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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 CO-
OPERATIVE

Receivi Weighi Sampli Colour Dumpin


ng ng ng Sampling g

Dr Dry/We Dry
y t

Milling Dryin Dechaffin Destoni


g g ng

Baggin Freezer
g
2 Bulk Bin Finish
Processing
Bulk Another
Truck Plant
3 Waste,
5%

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.
Case 1: 10000 bbl/day

Wet Berries (WB)  7000 bbl/day

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

We’ll 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
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
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.