Morris Valley Estate Winery – Case 3 Analysis

December 1, 2012

Capacity Management


At the request of the owners of Morris Valley Estate Winery our group has performed analysis of the capacity challenges faced at the present time. We also conducted calculation for estimated needs for capacity increase based on the current yield of the farm and projected growth of 5% according to the farm manager Jim Morris.

According to information we received in the interview with Cathy Tharlson, the winemaker, the capacity of the winery was already reached this year, when she had to use full capacity of the crusher, presses, barrels and tanks in the winery. This information was verified by our own analysis of the data collected and presented to us by the winery. The results of the analysis were slightly different from the Cathy’s perception, and showed that there is room for improving efficiency in some areas of the process in order to better utilize existing capacity. Below is a detailed capacity analysis by the various types of equipment and storage.

Crusher and Presses

In 1992 crush season the winery was receiving between 30-49 tons of grapes from the farm every day. The crusher processes up to 50 tons of fruit daily. But the capacity of the press owned by the winery was not sufficient to match that output. Therefore Cathy had to rent a press this year, so that fruit could be processed without must having to go to the tanks, just to preserve its quality.

The combined capacity of two presses is 5 tons per load, so it takes 10 loads per day to process all of the must produced by the crusher. There is no feasible possibility to add another load to a day, because even now it takes from 8 AM to midnight to run those 10 pressing cycles. And the employees need to have adequate rest to operate equipment efficiently.

However, the analysis of the data of how much fruit was harvested each day shows that the amount of fruit gathered every day had a great variation: from 30 to 49 tons. The whole harvesting season was 16 days. If the harvesting could be evened out to around 40 tons per day, then the capacity of a crusher and presses would be sufficient. In fact, even if the winery had to process 750 tons of grapes in the season, it would be possible to do with current capacity, if the amount of fruit gathered every day were equalized to about 47 tons per day.  By adding just one more day to gathering fruit the winery would further relieve the pressure from the crusher and presses’ capacity. E.g. processing of 750 tons of fruit in 17 days would be possible if daily fruit harvest were about 45 tons.

We know however, that wine making is as much art as pure math. Therefore if it were determined that gathering fruit needs to be done closely to its ripening, and equalizing the daily pick up would negatively affect the quality of the fruit and consequently the wine, then the winery needs to look into increasing the capacity of the crusher and presses in order to meet the increase of processed fruit amount.

Bottom line, the current capacity of the crusher and two presses is sufficient even up to 750 tons in a season, if the harvesting process done more efficiently, with equal amount of fruit delivered every day. If it is not possible for technical reasons or because of the quality concerns, additional – third – press needs to be used.

An additional cost-benefit analysis needs to be done to determine if it is more cost efficient to keep renting a press for a season or to purchase one outright.

Tanks

The situation with tanks is more complicated due to the wine making process that requires continuous filling, and transferring of grape juice at different phases for settling, quick fermentation, and longer-term holding. These transfers are further complicated by the need to clean tanks before the juice from the press is pumped in, and cleaning process takes one day.

A simplified table is attached in the Appendix A to show the daily need for tanks, based on the data from 1992 harvesting and crush season. As the table shows, if the process is going relatively smoothly it is possible to juggle the existing tank capacity to meet present need most of the time. However, by the end of the season when the 10000 gallons tanks need to be filled for holding Fume Blank wine for six months, the juggling becomes more challenging, as there are less tanks available for settling and quick fermentation, given the need for cleaning some of the tanks. This year the winery managed to do it, but with the projected intake of about 150 additional tons, as desired by the owners, the winery will definitely need additional tank capacity.

Based on our calculation of the outputs, given that a standard case contains 9 liters of wine, we found that a ton of raw fruit yields about 117 gallons of wine. See our calculations in Appendix B. With this yield the winery will have about 17500 gallons of additional wine, at total input of 750 tons of grapes. Only about 42% of that additional wine will need to be Fume Blank, based on the sales forecasts presented by Henry Dengler, the co-owner of the winery. Even though current total capacity of the tanks is 41000 gallons, we estimate that the winery will need additional tank capacity for wine holding – at least 7300 gallons, in order to efficiently manage increased volume of processing during the crush. This means that the new installed tank will have to be at least 8000 gallons. This tank will allow the winery to handle up to 750 tons of fruit and incremental annual  increases of 5% forecasted throughout 1995 by Jim Morris.

Barrels

Given the information from Cathy that the winery has used all of its available barrels this year, and the fact that about 58% of all wine requires barrel fermentation for extended time, we estimate that from 1992 to 1995 the number of new barrels purchased by the winery have to be increased by 3% annually.

Capacity Management Recommendation

Overall we estimate that improvements in efficiency of gathering and supplying grapes would allow the winery to process the forecasted increase of 5% annually throughout 1995 with its existing crusher and presses, i.e. two presses used in 1992 season.

The increased holding requirements would need additional tank of 8000 gallons installed.

The barrels purchases would need to be increased by 3% annually.

Morris Valley Estate Winery – Case 1 Analysis

Morris Valley Estate Winery – Case 2 Analysis