Boot ie ## Sol7 ES Marketing Research Report No. 827 Packaging Produce In Trays At The Central Warehouse LIBRARY RECEIVED MAR 5 1969 5. BAAR AF ASR Ar BEL VILLE BRA NCH. _ Agricultural Research Service UNITED STATES DEPARTMENT OF AGRICULTURE Historic, archived document Do not assume content reflects current scientific knowledge, policies, or practices. PREFACE During the past few years, most supermarkets have reported that sales of produce as a percentage of total store sales have decreased, while operating costs of produce departments have increased. The improved packaging systems and techniques de- scribed in this report present the industry an op- portunity to lower the cost of selling produce substantially. This report is one of a series of publications dealing with the packaging of produce at the cen- tral warehouse. It covers the results of research on produce items that are typically packaged in trays. The study was conducted under the general supervision of R. W. Hoecker, Assistant Director, Transportation and Facilities Research Division, Agricultural Research Service. Related publications previously issued by the U.S. Department of Agriculture are: MRR 278, “Packaging and Price Marking Produce in Retail Food Stores,” October 1958; MRR 721, “Packag- ing Produce at the Central Warehouse,” Novem- ber 1965; and ARS 52-7, “Produce Packaging at the Central Warehouse—Bananas,” October 1965. The following firms cooperated with the re- searchers by allowing the use of their facilities for this study : Publix Super Markets, Inc., Lakeland, Fla.; Red Owl Stores and Super Valu Stores, Hopkins, Minn.; and Safeway Stores, Landover, Md. The author would like to thank the many manufacturers of equipment and packaging ma- terials who contributed time and materials. Any trade names used or equipment illustrated in this publication are solely for the purpose of providing specific information. Mention of com- mercially manufactured products does not imply endorsement by the Department of Agriculture over similar products not mentioned. Much of the research on which this report is based was conducted by Paul Shaffer, formerly with the Agricultural Research Service. Contents Page SUDAN aT Ys a hak Ro eo Ee ee ek 1 Introductions ay eS oe ah Se eet ee en ee eee 1 Description of warehouse tray packaging..______--_-_-------------_--- 3 Central packaging equipment, layout, and work methods_____~__--_____- 5 esi @ $f ee ch ia oo See ae rN ce ye pe a ee 5 TD rene Ma ae es ye Fer Sle a sa pe ee 6 The wrappingsmachines=2_ = 2 2 2 Day he pee eee ee 9 Weighingvandtlabelins22 22255220222 = tae ene een aes sates 10 Hillingshippine-contain ers. 2 =e = ae a ee pe 13 Pa Cie Gorin ern 8 eT ah Sea ee a ov rr a ag 14 Containers for shipping packaged prcduce to the retail store.________ 16 Displaying produce in the shipping containers______-____--_-_------- 19 Costs of packaging at the store and central warehouse_________________- 20 Costs of packaging at the central warehouse______-__-------------- 20 Costs of packaging at the retail store_.._._._.__________--__--_---_--- 24 Comparison of store and warehouse packaging costs____--___------- 28 Discussion'.2 322 eae Sas ee 2 oe Se ee ee ee eee 31 WaVt@rel GUTe = CLG eed pas ea ta nem es rn aE 32 Ap peM ix S25 AS See he aie ae ot wae RPE I pr 33 Washington, D.C. Issued February 1969 For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 - Price 40 cents li List of Tables Table No. 1.—Labor requirements per package for tray handling on 3 types of feed-belt layouts__ 2.—Suggested crew distribution for a trayed produce packaging line in a central ware- TON @ USK ie dae pe pe RE 3.—Comparative costs of materials for packag- ing corn in trays or folding boxes_______- 4.—Comparison of package capacity for a 17- by 23-inch and a 17- by 29-inch container for selected sizes of packages when pack- ages are double stacked_______________- 5.—Capacity of small, medium, and large con- tainers for trayed produce items used in ON eshiMien es wee eae Ss ee 6.—Labor requirements to display packaged tray produce in the returnable warehouse- to-store container and when individual packages are displayed by hand_________ 7.—Costs of materials for overwrapping selected trayed produce items in polyvinyl! chloride 2-way shrinkable film at the central ware- NOUS Cmemeata oh Ue Ae certo 8.—Direct labor costs per package for the pack- aging of selected trayed produce items at the central warehouse____.-_--_-----_- 9.—Annual cost of equipment for a 2-line in- stallation for the central warehouse pack- aging of trayed produce items________-- 10.—Cost of returning empty produce containers toxtheswarehouse. 92-0 2. 2202 = 2 Le 11.—Total costs per package for packaging selected trayed produce items at the centraliwarehouse_-__....--2.-_.-.=--- 12.—Average cost of materials per package for selected produce items when wrapped by 3 methods at the retail store___-_-____--- 13.—Average time requirements and labor cost per package for 3 methods of wrapping selected produce items in the retail store__ 14.—Annual cost of equipment for packaging trayed produce items using 3 methods of wrapping at the retail store________----- 15.—Total cost per package of wrapping selected trayed produce items in the retail store_ __ 16.—Comparison of lowest cost store level pack- aging method with central warehouse Dackagingmes Hes sa see 2 = Page 15 16 17 19 20 List of Exhibit No. A.—Determining break-even point between man- ually overwrapping produce with poly- vinyl chloride stretch film at store level and a 2-line warehouse packaging opera- tion using polyvinyl chloride shrinkable filinieeeeetne. BN oe ee sk Se Page Table No. 17.—Average costs per package for warehouse packaging and the lowest cost store T9010) O10) 6 Le ae ee eee 18.—Annual savings through central warehouse packaging at different levels of volume__ 19.—Cost of materials per package for over- wrapping selected trayed produce items in sheeted cellophane in the retail store______ 20.—Cost of materials per package for manually overwrapping selected trayed produce items in polyvinyl chloride stretch film in thei retailistore: 2) 2 9552 21.—Cost of materials per package for sleeve- wrapping selected trayed produce items in polyvinyl chloride one-way shrinkable film in the retail store..._._...........- 22.—Total labor requirements per package for overwrapping selected trayed produce items in cellophane in the retail store____ 23.—Labor requirements per package for over- wrapping selected trayed produce items » in polyvinyl chloride stretch film in the TetallstOre. 2s 2 ee oe ee 24.—Labor requirements per package for sleeve- wrapping selected trayed produce items in polyvinyl chloride one-way shrinkable film in the retail store__._____-__-_------ 25.