Natural Blends Inc. (Part A) Questions – Part A Assume that the production system was running only one size of oranges. Consider just steps two through four : Extraction Filtration Concentration Extraction Process : -Time Setup = 20min -Capacity = 20,000lbs/hr Filtration Process : – Operation time = 90min -Filter Change = 30min -Capacity = 20,000lbs/hr Concentration Process : -Capacity = 18,000lbs/hr Question 1a : How much orange juice concentrate can be produced in one 8-hour workday?
Since we have bottleneck on process 3 (Filtration – with lowest production capacity in total 8hrs) then all process should be following process number 3 with downtime 30min for filter change. So we only can get maximum output from Concentration process is 108,000 lbs = (4 x (18,000+9,000)) = 108,000 lbs Question 1b : Assume extraction had previously been setup for the size oranges being processed. How much idle time will there be in the extraction operation during one 8-hour workday? Process 2 (extraction) should wait and follow the operation time of Process 3 since it should be shutting down for 30min for filter change after operate 90min.
Then during 8hr, process 2 have 4 idle times (=8hrs/2hrs) Idle time = 4 x 30min = 120min / 2hrs Question 2a : If you could add storage capacity somewhere between steps two and four in this production line in order to increase daily output, where would you place it? How much storage would you add? We will put 1 storage between process 3 (filtration) and process 4 (concentration) with capacity 3000lbs to accommodate the output from process 3 since the production time and speed is not the same between process 3 and 4.
Question 2b : Why? Process 3 after operate for 90min, it can produce 30,000 lbs of orange juice (20,000 lbs/hr) but the process 4 only have production capacity 18,000 lbs/hr and for 90min operation it only can proceed 27,000 lbs meanwhile the total output from process 3 are 30,000 lbs. The excess of orange juice 3,000 lbs should be put into temporary storage and will be proceed at process 4 for next 10minutes (see above table). So process 4 only have 20min idle time before continuing the process from the beginning.
The total capacity can be produced by process 4 : = 4 x (18,000+9,000+3000) = 120,000 lbs Question 3a : If the cost of adding storage was $30/lb and the cost of reducing setup time by 50% using additional fixtures was $20,000 for the filter process and $10,000 for the extraction process, what action would you recommend in order to maximize the output of this production line? We will recommend to use additional fixtures to reduce 50% of setup time for Process 3 instead of adding storage (assumed we don’t need to setup process 2 since there is only one size of oranges).
The capacity can be produced by Process 4: = (4 x (18,000 + 9,000)) + 18,000 = 126,000 lbs Question 3b : How much will your recommended improvement(s) cost? How much additional capacity do you create? Cost of adding a fixture to reduce setup time by 50% = $ 20,000 and we will gain output 126,000 lbs ($1,1/lbs) Meanwhile if we add 1 “3,000 lbs” storage will cost us = $30 x 3,000 = $ 90,000 but we only get output 120,000 lbs ($7,5/lb) So, cost for improvement is $20,000 and will create additional capacity 18,000 lbs with idle time of process 2 only 60’ (4 x 15’)