A Publication of The College of Agriculture UNIVERSITY OF CALIFORNIA The Sixth Report in a Series on Efficiency in Fruit Marketing IN-PLANT TRANSPORTATION COSTS AS RELATED TO MATERIALS HANDLING METHODS— APPLE AND PEAR PACKING L. L. SAMMET i UNIVERSITY OF CALIFORNIA DAVIS CALIFORNIA AGRICULTURAL EXPERIMENT STATION GIANNINI FOUNDATION OF AGRICULTURAL ECONOMICS Mimeographed Report No. 142 January 1953 TABLE OF CONTENTS Page INTRODUCTION 1 TRANSPORTATION LABOR COSTS IN SAMPLE PLANTS h ESTIMATING TRANSPORTATION COSTS 7 Fixed costs 7 Direct costs 9 Total costs 9 Requirements for transportation crew and equipment 11 TRANSPORTATION COSTS IN A MODEL PLANT ih The model plant 15 Transportation costs with hand-truck and fork-truck equipment 16 COST REDTTCTION POSSIBILITIES 19 Changes in equipment for transDorting packed fruit 20 Fork-truck plant 20 Hand-truck plant 22 Changes in equipment for transporting incoming fruit 2$ Changes in plan of operation for receiving incoming fruit 29 Direct movement of fruit to dumper 29 Revise floor layout of receiving area- ■ 32 Change in load size 3h Combining changes for low-cost operation 36 EFFECT OF CHANGES IN COST RATES ON TRANSPORTATION COSTS IN MODEL PLANTS 37 Changes in price level 39 Changes in proportion of nonproductive time hi Effect of idle equipment ill Changes in estimates of use life h3 OiWERSHIP COSTS VERST^S RENTAL COSTS FOR FORK-TRITCK EQUIPMENT ii3 OTHER FACTORS AFFECTING CHOICE OF EQUIPMENT k6 STJMMARY" hi APPENDIX A, ESTIMATING REQUIREMENTS FOR TRANSPORTATION CREIV AND EQUIPMENT, THE MODEL PLANT h9 Requirements for trucking operations 52 Requirements for setoff operation 57 Estimates of transportation crew and equipment 57 8? 1 t:oiTAT:' jinx* 9VXC}TCt^r';rrrtprj FORElfOHD This report is the sixth in a series aimed at improved efficiency and lowered costs in the local marketing and packing of deciduous fruits. The present report deals with a segment of the packing house operations — the transportation of fruit and materials at the packing house. In studies of costs in a number of California apple and pear packing plants, the labor cost of in-plant transportation varied from fl.lUO to $0,209 per 1,000 pounds of fruit received; these amounts represent, respec- tively, 16.1 per cent of the total direct labor in the high-cost plant and 3.7 per cent in the low-cost plant. This range in costs suggests that im- portant savings in the cost of in-plant transportation are possible. This report is designed to aid packing house managers in making deci- sions as to the adoption of changes in transportation equipment and methods. The report presents time requirements for the performance of various trans- portation jobs; estimates of season transportation costs in a model packing house operated with a variety of work methods and types of equipment; and an evaluation of the effect on relative transportation costs in hand-truck and fork-truck plants if certain of the rates affecting costs are changed. These studies were made cooperatively by the Giannini Foundation of Agricultural Economics, California Agricultural Experiment Station, and the Bureau of Agricultural Economics, U. S. Department of Agriculture. They were made under authority of the Research and Marketing Act of 19i|6. J ■■'■'t '..w ami hsitsv r:-- qsriK i - joelq *?.-:iO*dsirf f>riJ- jj; ^ 'to id&h i.' .aJIdisaoq sic iio 1 QS!ol-lB\ r a* BOO •. r CO .Dygaerts sis 8^- ©€Kti3': ^, - Efficiency in Fruit Marketing IN-PLANT TRANSPOmTION COSTS AS RELATED TO MATERIAIS HANDLING METHODS—APPLE AND PEAR PACKING L. L. Samraeti^ INTRODUCTION A casual observation of the work performed in packing fresh fruit in- dicates that much of it consists of moving fruit and materials from one point to another in the packing house. Several different types of equipment are used for this purpose. These include hand trucks, powered tracks (fork trucks and powered hand trucks), and various forms of gravity and powered conveyors. Apple packing plants in the Northwest — and California citrus packing houses — ^use a floor chain conveyor that will transport lugs or boxes in stacks (Figure 1). Load capacity varies considerably with the different types of equipment and with the type of material transported. For example, in transporting full field lugs, the load sizes observed varied from 5 to 6 lugs with hand-truck equipment and from 30 to h2 lugs with fork -truck equipment. In transporting empty standard packing boxes, the load sizes observed ranged from Ik to 21 boxes with hand trucks and from 72 to 96 boxes with fork trucks. Observed load sizes for various types of equipment and materials are sxiramarized in Table 1, The use of radically different types of equipment — such as described above — ^may result in large differences in costs. The important differences in costs are evaluated in this report. In the cost comparisons which follow, only the costs of labor and equip- ment are considered. This ignores an important aspect of the problem — the basic difference in building requirements for the hand-truck and fork-truck plants. In the hand-truck plants, the building usually is of wood frame con- struction, with a wood floor constructed at truck-bed height. Roof supports are spaced a moderate distance apart, say 20 to UO feet. The usual construc- tion in the fork-truck plants, however, consists of a concrete slab floor at ground level, concrete sidewalls, and a relatively long-span roof construction, say 75 to 100 feet. 1/ L. L. Sammet is a Cooperative Agent of the California Agricultural Experi- ment Station and the Bureau of Agricultural Economics, U. S. Department of Agriculture. iioiTOnanSTMi his ^Aotni :^^o'l ) . . - j faeis-'Toq tB^doirrj faaari abuConi saorfT • .asr . : IqqA- .emy.?" . ■ f^sTisw^q farrfe Tj^jfcvfiij? 'Jo emi- ' • - • . f:-' -- ' .i .sldeT ni basirtSiPoiu.-c oi.i^xxad'f.iti tn:; cfnam;.'.: :;.ov --iu; ;.• .;...-ci -qiups - buB iou.:.X "lo cj . lino ^wci-'.o': .loxdw : JEOO sd* ■ -mfir't boovf • rXlsasu gnibi r«d- ^ao^toi-u- , noi.|oircj3nso iooi suiq-o -^^ii-^x ^^lIsvi-Jsl'D;^ e uijxs . ^.'yi.v Figure 1. Equipment for transporting fruit and materials In apple and pear packing plants. Upper left: Power conveyor for packed fruit. Upper right: Floor-chain conveyor for stacked boxes or lugs. Center: Hand truck. Lovirer left: Pov^ered hand truck. Lower right: Fork truck. 3. TABLE 1 Effect of Type of Equipment and Type of Material on Size of Load per Trip Material moved Cannery lugs: Empty Full Field lugs ; Bnpty Pull Packed box: Los Angeles lug, empty Los Angeles lug, full San Francisco lug, empty San Francisco lug, full Standard box, empty Standard box, full Shook (pieces) : Los Angeles lug, bottom Los Angeles lug, head Los Angeles lug, side Standard box, bottom Standard box, head Standard box, side Standard box, lids Type of equipment Fork truck or povrered hand truck h2 to h2 30 to 30 to 81 to 60 to h2 60 to 36 to h2 h2 ISO 81 96 h8 Hand clamp truck 3,000 to 3,500 600 to 900 2,500 to 3,500 1,500 li5o to 600 2,500 to 3,000 1,800 6 to 6 to 8 to 5 to 2h to 9 to 10 to 6 Ik to h to 7 7 12 6 32 10 12 21 5 600f^ 600J; a/ Estimated . The differences in building design introduce several factors that affect building construction costs and therefore should be considered in a comparison of transportation costs with fork-truck and hand-truck equipment. Factors tending to increase the building cost for the fork-truck operation include the higher unit costs for wall and roof construction in the fork-truck plants and the need for a much larger — and usually better surfaced — area of pavement ad- jacent to the building for loading and unloading highway trucks. On the other hand, construction costs per unit area for a concrete floor slab at ground level are lower than for a wood floor supported above the ground; also, the roofed area in the fork-truck plant can be smaller because pallet loads of in- coming fruit, empty boxes, shook, etc., can readily be stacked several tiers high. -xaq far o* 18 005 J i cQa.i Xi', s.ij- sbyloni ncx^siaqo sioxrcit-yl-i -faa J-nenDVeq lo f S're — bvop,1iu5 -x-^cfrfacf -^Ilairaif brT''--i'--- eft;)- jbnuoig sri* evods feai-soqqi/s 'tooll bo Estimates of replacement costs for buildings indicate that the differ- ences in building requirements for the liand- truck and fork- truck plants balance fairly well from the standpoint of costs. This is particularly true if the building costs are estimated in terras of annual charges which reflect building expenses such as depreciation, repairs, and so on. For example, the 19$0 replacement cost of the building for a plant of U5,000 pounds per hour capacity is approximately '1562,000 if designed for hand-truck operation, and $73jOOO if designed for fork-truck operation. The estimated annual cost, however, is $6,500 for either building. From the above estimates, it appears that differences in building con- struction costs — especially when considered in terms of annual fixed cost — are not important. They are omitted from the comparisons that follow. This permits concentration on labor and equipment requirements and costs as af- fected by transportation equipment and methods. TRANSPORTATION LABOR COSTS IN SAMPLE PLANTS The effect of type of equipment on the labor costs of in-plant transpor- tation is illustrated in the summary for l5 California apple and pear packing plants given in Table 2. The table shows for each plant the types of equip- ment employed in the transportation of incoming fruit, fruit not packed (culls and cannery), and packed fruit. It also shows — in terms of cost per 1,000 pounds of fruit received — the labor cost for transporting each category of fruit, the total cost of transportation labor, and the cost of total direct labor, including supervision. To permit interplant comparisons, the costs were computed on the basis of an 8-hour workday at rates of output typical for each plant and with labor costs in each plant adjusted to reflect uniform wage rates typical for the industry. In the hand-truck plants, labor costs for transportation varied from |0.6[i5 to H.lUO per 1,000 pounds of frviit received. In the partially mechanized plants, the range was from ;i^0.353 to $0,637 per 1,000 pounds re- ceived, and in the fully mechanized plants, the range was from $0,209 to |0.338, Contrasting the high- and low-cost plants, we find transportation labor costs to be more than five times higher in plant L than in plant P. 2/ For a detailed analysis of building costs, see Building and Equipment Costs — Apple and Pear Packing, Mimeographed Report No. lUl. Giannini Foundation of Agricultural Economics, University of California. •tnx - iyqo jioin^-fjnfiri lol- ban^iasb .li 000,5 •i'nxxoiqqB .wo J, fiBqjnoo sriJ" noil ba-iJlaii^ 'eie v-Mj .■J-ioqmJ ;e ' 8^aoc» i>m; Ev?u&iRf»-ixx»p9-x in^v- ;n£ icdBi no noljii'iJnsonbo ejijinsq c'i'AKi 03U HOITATHOTeii:^ -qiirpa lo zaqxt -;3si& Jneiq iloso 10I fcffivf. S;. ;x nevig 3.tnslq be^tOBq ion ^i-xjn'i «*iin1; gnxraoor. ■ ti&ttoqsnBii grij nx baYoXcfcs inem !3 oeJjj dl .iiint b9>!osq bnt tcbo bna ellao) • bevisoai ^iji/'xl 'Jo sfcnx/oq 000,1 2*800 f3rid- tBnoaxieqma? Jrieif; tlmiaq Ifcifloiix tio? H ■ -.r-v .fudi r^-'T'-- r^.r^'-w ... . - :.:c'-T.r>X9 lol .sau bna 9mi;i rttod.c* ydxrEiJ-s YXiscroiq £. lin bnjs ^8ax^9J■.■t, ••■ ■--i & oi sob ndxeoino;:. -f-^JV.' lo anno , r.BsnalbJ: -yjd ; 13 roxof5'ioiTf>^eb Ic se.; bbj-esjxisy ax isoo ilfsq^i Xei/nns bsxxl b tJioqsT p,.i:fij nl .ssu liixv .„M bebsjionx 3x'?snoqx9 ixsqai d-o-^iib b.,.