National Cranberry
Cooperative Case
MGMT 660 Introduction to OM
Daniels School of Business
Mengshi Lu
Problems NCC is facing
• Overtime cost
• Personnel scheduling
• Truck waiting
• NCC worries about the truck waiting because farmers are
owners
• Inconsistent quality grading
• Increasing % of wet berries Change of product mix!
2
Process Flow Chart
Weigh Truck
1583 bbls/hr
Color Grade arrivals
2 Samples
Truck
Queue 4500bbls/hr 45 0 0 b b ls/h r 1200bbls/hr
3 @ 1 5 0 0 b b ls /h r 3 @ 1 5 0 0 b b ls /h r 3 @ 4 0 0 b b ls /h r
4 0 0 0 b b ls
Dry 1 6 @ 2 5 0 b b ls 475 bbls/hr
30 % B in
475 bbls/hr D e s t o n in g
1 -16
2 0 0 0 b b ls
Kiwanee 8 @ 2 5 0 b b ls
Dumpers Bin Dechaffing 600bbls/hr Jum b o
1 7 -2 4 3 @ 2 0 0 b b ls /h r S e p a ra t o r
1108 bbls/hr 1 2 0 0 b b ls
70 % Bin 3 @ 4 0 0 b b l s Drying
3 00 0 b b ls / h r
25-27
= 5 d u m p e rs W et
a v e ra g e 7 5 b b ls /t ru c k 600 bbls/hr
7.5 m i n / t r u c k , d u m p e r 3
(= 6 0 0 b b ls /h r,d u m p e r)
Identify Bottleneck
• Use implied utilization or utilization
• Be careful with how to identify bottleneck when there are
multiple products
• Check the sandwich example in last lecture notes
Demand Rate Flow Rate Capacity Implied
Resource Utilization
bbl./hr bbl./hr bbl./hr Utilization
Dumpers 1583 1583 3000 53% 53%
Destoning 475 475 4500 11% 11%
Dechaffing 1583 1583 4500 35% 35%
Drying 1108 600 600 185% 100% Bottleneck
Grading 1583 1075 1200 132% 90%
Grading does not >100% implied <100% utilization
have enough utilization does not does not 4
input from drying necessarily mean necessarily mean
bottleneck sufficient capacity
Inventory Buildup
Inventory 508*12 = 6,096
6,096 (6,096-3,200)/600=4.8 hours
3,200/508 = 6.3 hours
Waiting Truck
Inventory
Wet-bin 3,200 6,096/600=10.16 hours
508 per hour
Wet Bins Inventory
7AM 1:18 PM 7PM 11:48 PM 5:10 AM 5
Wet-bin full Max inv. Last unload Proc. end
22.16 hours total time
Truck Waiting Problem
• Maximum inventory on trucks
• (508*12 – 3200) = 2896 bbl
• Longest queue length: 2896/75 = 38.6 trucks
• Longest waiting time: 2896/600 = 4.8 hours (7-11:48pm)
• Average inventory: 2896/2 = 1448 bbl
• Average queue length: 1448/75 = 19.3 trucks
• Average waiting time: 1448/600 = 2.4 hours
6
Truck Waiting Problem
• What are different ways to reduce truck waiting times on peak
days?
• Add extra wet bins (convert dry bins to wet bins)
• How many?
• Pros and cons?
• Adding bins does not help with the overtime problem!
• Add extra dryers (increase the throughput of wet berries)
7
Benefit of One Extra Dryer
• Drying capacity becomes 800 bbls/hr
• Check implied utilization!
• Inventory builds up at: 308 bbls/hr (1,108-800)
• Existing wet bins will be filled in: 10.38 hr (3,200/308) at 5:23 pm
• At the end of 12 hrs there will be 3,696 bbls (308*12) of wet berry
inventory, of which 496 bbls (3,696-3,200) is waiting in trucks
• Longest queue 496/75 = 6.6 trucks
• Longest waiting 496/800 = 0.62 hrs = 37 min
• Processing will complete in 13,300/800 = 16.62 hrs
8
• Overtime saved = 22.16 – 16.62 = 5.54 hours
Inventory Buildup with One Extra Dryer
Inventory
Further reduce waiting?
Convert 2 bins to store 496 bbls
Waiting Truck
3696
Inventory
3200
Wet Bins Inventory
9
7AM 5:23 PM 7PM 7:37 PM 11:37 PM
Two Extra Dryers?
• Would it be beneficial to add two extra dryers?
• Wet capacity increases to 1000 bbl/hr
• Wet demand rate = 1108 bbl/hr
• Check implied utilization.
• Grading is the new bottleneck! Must analyze grading!
• Grading capacity for wet: 1200 * 0.7 = 840 bbl/hr. Drying capacity
above 840 does not help!
Demand Rate Capacity Implied
Resource
bbl./hr bbl./hr Utilization
Dumpers 1583 3000 53%
Destoning 475 4500 11%
Dechaffing 1583 4500 35%
10
Drying 1108 1000 111%
Grading 1583 1200 132%
Lessons learned
• Different ways of reducing waiting times
• Increasing bottleneck capacity
• Increasing buffer size
• Demand/product mix change may cause operational
problems
• Bottleneck may shift after process improvement
• Match supply with demand 11
Match supply(capacity)-mix with demand-mix