—Labor requirements for the irregular ele- ments in overwrapping selected trayed produce items in cellophane in the retail SUONC re Phat as ee Se ee 26.—Total cost per package for overwrapping selected trayed produce items in cello- phane in the retail store.__________---- 27.—Total cost per package for overwrapping selected trayed produce items in poly- vinyl chloride stretch film in the retail 28.—Total cost per package for sleeve-wrapping selected trayed produce items in poly- vinyl chloride one-way shrinkable film in thewretalistore 22) 225... eosen= == Soe 29.—Annual cost of equipment for a single-line installation for central warehouse pack- aging of trayed produce items__-_-_----- Exhibits Exhibit No. B.—Determining break-even point between man- ually overwrapping produce with poly- vinyl chloride stretch film at store level and a single-line warehouse packaging operation using polyvinyl chloride shrink- ablesfilmesi2: Soe 2. us tee eee ee Page 29 29 33 33 35 36 37 37 38 Page 39 ili List of Figures Figure No. iv 1.—Layout used in one firm for warehouse packaging: a2 ss ae a ee eee 2.—Lazy-susan type of tray-filling table_____- 3.—A tray-filling table with the feed conveyor to the machine located beyond the product on the same level___________- 4.—An automatic packaging machine used for warehouse packaging._____________---- 5.—Labeler unit for items sold on an even- weight or a count basis.____________--- 6.—Automatie scale and labeler for catch- Weigh thtems a. sae Sarees ae nee eee 7.—A shrink tunnel used for shrinking film on wrapped packages at the warehouse- ---- 8.—A semiautomatic scale and operator___-__-_ Page 12 13 Figure No. 9.—Trays and folding box used in warehouse packagin gees 2232 a ee ee eee 10.—Dimensions for trays and folding boxes to determine design of returnable container for packaged produce.__-__.__-------- 11.—Reusable warehouse-to-store container for tray-packaged produce----_--_____---- 12.—Displaying packaged produce in warehouse- to-store returnable container-_____---_-- 13.—A double-line layout for warehouse tray packaging=-22 2 eee 14.—Savings per package from central warehouse packaging at different volume levels__-_-_ 15.—Comparison of the lowest cost method of store packaging with the costs of single- and double-line warehouse packaging-- Page 14 17 18 19 23 30 31 Packaging Produce In Trays At The Central Warehouse By JAMES J. Karitas, marketing specialist, Transportation and Facilities Research Division, Agricultural Research Service, United States Department of Agriculture SUMMARY Sales of fresh produce in retail stores in the United States amounted to approximately $5.2 bil- lion in 1965. About 33 percent or $1.7 billion was sold in prepackaged produce departments. In- cluded in the $1.7 billion were about 567 million packages of produce, packaged in trays, at store level. Costs for the lowest cost method of packag- ing at store level amounted to 7.20 cents per pack- age. Packaging at the warehouse with the methods described in the report cost 4.80 cents per package, a difference of 2.40 cents per package or potential savings of $13.6 million annually. While the costs of materials for warehouse pack- aging were higher than for the lowest cost store method, and costs of containers were also incurred in warehouse packaging, the costs of labor, equip- ment, and space used were lower than for store packaging. Cost of overwrapping packages at the store in sheeted cellophane averaged 8.56 cents per pack- age. Sleeve wrapping with one-way shrink-type polyvinyl chloride cost 7.28 cents and overwrap- ping with stretch-type polyvinyl chloride cost 7.20 cents per package. These costs included labor, ma- terials, equipment, and space. A single packaging line at the warehouse oper- ated on a one shift basis can produce about 2.5 mil- lion packages annually with proper production scheduling. A two-line packaging operation can produce up to 5 million packages. When compared with the lowest cost store method (overwrapping with stretch-type polyviny] chloride), a single-line warehouse operation breaks even at an annual vol- ume of about 530,000 packages. The break-even cae for a double line is about 900,000 packages. avings for a single packaging line range from $7,575 per year at an annual output of 750,000 packages to $67,750 at 2.5 million packages. Sav- ings for the double line range from $55,250 per year at 2.5 million packages to $141,000 at 5 million. These savings are partly based on the assump- tion that when retail stores shift to warehouse packaging, equipment no longer needed can be sold and the space saved at the store can be utilized for other activities. While savings stated can be fully realized for new stores, some existing stores might be unable to realize the full savings. If the equip- ment and space savings were not included as sav- ings for the existing stores, savings through ware- house packaging at a volume of 3 million packages annually would be 0.61 cent per package and the break-even point between the lowest cost store method and a single warehouse packaging line would be about 1.1 million packages per year. Since costs were based on good operations and skilled operators at store level, when in reality many store operations are less than good and opera- tors often are unskilled part-time personnel, sav- ings through warehouse packaging would probably be greater than those projected. Operations and materials usage can be properly supervised at a central location far more easily than at store level. INTRODUCTION Customers in most modern supermarkets select their own produce. There are, however, two types of self-selection: (1) Bulk, where produce is dis- played in bulk displays and sold by piece or weight and priced at a station in the department or at the checkout, and (2) prepackaged, where all items are at De MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE either prepackaged or unitized and prepriced. Many supermarkets operate between these ex- tremes. In one survey (8), 1t was estimated that 77 percent of all produce departments were self- service and one out of three supermarkets sell all or nearly all produce packaged.1 The trend in packaging is upward; some estimate that by 1970, 60 to 75 percent of fresh fruit and vegetables will be packaged before reaching the retailer (9, p. 21). A suitable container for shipping packaged produce to the retail store is a thermoplastic con- tainer with bails. The container stacks or nests and has dimensions of 29 by 17 by 634 inches. If these containers are incorporated into the refrigerated display case in the retail store, there would be addi- tional savings of 0.30 cent per package in display labor costs and product rotation. Firms converting to warehouse packaging should adjust traditional store level gross margins downward