~ ;-^^b3 nl -.srodB bf, v...,. Idi>T see) Bgu .'8*itrcri 001 lyq aaon &rt5at. ^dj lo Jrf^jo Tsa P.C 8. TABLE 3 Annual Fixed Cost of In-Plant Transportation Equipment, as a Percentage of P,eplacement Cost Annual charge as a percentage of replacement cost Type of equiment Estimated service life^^ Deprecia- tion Repairs- Insurance, interest, taxes- Total Conveyor : Gravity 20 5.0 1.5 5.0 11.5 Powered 15 6.7 1.5 5.0 13.2 Hand truck 15 6.7 1.5 5.0 13.2 Fork truck 10 10.0 1.5 5.0 16.5 Powerei hand truck 10 10.0 1.5 5.0 16.5 Pallets 10 10.0 1.5 5.0 16.5 a/ Estimated ( actual service ) life, taking account of seasonal operation (1 to 3 months per year) . Assuming no salvage value at end of use period. b/ An additional amount for repairs is included with the direct costs. This direct repair cost is estimated as 0.5 per cent of replacement cost per 100 hours of equipment use per season. c/ Insurance 1.0 per cent; taxes 1.0 per cent; interest 3 per cent (interest at 3 per cent equal to approximately 5 per cent on undepreciated balance). j 1 ■ /-.Vr "■ ■J-n&o 9. When applied to the replacement cost, the rates given in Table 3 provide an estimate of fixed costs for equipment. For example, the estimated replace- ment cost of a gas-engine fork truck of h, 000-pound capacity at the 19^0 price level is approximately $3,300, and the replacement cost of the necessary pallets would approximate $hhO.-^ Using the percentage annual charge from Table 3, the estimated annual fixed cost for a fork truck and the associated pallets would be: Fork truck: $3^300 x 0.165 = Pallets: hhO x 0.165 = _73 Total: $618 Estimated replacement costs and annual fixed charges for various types of transportation equipment are summarized in Table k- Direct Costs Direct costs for the transportation equipment include the labor cost of the operator, repair costs directly attributable to use, and — ^with povrered equipment — operating costs such as gasoline or electric power. These costs vary with the kind of equipment and the particular plant. The rates used are typical of those observed in the plants studied, except for repair costs. Data on repair costs are very inadequate, and direct repair costs are esti- mated as 0.5 per cent of the replacement cost per 100 hours of use. This estimate of direct repair cost is in addition to the provision for repair ex- pense as a part of the fixed annual charge given in Table 3. Direct costs rates for various types of in-plant transportation equipment are summarized in Table U. For example, direct costs per hour of operation for a gas-engine fork truck of U, 000-pound capacity are given as: l?bor, $1.30j gasoline and oil, $0.15; direct repair costs, $0,165; total direct cost, $1.6l5 per hour. Total Costs Total transportation costs per season for a given type of equipment are the sum of the annual fixed charge for the equipment and the total direct cost for the season. For example, the total season costs for hand-truck or fork-truck equipment are estimated on paga 11 for seasons of 100 and 300 hours in length: h/ Equivalent to approximately 125, UO" x U5" pallets. This provides about 13 pallets per 1,000 pounds of fruit run per hour. If the frequently used prac- tice of continuous loading of packed fruit in cars is assumed, no pallets are "tied up" in cold storage or precooling operations, and — assuming that pallets for cannery fruit are furnished by the cannery firm — this number of pallets would be adequate for 1^ to 2 days' run without reuse of any field pallets. ■]-; a:/oxisv toll ' ■ oaxx i Ir.mrj: unt^ . ■ 916 acfEOO T 10. TABIE h Direct and Annual Fixed Cost of In-Plant Transportation Equipment Fixed costs Direct costs Item Replace- ment cogt new- Annual charge as a per- centage gf cost new- Annual charge Repairs- Power Labor Total dollars per cent dollars dollars per hour Conveyor: Side wheel, gravity, 8-foot section Roller, 10-foot sec- tion Power, 12-inch belt on steel rolls, 20-foot section Fovrer, 12-inch belt on steel rolls, 100-foot section Power, 12— inch belt on wood rolls, 20-foot section Power, 12-inch belt on vrood rolls, 100-foot section 2^ 58 hBO 1 200 h30 970 ' 11.5 11.5 13.2 13.2 13.2 2.90 6.70 63.itO 158. iiO 56.80 128.00 0.001 0.003 0.02U 0.060 0.022 0.0U8 — 0.02-/ 0.03^/ 0.02-/ 0.03^/ d/ ^/ d/ d/ 0.001 0.003 o.oliU 0.090 0.0U2 0.078 Hand truck, each 66 13.2 8.70 0.003 1.25 1.253 Fork truck (U, 000-pound capacity, gas engine), each 3,300 16.5 5I1U.50 0.165 0.15^/ 1.30 1.615 Powered hand truck, each 1,600 16.5 26U.00 0.080 0.10^/ 1.30 1.U80 Pallets, each 3.5 16.5 0.60 1 - 0.0002 1 0.0002 1 a/ Apcroximate cost installed, 1950 price level, b/ See Table 3. c/ Direct repair cost is estimated as 0.5 per cent of replacement cost per 100 hours ~ of equipment use per season. d/ Although no labor cost is incurred in operating a conveyor, some associated labor must be considered in analyzing costs. Thus, transportation of packed fruit by conveyor may require the services of a "conveyor man" to route fruit at a switching point to several different conveyors (see pages 5 and 25). Also, "set off packed fruit" at a lidding machine is a labor cost element that enters into the comparison of costs with conveyors for packed fruit and other types of equip- ment. e/ Cost of electric power. Does not include labor cost for hand transfer of packed boxes to, or from, conveyor. f/ Includes cost of gasoline and lubricating oils. " fcoi-J '>0 ^Sf;0 f- • 1 3.0 ■,0.0 Cij . U . . \ 0 ■■■A -oiir;.-:-? 'i' • ■l- £■ B • ■ on 8f? ^ -:-OY. 11. Item Total season cost Fork truck Hand truck Hours of operation per season 100 300 -100. 300 Annual fixed charge $618-/ $ 618-/ $ 9 $ 9 Direct cost oer season: Labor Repairs 130 32 390 95 125 375 1 Total cost per season $780 $1,103 |13i; $38U a/ Including cost of pallets. The total season cost divided by hours of operation per season gives the total cost per hour. In the fork-truck plant, the total cost with 100 hours' opera- tion per season is $7.20 per hour per truck and with 300 hours' operation per season is %3.70 per hour per truck. In the hand-truck plant, the hourly costs are, respectively, .^1.35 and $1.28. These figures show that for a given type of equipment the total cost per hour decreases as the length of season in- creases, also, that the difference betvreen the cost per hour for fork trucks and hand trucks decreases as hours of operation per season increase. These effects are the result of spreading the fixed costs over a larger number of hours of operation as the length of season increases. 5/ Requirements for Transportation Crew and Equipmen-t^ Only two types of jobs are considered in the analysis that follows. These are the setoff and stacking of packed boxes after lidding and the operation of various kinds of trucking equipment. In estimating the costs for the trucking operations, we must consider the requirements and costs for equipment as well as for labor. Both of these are affected by the type of equipment used, the size load carried per trip, and the distances traveled. For each type of truck, the initial step is to estimate the labor required to transport a given quantity of fruit. The procedure for hand- truck equipment is illustrated as follows. 5/ For a more complete presentation of procedures and data for estimating transportation crew requirements and costs, see Appendix A. to l^dTiUT -. ■;• 12. Suppose that fruit is packed in standard boxes of lj8 pounds net weight each at the rate of 30,000 pounds per hour. With a hand truck, the packed boxes are transported in stacks S boxes high a distance of 35 feet to a tem- porary storage. Studies of hand trucking in actual plants indicate that an average time of 0,529 minutes would be required per trip. With 21^0 pounds transported per trip, Ii.l? trips are required to transport 1,000 pounds of fruit; and the labor required is 2.20 man-minutes per 1,000 pounds. To trans- port 30,000 pounds of fruit per hour would thus require 66 man-minutes, or slightly more than the capacity rate of one trucker. A similar procedure is followed in estimating the labor requirements for the entire plant. First, the requirements for each element of the transporta- tion operations are estimated. The sum of the labor requirements for indi- vidual operations then represents the requirements for the entire plant. The results of this procedure are illustrated in Table 5, in which estimates are given of the trucking labor required in a typical hand-truck plant. In this plant, the rate of operation is assumed to be U0,000 pounds of fruit run per hour, of which 30,000 pounds per hour are packed, and the remainder consists of cannery fruit and culls. TABLE 5 Estimated Met Trucking Labor Requirements for In-Plant Transportation in a Hand-Truck Plant of U0,000 Pounds per Hour Capacity Operation Time required per 1,000 pounds of fruit run minutes Receiving! unload grower's truck and transport full field lugs to dumper via temporary storage; transport empty lugs to grower's truck via tem- porary storage 8.12 Cannery and cull fruit: unload truck and trans- port empty lugs to cannery station via temporary storage; transport full lugs to truck via tem- porary storage 1.71; Packed fruit; transport packed fruit to truck or car via temporary storage 3.55 Shook and boxes: transport shook to boxmaker and empty boxes to storage and return 0.39 Total time per 1,000 pounds run 13.80 oT .efaftuoq O00,jL r-Jl S£»J. bsixni ^ ;.J- 3no i--,. ecc^-i Xfl/^ofiqBp arfl nenj. ynou! yX.?ii^xIr to': 'pe'i 'fO',1s.£ -artj . i gi oxrfw nx ^< aldBT nx bedtsiisulli di'^ vaiq ehU .- : lo' sbnxioq ' -f^^qo "to a&ni etii ,imU\ nin Bfant«oq. 000,1 isq emL^ 13. In Table 5 each job grouping involves several individual time estimates. The estimate for receiving, for example, represents the sum of four separate items: unloading the grower's truck and transporting the incoming fruit to a temporary storage; transporting fruit from the temporary storage to the dumper; transporting empty field lugs from the dumper to a temporary storage; and loading the grower's truck with empty lugs. Estimates for the remaining job categories involve a similar procedure. The sum of such estimates for individual operations is 13. 8 man-minutes per 1,000 pounds of fruit run. In addition to the jobs specified in the above estimate, there are mis- cellaneous transportation jobs, such as hauling lids and wraps, unloading shook, and moving between different transportation jobs that are too irregu- lar and too minor to estimate in detail. Studies of materials handling in the packing houses indicate that this miscellaneous work amounts to roughly 10 per cent of the work included in the detailed estimate given above. With this addition to the above estimate, the total transportation labor require- ments are 1^.2 man-minutes per 1,000 pounds of fruit run. This, however, is the net working time to which must be added allowances for rest periods and for unavoidable delays. Based on the usual allowance of two 10-minute rest periods per 8-hour day, the rest time amounts to h.2 per cent of the total working time. The unavoidable delay is difficult to estimate and varies from plant to plant. In the studies of transportation in different plants, the actual delay observed for transportation workers ranged from 15 to hO per cent of the total work time. If 1$ per cent unavoidable delay is taken as a practical minimum and this figure is combined with the allowance for rest, the total unproductive time is 19.2 per cent of the total work time. Using a rounded figure of 20 per cent total unproductive time, the trucking labor required to handle U0,000 pounds of fruit per hour in this example then is 760 man-minutes per hour. This is equivalent to the employment of about 13 truckers. A similar procedure is followed in estimating the labor required to set off and stack packed boxes after lidding. For this job, the net productive time indicated by studies in several packing houses is 0.105 minutes per box. To set off 1,000 pounds of fruit in standard boxes of U8 pounds net weight each requires (l,OOOA8)0.105 = 2.19 mannninutes. This is net productive time. If the allowance for rest and unavoidable delay is 20 per cent of the total work time, the gross labor required is 2.73 man-minutes per 1,000 pounds. For a rate of packing of 30,000 pounds of fruit per hour, the total setoff labor then is (30 x 2.73) = 82 man-minutes per hour. In this case, the labor < - J. . . i" '-iiii' iCl RSi^fiatfctf^ ■ • .ea^l V^q/ria Uvfivj s"'iO." lo ffli/a ' •■••::b'xw ijTX edot no/.J-sj-'iocfBrss'i.J Oii cj i^r mcrfl. fjygnct sn^.