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Ncc Key Issues

In: Business and Management

Submitted By todzhao
Words 1018
Pages 5
National Cranberry Cooperative

-- Key Issues

OPMT 405
Summer 2006

Major Operational Problem:

Long truck waiting time to dump berries -- customer service

Excessive overtime -- operating costs

Both “symptoms” of a common ailment -- a bottleneck in the process flow.

A minor problem that can be easily solved has to do with the grading of berries.

$.75/BBL premium paid for grade 3 berries.
Premium paid on 450,000 barrels in 1980.
Half were incorrectly labeled as grade 3.
Accurate grading could save $169,000 per year.
Light meter system would cost $20,000 plus annual operator salary.

What does this imply to the growers who are also the owners of the plant?

Bottleneck Analysis

Some simplifying assumptions:

16,400 BBL are delivered per day (70% wet, 30% dry) over 12 hours.

Trucks arrive evenly spaced over 12 hours.

Each truck carries 75 BBLs

Downstream processing begins at the same time as dumping (7 a.m.).


Dumping = = [pic] = 2250 BBL/Hour
Destoning = 3x 1,500 BBL/Hour = 4500 BBL/Hour
Dechaffing (dry) = 2x1,500 BBL/Hour = 3,000 BBL/Hour
Dechaffing (wet) =1x1,500 BBL/hour = 1,500 BBL/Hour
Drying = 3x200 BBL/Hour = 600 BBL/Hour
Separating = 3x400 BBL/Hour = 1200 BBL/Hour
Bailey Mills = 3x400 BBL/Hour = 1200 BBL/Hour

Processing Requirement

Total: 16,400 BBLs / 12 hours = 1,367 BBL/Hour
Dry Berries: 1,367 BBL/Hour x 30% = 410 BBL/Hour.
Wet Berries: 1,367 BBL/Hour x 70% = 957 BBL/Hour.


Processing at 600 BBL/hour, dryer is the bottleneck.

Current System Performance Analysis

Dryers can process only 600 BBL/Hour.
Storage bins (wet) fill at a rate of 957 – 600 = 357 BBL/Hour.
357 BBL/hour x 12 hours = 4,284 BBL stored by the end of the day.
All dry berries are processed as soon as they arrive.

3,200 BBL held in wet storage bins.
4,284 – 3,200 = 1,084 BBL held in trucks.
14.5 trucks waiting. (1,084/75BBL = 14.5)

[pic] Inventory Build-up

At the end of the day, the stored berries must be processed:

To clear the trucks: 1084/600 = 1.81 hours

To clear the bins: 3,200 /600 = 5.33 hours

Total Overtime = 5.33 + 1.81 = 7.14 hours.
Total processing time = 12 + 7.14 = 19.14 hours
Maximum Waiting for a truck (over time of receiving) = 1.81 hours.

Additional Storage Bins for Wet Berries

If we were to convert 5 of the dry-berry storage bins into wet storage (i.e., total additional wet storage of 5 x 250 = 1250 BBL), then we could

• eliminate truck waiting and overtime at receiving, since the additional 1,250 BBL storage space can accommodate the 1084 BBL in trucks at the end of the day;

• but do nothing to reduce overtime at downstream operations, since the same total amount of berries has to be processed.

This will not affect the processing/storage of dry berries, since currently the 16 dry-berry storage bins are essentially not used at all.

One Additional Dryer

An additional dryer would increase drying capacity to 800 BBL per hour.
Process 800 BBL wet and 400 BBL dry per hour. (Separators process only 1200 BBL per hour.)
Dry inventory builds at 10 BBL per hour.
Wet inventory builds at 157 BBL per hour.

After 12 hours, inventory is 120 BBL dry and 1,884 BBL wet.
No trucks in queue.
Time to empty the bins = 1,884/800 = 2.35 hours.
Overtime reduction = 7.14 - 2.35 = 4.79 hours.

Inventory Build-up

Two Additional Dryers

Two additional dryers would increase drying capacity to 1,000 BBL per hour.
Process 957 BBL wet and 243 BBL dry per hour. (Separators process only 1200 BBL per hour.)
Dry inventory builds at 167 BBL per hour.

After 12 hours, inventory is 2,004 BBL dry.
No trucks in queue.
Time to empty the bins = 2,004/1,200 = 1.67 hours.
Overtime reduction = 7.14 - 1.67 = 5.47 hours.
Incremental reduction in overtime = 5.47 – 4.59 = .88 hours.

Who is the bottleneck now?

Inventory Build-up

Effect of 4 hours Delay in Downstream Operations

The analysis of the total time for downstream processing is unchanged.
Downstream processing takes 14. + 4 = 23.14 hours.
The 4 hour delay serves as a buffer to protect downstream operations from forced idleness due to random arrivals of trucks.
But by advancing the time at which the bins fill, it increases truck waiting time.

The Effect of the 4 Hour Delay on Truck Waiting


Inventory Build-up

The wet bins fill 3.34 (=3200/957) hours after dumping begins.
During the first 4 hours, wet berry inventory builds at 957 BBL/hour.
During the next 8 hours, wet berry inventory builds at 357 BBL/hour.
After 12 hours, there are 6,684 BBL in inventory. (957*4 + 357*8)

3484 in Trucks 3200 in Bins

[pic] [pic]

Downstream operations are completed 11.14 (5.33 + 5.81) hours after the last truck arrives.
Maximum truck waiting time is 5.81 hours, exactly 4 hours more than if downstream processing starts at the same time as receiving.

Final Note

The reason that NCC has a problem with capacity in the first place is related to the fact that their product mix is changing. Due to changing technology in cranberry harvesting, NCC is experiencing a shift in the mix of wet and dry berries. In practice, it is common for a change in product mix to create bottlenecks where none existed previously.


.877 BBL out per BBL in
(.94*30% + .85*70%)

Waste (12.3%)


Bulk Truck (2)
C = ?

Bulk Bin (4)
C = ?

Bagging (4)
C = ?


Bailey Mills
C= 1200BBL/Hr

Jumbo Separators



C=4500 BBL/Hr



Wet Storage
Bins 17-24, and 25-27

Dry Storage
Bins 1-16, and 17-24

5*(75 BBL/Tr)*(1Tr/10min)*(60min/Hr)

Berry Dumping
C = 2250 BBL/Hr

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