to reflect the transfer of packaging costs from the store to the warehouse. The operator of the produce department has two decisions to make relating to the operation of the department: Shall he sell produce bulk or pre- packaged (or some combination of the two mer- chandising systems) and, if he sells all or part of the produce packaged, where should the packag- ing be performed? The alternative packaging lo- cations are at the growing area, by a specialized packer in the terminal market, at the central ware- house, or at the retail store. When produce operators first began to convert from bulk to the prepack method of merchandis- ing, the packaging was usually performed in the backroom of the store. By adding film, trays, and a table or bench, it was relatively easy to convert to a prepack operation. However, as the volume of prepackaged produce increased, it became neces- sary to add better tables for wrapping, automatic scales, label printers, label applicators, and con- veyors to reduce labor costs. The overriding ques- tion at that time was customer acceptance. Pack- aging at the store had the following advantages: @ Produce had a longer shelf life as compared with bulk display. @ Packaging output could be more easily ad- justed to changing sales as compared with source or terminal packaging. _@ The operator was able to merchandise spe- cial packages such as mixed fruit packages and salads. ‘Italie numbers in parentheses refer to Literature cited, p. 32. Essential to the success of a prepackaged de- partment was close maintenance of product qual- ity to gain customer acceptance of packaging. Packaging at store level provided a “fresher” package, which was especially important where wrapping films became dull or lost shape from moisture and handling. With improvements in wrapping materials and techniques, several firms have switched the pack- aging of trayed items to the warehouse to take ad- vantage of specialized high-speed equipment that would reduce labor costs and have a high volume potential. Other advantages of warehouse pack- aging are: Central quality control by produce ex- perts; better disposal of off-grade produce; receiv- ing the product in larger than standard containers to lower costs of shipping containers and han- dling; and improved supervision. The objective of this report is to evaluate and develop improved methods, equipment, layout, and operating practices for packaging produce at the central warehouse and to compare costs of cen- tral warehouse packaging with the most commonly used systems of packaging produce at the retail store. Research on the packaging of produce in the retail store was reported in a previous report (7). The study reported here measures the direct and indirect costs of packaging at the store and central warehouse. It does not measure the merchandising effectiveness of the packaging techniques used, the effect of rewrap costs on total system costs, or the possible differences in product shrinkage when packaging in either location. This report is limited to those higher volume produce items that are typically packaged in a tray (or folding box). These items include table-sized round fruit typically packaged six per tray (ap- ples, oranges, peaches, and pears which henceforth will be referred to as “6-pack”) and beans, corn, grapes, lemons, plums, squash, and tomatoes.’ The report does not evaluate the alternative packaging materials available but develops labor and mate- rials costs only for the several methods and mate- rials used most frequently at the store and ware- house. The equipment used in the cost analysis of warehouse packaging is that most commonly used by firms that centrally package trayed produce. Labor costs are based on the standard time to perform the job at the stated wage rates. Labor 2 Table-sized fruit is the larger fruit which typically is sold in packages or bulk display; for example, sizes 88, 100, and 118 apples and oranges. Smaller apples (150 and 163) and oranges (126, 144, and 163) are frequently sold in polyethylene bags. A previous ARS publication (6) reported on methods of packaging produce in polyethylene bags at the central warehouse. Beans as used in this report are green, stringless, pole, and yellow wax. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 3 rates include an allowance of 15 percent to cover fringe benefits. The standard time is defined as the time for a skilled operator to perform a task using prescribed methods, layout, and equipment while working at a normal pace. It includes a 15-percent allowance for fatigue and personal time. This al- lowance is reduced to 10 percent for warehouse- packaging lines because of the use of specialized equipment and because most of the warehouse em- ployees do not handle heavy containers. In addi- tion, line delays included in the standards provide periodic rests. All equipment and packaging mate- rials are quoted at list prices. In several instances, it was necessary to weight packaging costs by the relative movement of the item. The trayed produce movement of several firms was averaged to obtain the following per- centages : Packaged tray item Percent Apples, oranges, peaches, and pears, 6-pack________ 44 IB CATS ees a eee ee ee ee a eee ten 15 COLMROLOLEDECA TS eee & meee eet ee ee ey Gla DOS Hea ten od FS ee a eee iB} Wemons 7O-d Ck ass ee ee ee eee 9 Blumss8:packsoss sees ee er Pie eee a} Squash (yellow and zuchinni) ~___________________ os Tomatoes, 4-pack (vine ripe and hothouse) ________ {( (Dota) ose a Sa ee ee 100 Not every firm in the study packaged these items or the package sizes listed above. These sizes have been used throughout the report because they rep- resent the most typical product and size mix. Some tray-produce packaging is performed by terminal packers in metropolitan areas. Their equipment and packaging techniques are similar to those used at the central warehouse but are beyond the scope of this report. DESCRIPTION OF WAREHOUSE TRAY PACKAGING Tray packaging of produce at the warehouse level involves the following activities: Receiving and storing product. Scheduling production. Feeding the packaging lines. Placing product in trays or folding boxes. Wrapping the filled trays. Weighing and labeling. Shrinking film on wrapped packages with heat. Packing finished product into containers for store shipment. Storing the packaged product. Selecting and delivering produce orders to the stores. In the firms studied, produce was received from both motor and rail carriers in standard shipping containers with the exception of some locally grown items that were packed into field crates. One inherent advantage of centralized produce pack- aging is the ability to receive produce at the ware- house in large containers and thereby reduce ship- ping container