-' ,tft4ioqenri t:^ -xcl: b^^v-taedo '{.Uab Xr id-os sild f:o/6cj- -si ^fifXsb. sidiibxcveax; .iq IJX 11 .sntW ?hcw Is^oJ- sftt '1 • einiJ- joi ^ri* ?t'- 4rj9o isq S,,i> J-r-mKy j at nforf igq vtiirtl %o afoniroq O0n,0il ©Xfjoatt oi bsilwpoi - atu -T.iods -io ^.-lOfinroXqms s-rfl oi J'nsXsvtfjp. . ,.T*rf tssa c'/rf-ifniiff- ^ bc-Jixirpa-i loriGX bd)- grti^saliES n.c bowoLCoT: s. • . ;;boTq . i-orr 'r.xi' .3itxi>bx.r i<9i-l;:- e&xod t '• .xod ■^9q ga^unxin .^OliO ax RBsirori g/iijloeCT' J nx. v i-vxdouboiq .ten 8x ac-rfT J;9^4/n.r. .nradVOOO^I) eft-. j>d^ 'JO vttiao 'iar •■rw is*..- .^orrmvo.. -.tj ,sbnijoq..C>00,X lyq r -.limrm-fjefir CT-.S .ax bsniapm ^ocfsl g-eoi^ -^U «9mLi- jliow fr..-'-^+ ''.'i.ci " 7* 3d.^ lo r-bnxroq. CW,0$: ."io. gnxTi^G'CT ■ ■I arfi -.tise/so «xfi^ nl ■.tucai naq -ffsm' Sfi- * fvi3 3*ii««w»ijti,'p»-i. c- . • ' ^eiiTnllol ae- so tilvov sjboo aoese?- b9^£iaj..r- xisatiSi ■.;t .^.t<5iT r.Lstjr^ tv&ia z \ ■ ? 3sqv.t 9 yjlavi:*/. ■1 revt-jao bn; •:tr Oi.+JBOri.CD- 15. held constant, while certain variations in transportation methods are studied to determine their effect on costs. The design of the model fallows closely that of typical operating plants and reflects the requirements for in-plant transportation represented in the simplified process diagram. Figure 2, page 18. The Model Plant Selecting only the transportation jobs shown outside the shaded area in Figure 2, the standardized, or "model," plant on which the cost comparisons are based may be specified as follows: 1. All incoming fruit is unloaded and transported to a temporary storage, then to the dumping stationj empty lugs (stacked by the dumper) are transported to a temporary storage, then to the grower's truck. 2. In a similar manner, empty lugs are transported from the cannery truck to storage, then to the cannery setoff, from which the full lugs are transported first to storage, then to the cannery truck. 3. Packed fruit is set off and stacked at the lidder, then is trucked to a railroad car or highway truck for loading. ii. Comparable operations are carried on for shook, empty packing bcxes, and other packing materials. The analysis does not include the transportation jobs shown within the shaded area in Figure 2. The operations omitted are the conveying of fruit from the dumping station to the sorters and from the sorters to the packers as this is a highly standardized operation in all plants. On the same ground, we omit the conveying of packed fruit from the packers to the lidder. Another omission is the delivery of empty boxes to the packers. This operation will be considpre>d in a later report. The transportation operations included in the model are illustrated in Figure 2 and are specified in detail in Table B of the Appendix. For example, in regard to unloading the grower's truck, the average transportation distance to the temporary storage is specified as 50 feet, and the size of load is specified as 6 lugs per trip. For the same operation, but with -fork-truck equipment, the distance is given as 100 feet and the number of boxes hauled per trip as 36. Similarly, load sizes and transport distance are specified for the other operations. The proportion of fruit handled as packed fruit is specified as 75 per cent of the total amount received, with 25 per cent diverted to cannery and culls. A further provision is that 80 per cent of the empty packing boxes go directly by conveyor from the boxmaker to the point of supply to the packers. 16. while 20 per cent of the empty boxes are transported to a temporary storage and later returned to the packer supply point. In the model, the latter quantity of boxes is all that is considered in estimating transportation costs as those conveyed directly from the boxmaker to the packer supply point involve no additional transportation labor. In addition, costs estimates de- rived from the model include allowance for a number of miscellaneous trans- portation jobs, none of which individually are important enough to detail. To simplify the analysis, it is assumed that all the fruit is packed in standard boxes. This model plant forms the basis of the analysis that fol- lows. Estimates of transportation costs first are made for the model as specified. Variations as to type of equipment are then introduced, and their effect on costs is examined. Throughout, the analysis is based on operation of the model plant for pear packing, but -writh slight modification the costs would apply to apple packing. The sizes of the various containers used are roughly the same for both kinds of fruit, and load sizes with the transportation equipment are about the same. Fith lighter net weights per box for apples, however, more trips are required to transport a given weight of fruit. This means that, on a weight basis, the costs of in-plant transportation in apple packing plants are slightly higher than in pear packing plants. In general, the level of costs per 1,000 pounds of fruit run would be about 10 per cent higher in the apple packing plants, although on a per box basis, the costs are about the same in both apple and pear packing plants. The general indications as to the relative costs with different types of equipment also are about the same in apple and pear packing plants. Transportation Costs with Hand-Truck and Fork-Truck Equipment Estimates of transportation costs for two variations on the model plant are presented in Table 6 and Figure 3. One variation involves the use cf fork-truck equipnent, the other, the use of hand-truck equipment. Annual fixed costs and direct costs per hour of operation are given for both types of equipment for rates of plant operation ranging from 20,000 to 80,000 pounds of fruit run per hour. In the fork-truck plant, the annual fixed costs are $1,U10 for a rate of operation of 20,000 pounds per hour and $lt,850 for a rate of operation of 80,000 pounds per hour. Direct costs in the fork-truck plant are $5.30 per hour of operation when fruit is run at the rate of 20,000 pounds per hour and !'>16.90 when the rate of plant operation is 80,000 pounds ajr-oo tnoiu/ ' ^ -viovfi ijyrx-i stict j-is v'Bri:: it "ia • \i ■ sBTf ■ ailJ- til todairi inafo laq CI im4& 's- . 16 3h- ^'r%s.1 ba& 6 '' ' ' 'io 3*61 orfcf 17. per hour. The corresponding range in direct costs in the hand-truck plant is from $10.00 to $36.Ii0 r>er hour of plant operation. TABLE 6 The Effect of Hand -Truck and Fork -Truck Equipment on Transportation Costs in the Model Plant Type of equipment Rate of opera- tion per hour Annual fixed costs fog/ equipment- Direct costs per hour of operation 1,000 pounds dollars Fork truck 20 UO 60 80 1,U0 2,570 3,700 U,850 5.30 9.20 13.05 16.90 Hand truck 20 ko 60 80 60 120 175 230 10.00 18.85 27.60 36. Uo a/ Estimated as a percentage of replacement cost, 1950 price level. See Table 3 for percentage rates. The transportation cost estimates in Table 6 show large differences be- tween the annual fixed costs in the hand-truck and fork-truck plants. This applies also to the direct costs. For costs to be equal TO-th either system, the excess of fixed costs in the fork-truck plant must be balanced by savings in direct costs when fork trucks are used. For example, with a rate of plant operation of U0,000 pounds per hour, the annual fixed costs in the fork -truck plant exceed those in the hand -truck plant by $2,U50, v/hile the saving in direct costs with the fork-truck equipment is $9.65 per hour. To accumulate savings equal to the difference in annual fixed costs requires operation for approximately 2,U5o/9.65 = 255 hours per season. At this length of operating season, the two types of equipment "break even" as to cost. Relative transportation costs with fork-truck and hand-truck equipment in the model plant are shown graphically in Figure 3 for a rate of plant opera- tion of U0,000 pounds per hour. In this diagram total season transportation costs are given on the vertical scale in relation to hours of plant operation per season, which are shown on the horizontal scale. The annual fixed costs for each type of equipment are indicated by the point at which the sloping cost line intersects the vertical scale, while the direct costs in each case are represented by the slope of the cost line. Thus, the steep slope of the .itfori Conner/ truck OUT IN Full Empty lugs lugs Shooli cor or truck Temporary I Stofoge I Car or truck Figure 2. Process chart for opple and pear packing plants. Figure 3. Effect of length of season on total transportation costs in the model plant, using fork-truck or hand-truck equipment. (Rate of plant operation, 40,000 pounds per hour.) 19. cost line for the hand-truck plant relative to that for the fork-truck plant reflects the difference in direct costs per hour with the two types of equip- ment. The break-even point is indicated by the intersection of the two cost lines, as at this point season total transportation costs read on the vertical scale are the same for either type of equipment. By reading total season transportation costs from Figure 3 for different lengths of season, an estimate of savings possible through the use of one type of equipment in contrast with the other can be made. With only 100 hours' operation per season, for example, the chart indicates that the season total cost with fork-truck equipment is approximately $3,^00 but is only $2,000 with hand-truck equipment. For this length of operation per season, there- fore, the use of fork -truck equipment instead of hand-truck equipment would result in a "less" of $1,^00 per season. With 1^00 hours' operation, however, the situation is reversed, and the use of fork-truck equipment would result in an estimated annual saving of approximately $1,U00. Comparisons such as the above can be made for other rates of plant opera- tion from the cost data given in Table 6. For different rates of plant opera- tion, the level of costs for a given length of season will be quite different. The break-even point also will shift, but not by a large amount. With a rate of plant operation of U0,000 pounds per hour, for example, the break-even point is at 255 hours operation per season. With rates of operation 20,000 or 60,000 pounds per hour, the break-even points are, respectively, at 285 and 214.0 hours operation per season. COST REDUCTION POSSIBILITIES The costs for in-plant transportation in the model plant that are pre- sented in Table 6 apply to a well-planned, relatively efficient organization. Nevertheless, some adjustments can be made that will reduce costs. As the organization of the model plant is similar to that commonly found in the in- dustry, cost-reducing changes in the model will indicate the kinds of adjust- ment that should be profitable in actual plants. These adjustments include a reduction in nonproductive time through better coordination of crew size with the rate of plant operation; change in the plant layout so as to reduce transportation distances; the substitution of different kinds of equipment; change in the pattern of movement for fruit and materials so as to reduce the amount of handling — as, for exam.ple, trans- porting incoming fruit directly to the dumping