National Cranberry Case Report

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National Cranberry Cooperative Case Report
EGES B332

Team Name: LOPPEM1
Authors: Harold Croenen
Charles Van Hoorebeke
Victor Talpe
____________________________
____________________________

February 2014

1 Harold Croenen – Charles Van Hoorebeke – Victor Talpe
Team Loppem
National Cranberry Case Report

To:Hugo Schaeffer
From: <<Loppem>>
RE: RP#1 processing

Memo
Dear Mr Schaeffer,
After intense analysis of the problems disrupting your production
process flow, we found out that the main cause of your problems is
the low hourly capacity of your dryers for wet berries (only 600bbls).
These form the main bottleneck of your rate of production. This
causes slower than expected treatment of berries, which in turn, fills
up your inventory bins very fast and causes long waiting lines in the
afternoon for truck drivers arriving with berries. Each truck that has
to wait costs you 20$/hr and in total this queue costs you 1000$
everyday in high season. The problem wasn’t situated in your
dumping capacities as you thought.
To reduce this cost, we advise 2 possible investments.
The first option would be the expansion of your drying capacity with
one dryer. This will cost $40.000 but would repay itself in only 40
days and highly reduce frustrations from local farmers because
there would no longer be any queues. A second dryer could be an
option in the long term, but we have calculated that at the current
hourly rate of arrival of berries, this investment wouldn’t be viable. If
you would see a big raise in this hourly rate of arrival of berries, we
advise you to perform a new research.
The second option would be to convert some of your unnecessary
dry bins to wet bins. Of your 16 dry bins, only 2 are really necessary.
If you would convert 6 of these 14 unnecessary bins, at the price of
7500$ per bin, you would already increase bin capacity enough to
no longer have a waiting line in front of your facilities. In total this
would cost 45000$ but as it saves 1000$ a day, this investment
would repay itself in 45 days.
Because of the smaller cost of expanding by adding a dryer, we
advise you to buy a new drying unit.
Next to these two investment options, it is also recommended that
you invest in a light meter to assure that you more easily recognize

Team Loppem
National Cranberry Case Report

No. 3 berries because at this moment, only half of these most
valuable berries are being recognized.

Weighting, gradingand sampling

Causes of delay

The primary bottleneck in the process flow diagram is the drying
Dumping(5
process for the wet berries
andKiwaneedumpers)
after that the separating process.
( 3000 bbls/ hr )
The dry berries currently don’t face any bottlenecks.
DRY

WET

Temporary
HoldingBins
#1-16
(4000BBLS)

Temporary
HoldingBins
#25-27
(1200 bbls)

Temporary
HoldingBins
#17-24
(52000 bbls)

DRY

WET

Destoning(3units)
(4500 bbls)

Dry Deschaffing(1unit)
(1500bbls)

Wet Deschaffing(2units)
(3000bbls/ hr)

DRY

WET

Drying(3units)
(600bbls/ hr)

DRY

Separating
(9 jumbo separators/ 3 feed
conveyors)
(1200bbls/ hr)
DRY
Bin station
Bulk(4units)

DRY

Baggingstation
(4units)

Bulk Freezer
Bagfreezer

Team Loppem
National Cranberry Case Report

DRY
Bulk truck stations
(2units)

Finish Processing

Inventory build-up diagram
We have solved this case assuming that that 75% of all berries are
wet berries and 25% were dry berries and that berries arrived at a
continuous pace, this gave us an arrival rate of 325 dry berries per
hour and 975 wet berries per hour.
1. Dry berries
The arrival rate of dry berries doesn’t exceed the processing
capacity of a single process in the process flow diagram; therefore
we can conclude that there is no inventory build-up for dry berries.
There is no inventory build-up in the separation process (capacity of
1200 berries per hour), because even though total berries arrive
with 1300 berries per hour, only 600 of the 975 wet berries can be
dried, so the maximum amount that the separating process could
face is inferior to it’s capacity ((600+325) < 1200).
2. Wet berries
The wet berries however face an inventory build-up in the bins as
soon as the first trucks start arriving at 7 a.m. in the morning. Taking
in account the maximum holding capacity of the dumpers (3200)
and that the accumulation of cranberries will happen at 375 bbls/h,
we easily calculated that, in average, the bins will be full at about
3.34 p.m. Once the bins are full, trucks will start to wait in front of
the bins in able to deposit their berries. This build up of waiting
trucks continues until 7 p.m. after which the amount of berries held
in waiting trucks starts to decline with 600bbls/h, which is the
capacity rate for wet berries, thus the draw-down rate of first trucks
and then the bins.
At 7 p.m. the line of trucks holds a total of 1300 bbls of berries. At
9.10 p.m. the line should have disappeared (7 + (1300/600)=
9,1666 or 9.10p.m.), and at 2.30 a.m. of the following night all
berries should have been processed (7+4500/600= 14,5 or 2.30
p.m. plus one day).
The build-up in bins, trucks and the total build-up of wet berries are
represented on this graph:
Team Loppem
National Cranberry Case Report

From this graph, we can also calculate the total amount that truck
drivers are waiting and the salary cost that comes with this waiting.
First, we calculate the amount of berries that are waiting; this is
represented by the top triangle between the total build-up and the
build-up in bins or the total build-up in trucks. In total 3750 of
berries will have waited one hour. Considering every truck can hold
75 bbl and that leasing a truck and driver costs $20/hr, the total
cost of this waiting is 3750bbl/75bbl *20$ = 1000$.

