Reference no: EM132231319

SUPER - Crunch Potato Chips

(Disclaimer: The following is based on, but not intended to be a perfectly factual representation of the process.)

Introduction: The SUPER - Crunch Potato Chip Company has a problem: they are having trouble meeting the aggregate demand for their potato chips, yet often have excess work - in - progress (WIP) inventory. While this may suggest the addition of another shift or the physical expansion of capacity as solutions, senior managers feel that better management of current capacity, specifically better management of constraints (bottlenecks) in their process, may provide a solution that doesn’t require additional labour costs or a major capital expenditure. The company has thus enlisted your help – you are required to analyze their production process (as described below), and make recommendations, based on the concepts of the Theory of Constraints, that will help them increase throughput whilst reducing WIP inventory.

The Company The SUPER - Crunch Potato Chip Company is known for the variety of flavours that they offer, such as cola flavor, fries and gravy flavor, and fruit - smoothie flavor of potato chips, to name a few. At the same time, SUPER - Crunch chips are seen as a good value to their customers – they are near the lower end of the scale in terms of price. In the words of the Marketing Manager “a reasonable price is an order qualifier for our customers, with the wacky flavours being an order winner. However, that doesn’t mean that we have to be the cheapest, it just means that we have to be below a certain price point.” Low costs are maintained by using ingredients (potatoes, seasoning, oil) of a modest quality and price, as well as through efficient operations and reasonable but not excessive wages. However, the high product variety, as well as their unsophisticated, ad hoc production planning process, requires frequent changeovers (setups) of production equipment which can add to cost (and cut into capacity). Generally, daily production plans are based on a visual examination of the stock in the warehouse, with items that are low in inventory being called into production on that day. The company currently operates one eight - hour shift per day, five days a week. They would like to avoid overtime or additional shifts, if possible.

The Production Process

Washing

The process starts with fresh raw potatoes being removed from storage and fed into a washing machine on a conveyor. (Assume for the current analysis that potato procurement and raw potato storage capacity are not constraints in the process.) The washing machine is intended to do a “rough wash” to clean away dirt and dust on the potatoes before peeling. The current washing machine is capable of washing approximately 4,000 kg per 8 - hour shift. Washed potatoes exit the washing machine and are dumped off of the conveyor into a storage tank. (The physical layout of the factory has the washing and subsequent storage located in a different area than the remaining steps. This is largely due to the piecemeal growth of the factory.)

Peeling

Washed potatoes are poured into a peeling machine in batches of up to 140 kg. The machine peels the potatoes and deposits them onto a conveyor for inspection (described next). The peeling machine requires approximately 20 minutes to peel a batch of potatoes. The time between batches is negligible, for the purposes of this analysis. Occasionally, the peeling machine is idle waiting for a batch of washed potatoes to be brought over from the storage area.

Inspection

After peeling, the potatoes need to be inspected to ensure that they are of suitable quality and were properly peeled. Peeled potatoes are moved by conveyor past stationary workers who visually look for defects, and remove any bad potatoes. The two workers (as a team) are capable of inspecting a total of 600 kg of peeled potatoes per hour. Inspected potatoes are dumped into a “feeder” that feeds potatoes into a slicing machine.

Slicing

Potatoes are sliced by either a flat knife or a wrinkle - type knife, the latter being used for ripple chips. The slicing machine is theoretically capable of slicing 450 kg of potatoes per hour, however time spent maintaining and changing the knife (e.g. when sharpening the blade, or when changing production from regular to ripple chips) can reduce this capacity by as much as 15% per shift.

Washing of starch

Sliced potatoes are washed again in order to remove starch that can turn the potato chips a dark colour when fried. The capacity of the washing process is constrained by the time it takes to adequately drain the water on the chips in order to promote frying quality. The chips drain while on a draining conveyor, and require approximately six minutes to dry 40 kg of chips (although this function is not very scientific and dry time can vary significantly.)

Frying (oil)

Potato chips are fried in oil on a conveyor. This equipment is very modern (given the importance of the frying function) and has a significant capacity of approximately 6,000 kg per eight - hour shift.

Seasoning

Seasoning of potato chips uses a sprayer to spray seasoning flour evenly on the chips, and then a seasoning drum to roll the chips to ensure a proper coating. The capacity of the seasoning function is approximately 450 kg per hour. However, when production is changed from one flavor of chip to another, a changeover of the equipment is required in order to clean out the seasoning sprayer and drum and change the flour. This could take from 5 to 15 minutes, depending on the degree of difference between the flavours that follow each other. There are typically 10 to 15 changeovers in a given shift, approximately equally split between minor (5 minute) and major (15 minute changeovers).

Packaging

The packaging equipment operates very efficiently, with capacity of approximately 5,000 kg per shift, less time lost on changeovers. Changeover of packaging equipment between flavours takes only about 5 - minutes and is typically done by the same person that does the seasoning changeover, after they have performed a changeover on the seasoning equipment and before restarting the production line (since there is limited space between the seasoning and packaging equipment for inventory.)

The Problem: The company finds that in general they are producing less than they would like to, despite the fact that work - in - process inventory can build up in various places in the plant (excessive WIP tends to lead to quality issues for this specific product). When asked where the bottleneck is, foreman Debbie Berg commented that “it seems to vary between a few activities and from shift - to - shift; I can’t put my finger on a single, obvious bottleneck. We need some fresh eyes to take a look at the whole process and give some suggestions for how to better manage the capacity that we have before we start looking at overtime or equipment purchases."