costs. This is not being done now on a very large scale, but it offers potential savings that may be realized in the future (6). Most of the palletized items were transported di- rectly by forklift truck to a multipurpose cooler maintained at about 34° F. with a relative hu- midity of 90 percent. Some products, such as corn, were covered with ice in the cooler. Orders from stores were recapped on a daily basis and placed in two groups—nearby stores and distant stores. Each item for distant stores was packaged in the morning and selected and shipped to stores in the afternoon. Items for nearby stores were packaged in the afternoon and selected and shipped in the late afternoon. As required, pallet loads were transported by forklift to the packaging lines. In most of the op- erations studied, this was not a full-time job for a forklift operator. Shipping containers were opened and dumped onto filling stations by the line feeder. This was heavy work and usually done by a man. The packaging line area was typically refrigerated at 50° F. Tray filling consisted of obtaining product from product-feed belts or turntables incorporated into the tray-filling station. Empty trays or folding boxes were obtained from master containers, or from shelves; produce was placed into the tray; and the filled trays positioned on conveyors feed- ing the automatic packaging machines. Female operators were typically used for tray filling. The automatic wrapping machines used in the firms studied overwrapped the packages in shrink- able film. While these machines were also capable of sleeve wrapping, none of the firms studied used this technique for warehouse packaging. If the packaged item was sold on a per package basis, a label imprinted with the commodity de- scription and price was automatically applied by a labeler unit installed on the wrapping machine. If sold by weight, the packages were weighed and labeled by semiautomatic equipment requiring an operator or by automatic weighing and labeling equipment. Scales were equipped with a tare de- 2 Since the study began, several firms have reported that the sales of tray-packaged yams and baking potatoes are increasing. The inclusion of these items in the product mix would not materially affect the cost comparisons among the various systems studied. 4 MARKETING RESEARCH REPORT vice whereby the weight of packaging materials was subtracted from total package weight to com- pute the package price. Labeled packages typically moved by conveyor through a heat-shrinking device which caused the film to tighten, resulting in a more attractive pack- age. After heat shrinking, packages moved by con- Nm os SS s AUTAAAAIAUUAUOVAATHUAL FIGURE 1.—Layout used in one firm for warehouse packaging. 827, U.S. DEPT. OF AGRICULTURE veyor to a turntable where a male employee ob- tained packages from the turntable and placed them in containers for store shipment. The ship- ping container rested on a tare-weight scale and the net weight or package count was recorded on a packing slip and placed in the container. The packaged produce was stored by commodity groups on pallets in the 34° F. cooler. Some firms Trimming and corn-husking station Turntable where product circulates Automatic packaging machine with label applicator Shrink tunnel Turntable for packout Tare-weight scale Gate for routing packages to packout or turntable H Turntable Semiautomatic scale and label printer combination (2) =) SCALE OF FEET Com dy Oh Ue Soe Tray-filling station Automatic packaging machine Indexer for the fully automatic scale Automatic scale and label applicator Shrink tunnel Turntable for packout Tare-weight scale Conveyor for routing packages to turntable H Shelf for holding odd lot packages PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 5 used pallet racks; others with adequate storage space did not use racks but planned to install them when necessary. Order selection personnel used walkie-type pal- let jacks that were electrically powered, and store orders were typically placed into trailers on pal- lets. Refrigerated trailers were used for store de- livery. A tray-packaging operation used by a warehouse participating in this study is shown in figure 1. This layout fulfills many of the basic requirements for an efficient yet flexible arrangement. Line 1 was used for packaged items that were sold by either count or weight. Items typically sold by count were 6-packs of fruit, 3- to 6-pack baking potatoes, and 3 and 5 ears of corn. A corn-trim- ming machine, not shown in the layout, was in- stalled at the beginning of line 1 when processing corn. Corn husking and items requiring manual trimming moved over trimming station (A). Prod- uct to be trayed circulated on a turntable (B) ; the trays or folding boxes were positioned on a tray- holding shelf mounted on the turntable frame- work. Product was trayed and placed on the con- veyor located under the turntable and transported into the automatic wrapping machine (C). If the item was sold by count, a labeling device on the wrapping machine printed the necessary informa- tion and applied the label to the package. Packages then moved by conveyor to the shrink tunnel (D) and to the packout turntable (E). If the items packaged on line 1 were to be sold on a catch- weight basis, then a gate at point (G) routed pack- ages to a turntable (H) where they were weighed and labeled by two operators using semiautomatic scales and label printers (1). Packages were then put on conveyors and moved through the shrink tunnel to the packout station. Items packaged on line 2 were sold on a catch- weight basis. Beans, squash, brussel sprouts, okra, rhubarb, and small fruit were typically packed. Product was dumped on the U-shaped portion of the tray-filling station and conveyed to the workers on feed belts. Empty trays or folding boxes were stored on an overhead shelf located over the cleated conveyor feeding into the machine. Product was obtained from the feed belt in front of the worker, placed into the tray, and filled trays placed on the cleated conveyor. Filled trays moved to the auto- matic packaging machine (2), and then to the au- tomatic weighing and labeling station (3 and 4), through the shrink tunnel (5), and to packout sta- tion (6). In the event of a breakdown of the auto- matic weighing and labeling station, packages would be routed to the weighing and labeling sta- tion of line 1 by a small belt conveyor (8). The typical procedure followed in this firm was to package items for stores outside the city during morning hours, 7:30 a.m. to 11:00 a.m., and for city stores in the afternoon. When packaging corn, this firm placed a corn-trimming machine at the beginning of line 1. Corn for all stores was proc- essed at the end of the morning run and only one set-up was