)

Trucks

Trucks

Dry Wet

Dry Wet

Dry Wet

3@1500bbls/hr 3@1500bbls/hr 3@200bbls/hr

Dry Dry, Damp

Dry 3@400bbls/hr Dry, Damp

Capacity at Each Process Step:

Dumper capacity = 3000 barrels per hour (5 dumpers * 75 barrels per hour) * (8 trucks per
hour = 60 minutes / 7.5 minutes). Average time to back a truck onto a dumper is 5-10 minutes,
so about 7.5 minutes.

▪ Temporary holding capacity for dry berries = 4000 barrels per hour (16 bins for dry berries
* 250 barrels per bin)
▪ Temporary holding capacity for wet berries = 3200 barrels per hour (3 bins for wet berries *
400 barrels per bin plus 8 bins for both dry and wet berries * 250 barrels per bin, taking the
assumption that these bins are used for wet berries)
▪ Destoning capacity = 4500 barrels per hour (3 units * 1500 barrels per unit)
▪ Dechaffing capacity = 4500 barrels per hour (3 units * 1500 barrels per unit)
▪ Drying capacity = 600 barrels per hour (3 units * 200 barrels per unit) ( Bottleneck
▪ Separating capacity = 1200 barrels per hour (3 units * 400 barrels per unit)
▪ Bulking and Bagging = 3133 barrels per hour (4*200+2*1000*(5/6)+8000/12=3133)

|Process |Required Capacity |Available Capacity

|Implied Utilization |
|Dumping |1500 |75*(60/7.5)*5=3000 |
1500/3000=50% |
|Holding Bins(Dry) |1500*0.3=450 |16*250=4000
|450/4000=11.25% |
|Holding Bins(Wet) |1500*0.7=1050 |8*250+3*400=3200
|1050/3200=32.81% |
|Destoning |450 |3*1500=4500 |
450/4500=10% |
|Dechaffing |1500 |3*1500=4500 |
33.33% |
|Dryer (bottleneck) |1050 |3*200=600 |
1050/600=175% |
|Separating and Milling |1500 |3*400=1200 |
1500/1200=125% |
|Bulking and Bagging |1500 |4*200+2*1000*(5/6)+8000/12=3133
|1500/3133=47.88% |

Since the Implied Utilization is greatest in the Dryer Section, the “Bottleneck” is in the “Drying
Process”

2)

➢ The capacity of dryer(wet only) is 600 bbls/hr

➢ So the plant can process 600 bbls of wet berries at most per hour

➢ The capacity of separator is 1200 bbls/hr

➢ Assume the rest of 600 bbls are dry berries

➢ The maximum throughput rate is 1200 bbls/hr

There were nine jumbo separators along each of the three feed conveyors.
It was estimated that the average effective capacity was probably slightly less than 400 bbls
per hour for each line.
The maximum throughput rate = 9/3*400 bbls/hr= 200 bbls/hr

The National Cranberry Cooperative has to change the operational format of receiving plant # 1
to meet production requirements during the high volume period of the cranberry harvest while
reducing the costs of trucks waiting, overtime and inaccuracy of the grading process. The two
types of harvesting techniques are water(wet) and dry which require different procedures to
process them.

Factors affecting Throughput Rate:

Capacity Constrained
Processing Start Time
Overtime Cost

The specific issues that have to be evaluated are the current maximum capacity the plant can
handle at this time, the cost of labor (including overtime), the wait time to unload trucks as well
as the benefits/cost of capital investments for the fifth Kiwanee dumper that was installed the
past winter, installation of 2 new dryers, conversion of the holding bins to wet/dry units as well
as a light meter for color grading.
3)

The major reasons for trucks waiting and excessive overtime

The National Cranberry Cooperative’s receiving plant number 1 (RP1), overtime costs are too
high and delivery trucks and their drivers have to wait several hours to unload. The trucks have
to wait because the plant’s holding bins fill up and there is not temporary storage. The holding
bins fill up because within the cranberry operating system there is a bottleneck, a place in the
production process where production slows down because of a slow or insufficient number of
machines. This bottleneck is being caused by the lower relative capacity of the dryers. The
National Cranberry Cooperative (NCC) has three problems to cause for trucks waiting and
excessive overtime. First reason is that the limited capacity of dryer. Drying capacity is only 600
barrels per hour. This is significantly lower compared to the capacity of the other steps in the
operation. NCC thus had to pay drivers to wait around because there was no place for them to
unload their berries. These are the constraints that limit the ability of a process to produce at a
higher level. The initial bottleneck was the drying process, which caused inventory to pile up and
overflow into the storage bins.