station rather than via a '.Iftafl ■-■ 20. temporary storage. Some such changes involve only a better adjustment within the existing plant, while others require alterations to the plant. In Tables 7 to 12, which follow, cost estimates are given for transporta- tion in the model plants after the introduction of specified changes. The effects of these changes are examined by comparison of costs in the revised plants vrlth those for the original model. Changes in Equipment for Transporting Packed Fruit Fork-truck plant . — Consider first the effect on season transportation costs in the model fork-truck plant if the methods of handling packed fruit are modified as follows: (M) Model plant — packed fruit transported by fork truck to car via temporary storage. (A) Model plant — except that the packed fnait is transported by a power conveyor directly from the lidder to the car or highway truck, thus eliminating the operation "set off and stack packed boxes" and also eliminating the tranoportation of packed fruit by fork truck. (Note* In the cost esti- mates, allowance is made for a "conveyor man" whose task is to route boxes from a given lot of fruit /or fruit of a particular size/ to designated cars, to set off fruit to temporary storage during interruptions in carloading work, etc. ) (B) Model plant — except that the packed fruit is transported directly to the car by fork truck rather than via a tem- porary storage. (C) Model plant — except that packed fruit is first set off from a gravity conveyor leading from the lidding machine and classified by lot or by size of fruit, as desired. Later, the fmit so classified is set on a parallel power conveyor leading to the car. To facilitate this operation, the fruit is set off on pallets which rest on gravity floor conveyors, thus allov7ing the loaded pallet to be pushed to a point ad- jacent to the power conveyor. This procedure permits the accumulation of a substantial quantity of fruit in a given size or lot before it is finally routed to the car. £3'/; 21. TABLE 7 Effect of Variations in the Method of Transporting Packed Fruit on Total Season Transportation Costs in the Model Fork-Truck Plant Method Rate of opera- tion per hour Annual fixed costs fog/ equipments' Direct costs per hour of operation 1,000 pounds do] .lars (M) Model plant — packed fruit transported by fork truck to teranorary stor- age, then to car 20 iiO 60 80 l,i|10 2.570 3,700 ii,85o 5.30 9.20 13.05 16.90 (A) Model plant — except packed fruit transported dii-ect from lidder to car by conveyor 20 ho 60 80 l,3hO 2,U75 3,li95 1;,520 ii.55 7.20 9.70 12.25 (B) Model plant — except packed fruit transported direct to car by fork truck 20 ho 60 80 1,305 2,380 3,ii35 h,h90 5.05 8.65 12.25 15.85 (c) Model plant — except packed fruit set off at lidder and classified, then to car by conveyor 20 ho 60 80 1,365 2,510 3,51i5 l4,585 6.35 10.65 lh.85 19.15 a/ Estimated as a percentage of renlacement cost. See Table 3 for percentage rates. From the standpoint of shipping procedures, all of the above methods are essentially the same except that in method A transporting fruit directly to the car by conveyor does not permit classifying the fruit if the output of packed fruit is not large enough to warrant loading more than one car at a time. In other words, if only one car is loaded at a time, the fruit must be loaded "house run." Estimates of the fixed costs for equipment and for the direct costs — labor and poT'rer — for the model plant and for the three variations are given in Table 7. Note that, for a given rate of plant operation, there is little difference in fixed costs for any of the four methods but that considerable difference is shoim in the direct costs per hour. Consider, for illustration, the estimated costs for a plant operating at the rate of U0,000 pounds per hour. Compared with the model plant, method A vrould result in a saving in direct costs of $2.00 per hour of operation. A smaller saving — $0.55 per Of..? '•■arc svods 3fi.t '' ' ' -■^.tv.n-j chOiJixb "r-'-l ^n.-r ■ , . . r>^ ; ^ -5 _ r . .-■ — "1 1 r : ■ 22. hour of operation — is indicated in comparing the model plant and method B. Direct costs with method C prove to be higher than in the model plant by- ill, ii^ per hour. These relationships are shown graphically in Figure h- Costs with method C are higher than in the model plant, regardless of the length of season, while costs with methods A and B are lower than in the model plant. With 300 hours ' operation per season, a change from the model plant to method A would result in savings of approximately $695 per season, while a change to method B would result in savings of about $355 per season. A change to method C would yield a "loss" of about $375 per season, the savings through use of the conveyor to transport the packed fruit to the car being outweighed by the ad- ditional labor required to transfer the packed boxes from the temporary pallet storage to the conveyor. Relationships similar to the above can be derived from the data in Table 7 for other rates of plant operation. Hand-truck plant . — The handling of packed fi-nit in the hand-truck plant has been analyzed in a similar manner, and the results are siuranarized in Table 8 and Figure $. Six different methods are compared as follov/s: (M) Model plant — packed fruit transported to car via temporary storage by hand truck. (D) Model plant — except that packed fruit is ti-ansported directly from the lidder to the car by conveyor. (E) Model plant — except that packed fruit is transported directly to the car by powered hand truck. (F) Model plant — except that packed fruit is transported directly to the car by hand truck. (G) Model plant — except that packed fruit is transported via temporary storage by powered hand truck. (H) Model plant — except that packed fruit is set off at the lidder and classified then set on a conveyor to the car. (The method is the same as that described previously for method C. ) Estimates of the fixed costs and direct costs associated with these methods of handling packed fruit in the hand- truck plant are given in Table 8. At a rate of plant operation of 140,000 pounds per hour, the annual fixed costs range from ftlO^ with method F to ^U.'^$ with method G. Two of the revised methods result in fairly substantial reductions in direct costs. With a rate ens ' jiTi-J. liJ ■■^l' GOC rfi. - 6ri* ifd'- h^ri^f 3v^ti;o gni :' • ■ o«q. erf* ^' Aoi as -be' -. ' .10V.=rV,, -.'SO Sir?:! ■ bs.tioqsffi^td' Si rAoo%) toriB . p'lv bo^tioqanc'i* si J-jml be^fosq iiirii -11 Hrsie ;1 6riT— .cin.^jq >!• "-I.tosixb ri^xw -Dftun IIP *iE»bbxI 23. TABLE 8 Effect of Variations in the Method of Transporting Packed Fruit on Transportation Costs in the Model Hand-Truck Plant Annual fixed Direct costs ' Rate of opera- costs fog/ per hour of Method tion per hour equipment- operation 1,000 pounds dollars (M) Model plant — ^packed fruit 20 60 10.00 transported to temporary liO 120 18.85 storage, then to car by- 60 175 27.60 hand truck fio 36 -Uo (D) Model plant — except packed R on fruit transported direct ho 360 1U.20 to car by conveyor 60 U85 20.30 80 595 26.iiO (E) Model plant — except packed 20 275 9.25 fruit transported direct ho 390 16.55 to car by powered hand 60 525 23.70 truck 80 6iiO 31.05 (F) Model plant — except packed 20 60 9.60 fruit transported direct iiO 105 17.95 to car by hand truck 60 165 26.25 80 220 3U.60 (G) Model plant — except packed 20 305 9.55 fruit transported to tem- ho U25 17.10 porary storage, then to i 60 635 2i|.65 car by powered hand truckj 80 800 32.20 (H) Model plant — except oackedl 20 175 9.75 fruit set off at lidder liO Uoo 17.60 and classified, then to 1 60 505 25. U5 car by conveyor i i 80 620 1 33.25 a/ Estimated as a percentage of replacement cost. See Table 3 for percentage rates. ' ■ ■ ( « . ■ • 1 . w Oil y;d ISO oJ no : , r ,' L ■"'1 0-: ■', \ 1 »■.-.- ■•■■V- v., . "J- v-"' *■ I 0 I I I \ I 0 100 200 300 400 500 Hours of plant operation per season Figure 4. Effect of variations in the method of transporting packed fruit on season total transporta- tion cost in the model fork-truck plant. (Rate of plant operation, 40,000 pounds per hour.) Figure 5. Effects of variations in method of transporting fruit on season total transportation costs in in the model hand-truck plant. (Rote of plant operation, 40,000 pounds per hour.) 25. of oneration of U0,000 pounds per hour, a shift from the model plant to method D would save $U.65 per hour of plant operation, while a shift from the model plant to method E would save $2.30 per hour. The cost relations for the various methods are shown graphically in Figure 5 for a rate of plant operation of U0,000 pounds per hour. Figure 5 indicates that, from a cost standpoint, there is little difference between the model plant and methods E, F, G, and H. Fixed costs in the latter methods are higher than in the model plant, while direct costs with the revised methods are somewhat lower. As a result, costs are slightly lower in the model plant if the operating season is short; the balance swings in favor of methods E, G, and H as the length of season extends beyond 200 to 300 hours. Method F results in small savings for any length of season. Method D shows more prom- ise. Fixed costs are higher, but direct costs are substantially lower than in the model plant, ''■'^ith 300 hours of operation per season, the indicated savings are approximately ,ftl,135. Similar results can be demonstrated for other rates of plant operation. Changes in Equipment for Transporting Incoming Fruit Similar studies of cost reduction possibilities in the transportation of incoming fruit and cainnery fruit are summarized for the model hand-truck plant in Table 9 and in Figure 7. Six different methods are considered. Each in- volves modification of an existing hand-truck plant. In some instances, this requires alterations to the existing building, although the alterations do not involve changes in the plant "model." No variations in transportation equip- ment for the receiving operations in the fork-truck plant are considered. The variations considered in transportation methods in the receiving operations are as follows: (M) Model plant — incoming and cannery fruit handled with hand-truck equipment. (I) Model plant — except that cannery fruit is handled with fork -truck equipment. This change requires the addition of a concrete loading apron and some remodeling of the building to provide storage space accessible to the fork truck. The annual cost of these changes is included in the estimate of fixed cost. c ■>■: : i3q Bfanuoq OOOtOi! 