required. When processing corn, em- ployees from line 2 were shifted to line 1 to achieve a balanced operation between trimming, husking, and packaging. This particular firm had an ad- vantage since it could shift employees between bagging operations and tray packaging, thus avoiding expensive unproductive idle time. This mobility helped management balance the various lines. CENTRAL PACKAGING EQUIPMENT, LAYOUT, AND WORK METHODS An important phase in shifting produce pack- aging to the central warehouse is the selection and the arrangement of equipment to achieve maxi- mum efficiency and lowest overall costs. The lay- out should provide a balanced operation with line feeding and tray filling geared to the capacity of the packaging machine, weighing and labeling, and the pack-out operation. Another important provision in the layout is flexibility. It should be possible to route output to another line in the event of a machine breakdown to avoid complete shutdown. Line Feeding Line feeding consists of obtaining produce in pallet-load quantities from the cooler by forklift truck and transporting the produce to the pack- aging line where a line feeder, typically a male operator, opens master containers and places the produce on the product-feed belt. On all items except grapes and asparagus, one man can supply two packaging lines. One man can also packout 321-413 O—69 2 for two packaging lines unless the combined line output exceeds 45-50 packages per minute. The operations observed having two lines used a line feeder for each line. For many items, how- ever, each feeder obviously had considerable un- avoidable delays, particularly with items such as beans, which require above average tray-filling time. 6 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE One solution would be to position gravity-feed the first tray filler at peak periods. While lifting conveyors at the beginning of each lineupon which full containers is not desirable for female opera- open master containers could be placed. One line tors, dumping a prepositioned container requires feeder serving two lines could then be assisted by __ relatively little effort. Tray Filling The arrangement of the feed table will have an One firm used three types of feed-belt arrange- effect on the productivity of tray or box handling. ments In one arrangement, the product circulated BN-32332 FIGURE 2.—Lazy-susan type of tray-filling table. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE Uf TaBLeE 1.—Labor requirements per package for tray handling on 3 types of feed-belt layouts Box-handling time Types of feed-belt layout Obtain Place and filled Total form boxin box slot Place tray onto cleated con- veyor to the side of the Minute Minute Minute turntabless==s2— 52 - = se 0.037 0.017 0. 054 Overhead feed belt____-_____- . 049 . 049 . 098 Feed belt level with produce and between operator and DLOGU CCE eee a fete . 046 . 046 . 092 on a turntable directly over the cleated conveyor feeding the wrapping machine (fig. 2). The filled tray was moved only 18 inches and the slots were always visible. This arrangement required 0.054 minute to obtain and open box and to place the filled box in the slot (table 1). In the second arrangement, the product-supply belt was directly over the cleated conveyor feeding into the wrap- ping machine. The operators had to bend to check whether a slot was available and to place the filled box in the slot. In the third arrangement, the feed belt to the machine was between the product and the operator. This improved the box handling time, as compared with the second method, but was, by far, the least efficient method of filling the box or tray because of the long reach to obtain produce. Filling the trays or boxes requires the most la- bor. This time can be reduced by providing a work place which locates product, trays, and the pack- age disposal within the optimum reach area of the worker.* Ideally, the filling should be done on a shelf or ledge between the product and the op- erator. This will allow the operator to use two hands, working from product to tray. The feed conveyor to the wrapper can be located above the product or beyond the product on the same level (fig. 3). The method of placing the product in the tray or box will affect productivity. The time per pack- age to place six apples in a box when an employee obtains three in each hand was 0.15 minute. When he obtained four (two in each hand) and then used one hand to hold the four in place while ob- taining the final two, the time was 0.17 minute, a difference in productivity of 14 percent. When traying five pears, the time to obtain three and ‘For optimum work areas, see (7, p. 10). then two was 0.14 minute, while the time to ob- tain two, then two more, and a final one was 0.17 minute. The three and two method was 17.6 per- cent more efficient than two, two, and one. The average time to fill a tray of beans varied from 0.33 to 0.52 minute per package. The beans were straightened and placed carefully in the box, otherwise a stray bean could cause the wrapping machine to malfunction. In studies of produce packaging at the retail store, a device was de- veloped to improve the tray filling of beans (see (7, p. 12) for “nest technique”). A row of beans was alined in the bottom of a special nest box. The rest of the beans were randomly placed in the next box. The box to be used as the package was placed on top of the nest box, the two boxes were turned over, and the filled box was wrapped. Only one row of beans was handplaced yet the package was most attractive. This device could be modified and be incorporated in the packaging line for such items as beans, okra, and squash. An important factor in controlling overall costs is crew size, especially the number of fillers on the line. Too many fillers are on the line whenever filled trays or boxes are being placed on the tem- porary storage shelf, rather than being placed in the feed slot on the conveyor. This results in dou- ble handling. Too few fillers are on the line when there are many empty feed slots or when the auto- matic labeler is not operating at capacity. Some flexibility must be allowed in the number of fillers from run to run to allow for differences in product quality. A suggested crew arrangement for several items is given in table 2. TABLE 2.