryers = 10500/1000 = 10.5 Milling: total time = 12.5 hours Reduction of 5 hrs/day, results in = 48.75 $/day Payback time = 80,000/ (48.75 * 30) = 54.7 months
Therefore, the optimum strategy will be to procure one new dryer. NUMBER DRYERS 3 4 5 OF DRYING TIME 17.5 13.125 10.5 MILLING TIME 12.5 12.5 12.5 REDUCTION FROM 3 DRYERS 0 4.375 5 PAYBACK MONTHS 31.25 54.7 IN
SAVING OF TRUCK WAITING TIME (with 1 extra dryer): Truck waiting time for 3 dryers: 17.08 hr Truck waiting time for 4 dryers: 0 hr BIN CONVERSION REQUIREMENT: No dry bins need to be converted to dry/wet bins SCHEDULING OF WORKFORCE AND ANOTHER SHIFT: Here the overtime is very high (5.125 hrs), we should calculate the overhead in both case (overtime and extra shift). In case of overtime, per worker spending = 5.125 * 6.5 * 1.5 = $49.97 (per worker per day) In case of more shift, per worker spending = 8 * 6.5 = $52 (per worker per day) So it would be better to have overtime instead of adding one extra shift.
7400
Inventory
3200
4.76
11
Time
18
23.3
Dry berries are entering at rate = 6000/11 = 545.45 bbls/hr Since 600 bbls/hr of mining is free, there is no accumulation of dry berries in holding tanks. ANALYSIS ON DRYERS TO BE PROCURED Time taken for manufacturing wet berries = 600/hour Total time taken to manufacture wet berries = 14000/600 = 23.33 hrs 4 DRYERS (Speed = 4*200 = 800 bbls/hr) Total time for dryers = 14000/800 = 17.5 hrs Milling: total time = 20000/1200 = 16.66 hrs Assuming that workers are paid = 1.5 * 6.5 $/hr = 9.75 $/hr Reduction of 5.83 hrs/day, results in = 56.84 $/day Payback time = 40,000/ (56.84 * 30) = 23.5 months 5 DRYERS (Speed = 5*200 = 1000 bbls/hr) Total time for dryers = 14000/1000 = 14 Milling: total time = 16.66 hours Reduction of 6.67 hrs/day, results in = 65.03 $/day Payback time = 80,000/ (65.03 * 30) = 41.25 months
Therefore, the optimum strategy will be to procure one new dryer. NUMBER DRYERS 3 4 5 OF DRYING TIME 22.3 17.5 14 MILLING TIME 16.7 16.67 16.67 REDUCTION FROM 3 DRYERS 0 5.8 6.63 PAYBACK MONTHS 23.5 41.25 IN
SAVING OF TRUCK WAITING TIME (with 1 extra dryer): Truck waiting time for 3 dryers: 370.72 hr Truck waiting time for 4 dryers: 89.24 hr BIN CONVERSION REQUIREMENT: Some dry bins need to be converted to dry/wet bins Cost of truck waiting: = waiting hour * hourly rate * total number of daye = 89.24 * 5 * 90 = $40158 By converting 1 bin, waiting time = 68.17 hr Cost of truck waiting = $30677 Saving = (40158 - 30677) - 7500 (Cost of conversion) = $1981 Similarly, by converting 2 bins, Saving = $640 Addition of 3rd bin is not cost effective. So we should go with converting 2 dry bins to dry/wet bins. SCHEDULING OF WORKFORCE AND ANOTHER SHIFT: Here the overtime is very high (9.5 hrs), so it will be nice idea to add another shift of 8 hours, and the rest 1.5 hrs should be allowed for overtime.