'lo . .jc:u J.; -fax"? ni fcns Q alo'f. rid* fZ^onBitn'i sfff^ nl .ifffiJo ?lo{' adj '10 gnxIsfJOOTs't o'nr?? hrft nnf.qjG "^rr. ■ . . lo bftbiiloni ax s«>?.fis/(o saariJ- '♦o .ts^o ffsurrnr •^rfT ^ ?fio"l ' . rfj: — New concrete ^ — Remodeled storage dreo - receiving apron — - Existing packing- house platform (A) Hand truck plant remodeled to permit incoming fruit to be handled with fork-truck equipment. Storage Dumpei ad. 1 ^ . - New concrete receiving apron - ■ Existing packing-house platform (B) Hand trudc plant with incoming fruit handled with fork truck and powered hand truck. Figure 6. Rearrangement of receiving area in hand-truck packing house to permit use of fork-truck and powered hand-truck equipment for the transport of incoming or cannery fruit. r4 r 3 o 2 .Methods for tronsporting incoming and cannery fruit M. Model plant; incoming and can- nery fruit (and empty lugs) trans- ported to temporory storoge, then to dumper (or to truck) with hand truck 1. Model plont; except cannery frurt handled by fork truck (building remodeled) J. Model plant; except incoming fruit handled by fork truck (buildtng remodeled) K. Model plant; except incoming end cannery fruit handled by fork truck (building remodeled) L. Model plant; except incoming fruit hondled by fork truck ond powered hand truck N. Model* plant; except incoming and cannery fruit handled by fork truck and powered hand truck 100 200 300 Hours of plant operation per season 400 500 Figure 7. Effect of variations in method of handling incoming fruit and cannery fruit on season total transportation costs in the model hand-truck plant. (Rate of plant operation, 40,000 pounds per hour.) 27. (j) Model plant — except that the incoming fruit is handled with fork-truck equipment. As in method A, this change requires building alteratioirs to provide a concrete un- loading apron. In addition, storage space accessible to the fork truck and access to the dumping station for the fork truck must be provided. The building alterations include removal of the wood floor and supports and the construction of a new concrete slab on the ground, also respacing the roof supports in the receiving area so as to reduce interference with the operation of the fork trucks (Figure 6A). (K) Model plant — except that both incoming fruit and cannery- fruit are handled with fork-truck equipment. Building alterations as described in methods A and B are provided. (L) Model plant — except that incoming fruit is handled with a combination of fork-truck and powered hand-truck equipment. (The movement of fruit between the highway trucks and the edge of the packing house platform is accomplished by fork truck; movements between the edge of the packing house and points within the house are made with the powered hand truck — see Figure 6B.) A concrete loading apron is re- quired in the receiving area. (N) Model plant — except that both incoming and cannery fruit are handled with a combination of fork-truck and powered hand-truck equipment as in method L. Estimates of the fixed costs and the direct costs for each of the above methods are given in Table 9. Note that a new complication has been intro- duced, a fixed charge for building remodeling. In the preceding studies of cost reduction possibilities, the cost of building changes was not a factor, but the adoption of the changes in the model plant proposed above is condi- tioned on some building alterations, and the costs of such changes must be 7/ included.— As a result, the fixed costs are substantially greater than would be necessary to cover the cost of equipment alone. 7/ An important difference should be recognized in the cost problems re- lated to planning new construction in contrast with rmodeling existing facilities. In new construction, any available alternative may be chosen with- out any concern regarding costs for demolition and remodeling. In changes to existing facilities, however, the additional costs of remodeling may be quite important. The present example is approached in terms only of remodeling as no "extra" costs for remodeling are involved in new construction. ^1 c abxvcnq oit . .-.in vhcl ^rtd- 'to noi.J6t«?o &Ai ti^iv^ son • .(A- - a bar, Hy r t ff Jo ' .t':>hxvo'xq &v .boiitam ni badi'ioai"!! ■id lot' -1 erfT) Ibq • a;p ■.-•in n.; TABLE 9 Effect of Variations in Methods of Transporting Incoming Fruit and Cannery- Fruit on Transportation Costs in the Model Hand-Truck Plant (Rate of Plant Operation, [tO,000 Pounds per Hour) Annual fixed costs Direct j Method Rate of operation per hour Equigy i mentr-' ' Building and, / loading apron- Total ; costs per hour 1,000 pounds dollars (M) Model plant — incoming and cannery fruit (and empty lugs) transported to tem- porary storage by hand truck, then to dumper (or to truck)! 20 ho 60 80 ! 60 i 120 i 175 230 60 120 175 230 10.00 18.85 27.60 36. UO (l) Model plant — except cannery fruit han- dled by fork truck (building remodeled) 20 ho 60 80 U35 600 760 925 315 ii25 575 750 750 1,025 1,335 1,675 10.23 18. UO 26.55 3U.75 (j) Model plant — except incoming fruit han- dled by fork truck (building remodeled) 20 ho 60 80 you I,6ii5 ' 2,325 3,010 670 935 l,2li0 2,315 3,260 U,25o 1U.70 21.00 27.30 (K) Model plant — except incoming and cannery fruit handled by fork truck (building remodeled) 20 ho 60 80 1,065 i 1,850 2,6u0 : 3,U25 I 1 U70 815 1, 160 1,560 1,535 2,665 3,000 U,985 7.80 13.55 19.25 25.00 (L) Model plant — except incoming fruit han- dled by fork truck and powered hand truck 20 Uo 60 80 ' l,li|0 1 1,860 i 2,510 1 3,320 200 ' Uoo 615 825 l,3l;0 2,260 3,125 U,iii5 9.95 17.10 23.75 31.30 (N) Model plant — except incoming and can- nery fruit handled with fork truck and powered hand truck 20 Uo 60 80 ! 1,570 j 2,735 i 3,900 j 5,060 i 200 1 hoo I 615 825 1,770 3,135 U,515 5,885 10.95 19.05 27.15 35.27 ■ a/ Estimated as a percentage of replacement cost. See Table 3 for percentage rates. b/ Computed from estimated cost of constructing concrete paving for loading apron and of remodeling building at annual rate of 8.0 per cent. (Assumed life of building improvements, 20 years — ^based on assumption of partial expiration of life of original structure. Annual rate then consists of; depreciation, 5.0 per cent; interest, 3.0 per cent, mal c o?"v •r C/;V" .01 '?:'d,} 0;' 1 ^ N *- ^ ■ g8 •-J ■ OS 0;d r i ' ij£ . : ■ t _ ■ ' -.8 o>- l""' ■ t . ■ . ooti ■ .'1 29. Cost comparisons with the various methods can be made from Table 9. With a rate of plant operation of liO,000 pounds per hour, for example, the fixed costs for the hand-tinack equipment required in the model plant are estimated as $120. In the model plant, after conversion to the use of fork-truck equip- ment for handling incoming fruit and cannery fruit — method K — the annual fixed cost for the equipment and building alterations is estimated as $2,665, of which the sum of $Ql$ is the annual charge for building alterations. Fairly impressive reductions in direct costs result in two instances. With a rate of operation of iiO,000 pounds per hour, adoption of fork -truck equipment for handling incoming fruit — ^method J — ^would reduce direct costs by $U.l5 per hour of plant operation. If this change were extended to include the handling of cannery fruit — method K — the saving would be $5*30 per hour. For the remaining proposals — methods I, L, and N — the indicated reductions in direct costs are relatively small. Total season costs shown in Figure 7, page 26 — for a rate of plant opera- tion of UOjOOO pounds per hour — indicate that none of the proposed changes reduce the total plant transportation cost if the length of season is less than about U80 hours. The break-even point between method K and the model plant occ\irs at about U80 hours of plant operation per season, and for method J the break-even point is about 530 hours per season. For the remaining methods, the reduction in direct costs relative to the model plant is not suf- ficient to outweigh the higher fixed costs except for a long period of opera- tion per season. Changes in Plan of Operation for Receiving Incoming Fruit The effects of two additional types of change in the receiving operations are summarized in Table 10 and in Figures 8 and 9. One change involves a dif- ferent pattern of movement in the receiving operations, the other, a revision of floor layout in the model plant so as to modify the trucking distances. The changes are as follows. Direct movement of fruit to dumper . — In the model plant, all fruit re- ceived is transported to a temporary storage before going to the dumper. Some direct movement of fruit from the grower's truck presumably is possible in all plants. Such movements are likely to be small, however, if grower's lots must be kept separate. If incoming fruit can be pooled — as, for example, where the incoming fruit is sampled for quality — a substantial proportion of direct movement is possible. i: ^.-. • ' ■ . i. .. ^-xi/oii isq afMjuoq 000,0: '. v-Taqo cfnclcf i-- fcs^sn- .li-q X :'- -- ■ ' '•=^iiup9-t .jnscx „ ■.v-bffrri erf.t > ■. . . w lo ss.' .. . ; . ■ LBtavnoo i9.Jls iJ . ' Soni srlS i-": •3fioi:cfsl9#XG ^nffa-IxjL'd lol s^'wrio 1/5!;. " ■ ' . "ild 8^800 J-oarrxD s^Xfijat bludw—l. boflcf3m--.tj:tni jnjx.«03rti 3nii;r.fr-,rl id ^ -blifo-i: sfilvBg .1 i^wuj v>iK— J ...nl: ■ ■• 'ttfaasri siid- ■ btCioqcic -/uj *o ^uoxi -I abiiiioq OJo^Oti ■• ' sBoo noxji-.ci'ioqa/- ^G&of 5>dd bcriJ'ar.; . > ■ ' . has t^q naits'isq ' .t5- s.n/ooo .t'on J-nsIr t^^^^^xb .u' -ux^oubaf^. erf.t tSi'OfijciQ ' -to'l <) "fo nsi'i r. .iO -lib ^ 39vI'ovr. anO .525 i,3Uo 2, U25 3, U95 U,575 1,U90 2,710 3,935 5,160 5.30 9.20 13.05 16.90 5.05 8.70 12.35 15.95 5.10 8.75 12. U5 16.10 5.55 9.65 13.75 17.85 a/ Estimated as a percentage of replacement cost. See Table 3 for percentage rates.. bn.tH j t ■ ' - ■ ' - * -■ ■ ' . J. " r i r— Oil _ r ■ 1 " "I fi i . 01 s OS 'to rii§n.. 0.1 : 1 t ex OLS, ■ =i 6 a. 4 5 3 - 2 - / -r / f / / - - Mod( 1 plants - - On, third of incomin ted direct to dum g fruit trans- aing station —7/ // // u . M_ Hand true ■ Fork truci O Breakeven 100 200 300 Hours of plant operation per season 400 500 Figure 8. EfFect of transporting '/a of incoming fruit direct to dumper rather than via temporary storage on total season transportation costs. (Also direct movement for 16 of empty field lugs.) (Rote of plant operation, 40,000 pounds per hour.) Figure 9. Effect of change in transport distance for incoming fruit on total season transportation costs. (Rate of plant operation, 40,000 pounds per hour.) 32. The revised costs with hand-truck or fork-truck equipment presented in Table 10 are based on the assumption that one-third of the incoming fruit can be transported directly to the dumper. This change obviously would reduce transportation costs by reducing slightly the transportation distance, but a more important effect is the reduction in the number of "pickup" and "release" elements in the trucking operations. As indicated in Table 10, this change would permit a slight reduction in fixed costs and a moderate reduction in direct costs. With a rate of plant operation of U0,000 pounds per hour, the saving in direct costs in the hand- truck plant would be $1.55 per hour of plant operation, and in the fork-truck plant the saving would be $0.^0 per hour. The cost relationships are illus- trated in Figure 8. Note that costs in the model plant are represented by the heavy lines, while costs in the revised plants are represented by the lighter lines. For each type of equipment, the reduction in cost per season for a particular length of season is indicated by the vertical distance between cor- responding cost lines. Thus, with 300 hours' operation per season — at a rate of oDeration of ii0,0G0 pounds per hour — the savings are roughly $U80 in the hand-truck plant. Note that a range is possible in the proportion of fruit trucked directly to the d-umper. For the conditions represented in Figure 8, this range might be from zero to one-third. The corresponding range in costs for a given length of season is indicated by the vertical distance between the two cost lines for each kind of equipment. Similar relationships are shown for the fork -truck plant. Relative costs for the two types of equipment also are shown in Figure 8. For a 300-hour season in plants trucking one-thiixl of the incoming fruit di- rectly to the dumper, for example, costs would be lower in the fork-truck plant by roughly $285 per season. Rsvise floor layout in receiving area . — In the model hand- truck plant, the total length of trucking path in the receiving operations is 220 feetj in the model foric -truck plant, this distance is 310 feet. These distances are based on a fairly typical layout of space and equipment in the receiving area. In some of the plants studied, the trucking distances in receiving were consid- erably greater because of faulty layout, and in other plants shorter distances were observed. Trucking distances in receiving could be reduced in the model plant, for example, by using conveyors to transport fruit to the dumper and to transport empty lugs to the storage area after dumping. Further reduction in ■l9i« bfiB "qjnloiq*' lo i&dititm ■3 tasiioqmi b-teow c±j'' -.'oa dosiib ni. ^nxvt-.a f;. ■arid- xd bdirnQoiqai ^^s cfae-iq isix^m srii:^ ni. b^so 31x;3x^ ni bsisi^ isirij^il s': Jnaaoiqsi stjb sctnelq beexvet &ri. soo aXiriw f( ..