National Cranberry Case
What are your recommendations to NCC on how to deal with their problems? (in terms of starting processing at 7 rather than 11am, the number of bins to convert, the number of dryers to purchase). Assume that drivers are paid $15 per hour and that an average busy day has a continuous arrival rate of berries of 1,500bbs/hr. (also assume 100% bulking on busy days.)
The current operating strategy of National Cranberry Cooperative is causing high cost in paid overtime for the workers inside the production site and high cost in paid time for drivers waiting outside of the facilities while they wait to unload their trucks.
Starting the processing at 11am leads to 6 hours of paid overtime during the 20 busiest days of the year, since workers have to stay after 11pm, until 5 am. The overtime average $11,500 to $21,000 depending on the number of workers (8 or 9) and their status (seasonal or permanent). It is also impossible to process all the berries and the waiting time of the drivers is really high - the highest from all possible scenarios.
Even though starting operations at 7am does bring additional value to the cooperation, it wouldn’t solve all of the problems they are currently experiencing. The overtime wouldn’t be significantly reduced since workers would still have to work 5 hours in additional hours, bringing the cost of overtime between $9,600 to $17,500. Drivers would still have to wait hundreds of hours outside the facility.
Therefore, the current situation isn’t optimal, knowing they have the space needed to add additional machinery. The following paragraphs will analyze a few possible scenarios National Cranberries could undertake to improve their operational process.
Scenario 1 - Starting time at 7am - 0 dryer, 1 bin conversion
Since the trucks start arriving at 7am, it makes sense for the facility to start their operations at the same time to avoid the trucks from waiting, in which case they will have to pay the charges for the trucks, which is a waste of money.
Even though it is much cheaper option to convert bins rather than purchasing a dryer, it does not solve the bottleneck, which has been identified as the dryer. There is enough storage for wet berries with the dedicated bins and the common bins that have been allocated for them. The processing time of the facility still remains at 21 hours, which means that overtime will have to be paid for 5 additional hours for each of the employees that continues to work there. Also, the drivers are still waiting an additional 100 hours, which sums up to a total cost of $15000 considering that each driver is paid $15/hour. All this is only incurring extra cost while ...