National Cranberry Cooperative

Submitted by: Jishnu Roychaudhuri Roll Number: 11BM60010

Introduction
The basic aim of this case analysis is to identify the problems faced at the Receiving Plant 1 of National Cranberry Cooperative during the cranberry harvesting period and thereby try and propose possible solution to resolve those problems.

The challenge confronting NCC

UNLOADED TRUCK Too much waiting period for trucks before they unload berries at the RP1 OVERTIME COSTS Current OT costs are out of control over 12,000 hours spent costing over $100K 50% PREMIUM There is also a secondary problem regarding grading of process berries. Half of the berries graded top qualities are actually not top quality and do not deserve extra premiums paid on the top quality berries. CHANGE IN PROCESS TIMINGS Currently on a peak day processing starts at 11AM and on Low days at 3PM

We start by analyzing the existing process that the NCC as follows:

National Cranberry Cooperative Process Flow Diagram

Unload 5 to 10 minutes per Truck

Weighted/Gra ded

Tested/Sampl ed

Destone Dry

Dechaff

Freeze

4000 bbls

1500 bbls/hr

1500 bbls/hr
Bulk Bin - 800 bbls/hr

Both

Destone

1200 bbls/h
Separate Bulk Truck 2000 bbls/hr

2000 bbls

3000 bbls/hr

Wet

Dechaff Dry

Bag 667 bbls/hr

1200 bbls

3000 bbls/hr 600 bbls/h

Freeze

The capacities of the various processes are calculated as below: Dumping Capacity
Number of Kiwanee Dumpers = 5 Average time taken by truck to load the berries onto Kiwanee Dumpers = 7.5 minutes (7 to 8 minutes) Average weight of berries in a truck = 75 bbls. Dumping Capacity = 5 * 75 * 60 / 7.5 = 3000 bbls/hr.

Holding Bin Capacities

Bin No. 1-16 can hold dry berries only up to 250 bbls per bin. Total capacity of bin numbered 1-16 = 250*16 = 4000 bbls Bin No. 17-24 can hold dry/wet berries up to 250 bbls per bin Total capacity of bin numbered 17-24 = 250*8 = 2000 bbls. Bin No. 25-27 can hold wet berries up to 400 bbls per bin Total capacity of bin numbered 25-27 = 400*3 = 1200 bbls.

De-stoning Capacity
No. of destoning units = 3 Capacity of each unit = 1500 bbls/hr Total destoning capacity = 4500 bbls/hr

De-chaffing Capacity
No. of dechaffing units = 3 Capacity of each unit = 1500 bbls/hr Dechaffing capacity dedicated to wet berries (2) = 3000 bbls/hr Dechaffing capacity dedicated to dry berries (1) = 1500 bbls/hr

Drying Capacity
No. of dryers = 3

Capacity of each unit = 200 bbls/hr Total drying capacity = 600 bbls/hr

Jumbo Separator and Bailey Mill Lines

No. of separator units = 3 Average capacity of each unit = 400 bbls/hr Total separator capacity = 1200 bbls/hr

Some possible solutions

1. Installing a Light Grading System:
As given, out of a total of 4,50,000 bbls of berries graded as top quality only half were top quality and deserved the 50 cent per bbl premium. The light grading system which would accurately grade the berries would save 4,50,000*0.5*1.5 = $337,500 per season at one time investment of $40,000 and recurring cost of hiring a skilled operator at $10,000 (assumed)..This would lead to a substantial saving. But another fact needs to be considered that this is a cooperative organization. Although installing a light grading system would lead to increase in the margins of the receiving plant 1 but would be loss for the cooperative as a whole as money instead of being paid to farmers would go to worker who is hired. But status quo can also not be maintained as it leads to wrong distribution of benefits to farmers with a lower quality crop. An alternate solution can to be stricter in the manual grading process and increasing the variety of shade cards so that berries can be rightly classified. One more category in between 2A and 3 can also made having a lesser premium than quality 3. But the various other implications of this step should be taken into account like increased final processing cost and resentment from the farmers.

2. Decreasing the truck waiting time

The main problem that the receiving plant is facing is that the trucks have to wait a lot particularly in the peak season before they can unload the berries. This cope up with the problem

the cooperative installed an additional Kiwanee Dumper last year (i.e. 1969) but that didn't help in solving the problem. We first analyze the average truck waiting time for the next year with present capacities and assuming 70% to be wet berries and rest dry.

In the peak season:

Assumption of berry arrival in a day (7am to 7pm) Average wet berry arrival rate: (18000/12) * (70/100) Average dry berry arrival rate: (18000/12) * (30/100) 18,000 bbls per day at a constant rate 1050 bbls per hour 450 bbls per hour

With the processing starting at 11 am, the holding bins will continue to be filled at this rate subject to the maximum capacities for: Wet berries = 3200 bbls Dry berries = 4000 bbls

The bins capable of holding wet berries would be completely filled after 3200/1050 hours after 7 am i.e. at 10:03 am and the trucks carrying wet berries would have to wait after that. The bins capable of holding dry berries would be filled unto 450*4 = 1800 bbls.