•1 noeB^)3 ^^^q -ix^oufcaT: 9fl«t ^tnomqivpa xo ©qif* .fanuoq 000 tOi. srt^ rx '& — tu.^ v+xinl. Io noicfToqoiq fix bs.j-;TJ89ia3i 3noxJxb»too siW ■:. 3rf'; . 'n'^'?- anibnoqssfToo sriT .inxtfd'-sno ' riToria sne aqlrisnoJtitr. ^ : Mom.-! .8 sicfgx"? nir nwarlB sxe osXr, inomqxxrpa to eecrvi owd- arii lol bJ'soo r*vx.isl-; .'yil sinxnc fcrit-afio sax:J- e.iJ OSS ai enoxisiiaqo b98i5d 91S BsooBiaib sesriT .toe't nl .."^exG gnivxeosi adcf ni .joi.cKixirp9 . •fcxanoa ai&v- ^arvxoos- onftj-axfo sr!.r?J'^tr£* si a.-3onBj-axb is^iorie a#ftsXq isrijo ax ba. Isbota.^iid' ni b^oj/bsT ad blvoo snivisos £.'.<■:'; aaqfiftib ( 111 noBfi^sa tifod-OOf s . n TX>I.'>irt* lo rtt tijnyal iBoicr. no "to 9Si/6oad •Ji*tr,9i!5 ^^ds-xs •tiirtl d'loqenaiJ' too •^ntef.' yd .elcr'fisxs *co'i 33. trucking distance might be possible if a considerable proportion of the in- coming fruit were trucked directly to the dumper. This would reduce the quan- tity of fruit held in temporary storage, thus permitting a reduction in the dimensions of the storage area. The effects on transportation costs resulting from differences in layout of the kind outlined above are indicated in Table 10 for two different adjust- ments. In one case, it is nresumed that the receiving area in the model plant can be rearranged so as to make the total length of transportation path in the receiving operations 1^0 feet in the hand-truck plant in contrast with 220 feet in the model plant. Similar adjustments in the fork -truck plant involve a length of path in the revised plan of 210 feet in contrast with 310 feet in the model fork -truck plant. A second situation is analyzed in which it is presumed that many plants may have a layout in the receiving area that is less efficient than that specified for the model plant. For illustration, the total length of the trucking path in the receiving operations is taken as 290 feet in the hand -truck plant and UlO feet in the fork-truck plant. These changes represent an upward and a downward adjustment in trucking distance for the receiving operations of about one-third in comparison with the model plant. As Indicated in Table 10, the effect of these variations in distance on the fixed costs is not great. An appreciable reduction occurs in the direct costs. Contrasting the plants of high and low trucking distance, the differ- ence in direct costs — at a rate of plant operation of U0,000 pounds per hour — is $2.70 per hour of plant operation in the hand-truck plant; this saving in the fork-truck plant is $0.90 per hour. The effects on season transportation costs for a rate of plant operation of liOjOOO pounds per hour are illustrated in Figure 9. Again, the costs in the model plants are represented by the heavy cost lines. For each type of equipment, the variations in transportation costs associated with the range in trucking distances described above are indicated for a given length of season by the vertical distance between the high and the low cost lines. Costs in the hand-truck plant can be contrasted with those in the fork- truck plant by comparing appropriate readings from Figure 9. Note that a slight shift occurs in the break-even point, the hours of operation to break even tending to be less as the trucking distance increases. The greater ad- vantage of the fork truck as the distance to be traveled increases reflects its higher load capacity and higher travel speed in comparison with the hand trucks . Jt-T -sXimic. .jxifil- /•j-ir bn- ■ 1o >enife ni eons 300 sriit ^nJ-.r, . ■■ . • -jsaop no B^tos'Jle ^3*Boi:tMi.£ 9^J5 3Vods berfitos-efa fisons.fgxb -^niHoini ci^td rs,t8tb Xsr^x^isv sr(.t •'id W5 ed.} lij,- coscjSo hsol -r fr ,.8Kr;fr:.T 3U. The comparisons made in Figure 9 in regard to reductions in the trucking distance do not take into account the cost of physical changes that may be re- quired in the plant layout. Hence, the costs indicated would be appropriate as a guide in planning new facilities. In a situation involving remodeling expense, the relative costs indicated in Figure 9 would be substantially changed. Change in Load Size Still another cause of variation in transportation costs is the size of load carried per trip vrLth a given type of equipment. Upward adjustments in load size will reduce the number of trips required and thus reduce costs. The effect of adjustment in load size can be observed by comparing estimates of cost based on the extremes in load size observed and by contrasting these costs with costs in the model plant. The range in load sizes to be considered for the principal transportation jobs is indicated in the following summary. tJumber of lugs or boxes hauled per trip Hand-truck plant Fork-truck plant Minimum Maximxim Minimum Maximum Model load load Model load load Operation plant size size plant size size Receiving: Full lugs 6 6 36 30 h2 Empty lugs 9 8 12 36 30 h2 Cannery and cull fruit: Full lugs 7 6 7 U2 U2 Empty lugs 7 6 7 1^2 h2 5U Packed fruit: Full standard boxes k i 36 36 36 Bmpty standard boxes 21 Ik 72 60 96 Estimates of transportation costs for the range in load sizes given above are presented in Table 11 and Figure 10. With a rate of plant operation of 1|0,000 pounds per hour, the direct costs in the hand-truck plant with minimum load size are #2.85 per hour greater than in the model plant; with maximum load size the direct costs are $0.85 less than in the model plant. In the fork -truck plant, the direct costs — ^with a rate of operation of U0,000 per hour — are .*;0.80 per hour greater with minimum load size than in the model plant; ■■.iiiU Jjbuu iAi'^uAo 'Iryjx^vjiq to- ■nxfooos o&ni . -site J- cfon f! dioxiqoTcqs srf bXi;owbf>^ ^nila .r;dJ bfts bsnitfpet sqii* lo tadmun oriJ: sr:ubf3i lit- 93£»ri* anxd-SBijnoo -^^d bn« f«)vrt^c . . . isiaBi<^\3 adt no hssGd b^^9bxa^oo ad oi esfiis agfTtii sxlT -.^miq /shorn p-!- I'"- " »' ' t 1 f-i.-ir nc laboM u. ,. b£Ol i ' ■ f "1 ! i sgniYxsoaa ; i oi • 1 1 i ! 59xod btsbne:;:. ^vodB rtsvig Resxs baol nx -ri^ to'i adsoc . afetrrxd-sS - Xifsisn-co jnslq 'io scJ-ei j5 ri iifocfs 0CJ59ioni; 399ncjrio od>t t^-tnaXq ?(oinLd--:{'to'5. ,*toY9vnoo J-xtnl.bajfoisa s lo'no^xJ-ibbs ai noird-ei- " — sjboc- bsxil iBi/nns nx noxd-oxribsf 6 nl. ilushx -9T aifi. inBlq ■^v.Lni'-ba&a ax ~ .084$^ lo^-ix- ■ ^-fonyoq' 000^04 tctnr.[q •>}oini-3T'io'J • : j.-.t si eqo crT:-lq 'lo ilK).:! isq cfltd-^: vd beoyfc ,si80o XsJ-o^i-- no2JS9e 'lo sfln**-? . .100x1 iSq. b9?rrb9T9';B.a^8C3' Joatlb noxJ-£i8qo inx;; ' >ijJ3ir? nx J^s>.' ib sqirfanoiislsi aasrij cgniVBs ba^aoxtinx .:ai§GxD asi) mo%1 iniJtetnr. .luorf *t9q ebn-jcq OOOtOii "io jjotni-bmifi arfJ- nx 00dtX$ YXaJ-JsmixotoqB ais ooasas" aniisioqo lifod-OOC iE? lol H 5l3xnst-3iio^: arid- nx OOiitl^ ^irods bna inaXq iQbttu atflslq j{oirxi-*bnBft Jbfie jiooii-jjif: ■ ^oq n«»V9-3lB9idi s/lT srfj lo £toiJ-093i9inx xd- be&Bolbtit zBr-^^iui't anxd-roqartei^t lal rf^ccf •.noBB-j ijxori 06s *xrot , oaxb ^nlfcgosiq- srtf nl dxiB-Xq-nx to Bttsoo oAt at nol&r. ro lo sbori ~.mcrxx/ps lo ssqic* cfnsial Lo'or.r^ B i'jI BEtJfiinxJes ieoo lo er ^nob naad asxi sirfT .rtot&BttoasnB'xS s9*Bi d-Boo sdi lo niB^iao baa J&emolisq "jdof, ^ieisd sric^ . rfoiriw ni d-nelq Xbisvss tnoxdoee liniwoXXol adcf fli .begns;: +Kiiij:^89 qi^j nx.basu 10I ssifii 9rf- , . ■ -.'too aifi a«olJtsii3v isriiii;! aVi^^ffEieiqnp.i nol ssonswoiCB fcns ^ctngrnoirrps. tol adeoo baxxl Lbpcifib tSe^Br . ^inxd' oi anox^BxiBV Xsnoidibbs searit sni^bir.-ffi nl isei^^nx VJ£rT.!iq arfT • ind'-bfi^x! .Jilt nr bJsoo noLtBdioqgnsi^ -^vi^+Slsi rTo i-oslla TCisrf* evisa sctdiji J-aoo oricf /li aa^nerio wori fsiroxbnx XCx'T anoaxTjBomoo JioxrB . .t-f^Blq 5{otrrJ- .J-n9Wqiyp9 lb eq,, s&oel- . noxaioab Joalls yBm 38. TABLE 12 Cost Reduction Possibilities through Combination of Several Changes in Transportation Equipment and Methods as Reflected by In-Plant Transportation Costs in Model Plants and in Revised Plants Hand truck Fork truck Rate of Annual Direct Annual Direct operation costs fog/ equipraentr- costs costs for/| equipment- j costs Method per hour per hour per hour 1,000 pounds dollars 20 60 10.00 ljUlo 5.30 (M) Model plant UP 120 io.op 2,biO 0 on 60 if? 07 An (UU 1 1 "x nC 1 oO 230 •jA l.n Jo. uU T A on (R) Model plant — ex- cept for the f ollovang : (1) One-third of incoming fruit is transported Hi rpotlv to the dumper; - (2) Trucking dis- tances in re- 20 160 7.30 i,iU5 U.05 ceiving at Uo 375 12.70 2,090 6.05 minimum; 60 U80 18.10 2,910 8.00 (3) Packed fruit 80 580 23.ii5 3,7U0 9.95 is transpor- ted direct to car by con- ! veyor; (U) Load sizes for principal transporta- tion jobs are the maximum observed. 1 a/ Estimated as a percentage of replacement cost. See Table 3 for percentage rates. icfmqO . i-.txli-.! .^1 • r^l. I 39. Changes in Price Level The preceding analyses are based on specified wage rates and on given prices for equipment. With these cost rates, cost estimates are derived which show for the model plant the hours of operation per season required to break even on transportation costs with hand-truck and fork-truck equipment. What is the effect of a change in the costs rates on the break-even point? If the prices of equipment and the rates for direct costs — ^wage rates and equipment operating costs — change in the same proportion, the level of costs will change, but the break-even point will remain as before. If direct costs and equipment costs do not change in the same proportion, however, the break- even point will shift .-'^ This effect is illustrated in Figure 12. Two situa- tions are considered. In one, wages and other operating costs rise 25 per cent above the original levels used in analyzing the model plant. The result is illustrated in Figure 12A. Note that fixed costs — as represented by the intersection of the cost lines with the vertical scale — are unchanged but that the total season costs are higher than in the model plants. The increase in costs is relatively greater in the hand-truck plant than in the fork-truck plant. The hours of plant operation required to break even are reduced from 255 hours per season in the model plants to approximately 230 hours with the higher level of operating costs. The other side of this question — pertaining to a reduction in operating costs — is presented in Figure 12B. Fixed costs are the same in the model plants and in the revised situation, but operating costs are presumed to de- crease 25 per cent. The effect is to reduce the level of cost in both the hand-truck and fork-truck plants but with a relatively greater reduction in the hand-truck plants. Hours of plant operation required to break even are increased from 255 hours per season in the model plants to about 385 hours with the reduced level of operating costs. 8/ This example is concerned with trends in future costs and prices. The~effects demonstrated, however, are similar to those applying to the current situation of plants located in an area in which the existing wage level is different from that used in the analysis of the model plants. In other words, if a firm were confronted with the same costs for equipment as those applying to the model plant but could obtain labor for 25 per cent less, the firm's current situation with regard to the model plants is roughly that illustrated in Figure 12B. The reverse situation—fixed costs the same, but direct costs 25 per cent higher — is illustrated in Figure 12A. flc 3.ieoo 9fI.l:nJ. agnsdo £ ' . i^j i^rikJ - ■ ^ : ■ , -i5i& ^nXi'£x .