Secondly, one possible cause of the buildup, especially as seen by the truck drivers and those in
the receiving area, is the limited number of Kiwanee dumpers. So, a fifth Kiwanee dumper was
purchased for $75,000. But the analyses in this article reveal that, unless there were good other
reasons for buying the additional dumper, the money could have been spent more wisely on other
things. The limited number of Kiwanee dumpers causes another problem.

Third, the current system fails to provide this storage capability for wet berries. The operation
system also needs to provide more bins for wet berries in order to provide more storage and
thereby reduce waiting time for delivery trucks. However, the maximum holding capacity for
wet berries is only 3200 barrels per hour, compared to the maximum holding capacity for dry
berries at 4000 barrels per hour.

4) On average, how long will the trucks have to wait on a busy day? Assume a 11am start of
processing of berries and a continuous arrival rate of berries of 1,500 bbls/hr. Average waiting
time for trucks when day starts at 11am

Solution:-

• Each hour there will be 1500*70%= 1050 bbls for wet berries and 450 bbls dry berries

• The truck arrival starts at 7am

• After 3200/1050=3hrs, bins get full. The time now is 10 am

• At 11 am the processing begins.

• Trucks continue to arrive till 7 pm

 • So at 7 pm, (1050-600)*8 = 3600 bbls will hold outside the plant.

• So after (1050*4+3600-3200)/600 = 7.67 hrs, last truck is unloaded, which is at 02:40.

• So the total waiting time will be 1000 to 0240, which is 16.67 hrs

• So average waiting time will be

• (7800-3200)*(16.67/2)/(75*243*70%) = 3 hrs

5) On average, how long will the trucks have to wait on a busy day? Assume a 7am start of
processing of berries and a continuous arrival rate of berries of 1,500 bbls/hr.

• Each hour there will be 1500*70%= 1050 bbls for wet berries and 450 bbls dry berries

• Truck arrival starts at 7am

• Processing start at 7am, which means every hour there will be 450 bbls in holding bins

• After 3200/450=7hrs, bins get full. Now the time is 2 pm

• Trucks keep coming till 7 pm

• So at 7 pm, (1050-600)*12=5400 bbls will hold outside the dryer

• So after (5400-3200)/600 = 3.67 hrs, last truck is unloaded, which is at 22:40

• So the total waiting time will be 1400 to 2240, which is 8.67 hrs

• So average waiting time will be

(5400-3200)*(8.67/2)/(75*243*70%) = 0.75 hrs = 45 mins

6)

Processing time was moved up from 11:00a.m to 7:00a.m

There have some benefits, if processing time was moved up from 11:00a.m to 7:00a.m.
According to above calculation, the average waiting time will reduce from 3 hours to 45 minutes,
if the processing time begins at 7 am instead of 11 am. The average waiting time reduced 2 hr
and 15 minutes. It means the throughput rate increased. It should be applied for entire peak
season. In the slow days, the decision should be made by further data support.

7) Recommendation

NCC are considering to buy two new dryers [$25,000 each ]and to convert 10 dry berry holding
bins so that they can hold water harvested or dry berries [5,000 per bin]. This investment not
only increases the implied utilization but also reduces the waiting time and save the labor cost.
The benefit from reducing the average waiting time and saving labor cost offset the expenditure
of this investment,$100,00. Let’s start at the flow map shown below (see Exhibit7-1)

As we can see, after the investment, the implied utilization of drying decreases from 175%,
which is the bottleneck in an original plan to 105% in a new plan. After converting 10 dry
holding bins, the implied utilization of dry holding bins increases from 11.25% in the original
plan to 30% in the new one.