When the processing starts at 11 am:

The wet berry processing rate 600 bbls/ hr Arrival rate 1050 bbls/hr. The trucks carrying wet berries would continue to queue up to 7 pm.

Total qty of wet berries received at RP1 in a 12-hr shift Qty received in 1st four hours (starting from 7.00am) From 11.00 am to 7.00 pm, Qty of berries will be processed Unprocessed qty.(which includes 3200 bbls in temporary bins). Amount left in trucks =

18000*(70/100) = 12600 bbls 1050*4 = 4200 bbls 8*600 = 4800 bbls 12600 - 4800 = 7800 bbls 7800 - 3200 = 4600 bbls

The trucks will continue unloading up to 4600/600 (= 7 hours 40 min) hours after 7 pm that is up to 2:40am. Unprocessed qty of 7800 bbls will require (7800 / 600) = 13 hrs over and above the 8 hr shift, for getting processed till 8 am the next day.

Peak Season - Processing starts from 7.00 am:

Additional hours in hand (as compared to usual start time of 11.00 am) Accumulation rate of wet berries (arrival rate - wet berries processing rate) For 12-hr shift of trucks depositing wet berries, total inventory of wet berries

4 hours 1050 600 = 450bbls/hr. 12*450 = 5400 bbls.

Estimated total waiting time for all the trucks as follows:

Out of 5400 bbls, amount in temporary bins Amount in trucks Total waiting time for trucks 3200 bbls 2200 bbls (2200/600) = 3 hr 40 min.

Unprocessed berries will require time = (5400/600) = 9hrs, after 7.00 pm till 4 am the next day. Thus the truck waiting times has been reduced just by starting the processing at 7am instead of 11am.

When a new dryer is added:

Now the truck drying capacity = 800 bbls./day. Accumulation rate of wet berries = (arrival rate - wet berries processing rate) = 1050 - 800 = 250bbls/hr. For 12-hr shift of trucks depositing wet berries, total inventory of wet berries = 12*250 = 3000 bbls. So, 3000 bbls can be accommodated in the holding bins.

The truck waiting has been reduced to zero. This also has the advantage that the workers at the receiving crew will now be working only for 12 hrs as compared to 15hrs 40min with only three dryers and processing starting at 7am.

Conclusions:
Increase Processing Start Time: Truck waiting time can be reduced by simply starting the processing activity at 7:00 am. Removing Production Bottlenecks Installing one extra dryer is imperative at this point as it reduces the truck waiting time to almost zero if processing starts at 7:00 am and moreover the overtime costs are significantly reduced. Light grading system should be avoided as far as possible and stricter grading rules should be implemented. Converting bins to hold both wet and dry berries would help in lending flexibility to the existing capacity and mitigating uncertainties in the proportion of dry and wet berries received at any point of time.

Appendices
Berry Flow during day (processing starts at 11 am)

Deli v. Time 7-8 8-9 9-10 10-11 11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 Dry 0 450 450 450 450 450 450 450 450 450 450 450 450 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Proce ss Dry 0 0 0 0 0 600 600 600 600 600 600 600 600 600 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 0 0 0 0 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 0 0 0

Store d Dry 0 450 900 1350 1800 1650 1500 1350 1200 1050 900 750 600 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 1050 2100 3150 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3200 3000 2400 1800 1200 600 0 0 0 0

Backu p Dry 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Backu p Wet 0 0 0 0 1000 1450 1900 2350 2800 3250 3700 4150 4600 4000 3400 2800 2200 1600 1000 400 0 0 0 0 0 0 0 0 0

Total Backu p 0 0 0 1000 1450 1900 2350 2800 3250 3700 4150 4600 4000 3400 2800 2200 1600 1000 400 0 0 0 0 0 0 0 0 0

Berry Flow during day (processing starts at 7 am)

Delv . Time 7-8 8-9 9-10 10-11 11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 Dry 0 450 450 450 450 450 450 450 450 450 450 450 450 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 1050 0 0 0 0 0 0 0 0 0 0 0 0

Proce ss Dry 0 450 450 450 450 450 450 450 450 450 450 450 450 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 600 0 0 0

Store d Dry 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Amou nt Wet 0 450 900 1350 1800 2250 2700 3150 3200 3200 3200 3200 3200 3200 3200 3200 3000 2400 1800 1200 600 0 0 0 0

Backu p Dry 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Backu p Wet 0 0 0 0 0 0 0 0 400 850 1300 1750 2200 1600 1000 400 0 0 0 0 0 0 0 0 0

Total Backu p 0 0 0 0 0 0 0 400 850 1300 1750 2200 1600 1000 400 0 0 0 0 0 0 0 0 0