—Suggested crew distribution for a trayed produce packaging line wn a central warehouse ' Crew distribution Item ——_ Total Line Fillers Packout feeder ps i nh i eee 6-pack (apples, Number Number Number Number lemons, oranges, ; By peaches, pears) ---- 72 ff 1 7 oe [Beansaaas Seeeeeene = % 72 "4 Come 32sec oes 1 3 1, Dy Grapes]. es sss 1 5 / O72 emonsae === eo-— a 4 72 oa PWM SBee 222 ease 1 5 t% 7/2 Squashss=se2 2225 2= u% 5 72 6 MomsatOes=- 42 2s-= 45 u% + % 5 1 Weighing and labeling performed by the automatic labeler used in conjunction with the electronic computing scale or packages sold by count and labeled automatically by a labeling unit. 8 MARKETING RESEARCH REPORT The equipment used for feeding the filled trays into the wrapping machine will also affect the pro- ductivity of the tray fillers. For instance, the use of an intermittent feed device (indexer) connected to a belt conveyor, rather than a cleated conveyor, will increase productivity. The intermittent feed device will lower labor costs because the operators do not have to check whether the conveyor slot 827, U.S. DEPT. OF AGRICULTURE BN-32331 Ficure 3.—A tray-filling table with the feed conveyor to the machine located beyond the product on the same level. is empty and perhaps wait for another. In one test where lemons were packaged six per box and placed directly in conveyor slots, the time to fill the box and place it in a slot was 0.095 minute. When the boxes were filled and 50 percent placed tempo- rarily on a holding shelf, the time was 0.120 min- ute. The extra handling required 26 percent more time or 2.5 minutes per hundred packages. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 9 The Wrapping Machine A principal reason for moving the packaging tray and sleeve wrap or completely overwrap it. A function to the central warehouse is to lower labor machine commonly used for packaging produce costs through the use of specialized equipment. is illustrated in figure 4. This machine makes a Available equipment is not fully automatic since _ bottom and end seal on folding boxes and a bottom the produce must be handplaced in the tray or box. __ seal on trays. The packaging machines used will take the filled BN-32333 Ficure 4.—An automatic packaging machine used for warehouse packaging. 10 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE Weighing and Labeling Packaged produce is priced by catchweight, even weight, or count. When packages are sold on an even- weight or a count basis, a preprinted label identifying the product and giving weight or count and price can be used. On the automatic w rapping machine, the label for count or even-weight items is automatically apphed by a labeler unit (fig. 5). The typical method of pricing studied was catchweight. Packages were weighed on an elec- tronic computing scale that weighed the packages and printed the label. The label was applied to the package either manually or by an automatic la- beler. When the labeler was used, the packages were moved from the wrapper onto the scale for weigh- BN-32330 F1GurRE 5.—Labeler unit for items sold on an even-weight or a count basis. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 1 BN-32327 Figure 6.—Automatic scale and labeler for catchweight items. ing (fig. 6), then to the labeler through a shrink tunnel (fig. 7), and to a turntable for packing into a container for shipping to the store. Some firms conveyed the packages to a cooler and filled ship- ping containers there. An indexing device to move the package from the wrapping machine to the scale and automatic labeler is required. The indexer adjusts the flow rate of the packages to the cycle speed of the auto- matic scale and labeler. The wrapping machine may also be connected to the indexer by conveyor to facilitate automatic weighing and _ labeling. When an operator uses the electronic computing scale and manually applies the label, the effective rate is 25 packages per minute, excluding the time required to set the tare weight and price per pound in the scale, to change the commodity identification insert, and other miscellaneous weighing functions. The automatic labeler will eliminate the person at the weighing station except for setup time for each product run. The potential savings through the use of the automatic labeler compared with the semiauto- i MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE a AS =—— matic scale and operator (fig. 8) is 0.040 minute per package. At an average rate of $2.50 per hour (female employees), savings would be 0.17 cent per package. If 214 million packages are auto- matically weighed and labeled, the potential sav- ings for the automatic labeler (excluding deprecia- tion and interest charges) would be $4,170. At this rate, the semiautomatic labeler would be paid for out of savings in less than one year. BN-32326 FicurRE 7.—A shrink tunnel used for shrinking film on wrapped packages at the warehouse. Because of the possibility of malfunction in the weighing and labeling equipment, a provision should be made in the layout to route the packages from the wrapping machine to a supplementary weighing and labeling station rather than to shut down the line. Firms using the fully automatic weighing and labeling equipment typically pro- vide semiautomatic equipment to be used for such emergencies. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 13 BN-32324 FIGURE 8.—A semiautomatic scale and operator. Filling Shipping Containers Filling shipping containers, called “packout,” for a two-line operation generally requires two men who obtain the packaged produce from turntables and pack master containers for store shipment. The task, however, involves more than merely packing containers. Empty containers must be ob- tained and positioned for use, net weight or count must be recorded and a packing slip placed in the container, leftover partial containers of packages from previous runs must be worked in with like items, and full pallets of containers moved to the store selection area. In a two-line operation, one operator assists the other during delays occurring in line changeovers. The tare-weight scales should be portable to facilitate the use of two operators on one turntable. 321-413 O—69——_3 If the packaging line layout provides for a U-shape flow so that the finished product is moved to a single turntable in the packaging area, two tareweight scales adjacent to the turntable would allow one man to do most of the packout with a second man assisting. The second man can also as- sist on the packaging line and do other activities such as cleanup and line dumping. One problem that arose in one firm studied con- cerned items that were in partly filled containers left over from previous runs and stored in stacks of wire baskets. For an employee to obtain individual items, he had to move several containers. This problem could be eliminated by installing shelving in the packout area to hold such containers and making items readily accessible. 