Exhibit 7-1

|Original plan
| |
| Process
|
|
|
|(bbls)
|
| Process |
| |
|(bbls) |
|3- hour driver saving |
|number of dumper | Trunk per dumper |Busying |hours saving |total
|
| | |days | | |
|5 |243 |21 |3 |76545 |

Thirdly, total labor cost is saving in this investment due to the required work hours reduce. In the
new plan, the required work hours is 15 ,which is less than 21 hours required in the original
plan(see exhibit 7-4). The total labor cost saving is $30,192.75(see Exhibit 7-5)

-----------------------
Weighing, Grading(Color) and Sampling(2 Samples)

Dumping (5 Kiwanee Dumpers)

[3000bbls/hr]

Temporary
Holding Bins
# 1-16 [4000bbls/hr]

16@250bbls/hr 8@250bbls/hr
3@400bbls/hr
Temporary
Holding Bins
# 25-27 [1200bbls/hr]

Temporary
Holding Bins
# 17-24 [2000bbls/hr]

Drying (3 units)

[400-600bbls/hr]

Dechaffing (3 units)

[4500bbls/hr]

Destoning (3units)

[4500bbls/hr]

Separating and Milling

(3 Jumbo Separator and 3 Bailey Mill Lines)

[1200bbls/hr]

2@1000bbls/hr

4@200bbls/hr

Bulk Freezers

Finish Processing Plant

Bag Freezers

8000bags@12hr period

8000/12=667bbls/hr

Bulk Bin Station (4 units)

[800bbls/hr]

Bulk Truck Station (2 units)

[2000bbls/hr]

Bagging Stations (4 units)

[667bbls/hr]

---------------------------------------

National Cranberry
Submitted by house24 on October 7, 2010

• Category: Business and Economics

• Words: 1115 | Pages: 5
• Views: 20
• Report this Essay

n
Team 3

National Cranberry Cooperative

Analysis and recommendations

1.

[pic]

2.
The resource with least capacity determines the maximum long-term achievable throughput rate.
Because wet and dry berries follow different routes at RP#1 there will be a maximum achievable
throughput for each. The capacity of the dryers is the bottleneck for the wet berries. The
maximum throughput for wet berries is 600 bbls/hr. For dry berries the separation process is the
bottleneck. The maximum throughput for dry berries is 1200 bbls/hr.

The percentage of wet berries to dry berries would affect the throughput rate. Given the current
proportion of berries received the capacity of the dryers would be the maximum throughput of
the system. The dryers are the system bottleneck. And as the trend of water harvesting continues,
this situation worsens. All the process/resources at RP#1 contribute to the throughput but the
limitation is the bottleneck.

3.
The trucks wait because the processing capacity is less than the system input. And the temporary
holding bins are inadequate to buffer the berries coming in and the plants processing capacity.
But by using the Theory of Constraints to identify the system bottle necks we are able to
discover the root cause of the waits. The large back log of berries is caused by several factors

The plant is not currently equipped to handle the supply of wet berries. This problem has likely
been increasing over the years as more cranberries are being wet-harvested. This problem is
evident in the lack of web berry temporary storage and inadequate berry drying capacity. These
bottlenecks are slowing the entire system.

The demand for and production of cranberries is uneven. The seasonal nature of cranberry
harvesting creates a need for a flexible system that can utilize full capacity in harvesting season
and minimize loss from excess capacity during off season. NCC current system at Receiving
Plan #1 is not meeting the input levels. NCC has two immediate options: increase the temporary
storage capacity or increase the maximum throughput capacity of the system.

4.
Under the current system trucks carrying dry berries have no wait times because the plant has
adequate temporary storage for them. The trucks that must wait are the ones carrying wet berries
and have the following wait times.

| |11:00 AM Start |7:00 AM Start

|
|Max Build up = (1500*.7*12) - (600*12) - 3200 |4600 |
2200 |
|Bottleneck (bbls/hr) |6000 |600
|
|Max wait time |7.67 |3.67 |
|Average wait time (for those who wait) |3.83 |1.83
|
|Weighted average wait time (hrs) |1.60 |0.76
|
|Weighted average wait time (min) |95.83 |45.83
|

5.
Using the current system the RP#1 is not capable of receiving last years supply if 70% of the
berries will be wet harvested. The first benefit is continued operation without a processing
emergency.

