OPERATIONS MANAGEMENT-1 Group Assignment National Cranberries Co-operative 3rd September 2009 Group 1, Section A, PGP1 A.G.

Lakshmanan Aashish Mylapally Abhishek Apurv Adarsh Sharma Bothra Deepak PROCESS DIAGRAM NATIONAL CRANBERRIES COOPERATIVE Assumptions: We have assumed that: There is a cost associated with trucks waiting to be unloaded and it is $5 per hour. We have not considered per hour operating cost of plant Overtime for both regular and part time worker has been taken to be $ 6.50 per hour. In calculating the payback time, the same cost saving will occur every day. It is given in case that wet berries will make 70 % of total berries and that normal running hours for plant is 11 (12-1) hours. Receivi ng Weighi ng Sampli ng Colour Sampling Dumpin g Dr Dry y Dry/We t Destoni ng Dechaffin g Dryin g Milling 1 2 3 Waste, 5% Baggin g Bulk Bin Bulk Truck Another Plant Freezer Finish Processing Case 1: 10000 bbl/day 7000 bbl/day Wet Berries (WB) Dry Berries (DB) 3000bbl/day Total Time = 11 Hrs WB feed=7000/11 = 637 bbl/hr DB feed= 3000/11 = 273 bbl/hr

Minimum processing rate for WB is at dryers, which is = 600 bbl/hr Minimum processing rate for DB is = 1500 bbl/hr Hence, after 11 hours total accumulation of WB = (637-600)*11 = 407 bbl Overtime = 407/600 = 0.7 hrs Now, assuming this is not a peak season, we have considered only 27 workers. Since plant is working suboptimal level during overtime , only two-third of the work force will be working on wet berries drying process. =2/3 work force = 20*(2/3) = 12 Savings per day = 12 * 6.5= 78 Savings for season = 78* 90 = 7020 If we add another dryer, to save overtime cost, cost will be = 40000 Analysis Considering the cost of depreciation and cost of investment in dryer(8-10%) it will not be economical to buy another dryer. Case 2: 15000 bbl/day Wet Berries (WB) 10500 bbl/day Dry Berries (DB) 4500bbl/day Total Time = 11 Hrs WB feed=10500/11 = 950 bbl/hr DB feed= 4500/11 = 410 bbl/hr Minimum processing rate for WB is at dryers, which is = 600 bbl/hr Minimum processing rate for DB is = 1500 bbl/hr Hence, after 11 hours total accumulation of WB = (950-600)*11 = 3850 bbl Overtime = 3850/600 = 6.5 hrs Adding one dryer Feed capacity 800+400=1200 Accumulation of WB in 11 hrs (950-800)*11 = 150*11 = 1650 Overtime = 1650/800 = 2 hrs Analysis Adding another dryer will create bottleneck at separator. Payback Period Estimation Overtime saved in receiving 12.16-11 = 1.16 hrs Workers 15 Cost saved = 15*1.16*6.5= $113 Overtime saved in Processing 6.5 2 = 4.5 hrs Workers 36 Cost Saved 36*4.5*6.5=$1053 Cost connected to truck weighting period $ 600 Total cost saved = $1766 per day Payback Period = 40000/1766 = 22.7 days Case 3: 20000 bbl/day Wet Berries (WB) 14000 bbl/day Dry Berries (DB) 6000bbl/day Total Time = 11 Hrs WB feed=14000/11 = 1270 bbl/hr DB feed= 6000/11 = 550 bbl/hr Minimum processing rate for WB is at dryers, which is = 600 bbl/hr Minimum processing rate for DB is = 1500 bbl/hr Hence, after 11 hours total accumulation of WB = (1273-600)*11 = 7403 bbl Overtime = 7403/600 = 12.34 hrs Adding 2 dryer Total feed 1000+200 Accumulation of WB in 11 hrs (1270-1000)*11 = 2970 Accumulation of DB in 11 hrs (550-200)*11 =3850 Overtime = (2970+3850)/1200 = 5.7 hrs Adding 1 dryer and required bins

WB feed 800 Accumulation = (1270-800) * 11 = 5170 Holding Capacity 3200 Capacity of a bin = 250 Cost of a bin = 7500 Well have to convert dry bins to wet bins, number of bins needed to be converted = (5170-3200)/250 =8 Total Cost 8* 7500 = 60000 This is more than the cost of adding one more dryer (40000). Payback Period for 2 dryers Saving in overtime for receiving process = 18-11 = 7 Workers = 15 Cost saved = 15*7*6.5 = $682.5 Cost of Trucks Weighting $3500 Processing Hours 12.34-11 = 1.34 Worker 36 Cost saved = 36*1.34*6.5 = $313.5 Total cost saved = 682.5+3500+313.5 =$4496 per day Payback period = 80000/4496 =17.8 days The chart displaying the initial scenario in all three cases 10000, 15000, 20000 bbls/day has been provided below: Intake (BBls/Day) Trucks Wet Dry The chart displaying the new scenario in all three cases 10000, 15000, 20000 bbls/day with additional dryers (as applicable), has been provided be;ow: Intake (BBls/Day) Trucks Wet Dry Scheduling of workforce and another shift: In the case of 10,000 bbl per day, overtime is minimal so another shift is not needed. In the case of 15000 bbl per day, overtime is about 2 hrs which is not enough to schedule another shift. Moreover, since it is almost a continuous process, we can start all the processes at same time. At most De-stoning, De-chaffing, Milling and shipping can start one hour after receiving and control room operator has started working. In case of 20000 bbls per day, overtime is approximately 6 hrs, which means that we can schedule another shift of part time workers on busy or peak days. All the operations will have to start at same time otherwise if we wait one hour, holding bins (both dry and wet) will be full and trucks will have to wait.