Team Loppem
National Cranberry Case Report

Analysis of Investments
1. Kiwanee Dumper #5
The addition of a fifth dumper to the dumping process wasn’t the
best investment to make. The dumping process wasn’t a bottleneck,
so this investment that increased dumping capacity with 600 bbls/hr
, from 2400 bbls/hr to 3000 bbls/hr doesn’t benefit the total capacity
rate of the process flow. The price of $100000 paid for a fifth
Kiwanee dumper that didn’t solve the problem of the waiting lines is
therefor not praised as useful. This higher capacity might become
more useful if the other bottlenecks other than the dumping process
were dealt with and if the arrival rate exceeded 2400 bbls/hr. This
wasn’t the case. We wouldn’t recommend further investment in
Kiwanee Dumpers for as long as there are other existing
bottlenecks.

2. 1 or 2 new dryers
The cost of a new dryer is 40.000$ and every dryer expands current
capacity with 200bbls/h. It has no impact on the dry berrie
production, which has no build-up.
a. 1 New dryer
Adding one new dryer to the drying capacity raises the capacity
from 600bbls/h to 800bbls/h. With this new dryer, there will never
have to wait a truck, as overall capacity of the process flow is now
325bbls dry berries per hour (stayed the same) and 800bbls wet
berries per hour (up from 600bbls/hr). With a cost of 40000$, we can
save 1000$ every day in waiting costs. That means the investment
of a new dryer will have repaid itself in only 40 days. We highly
recommend doing this investment.
The build-up in the bins will never exceed 2100bbls of berries. This
number stays largely under the 3200bbls of wet berries that the
bins can handle.
Build-up in bins represented on a graph:
Team Loppem
National Cranberry Case Report

(Note that there is no build-up in trucks)

b. 2 New dryers
Adding a second dryer will still benefit the capacity rate of
production but won’t be as effective as the first added dryer. This
reduced effect is because of the change of bottleneck in the process
flow after adding another 200bbls/hr of capacity to the drying
process (drying capacity would then be 1000bbls/hr, up from
800bbls/hr) and because the current arrival rate of berries isn’t high
enough to justify a new investment in the capacity rate of
production. As long as there are no costs associated to a build-up in
the bins and as long as the arrival rate of berries doesn’t show any
signs of rising, we have no interest in investing in higher capacity
rate of production.
Also, because of this second dryer, the bottleneck would now
become the separation process, which is currently capable of 1200
bbls/hr and would have to handle in case of a second drying unit
1300bbls/hr.

Team Loppem
National Cranberry Case Report

That’s why we don’t recommend an additional investment of
40000$ in a dryer.
Build-up in bins represented on a graph:
(Note that there is no build-up in trucks)

3. Bin Conversions
Another option to reduce the costs is to convert dry bins to wet bins.
The price of conversion per bin is 7500$. Because there is no buildup in bins for dry berries and we only produce 325bbls/hr of dry bins
while our dry bins can stack 4000bbls divided over 16 bins, we can
convert some of these bins, with a maximum of 12 conversions.
Knowing that the maximum total build-up that we ever had is
4500bbls, we should convert 6 bins to be able to handle this buildup without having a queue. This conversion comes with a total price
of 6*7500 or $45000. This makes the total bin capacity for wet
berries 4700bbls.
Team Loppem
National Cranberry Case Report

By eliminating any costs associated to queuing truck drivers (1000$
per day without bin conversion), this investment would repay itself
in only 45 days.

4. Light meter system for color grading
We can consider the instalation of a light meter system for color
grading at the cost of $20000. Next to this cost this system also
requires a full-time skiled operator at the same pay grade as the
chief berry . In 1980 there was a premium of 75 cents that was paid
on about 450.000 bbls. of No.3’s berries. But , we found out that
when these berries were used only half of them were No. 3’s. To
know how much money we will earn with the light meter system we
have to multiplie that premium with 225.000 (the half of the No. 3
berries) and we obtain 0,75$*225000= 168.750$.
We must also pay the full-time skilled operator 6,5$ per hour. That
worker works as a full-year employee 40 hours each week of the
year. So he would cost 40*52*6,50$ = 13.520$. This means that this
investment would increase profits with 168.750-13520-20000=
135230$.

Conclusion
The main problems, the long waiting lines for truckdrivers before
they can dump their berries, at RP#1 didn’t have anything to do
with the lack of dumpers. That’s why the decision to invest in an
additional Kiwanee dumper didn’t have any use. The main
bottleneck in the production process flow was the drying process. By
installing an extra dryer at the cost of 40.000$, this problem can
easily be addressed. The cost of 40.000$ would be regained in only
40 days and would eliminate any waiting time. An additional dryer
wouldn’t raise the profit with the current arrival rate of berries.
However, if this rate of arrival would go up, we highly recommend
analysing the possibility of investment in a new dryer.
Next to dryers, a second option would be to convert 6 dry bins to
wet bins. With a total cost of 45000$, this investment would repay
itself in 45 days and would completely eliminate waiting lines, as
Team Loppem
National Cranberry Case Report

the wet bin capacity is high enough to hold all trucks at the current
rate of arrival of berries. These bins are not necessary for the dry
bin production, which only needs 2 of the currently 16 dry berry
dedicated bins.
A light meter would also increase profit because not enough of our
no. 3 berries are being recognised with the current means. The
investment is inferior to the profit it would bring to the company so
we think this would benefit the company.

Team Loppem
National Cranberry Case Report

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