Natural Blends Inc

Prof M G Korgaonker

Natural Blends Inc

Sorted Oranges Storage 240000 lbs

Testing/Concentrate Storage ( 4 tanks ) 25000 lbs

Extraction

Filtration

Concentration

Blending

Pr = 20000lbs/hr ST= 20min

Pr = 20000lbs/hr ST= 30min

Pr = 18000lbs/hr

Pr = 22000lbs/hr ST= 40min

Orange Juice Process Flow Diagram

Natural Blends Inc Q 1 a : How Much Orange Juice Concentrate Can Be Processed In One 8 Hr Workday ? This is a continuous flow process without buffers between steps two, three, four. Each of the steps have to run at the same rate Production rate extraction = Production rate filtration = Production rateconcentration

System production rate = Lowest of the three production rates = production rate of the concentrator = 18000 lbs / hr

Natural Blends Inc

In addition, the run time of the system is limited by filtration, which requires 30 min set up time for every 90 min run time The amount of juice processed in one 8 hr day = [ 8 hr ( 0.5 hr set up * 4 filter set ups )] * 18000 lbs/hr = 6 * 18000 = 108000 lbs / day

Natural Blends Inc Q 1b : Assume Extraction Has Previously Been Set Up For The Size Of The Oranges Being Processed. How Much Idle Time Will There Be In The Extraction Operation During One 8 Hr Workday ? Production time of the extractor is exactly the same as production time of the filtrator Idle time of extractor = time required for filter set ups over the 8 hr workday = 0.5 hr * 4 filter set ups / day = 2 hrs / day

Natural Blends Inc If idle time due to unused capacity of the extractor is taken into account, Total idle time = 2 hrs + Idle time due to unused capacity Capacity not utilized when running = ( time extraction is running ) * ( fraction capacity utilized ) = 6 hrs [ ( max extractor capacity actual production)/max extractor capacity ) ] = 6 hrs [ ( 6 hrs * 20000 lbs/hr 108000 lbs/day) / 6hrs* 20000 lbs/hr] = 0.6 hrs / day Total idle time / day of extractor = 2 + 0.6 = 2.6 hrs

Natural Blends Inc Q. 2 a and 2b : If You Could Add Storage Capacity Somewhere Between Process Steps Two And Four In The Production Line In Order To Increase Daily Output, Where Would You Place It ? How Much Storage Would You Add ? Why ? The purpose of the storage is to buffer or decouple one process step from another, to improve the performance of the system. Storage does not make the concentrator run at a faster rate but it can ameliorate the effects of downtime.

Natural Blends IncHow Can Added Storage Be Used To Improve The Daily Output ? Since only one orange size is to be processed, the extractor does not require any changeovers. The production rate of the extractor is determined by what happens downstream. Buffer storage after the extractor does not reduce he downtime of filtration or increase the productive capacity of concentration

Natural Blends Inc

There is an advantage having buffer storage after filtration. It compensates for downtime during filter set ups and filtration can produce extra juice during the 90 min run time, up to 20000 lbs / hr. Accumulating this in storage, concentration can continue to run during the filtration downtime. Thus storage after filtration decouples filtration and concentration and increases daily output.

Natural Blends Inc The amount of storage needed is the smaller of the following two values : ( a ) Amount processed at concentration in 30 min = 0.5 * 18000 = 9000 lbs ( b ) Amount stored during 90 min run of filtration = 1.5 * ( 20000 18000 ) = 3000 lbs Therefore, the amount of storage capacity needed between filtration and concentration is 3000 lbs.

Natural Blends Inc

During the 8-hr workday, the output of the system is improved by = 3000 lbs/run * 4 runs = 12000 lbs

The total output of the system will be = 108000 + 12000 = 120000 lbs/day

Natural Blends Inc Q 3 : If The Cost Of Adding Storage Is $ 30 / Lb And The Cost Of Reducing Set Up Time By 50 % Using Additional Fixtures Is $ 20000 For The Filter Process And $ 10000 For The Extraction Process, What Action Would You Recommend In Order To Maximize The Output Of The Production Line ? Reducing the set up time of extractor has no effect on the current system because it processes currently only one type of orange. Production time of the system is determined by filtration set ups and production rate of concentration process.

Natural Blends IncThree Options Are Available To Increase The Output : Add storage capacity Reduce filter set up time by 50 % Reduce filter set up time by 50 % and add storage capacity

Natural Blends Inc

Option 1 : Add Storage Capacity The amount of storage needed and the increased daily output is already determined in the previous question. Add 3000 lbs of storage after filtration to gain 12000 lbs of output / day. The cost of the improvement = 30 * 3000 = $ 90000

Natural Blends IncOption 2 : Reduce Filter Set Up Time By 50 % One approach to this option is to view the system on an average day. Reducing filter set up time by 50 % allows filtration to have more run time per day. By reducing filtration cycle time from 2 hrs to 1.75 hrs ( 1.5 hrs run time + 0.25 min set up time ), number of filtration cycles per day. = 480 mins/day / 105 mins = 4.57 cycles / day

Natural Blends Inc

Amount of concentrate produced / day = 4.57 * 18000lbs/hr * 1.5 hr = 123390 lbs/ day This provides a benefit of (123390 108000) = 15390 lbs / day at a cost of $ 20000. This does not include a fifth set up per day. The remaining run time before changing filters is assumed to carry over the rest of the day.

Natural Blends Inc

Another approach is a bit more conservative. After 4 filtration runs and 4 filtration set ups, 60 mins ( 8 hrs 4 * 1.75 hrs ) are left over at the end of the day. During this 60 mins, a 45 min run is conducted followed by a 15 min filter set up. Thus there are 45 min / day of extra capacity. In this case the extra output / day = 0.75 hrs * 18000 = 13500 lbs / day.

Natural Blends Inc Option 3 : Reduce Filter Set Up Time By 50 % And Add Storage Capacity Between Filtration And Concentration The added daily capacity = added run time due to shorter set ups + Added usage of the concentrator due to storage = 13500 + 12000 = 25500 lbs / day The total cost of shorter set up and added storage = $ 20000 + $ 90000 = $ 110000

Natural Blends Inc Q 3 b : How Much Will The Recommended Improvement Cost ? How Much Additional Capacity Do You Create ? Depending on which of the options are chosen, the costs range from $ 20000 to $ 110000. On a daily basis, each option generates additional output at a particular investment cost : ( a ) Storage only : $ 90000/12000 = $ 7.5 / lb of increased output ( b ) Set up reduction only : $ 20000/13500 = $ 1.46 / lb of increased output ( c ) Both ( a ) and ( b ) : $ 110000/25500 = $ 4.31 /lb of increased output

Natural Blends Inc

Given the kind of margins described in Part C of the case, the best option is implementation of both options ( a ) and ( b )

Therefore the recommendation is to reduce the set up time at filtration by 50 % and add storage between filtration and concentration

Natural Blends Inc

Thank You