{J 3Vod6 JfltVj .anxjk isoo eri f floor; ■ (rid- 916 Bj-500 bsxxl .SG'X 91:;. -jrxqf si- --sb oi bamt/ae-iq 9ifi £ j^g baairi- . od* :'.Jod I. /»! 3xli soub&t Oct ax cTosl^s e.. ;-i9o ler; iw fasmeondr- v sxdT ;.enB 9iiJ- Hi - i Figure 12. EfFect of variation of the level of direct costs on season total transportation costs and in the "break-even" points for the model plants. (Rate of plant operation, 40,000 pounds per hour.) (a) Level of direct costs 25 per cent higher than in model plant, (b) Level of direct costs 25 per cent lower than in model plant hi. Changes in Proportion of Nonproductive Time One of the important conditions specified in the model plants is the amount of unavoidable delay, amounting to 1$ per cent of the total working time. This proportion, however, applies to an efficient operation, and in most plants, or at least in some years, the proportion of unavoidable delay might easily be much higher. For example, if it is difficult to schedule an even flow of fruit from the orchards, there may frequently be a surplus of labor at the packing house and this would increase the average proportion of idle time. Or uncertainty as to market conditions might result in wide fluctuations in day-to-day shipments yet require the maintenance of a rela- tively steady work force at the packing house. The effect of variation in the proportion of nonproductive time is illustrated in Figure 13. As in the previous diagrams, the season costs in the model plants are shown by the heavy cost lines. The lighter cost lines represent estimated season costs when operations in the model plants are revised so as to allow for hO per cent nonproductive time. An increase in the delay time means that more workers are required to do the same amount of work and that a correspondingly greater number of equipment units are required. This is reflected in Figure 13 in the higher level of fixed costs in both hand-truck and fork-truck plants and in the fact that the season costs rise more rapidly in the revised situation than in the model plants. The hours of plant operation required to break even between the two types of equipnent are slightly less with the higher proportion of delay. Effect of Idle Equipment Still another type of variation might be considered. Suppose that a "design" rate of operation of [iO,000 pounds per hour is considered appropriate in selecting the equipment for the packing house. Transportation equipment is purchased on this basis, but because of year-to-year variations in production, a reduced labor force is employed throughout the season in some years. How does this affect the decision as to appropriate type of equipment? The ef- fects of this variation are illustrated in Figure Hi. Costs in the model plants are indicated by the heavy cost lines. Costs for a revised situation in which it is assumed that, on the average, 20 per cent of the equipment is idle throughout the season are given by the lighter cost line. In this situa- tion, the fixed costs are charged for the full amount of equipment, but operating costs are less in proportion to the amount of equipment not utilized. 'tis dxlT .930Oii jini^Ioiv >iol >liew y&ss^?- ^,inalq :;oi:vaiq ho farris ^.jBC• f{*od Hi r ■ ■ •l.rtoxi. Figure 14. Effect of variation in the average percentage of equipment utilization on total season transportation costs and on break-even point in the model plant. (Capacity rate of plant operation, 40,000 pounds per hour; achieved rate, 32,000 pounds per hour.) k3. As indicated in Figure Ik, the fixed costs are the same in both the model plants and in the new situation. Season costs, however, are less on the average than in the model plants. The hours of plant operation required to break even increase fixim 255 hours per season in the model plant to about 360 hours per season in the revised situation. Changes in Estimates of Use Life One final variation is presented in Figure 15. In the model plants, the use life was taken as 10 years for the fork-truck equipment and l5 years for the hand trucks. These, however, do not represent a sure use life; obsoles- cense or actual wear-out may compel retirement of the equipment in a shorter time, or the actual use period may be longer than originally estimated. If the actual equipment life should prove to be only five years for the truck equipment and pallets, and the remaining annual charges are unchanged, the annual charge for equipment is 26.5 per cent in contrast with the rates used in the preceding costs estimates. The effect of this change in the annual cost rate for equipment is re- flected in Figure 15. The increase in annual fixed cost for the hand -truck equipment is not large. For the fork -truck equipment, however, a large in- crease occurs in annual fixed cost. For both types of equipment, the direct costs are unchanged by the shift in basis for estimating fixed costs. The hours of plant operation to break even increase from 255 in the model plants to about U05 in the revised situation. Similar comparisons on the basis of a l5-year life instead of a 5-year life indicate the break-even point between the fork-truck and hand-truck equipment in the model plants to be about 200 hours per season (see Figure 15). OTOERSHIP COSTS VERSUS RENTAL COSTS FOR FORK-TRUCK EQUIPMENT In the preceding examples, transportation labor requirements are much less with fork -truck equipment than with hand trucks. In many instances, however, the high fixed costs associated with the fork trucks and a short operating season make the use of the fork-ti*uck equipment imeconomical. Since the fork truck is mobile and easily moved, could this situation be improved if the equipment were rented rather than owned? A graphic answer to this prob- lem is given in Figure 16. Three ownership cost lines are shown in this dia- gram. The lower line gives the annual fixed cost per equipment unit as $Ii35> based on a l5-year use life; the middle line indicates an annual fixed cost iiOC- .4 ,, J- ,+ r r.f^ ■ . > '• ' . •'.9lC: 8 1 Mod 5-yeor equip 1 1 el plants, ^^yf. ment life j^y^ - - // - A - ^ — w _ ^ 10-y< odel plant-fork tr or equipment life — 1 - Model plants 15-year equipn ent life - f- _ . Hand truck Fork truck O Breakeven 0 100 200 300 500 400 Hours of plant operation per season Figure 15. Effect of variation In depreciation rote for transportation equipment on total season transportation cost and on breal<-even point. (Rate of operation, 40,000 pounds per hour.) 1,000 500 1 1 Wnuot ownership cost, bosed on eat M« _ . „ 1 } — 10-veor li lo'X "namqiupa m itnr, sbh e Lrrcf-bnsrf ,noo n • p.+'toqans-. : 'ji ■ ■} aot.^ 3 sxtt h9. APPENDIX A ESTIMATING REQ^IRMENTS FOR TRANSPORTATION CREl'^ AND EQUIPMENT, THE MODEL PLANT The cost comparisons given in this report for different methods of in-plant transportation are based on estimates of crew and equipment requirements in a typical or "model" plant. The model represents relatively efficient plant organization rather than an "ideal," optimum efficiency plant. The arrange- ment of packing equipment, storage areas, and work spaces in the model plant follows the pattern indicated in Figure 3, and a detailed specification with respect to in-plant transportation is given for tv/o types of transportation equipment — fork trucks and hand trucks — in Table A. As indicated in Table A, five groups of transportation operations are involved. These are receiving incoming fruit, transporting packed fruit, transporting cannery and cull fruit, transporting shook and boxes, and mis- cellaneous transportation jobs. Each of these job groups includes several separate operations. Receiving, for example, includes unloading the grower's truck and transporting the fruit to a temporary storage; transporting full lugs from the temporary storage to the dumper; transporting empty lugs from the dumper to an empty lug storage; and loading empty lugs on the grower's truck. The proportion of fruit packed is specified as 75 per cent of the total receipts, vlth 2$ per cent diverted to cannery use and to culls. In supplying emnty boxes to the packers, it is specified that 80 per cent of the boxes are moved by gravity conveyor directly from the boxmaker to the point of supply to the packers, while the remaining boxes are transported to a temporary storage and later transported to the packer supply point. Only the latter quantity of boxes is considered in estimating transportation costs for the model plant. The average length of haul and size of load is specified for each trans- portation task. For example, in unloading the grower's truck, the average length of haul is $0 feet in the hand-truck plant, and the load size is 6 lugs; in the fork-truck plant, the trucking distance is 100 feet, and the load size is 36 lugs. An additional operation — not shown in Table A — is included in the model. This is the setoff and stacking of packed fruit after lidding. Although not ordinarily regarded as a transportation job, consideration of this operation is necessary in analyzing transportation costs if a conveyor is used to transport packed fruit. -.inmo^i. ■: . -'■■h-mi&c. ■ . ts mMsitoqtPM-ia ixLBlq .j.. . ' :'<■ ' • " " f.- --" Ceol-fcr\jt .rjfisrt'ifi eriT . tr -'', v&neioilts. mur.. f:... ./ .. ,j r- ..osinsgio - ' bom .9flv . : ... ,)fiqr ftr ■ - v .-.nBioj , t ; < .j:: oj gnxifosq Ic inam . , ^crco 'i" .1 ; nx bsJRsibnx mad-Jsq arid-' k«oXIol ■ 'j'-iv^ . .j.-.oiij.' ^ :>!•■. II; ■*=:<::") 'io.:. ^'^iixvJi'.ujjT .snciv -i'l -lao sde'') ■ . :)rlJ- flo e?,i:fX -id-qcia gnxbsoX b^u^ gi,-! Tfigaia na o.t 'ioqrrujr. ■''v'" ^' 8S bax'txooq?: loeq iii.f i\^ lo aoxiioqoig ^^^^T ,Iqq;jc r-ais sB^f -vrtsnnso 07 jiaJ-xavib ' 5S ri^ir* tstcrx' isq 08 ^6tlt boi't u'lrAoaq biH eay.od YJ-aju-.^ s>qc«v;: xo aijxoc, ' ■■' ■ "^avnoo y^iivsn^ fodvom ':>qm9;> . e&xod jixinis/fit^'i • , •is^losq srij- T&Jjiix 9ffJ- liXfiG .j-nioq Y.U!q^^ ''^ isjfiX bna e3sioi£ ' .tt«'ttoq•'..^6^i gnx-ismxJes ..li ^019018^00 si eexod .JnsXq Xebosr. ,aXqiTu . Oili r- Oi ex ■■\oir%t--incn =»rid- r. suofn yrtj ni b ■ on — noii*!Tc»qo iKno.-. i:>fo8it2 br 00 diJBi/ ax 'ioyjav .-,xcf6cJ-iOv-'aa£ici' Tsn 50. TABLE A Transportation Jobs, Distances, and Size of Load in a Model Plant Average dis- j tance trans- j ported- ' Transportation task Per- centage of total voliime ran Size load per trip Hand : Fork | Hand | Fork truck i truck ' truck i truck i per cent feet boxes Receiving Unload grower's truck and transport to temoorary storage Transport full lugs from temporary stor- age to dumper Transport empty lugs from dumper to empty lug storage Load empty lugs on grower's truck Packed fruit Transport from setoff to temporary stor- age Transport from temporary storage to highway truck or railway car Cannery and cull fruit Unload empty cannery lugs and transport to temporary storage Transport empty lugs from temporary stor- age to cannery setoff Transport full lugs from setoff to tem- porary storage Transport full lugs from temporary stor- age to cannery truck Shook and boxes Transport shook from temporary storage to boxmaker Transport boxes to temporary storage; thence, to box liner Miscellaneous Transport lids and wraps, unload shook, move pallets, etc.