14 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE Packaging Materials The packages commonly used for tray-packed produce are trays (paperboard or pulp) with either a film overwrap or sleeve wrap that leaves the ends of the package open and folding boxes that are usually overwrapped. If shrinkable films are used, a shrink tunnel is essential. Generally, a central warehouse packaging operation will have a wrapping machine that can be used with differ- ent films and with either trays or folding boxes. The film or tray deemed best for each item may then be used. Trays and folding boxes The pulp tray is fairly rigid with a lip around the top edge that limits bruising. Round fruit packed in these trays will not come in contact with A, Paperboard tray C. Pulp tray with molded indentation fruit in an adjacent tray either on display or in the warehouse-to-store shipping container. Some pulp trays also have molded indentations to hold the item, preventing it from moving about in the tray. The pulp tray, because of its rigidity, lends itself to sleeve wrapping and is used with shrink-type films. The paperboard tray uses less film than the pulp tray; it can be printed; and it is flexible enough to adapt to shghtly different sizes of fruit. The square sides on the folding box make the box ideal for use on automatic wrapping machines, but it is more costly than a tray. The folding box can be printed and comes in different colors. The three types of trays and the folding box are illustrated in figure 9. In one firm, corn (five ears per package) was packaged either in trays or fold- ook B. Pulp tray D. Folding paperboard box BN-32321, BN-32322, BN—32325, BN-32323 Figure 9.—Trays and folding box used in warehouse packaging. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 15 ing boxes. The cost of packaging materials was 0.55 cent per package less for the tray operation, while labor costs for both tray and folding box were identical (table 3). Films During the early years of produce packaging, cellophane was the most commonly used film. Ace- tate was used in some instances, especially where the produce had a high rate of respiration.* The items were either completely overwrapped with sheeted cellophane or were enclosed with a band of film (roll stock) slightly wider than the package. Perforated film was used for the overwrapped packages to provide for respiration. Recently, sev- eral new plastic films have been used. These films are usually transparent and some shrink when ex- posed to heat. The types most commonly used are polyethylene, polystyrene, polyvinyl] chloride, and polypropylene. Not one of the new plastic films has emerged as an allpurpose film for packaging produce. Polyethylene is widely used for bagged produce items, for shipping-container liners, and as a coat- ing on films to increase their strength and flexi- bility. Polystyrene, a crisp film of excellent clarity and good shrinkage characteristics, provides per- meability for respiration. Polyvinyl chloride is a soft, clinging film which is available either oriented or unoriented.® The un- oriented polyvinyl chloride (stretch film), which is manually stretched at the time the package is wrapped, is frequently used to overwrap packages on a wrapping device. This device consists of one or more rolls of film on a metal roller that has an adjustment for tension, a place for wrapping the package, a hot wire to sever any given length of film from the roll, and a hot plate for sealing the film. After the film is cut on the hot wire and the first seal made on the hot plate, the two ends are pulled tight and the last two seals made. This re- sults in an attractive, tight package that does not require heat shrinking. This type of film and pack- age is well suited for store packaging. The polyvinyl chloride two-way shrinkable film is used to overwrap packages, usually on a wrap- ping machine. When polyvinyl film is used for 5¥Fruits and vegetables are living commodities, and in the respiration process they use up oxygen and give off carbon dioxide and water vapor. It is necessary on many items to use a permeable or perforated film which does not interfere with respiration and also allows for a controlled escape of water vapor from the package (+). ® Plastic films to be shrunk by heat after the package is wrapped are oriented (stretched) during the manufactur- ing process. The film can be oriented in one direction (uniaxially) or in more than one direction (biaxially). In practice, uniaxially oriented films are used for sleeve wraps and biaxially oriented films for full overwraps. TaBLE 3.—Comparative costs of materials for packaging corn in trays or folding boxes Costs of materials Item for— Tray Box Cent. Ci Fie oe es Eee ae 1081 20.71 ALTA yg OTAD OXee ee: eee ne . 73 1. 38 Total materials____________ 1. 54 2. 09 115% 18 inches, 270 square inches at 3 cents per 1,000 square inches. 2 14X17 inches, 238 square inches at 3 cents per 1,000 square inches. overwrapping, it should be perforated to allow for respiration. The newest member of the “poly” family is poly- propylene, a clear, strong film. The sealing tem- peratures, however, are more critical than for the other poly films. Because of its strength, a lighter gage film can be used, hence a higher yield than regular gage film and a lower cost. Just as there is no one film that is ideally suited to all types of produce, there is no universal type of package. A sleeve wrap will provide excellent ventilation ; so a film for this type of package will not require breathing qualities. But in some instances, espe- cially in refrigerated display cases with a high air flow, the sleeve wrap permits too much exposure, resulting in some drying out of the produce. Film requirements for sleeve wrapping are clarity, good shrink, and a minimum of corner wrinkling.’ Several items, such as beans, brussel sprouts, and grapes, require a complete overwrap to prevent merchandise from falling out of the tray. Other items are overwrapped because the produce is bet- ter protected than in a sleeve wrap. The film on these packages is usually perforated. In warehouse packaging, labor requirements for machine wrapping of sleeve-wrapped and over- wrapped packages are the same. Sleeve wrapping uses less film. But, on the other hand, a thicker gage film may be required than for a complete overwrap. The choice of film is very important because of differences in cost of film. Many of the warehouse packaging operations studied used polyvinyl chloride two-way shrink film and the overwrap method. If these operators 7 Corner wrinkling occurs when round items such as ap- ples, pears, peaches, plums, oranges, and lemons are pack- aged with shrinkable film and the package processed in a heat tunnel. It can be due to moisture on the surface of the fruit or the low temperature of the fruit (3). 