National Cranberry Cooperative

National Cranberry Case Report

Group Members:

Bo Gao, Boru Zhang, Xutong Wu, Yan Lan

_____________________________________________________________

Fall 2016

To:        Hugo Schaeffer

From:        <>

RE:        RP#1 processing

Memo

In order to identify the reason causing overtime cost and drivers to spend time waiting for uploading process fruit, we reviewed each activity’s flow rate and utilization rate in RPI operations and found out drying is the bottleneck activity. Also, we analyzed 3 potential solutions’ capital investment and cost saving, and found that the optimum solution is to buy a new dryer and to convert 4 holding bins for wet cranberries.

The flow rate of bottleneck activity – dryer is only 600 bbls per hour that is less than half of other activities’ flow rate, and its utilization rate is 192%, which is much higher than others. The bottleneck leads to surprisingly huge truck-waiting and overtime cost. Based on the given data, we estimate that in the busiest 20 days in September, the overtime cost is $63,000 and waiting cost is up to $163,113.

Since the production of wet harvested berries is expected to increase in future, we have to invest on dryers and other related facilities to solve the problem. We evaluated 3 solutions:

• Add 1 new dryer
• Add 1 new dryer, convert 4 bins for wet cranberries
• Add 2 new dryer

Based on our comprehensive evaluation of all the 3 alternatives, we identified that the solution providing the best return is to add 1 new dryer and to convert 4 bins for wet cranberries. It asks for $64,000 investment but will create $176,990 saving.

We also evaluated the investment of light meter system. The result shows that the potential benefits cannot cover the cost of equipment and labor. So we believe RP should not adopt light meter system.

Causes of Delay

We have indicated that dryer capacity for processing wet berries is the bottleneck as it has the highest utilization rate of 192% (Shown in the following chart).

[pic 1]

• In a typical busy day in September, the amount of total, wet and dry cranberries are as following:

• According to the process flow analysis, we find that the inflow of dry cranberry is 288 bbls per hour, which is less than the processing capacity. So there is no bottleneck for dry cranberry processing.
• However, the inflow of wet cranberry is 1152 bbls per hour, which is much larger than the dryers’ capacity (600 bbls per hour). So there is 552 bbls inventory per hour, and the cranberry inventory will be stored in bins.
• The total capacity of bins for wet cranberry is 3200 bbls. After 13:00 pm, the bins are full with wet cranberry and then the trucks have to wait outside. When bins are full, there are 7.36 more trucks waiting each hour until 19:00 pm. The inventory and waiting trucks information is as following: