National Cranberry Cooperative

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Case Report: National Cranberry Cooperative
Fill in your name in the header. Please read the Course Syllabus for guidelines on collaboration in assignments: Below, write your answers to Guiding Questions 1-4.
The case is due at the beginning of class on January 29 (Wednesday). Please submit only one document per group. We will discuss the answers in class. You may want to print out your answers and charts for your reference during the class discussion.
Some additional information about National Cranberry follows. Not necessarily all of this information is relevant to your answers. You may assume that:
On an average “busy” day 18,000 bbl arrive over the 12-hr period (7 am to 7 pm). This is based on a typical busy day in September.
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First of all, purchasing a light meter and hiring an operator would reduce large amount of unnecessary cost incurred from cranberries that are misidentified by the chief berry receiver. The case reports that half of 450,000 bbls of berries were misidentified as No.3. Since $1.50 was paid for every No.3 berries, we can say that $337,500 was overpaid. Assuming that the cost of this system is about $40,000 and the cost of full-time skilled operator is about $34,944 (as a straight-time pay rate for the full-year employee) per year, we can calculate the return on investment in the light meter system. The return would be 4.503 ($337,500/$74,944). Even though, the operator gets paid more than the amount above, the return on the investment would still be positive.
Secondly, purchasing one additional dryer would cost $60,000. Then, the process capacity would increase to 800 bbls/hr. The dry berries (375bbls/hr) and the wet berries (800bbls/hr) would now sum up to 1175 bbls/hr, which will increase the utilization rate of separators to 97.91%. The resulting increase in flow rate could reduce the overtime labor as much as $78,000 (assuming 12,000 over time hours of all workers * $6.5/hr) and the return on the investment would be 0.3 (18,000/60,000).
Thirdly, purchasing the fifth Kiwanee Dumper had increased the capacity by 600

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