Potter's Quandary - Spreadsheet Analysis

Recycle
5 cups

Throwing Kiln
45 cups/batch Wheel Drying Loading

Kiln Kiln
Glaze Loading Firing

Question: How long will it take to produce 2000 good cups?

Mass Flow
Throwing: takes 1 hour to throw 20 cups 20 cups/hr
Drying: 200 cup capacity, takes 24 hours 8.33 cups/hr
Kiln loading: 50 cup capacity, takes .5 hours
Kiln Firing: 8 hours (kiln capacity is 50 cups)
Cooling: 8 hours
Kiln unloading: .5 hours
Total kiln time 17 hours 3.03 cups/hr
Glaze: 2 hours for 50 cups (kiln load) 25 cups/hr
Kiln loading: 50 cup capacity, takes .5 hours cups/hr
Kiln Firing: 8 hours cups/hr
Cooling: 8 hours cups/hr
Kiln unloading: .5 hours cups/hr
Total kiln time 17 hours 3.03 cups/hr
Packing: 1 cup per minute 60 cups/hr

Critical Output Variables:

Throughput: 2000 good cups

Critical Input Variables:

Processing times: (listed above)
Potter availability: 8 hrs per day (with some additional availability at night to switch the kiln), 1/2 hour lunch break
Recycling: listed above…more accurate: a triangular distribution 82%, 90%, 98% for wet waste
Scrap/reject: 5-10%, as stated above…more accurate: triangular distribution 92%, 93%, 95% good cups at

Quick solution: We can see right away by reviewing the mass flows above that the kiln operation is the bottlen
capacity of the system.

If the potter were able to always load the kiln before the workday ends, and then fire them ove
2000/(24/17 * 50)/.95=29.8 days for one of the kiln operations. If we were to consider the oth

It would be very difficult to get more precise than this using a spreadsheet with no simulation a
 Kiln Kiln
Firing Cooling Unloading

Kiln
Cooling Unloading Packing 2000 cups

Scrap
3-5 cups

bottleneck

kiln), 1/2 hour lunch break

% for wet waste
%, 93%, 95% good cups at packing

kiln operation is the bottleneck. We can use that as an initial estimate as to the
nds, and then fire them overnight, the production rate would be greater than 1 kiln-load per day.
we were to consider the other (second) kiln operation, the time required would be 60 days.

dsheet with no simulation add-ins.

The Potter Quandery Costs Inputs-outputs
Variable costs

Clay $/cup 0.5

Glaze$/cup 0.2
Drier Electricity $/cup 0.1
Kiln Electricity $/cup 0.25
Packing materials $/cup 0.1
Total per cup $1.15
Assistant wages $/hr 17

Production volume per year: 11000 Since the production rate is estimated (on the mass flow page) at 60 days for 2000 cups

Fixed costs
Buildings maintenance $/year $3,000.00
Equipment maintenance $/year $2,000.00
Taxes and utilities $/yr $3,500.00
Total $8,500.00
Per cup $0.77

Capital asset costs

100 cup capacity drier $2,000

Cost capacity ratio 0.8 not used in this analysis

50 cup capacity kiln $6,000

Cost capacity ratio 0.7 not used in this analysis

Buildings $130,000

Depreciation 20 years straight line 5%

Total Investment $138,000
Depreciation charge per year $6,900
Depreciation charge per cup $0.63

Net Profits
Total cost per cup (with no depreciation) $1.92
Price per cup $4.00
Net Profit $22,850
Taxes (at 20%) $4,570
NOPAT $18,280

EVA Calculation
WACC 16%
Working Capital $3,667
Capital Charge $22,667

EVA -$4,387