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National Cranberry Cooperative Case Solution & Answer

National Cranberry Cooperative Case Solution 

Question No 1

  1. What is the Goal for the business and how is it measured?
    1. How is Throughput measured?
    2. What are the Operating Expenses of the business?
  • What Inventory does the business have?

National Cranberry Cooperative (NCC) goal is to increase net income of the business and reduce its costs and expenses. It is the largest organization which produces cranberries, besides that it has also occupied a wide area of fields in the USA for its operational activities, where a largest amount of cranberries is produced. The cooperative is owned by its growers who have also founded this cooperative. These owners are involved in the marketing and processing of cranberries. Recently, the management has decided to come up with various operational changes with regards to the efficiency of processes as the company is the market leader. In order to do so, the cooperative is considering to buy new machinery that would help them in increasing the capacity. Additionally, according to the management; the company is facing similar problems since two decades, but it has not taken any major actions to deal with such problems. But now it is time to bring some these changes in order to make procedures more efficient for the company. The processes of the company could be faster without bringing major changes but little ones would work. The company has thought of a strategy to makes changes in the processing of cranberries in order to cut off the waiting time of unloading. By implementing this strategy effectively; NCC will be able to cut the cost and increase its efficiency. (Tucker, 2011).

One of the major and most sensitive issues that the organization is confronting is connected with the appearance and holding up of the trucks. The additional time cost of the organization wasstill not what the company has expected in the previous fall. Moreover, the cultivators are disturbed because of the way drivers had to burn through their time in trusting that the trucks will dump to the RP1. It has been referenced for the situation that a standard truck takes nearly 7 to 8 minutes for a truck to dump cranberries in the RP1 and to get it onto a Kiwanee unloader. The transporters need to wait until the cycle is completed. These hold upstook place when the holding canisters turned out to be full and there was no spaceleft in the plant to store the berries before going for further loading of the berries. The transporters were frequently waiting for three or more hours and were paying $100 each hour to rent a truck and a driver. The entire situation indicates that there is a need of impermanent the holding receptacles, so this issue could be addressed.

One more issue found by the NCC is connected with the extra time consumption. The additional time consumption’s of the organization were out of the cutoff and there was a significant need of restricting the capital connected with the extra time costs. The compensation rate for part time employees in the process organic product segment was $8.00 each hour. They were compensated on double time pace of 1-1/2 times their straight-time rate if they worked for more than 40 hours out of every week. The issue turned out to be more noticeable during the pinnacle seasons. Overall months which are expected by the labors to work in the plant was 27. In actuality, the quantity of laborers expected in the pinnacle season increased from 27 to 53.

Assumptions

During peak days 18000 barrels of berries would be processed and 70% of the berries out of that would be wet (12 hours spread) 18000*70%=12600 bbl./day. The wet bbl. per hour 12600/12 = 1050

Calculations for 11:00 AM

First, we have identified a bottleneck in the process, as the drying, capacity of the drying unit is 600 bbl. /h and the required is 1050 bbl./ hr and it is more than it.  At 7:00 am the trucks come for loading and start loading so, the total capacity of the bins is 3*400+8*250= 3200 bbl. Trucks start operations after waiting for 3 hours.The total waiting time for the truck has been calculated based on the below descriptions:

We have analyzed that at the end of 12 hours, 7800 will be our remained inventory. From that, we analyzed that 3200 would be in bins and 4600 would be in trucks. So if we calculate it would take 7.67 hours to clear all. So it would help in clearing the bottleneck and after 2:40 AM all trucks would be clear and no truck would be waiting.

Total waiting time = 7.67 + (12-3) = 16.67 hours

16.67* (4600/2) = 511 hours

Overtime Calculations

As we know that on peak days there would be 18000 bbl. and among that 70% are wet berries (12600). The processing average rate is 600 bbl. /hour. So it would complete in 21 hours (12600/600 =21). Overtime is 13 hours. So to reduce the waiting time and overtime cost the plant operations should start at 7:00 AM rather than 11:00 AM.

The Calculation for 7:00 AM Operations

According to this situation, the waiting time and overtime cost will decrease. As the arrival buildup rate is (arrival rate – processing rate) i.e. (1050-600 = 450bbl.). At this rate, the bins will be filled at 7.11 hours (3200/450) and the truck waiting time will start at 2:06 PM.

Total truck waiting time:

Ending inventory= (450*12 =5400)

If 3200 are in the bin then the remaining 2200 bbl. would be in the truck. So it would take 3.67 hours to empty the truck (2200/600). We can see that the inventory building will start at 7.11 hours and will go up to 15.67 hours. In this case, at 10:40 there would not be any truck in waiting.

Truck waiting time= 15.67-7 =8.67 hours

And waiting for all trucks is (8.67*(2200/2)/75 =127 hours

Overtime Calculation

Even if the plant operations start at 07:00 AM the overtime is 13 hours. Which is less than 21 hours. (See Exhibit 1)

Planning is very essential for every situation in the organization, regardless of peak days or quiet days. Organizations that prepare themselves in advance for peak days or during the high-demand period are more likely to face situations with an ease… The vehicle usage during peak days and related calculations are given below:…………………………

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