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National Cranberry Cooperative Case for MBA
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National Cranberry Cooperative Revised 3
Arrivals
Wet berries16,400 *.8 = 13,120Dry berries16,400 * .2 = 3,280Per hour 13,120/12 = 1093.3per hour3,280/12 = 273.3
7 am start with no changes
Receiving backup wet berries (1093-675)*12 -3200 in bins = 1820Time to unload trucks1820/675 = 2.7 hoursTotal Time per worker(7am to 7pm = 12 hours + 2.7=14.7)*20 days = 294 hoursRegular Time for 20 days4 weeks * 40 hours per week = 160 hoursOvertime294-160 = 134*15 workers = 2010Overtime cost2010*$15.75 = $31, 658
Processing Time per worker13,120 wet berries per day/675 berries per hour = 19.4*20 days = 388Regular Timefor 20 days160 * 2 shifts = 320Overtime388-320 = 68*17 workers = 1169Overtime cost1169*$15.75 = $18,405
Total Overtime cost$31,658 + 18,405 = $50,063
7 am start with 1 new dryer
Receiving backup wet berries(1093-900)*12 -3200 bin capacity = 0 (no new bins needed)Total Time per worker(7am to 7pm = 12 hours)*20 days = 240 hoursRegular Time for 20 days4 weeks * 40 hours per week = 160 hoursOvertime240-160 = 80*15 workers = 1200Overtime cost1200*$15.75 = $18,900
Processing Time per worker13,120 wet berries per day/900 berries per hour = 14.6*20 days = 292Regular Timefor 20 days160 * 2 shifts = 320Overtime292-320 = 0 (no overtime)Overtime cost$0
Total Overtime cost$18,900Savings with 1 new dryer$50,063 - $18,900 = $31,163Cost of 1 new dryer$60,000/$31,163 = 2 years. A great investment.Pay Back Period
7am start with 2 new dryers
Receiving stays same
Processing time wet berries13120/1125 = 11.7 hoursBut separator becomes bottleneckProcessing time separator16400/1200 = 13.7 hours
Processing Time per worker13.67*20 = 273Regular Time for 20 days320Overtime 273-320 = 0No SavingsPayback periodInfinite, a very bad investment
Recommendations
1. Buy one new dryer2. No not convert any bins