Om Cranberry Case

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- Add 1 more dryer (bottleneck) + bins conversion

- If we add 1 more dryer ($60,000), the capacity of the dryers’ process increases to 800 bbl/hr.

- The maximum hourly throughput rate is 800 + 360 = 1160 bbl/hour

- The maximum total inventory is 12*(1080-800) = 3360 bbl. It will need 3360/800 = 4.2 hours to finish them.

- We save 9.6-4.2 = 5.4 man-hour and 87 truck-hour*.

- The truck hours are calculated based on 2560 bbl which is the maximum truck inventory at 7pm. For 2560 bbl, we would need 34.13 trucks to standby from 7-8 pm. Since the capacity is 600 bbl/hour, the standby truck reduces by 8 every hour. In average, we need 91 truck-hour/day before an investment.

- If we assume that 9 full-time workers work overtime to finish the wet berries, then the cost of labor for a season will be 5.4 hour/day*$13/hr*1.5 (OT) * 22 days/month * 3 months * 9 people = $62548.

- Because the maximum total inventory exceeds the capacity of the current bins which is 3200 bbl. Thus, the extra 160 bbl will be either stay on the truck or a converted bin.

- The bin conversion cost $10,000/bin and the truck waiting time cost $100/hr/hour. With the excess 160 bbl, we need 3 trucks standby for 1 hour daily.

- The standby truck will cost 3 trucks/day * 22 days/month * 3 month * $100/hr/truck * 1 hour = $19800.

- The standby trucks cost more than 1 bin conversion. Thus we opt for 1 bin conversion.

- In summary, we add 1 more dryer and 1 bin conversion which cost $60,000 + $10,000 = $70,000 which is one-time investment can save the NCC 5.4 man-hour and 91 truck-hour. Based on our assumption, we save $62548+$600,600 = $663,148/year.

- Add 2 more dryers

- If we add 2 more dryers ($120,000), the capacity of the dryers’ process increases to 1000 bbl/hr. However, overall process capacity will be limited by separators (1200 bbl/hr for wet berries and dry berries). Thus, the wet berries process capacity is capped at 900 bbl/hour(75%) and the dry berries process capacity is limited at 300 bbl/hr(25%).

- The maximum hourly throughput rate is 900 + 300 = 1200 bbl/hour

- The maximum total inventory for wet berries is 12*(1080-900) = 2160 bbl. It will need 3360/800 = 2.4 hours to finish them. While the maximum dry berries total inventory is 12*(360-300) = 720 bbl. It will need 720/300 = 2.4 hours to finish them. So both dry berries and wet berries will be empty at the same time.

- We save 9.6-2.4 = 7.2 man-hour and 91 truck-hour.

- If we assume that 9 full-time workers work overtime to finish the wet berries, then the cost of labor for a season will be 7.2 hour/day*$13/hr*1.5 (OT) * 22 days/month * 3 months * 9 people = $83397.6.

- The standby trucks saving is 91 truck-hour/day * 22 days/month * 3 month * $100/truck-hour = $600,600.

- Because the maximum total inventory does not exceed the capacity of the current bins so we do not need to convert the bins or pay for the truck waiting.

- In summary, we add 1 more dryer and 1 bin conversion which cost $120,000 which is one-time investment can save the NCC 7.2 man-hour and 91 truck-hour. Based on our assumption, we save $83397.6+$600,600 = $683,998/year.

- We recommended to invest in 2 dryers because in long term it will be more economical than install 1 dryers and convert 1 dry berries bin to wet berries bin.