Recommendations

a. Purchase the Light Meter System for color grading. While this system will not directly help
the plants flow problems but it will pay for its self three times over within the first year and
continue to save the plan money from erroneous berry quality premiums.
|
|
|1980 |Premium No. 3 Berries Paid (bbls) |450000
|
| |Premium per barrel | |0.75 |
| |Total premium paid | |337500 |
| | | | |
|
| |Berries not grade 3 | |225000 |
| |Premium per barrel | |0.75 |
| |Total paid for berries not grade 3 |168750
|
| | | | |
|
|1981 |Premium No. 3 Berries Paid (bbls) |292500
|
| |Premium per barrel | |0.75 |
| |Total premium paid | |219375 |
| | | | |
|
| |Premium savings | |118125 |
| |Less: | | |
|
| | Purchase price | |20000 |
| | Operator costs* $6.50 * 12 * 365 |28470
|
| | Light Meter will save |$69,655.00 |
| | | | |
|
| |* Assuming the light meter system can reduce grading errors by only 30% and was
manned full-time all year |

b. Purchase two additional dryers. The addition of new dryers will eliminate the current
bottleneck for wet berries. Two new dryers increase throughput enough that there will be no
trucks waiting during the peak operations when processing starts at 7:00 AM. The new dryers are
an improvement but not enough to eliminate waiting times if operations start at 11:00 AM. The
theoretical capacity of the combined dryers would become 1000 bbls/hr which is more than the
current capacity of the separators if they are devoted to 70% wet berries. The new bottleneck
becomes the separators at 840 bbls/hr. These wait times are much better, but there is still a lot of
overtime holding the profitability of the plant down.
| |11:00 AM Start |7:00 AM Start
|
|Max Build up = (1500*.7*12) - (840*12) - 3200 |2680 |0
|
|Bottleneck (bbls/hr) |840 |840
|
|Max wait time |3.19 |0.00 |
|Average wait time (for those who wait) |1.60 |0.00
 |
|Weighted average wait time (hrs) |0.66 |0.00
|
|Weighted average wait time (min) |39.88 |0.00
|

c. Convert five dry bins to wet/dry bins. Given the excess temporary storage capacity dry
berries five dry bins should be converted to wet/dry bins. If anymore than five bins were
converted trucks delivering dry berries would have wait times during normal operations (starting
at 11:00 AM). Converting these bins would greatly decrease waiting time/cost of idle drivers and
trucks while optimizing the resources the plant currently owns.
| |11:00 AM Start |7:00 AM Start
|
|Max Build up = (1500*.7*12) - (840*12) - 3200 |1430 |0
|
|Bottleneck (bbls/hr) |840 |840
|
|Max wait time |1.70 |0.00 |
|Average wait time (for those who wait) |0.85 |0.00
|
|Weighted average wait time (hrs) |0.35 |0.00
|
|Weighted average wait time (min) |21.28 |0.00
|

d. Purchase four new wet bins or purchase one additional separator. In order to eliminate wet
berry truck wait times completely, four additional wet bins would be or one additional separator
is needed. Further information would be needed to determine the most effective purchase but the
effects can be calculated for either.

|Four Additional Wet Bins |

| |Dry |Wet |
|Minimum |2750 |2800 |
|Maximum |6000 |6050 |
|Optimal * |2750 |6050 |
|* With the current set up and ratio of 70% wet berries the Wet/Dry bins will be utilized for
incoming wet berries. |
| | | |
|Max Build up = (1500*.7*12) - (840*12) - 6050 |-170 |
|
|Max wait time |0.00 | |

Alternatively the plant can purchase one additional separator and devote it to wet berries.
This would shift the bottleneck back to the dryers at 1000 bbls/hr. At this rate of throughput wait
time for trucks delivering wet berries would be eliminated.
| |11:00 AM Start |7:00 AM Start
|
|Max Build up = (1500*.7*12) - (1000*7) - 3200 |0 |0
|
|Bottleneck (bbls/hr) |1000 |840
|
|Max Wait Time (hrs) |0.00 |0.00
|

-----------------------
MBA 640C
10/09/06