-' 100 100 100 100 75 75 25 25 25 25 75 15 50 ho 100 30 35 llO 35 50 liO 35 ho 50 100 50 120 1^0 35 50 ho 60 ho 50 50 60 6 6 9 9 5 5 7 7 7 UO^/ 21 36 36 36 36 36 36 h2 h2 h2 h2 200^/ 72 (Continued on next page.) I inr. I >t'icqs: I 51. Table A continued. a/ Transport distances for each task are taken as constant for a range in plant capacity of 20,000 to 80,000 pounds per hour. This is based on the fact that in-plant transportation consists largely of inward and outward movements of materials (movement at right angles rather than parallel to the building walls) around the edges of a "center core" of floor area containing the packing equipment (aee Figure 3). Hence, for a wide range in plant capacities, the changes in trucking distances are relatively small. If full account were taken of these differences, downward adjustments in estimated costs would occur. Costs for rates of operation of 60,000 pounds per hour would be about 2 per • cent less than indicated. Similarly, the costs for rates of [|.0,000 pounds per hour would be about li per cent less and for 20,000 pounds per hour, about 6 per cent less than indicated. b/ Standard box equivalent of quantity of unassembled shook transported per trip. c/ Estimated as 10 per cent of total trucking requirements, exclusive of "mis- cellaneous." -J j 52. Finally, the net weights selected as appropriate for the various con- tainers are as follows : Container Pears Apples net weight, pounds^/ Standard packed box hd h2 Field lug ko Cannery or cull lug h6 ho a/ Net weights for Bartlett pears and Gravenstein apples. For other varieties, the net weights may be slightly different. The above specification of the transportation operations forms the basis for estimates of transportation costs in hand-truck and fork-truck plants that are essentially alike, except for the type of transportation equipment. Varia- tions in the basic methods can be introduced and their effects on costs studied. Requirements for Trucking Operatio ns The amount of trucking labor and equipment required in the model plant depends on the type of equipment used, given the size of loads and trucking distances specified. For each trucking task, the initial step is to estimate the time required per trip. This estimate must be made in two parts. One part includes the operations performed on each trip regardless of the distance traveled^ the other part is the time spent in travel. This division of time is as follows; (a) engage load, back and turn; (b) "spot" load at delivery point, release and turn; (c) travel with load to delivery point; and (d) travel without load to pickup point. Thus, operations (a) and (b) are on a per-trip basis, while operations (c) and (d) are related to the distance traveled per trip. Time requirements expressed on this basis for hand-truck, fork -truck, and powered hand -truck equipment are summarized in Table B. These time requirements are based on a round trip from pickup to delivery point and return. The use of the data in Table B to estimate labor and equipment require- ments is illustrated as follows for the job of transporting packed fruit from the lidder to temporary storage in the model plant: Suppose that fruit is packed in standard boxes of U8 pounds net weight each at the rate of 30,000 pounds per hour and that the transportation equipment consists of hand trucks. CC/. . m aiiJ 4, 53. TABLE B Time Requirements for Transportation with Farehouse-Type Trucks, Minutes per Round TripV — TvDe of eouiiDTnpnt and iob "IHirn-around" time Travgl time- minutes HAND TRTTCK . / Unload highway truck- : full field lugs, to storage or dumperj empty cannery lugs, to storage or cannery setoff c/ Transport to highway truck or car- : empty field lugs, from storage or dumper; full cannery lugs from setoff or from storage 0.311 0.00659 D 0.339 0.00659 D Transport from storage: full field lugs to dimper; empty cannery lugs to cannery setoff, empty packing boxes to box liner 0.27ii 0.00659 D Transport to storage; Packed fruit from lidder; full cannery lugs from cannery setoff 0.292 0.00676 D Empty packing boxes from boxmaker 0.27U 0.00676 D Empty field lugs from dumper 0.236 0.00676 D FORK TBJTCK Unload highv/ay truck: Full field lugs to storage or dumper 0.805 0.0050 D Empty cannery lugs to storage or cannery setoff 0.760 0.0050 D Load highway truck: Empty field lugs from storage or dumping station 0.617 0.0050 D Cannery lugs from storage or cannery setoff 0.765 0.0050 D Transport from storage : Packed fruit to car; full field lugs to dumper 0.688 0.0050 D j Empty cannery lugs to cannery setoff; shook to box- maker; empty packing boxes to packer supply point 0.538 0.0050 D Transport to storage ; Empty field lugs from dumper; empty packing boxes from boxmaker 0.513 0.0050 D Packed fruit from lidder setoff; cannery fruit from cannery setoff 0.668 0.0050 D POT^'ERED HAND T^TCK Transport to and from storage points: field lugs, cannery lugs, packed fruit; shook; empty packing boxes 0.690 0.0053 D ( Continued on next page . ) 51.1. Table B continued. a/ Trucking time per round trip is expressed in terms of the type of equipment used and the distance traveled. The time required may also be affected by the size of load, v/ith increased labor requirements for excessively large loads. For the range of load sizes observed in this study, the variation in time required due to size of load was not large, and the effect of this factor has been ignored. b/ D = one-way distance in feet. c ' Di5t.in«-o iiit'.m^ni-oA fiwii delivery or pickup point in packing house to edge of t.i'ack. riS)j:jsii£v 1 55. As specified in Table A, the load-size is five boxes, and the transportation distance, 35 feet. From Table B the time required per trip would be: Man-minutes "Turn-around" time 0.292 Travel time = 35 X 0.00676 0,237 Time per trip 0.529 Ti^ith 2ij.O pounds transported oer trip, li.l7 trips are required to transport 1,000 pounds of fruit; the labor required is 2.20 man-minutes per 1,000 pounds. To transport 30,000 pounds of fruit per hour to the temporary storage would thus require 66 man-minutes, or slightly more than the capacity output of one trucker. An estimate of labor and equipment requirements for the entire plant is made by a similar procedure. First, the requirements for each element of the transportation operations specified in Table A are estimated. The sum of the labor requirements for individual operations then represents the requirements for the entire plant. The results of applying this procedure to the model hand-truck plant are summarized in Table C. The transportation labor require- ments indicated are for a rate of plant operation of [tO,000 pounds per hour, of which 30,000 pounds per hour are packed, and the remainder consists of cannery fruit and culls. The estimate of labor requirements for each job group is given in Table C for a rate corresponding to 1,000 pounds of fruit per hour in the particular job group. These labor requirements are then adjusted according to the pro- portion of the total fruit run that is handled in each category. For the model plant, these proportions are as follows : for the receiving operation, 1.0; for cannery and cull fruit, 0.25; and for packed fruit, 0.75* The appropriate proportion, when applied to the labor requirements per 1,000 pounds in a job category, gives an estimate of labor requirements that is related to total fruit run. In the above example, the sum of such estimates for indi- vidual OTjerations is 13.8 man-minutes per 1,000 pounds of fruit run, and with the addition of miscellaneous transportation jobs, the total labor require- ments are l5.2 man-minutes per 1,000 pounds run. Using a rounded figure of 20 per cent total unproductive time, the gross labor requirement is 19.0 man- minutes per 1,000 pounds of fruit received. To perform the trucking work 10 / For an explanation of the basis for this percentage, see page 13 cf this report. TPS.O arid- "io j'-rr • 'T - -tAmi-tag ^Ts '..-h'--'t' ^TX/o'r! "esq zbciar . ■'■ ; -Mq siij- od gnirbtooos bsd'sut^^ j1 nsiiiii'x EiX j>,x-.j aj ii^. .ub ixiipai nod*;! xc b^r.. • -• ^avxg . jiUi aiiJiX 'io aLaxioq 000,. r '. ' .■'nxm-afiai B,r.[ c.^. Uitcxa. - babfiii-- ' : 000,1 -uci esj i.'axia-ai^n : -isffl • • ^ '••ns-ixxTpici -xo.- -rg 9ri* ,er' '- OS io c. agj-j4 3-3vi ^c;.^*. 56. TABLE C Estimated Net Trucking Labor Requirements in the Model Hand-Truck Plant — Rate of Operation, liO,000 Pounds of Fruit Pfun per Hour Operation Time required per 1,000 pounds of fruit Proportion of each category to total run Time required per 1,000 pounds of fruit run minutes minutes 1. Receiving: unload grower's truck and transport full field lugs to dumper via temporary storage; transport empty lugs to grower's truck via temporary storage 8.12 1.0 8.12 2. Cannery and cull fruit: unload truck and transport emoty lugs to cannery station via temporary storage; transport full lugs to truck via temporary storage 6.96 0.25 3- Packed fruit: transport packed fruit to truck or car via tem- porary storage h.73 0.75 3.55 h' Shook and boxes: transport shook to boxmaker and empty boxes to storage and return 0.52 0.75 0.39 5. Subtotal time per 1,000 pounds run 13.80 6. Miscellaneous: transport lids and wraps, unload shook, etc., 10 per cent of operations 1 to it l.h 7. Total transportation labor per 1,000 pounds run 15.2 r Si,'- Si 57. involved in this example then requires a total of 760 mannninutes of labor per hour. This is equivalent to the employment of about 13 truckers.—'^ Requirements for Setoff Operation A similar, although much simpler, procedure is followed in estimating the requirements for setoff labor. Studies of this job in several packing houses indicate the net productive time required per standard box to be as follows: Grasp box on conveyor, turn and stack on floor to a height of h or 5 boxes (or the reverse operation) . . 0.105 minutes per standard box To set off and stack 1,000 pounds of fruit in standard boxes require (1,OOOA8) X 0.105 = 2.19 man-minutes. Adding an allowance of 20 per cent for nonproduc- tive time—as with the trucking labor— makes the gross labor requirement 2.73 man-minutes per 1,000 pounds of fruit setoff. To set off 30,000 pounds of fruit per hour would require (30 x 2.73) = 82 man-minutes per hour. In this case the labor actually supplied would be two workers, unless it were possible to use part of the setoff worker's time on some other operation. Estimates of Transportation Crew and Equipment Bringing together the estimates of labor requirements for the above ex- ample, the "transportation" crevr and equipment would consist of two setoff men, 13 hand truckers, and 13 hand trucks. Equipment and labor costs for this crew may be estimated in the manner described on pages 7 to Ik of this report. Similarly, transportation crew and equipment could be estimated for other rates of operation in the model plant or for operation with fork-truck equip- ment. Moreover, the basic requirements for trucking and setoff operation could be used to estimate requirements for plants differing in layout and specification from the model plant. 11/ In regard to the creiv organization required for in-plant transportation, it IS clear that crew size must be changed in whole units. One may have 12 truckers, or 13 truckers, but not 12^ truckers. This "indivisibility" of workers and equipment means that as crew size in different plants is adjusted to the work load the costs change in discontinuous steps. Note, however, that these step adjustments do not occur at precise points as the rate of output changes but occur over a "zone" of output rates. In other words, relatively more workers are employed in some plants than would be indicated by the analy- sis. In other plants more intensive use than is indicated in the analysis may be made of the transportation equipment — for example, by working overtime hours, or by reducing the proportion of nonproductive time. This degree of flexibility is roughly accounted for in the estimates of transportation costs given in this report by basing the cost comparisons on the average cost at each step interval. : r;-'foII ol 3S ac{ v i