1 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,

M. Thiruvarasu

Introduction and issue statement

National Cranberry Cooperative (NCC) is an organization, formed and owned by
growers of cranberries, to process and to market their produce. Through a
Receiving Plant # 1 (RP1), it processes dry and wet berries to prepare them for
process fruit products (for example, juice, canned, frozen berries etc.). A recent
review of last falls operations at RP1 by Superintendent and co-op members has
identified following issues.
Even after installing a 5th Kiwanee dumper at RP1,

The waiting time to unload at receiving is too long and inconsistent. Once
started, receiving is a 7 to 8 minute process, but the growers are upset as
their leased trucks with hired drivers are sitting idle for unknown periods of

time.
Overtime at the plant is out of control.
The berry grading process between numbers 2B and 3 berries is not accurate.
Whenever there is a close comparison as to whether a load is 2B or 3, the
chief berry receiver usually grades it a 3. In 1995 the number 3 berry
premium was $1.50 and was paid on about 450,000 bbls. It was found that
when the berries were used, only about half of them were number 3. This is a

considerable loss in terms of price paid.

There is not enough capacity for wet berries. There need to be more holding
bins.

Following business case discusses measures that can be adopted to cut wait times
for better serving of our growers, to help decide equipment purchase for increasing
capacity, to make the berry grading process more accurate as well as to cut
overtime for cost controlling.

NCC Process Analysis

Process Flow Diagram

2 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,
M. Thiruvarasu
The process flow diagram of the process fruit operation at NCC is as shown on the
next page.

3 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,
M. Thiruvarasu

4 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,
M. Thiruvarasu

Capacity calculation
Capacity of each process step is calculated in barrels per hour (bbls/hr). Please refer
appendix page for detailed calculations.

Receiving

Dechaffing

Drying

2 units
3000 bbls/hr

3 dryers
600 bbls/hr
Separator

5 dumpers
3000
bbls/hr

3 lines
1200bbls/hr
Destoning

Dechaffing

3 units

1 unit
1500 bbls/hr

Bottleneck identifi cation 4500 bbls/hr

It was observed that on a peak harvest day RP1 receives 18,000 barrels of berries of
which 70% are wet harvested and 30% are dry. If we assume that the trucks arrive
uniformly over a period of 12 hours, the bottleneck could be identified by
calculating the implied utilization:
Process Step

Calculations

Implied Utilization

Receiving (dry and wet

(Demand/Capacity)
1500/3000

(In Percentage)
50%

berries)
Dechaffing (wet berries)
Drying (wet berries)
Destoning (dry berries)
Dechaffing (dry berries)
Separator

1050/3000
1050/600
450/4500
450/1500
1500/1200

35%
175%
10%
30%
125%

It is evident from the above calculations that here the bottleneck is

Drying process for wet berries with 175% implied utilization at a capacity
of 600 bbls/hr.

Processing time on a peak day

The peak day processing time can be calculated as,

5 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,
M. Thiruvarasu

Flow rate = Minimum {Demand, Process Capacity}

o At a capacity of 600 bbls/hr & demand of 1050 bbls/hr, the flow rate =
600 bbls/hr
o Hence, Cycle time = 1/flow rate = 1/600 hr/bbls
Time to produce 12600 barrels of wet berries = Time through empty system
+( Units/ Flow rate)
o Time through empty system = # of steps * cycle time = 4/600
o Time to produce 12600 barrels of wet berries = 4/600 + 12600/600 =
21.0066 ~= 21 hrs

Hence, on a peak day it would take 21 hrs to process 18000 bbls of

berries. Assuming that the process starts at 7.00 AM, it will continue until
4.00 AM the next day with continuous operations.

Unloading and waiting time for trucks

At this flow rate, the number of barrels of berries processed in 12 hrs = 12 *

600 = 7200 bbls/hr

The total wet berries coming in for 12 hrs = 18000 * 0.7 = 12600 bbls
The inventory accumulated = 12600 7200 = 5400 bbls
Now, the holding bins for wet berries have a capacity of 3200 barrels, hence
5400-3200 = 2200 bbls of berries will be waiting in trucks after 7.00 PM. Until
the holding bins are emptied for the remaining 2200 barrels, the trucks would

continue to wait.
With the flow rate of 600 bbls/hr, time taken to free up these 2200 barrels=
2200/600 = 3.6 hrs.

Assuming every batch of trucks arrive simultaneously, the last truck would
arrive at 7pm and wait 3.6 hours and unload at 10:40 pm.

Proposed changes
Add one dryer
It is evident from the above calculations that drying wet berries is a bottleneck.
Addition of one dryer would be beneficial as shown in these calculations.

One dryer addition will change flow rate to, 4 * 200 = 800 bbls/hr
In 12 hours, number of barrels processed = 12 * 800= 9600 bbls

6 National Cranberry Cooperative

A business case report by A.Chhatre, J. Parkinson, A. Sivaraman,
M. Thiruvarasu
Accumulated Inventory = 12600-9600 = 3000 bbls
As the holding bin capacity is 3200 bbls, it will accommodate the accumulated
inventory. This will resolve issue with waiting of trucks.
The processing time now becomes (4/800) + (12600/800) = 15.8 hrs. This is a
reduction of 5 hours over 21 hours. This helps reducing overtime payments to
workers.
A point to note is the cost of the new dryer is $60,000.

Add holding bins

Let us calculate impact of converting holding bins 1-16 from holding just dry berries
to dry as well as wet berries.

Number of holding bins required to hold the last 2200 bbls of inventory

= 2200/250 = 8.8 ~= 9 bins.

The cost required for this conversion will be 9*10000 = $90,000.

Add a light meter system for color grading

In 1995, NCC lost 1.5 * 450,000/2 = $337,500 on premium due to shortcomings in
color grading process. A new light meter system installation that costs $40,000 with
an additional full time skilled operator will help drastically reduce this loss.

Summary
In conclusion,
By adding one dryer instead of the holding bins, we would solve the
problem of the trucks waiting and also reduces the overtime costs
which would not be possible by just increasing the number of holding

bins.
In addition to the dryer, the light meter system would reduce losses
incurred by paying extra premium.

Appendix
Receiving:
Although the berries in the truck are sampled for weighing and color coding we shall
take the Kiwanee dumpers as the main equipment to calculate capacity at
receiving.

Time taken to empty 1 truck at Kiwanee dumper: 7 to 8 min.

Average Time per truck: 7.5 min.
Number of trucks per hour by 5 dumpers = 7.5*60*5= 40
Capacity in barrels per hour = 40 * 75 = 3000 bbls/hr

Wet Processing

Dechaffing: Capacity of 2 units = 2 * 1500 = 3000 bbls/hr

Drying: Capacity of 3 units = 3 * 200 = 600 bbls/hr

Dry Processing

Destoning: Capacity of 3 destoning units = 3 * 1500 = 4500 bbls/hr

Dechaffing: Capacity of 1 dechaffing unit = 1 * 1500 = 1500 bbls/hr

Separators

Capacity of 3 line separators with average efficiency of 400 bbls/hr = 3*400

= 1200 bbls/hr