16 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE used the sleeve-wrap method with one-way shrink film, cost would be 0.289 cent less per package. The overwrap method for the typical package required 238 square inches (14X17 inches) of film or a cost of 0.714 cent, at 3 cents per 1,000 square inches for 0.50 mil polyvinyl chloride two-way shrink film. The sleeve-wrap method used 170 square inches (10X17 inches) or a cost of 0.425 cent, at 2.5 cents per 1,000 square inches, for 0.75 mil one-way shrinkable film, a difference of 0.289 cent per package.* Containers for Shipping Packaged Produce To the Retail Store A limitation on produce packaging at the ware- house has been the availability of a suitable re- turnable shipping container. Some firms are using the shipping container in which produce is re- ceived for repacking. Most produce items, espe- cially round fruit, occupy more space in a shipping container when packaged in a tray than in bulk. Therefore, extra containers are required to handle the packaged output. More importantly, the pack- ages will not fit properly in the shipping container when they are placed upright; so the packages are often packed on their side or end. This causes bruising and affects package appearance—espe- cially for sleeve-wrapped packages. The selection of a container for shipping pack- aged produce to the retail store should be based on the container’s stacking stability when full; the space the container takes when empty; the contain- er’s durability and cost; and the container’s ability to deliver produce to the store in good condition (6, 9..61).. Dimensions 1. The container should accommodate the larg- est number of packages of the most commonly used sizes for a variety of items. If one type of con- tainer cannot handle all central packaging re- quirements, then perhaps two sizes of containers can do this. 2. For ease of handling, the container should not be too long or wide. A container over 24 inches long increases strain on the worker when lifting because he must spread his arms wide apart to handle it. When a container is over 20 inches wide, it is harder to handle because the center of gravity moves farther away from the body, placing the strain on the back. 3. The container should not weigh more than 40 pounds when full if women are to handle it or more than 70 pounds for men. 4. The container should not be so deep that the produce may be bruised. 5. The container should not be so small that the cost of the extra handling and the inventory will be prohibitive. The dimensions of a container for tray-packaged produce are determined by the size of the packages. If the produce is packaged in trays, the most com- monly used sizes are the No. 2 (8514 inches), No. 114% (8X8% inches) and No. 1 (5X5 inches or 514 X5% inches). These three sizes have a com- mon dimension of either 514 or 8 inches and will fit equally well in a container that is 17 inches wide (fig. 10). The length of the container depends on the de- sired capacity and the size of tray. Four No. 2 trays would require a length of 22 inches plus a tolerance for oversize fruit and ease of packing. The container will hold eight No. 2 trays per layer. This would also accommodate three rows of four No. 1 trays or 12 trays per layer. The smaller size No. 1 (5X5) would only require 21 inches for 12 trays per layer. A 23-inch-long container would readily accommodate two rows of six No. 11% trays or 12 trays per layer. The container would have to be 29 inches long to accommodate an additional row of trays. The capacity of two containers of different lengths is given in table 4. Each container would be 17 inches wide at the inside base di- mension. The capacity of a 29-inch-long container in- creases 25 percent. for the most commonly used trays (No. 1 and No. 2), resulting in fewer trips and handlings. ’'The use of a sleeve-wrap with one-way shrinkable polyvinyl chloride may require some modification of the wrapping machine. Taste 4.—Comparison of package capacity for a 17- by 23-inch and a 17- by 29-inch container for selected sizes of packages when packages are double stacked Packages for— 17- by 17- by 23-inch 29-inch container container Size of tray Number Number INO. ols We ee ee a ee 24 30 INO 1G Se ee ee eee ee 24 No. oe os gee ee NE er neg ee 16 20 PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 17 TRAYS SS No. 2 (8x5)’’) i iz (8x3) No. 1 (5%x54"') Tan 3 FOLDING BOXES 172 8x5," 5 4x5 "f” 5x9” Figure 10.—Dimensions for trays and folding boxes to determine design of returnable container for packaged produce. Standardizing sizes of tray with at least one common dimension simplifies the problem of deter- mining size of the container. If, for special con- siderations, the produce merchandiser in a firm introduces a package with odd dimensions, a spe- cial container may be required for these packages. Or a standard container might be used and some packages placed on end. This method of packaging 1s not recommended as it may cause bruising or af- fect package appearance. For instance, a size 14 tray with dimension of 6 X6 inches would not lend TaBLE 5.—Capacity of small, medium, and large containers for trayed produce items used in one firm Item Size of container Packages per container ! Number G~paCkceeerees 228 ot ances = 18-24 iB Caniswave sii ek arses 222 28-32 Worna(3) ee Medium________ 24 Worng (5) ees Garces ees 24 TAD ese see Medium________ 24 GEMONSE =H 8 = Smale eee ea 12-14 emons4es == 2 /.-._____ Wargei e522 40 SCUEC Wargers .2— 25 2 28-32 omatoese= 2 ores tS cacy es ae 12-14 shRomatoestes- ee are ese esse 18-24 1 The number of packages per container varies because different sizes of folding boxes are used for the item. For example, 6 small apples will require a smaller tray or box than 6 large apples. itself to the 17- by 23-inch or the 17- by 29-inch container. The size of a folding box is comparable to the tray because they are both designed to fit a given quantity of produce such as six apples, three ears of corn, or four tomatoes. The smaller container will hold 16 packages of either the No. 2 tray or the 8- X 514-inch box, 24 packages of No. 1 or 1% trays, or 24 514- X 514-inch boxes. The larger container will hold 20 packages of No. 1 trays, : or 28 No. 114 trays or 514- X 514-inch boxes. The smaller container will hold 12 9- X 5-inch folding boxes with much wasted space while the larger container accommodates 18 boxes with better space utilization. One large firm that packs at the central ware- house uses three sizes of wire containers to adjust to different items and sizes of orders. The con- tainer is galvanized, has a bail which permits double stacking, and is tapered to allow for nest- ing. Dimensions of small and large containers follow: Small Large (inches) (inches) Outside top______-_____- 22% x 19 26% x 2434 Inside bottom__________- 21% x 171%46 25 x 2244 Clear depth__________--- 27% 734 A medium-size container also used has the same dimensions as the small container, but it is approxi- mately 1 inch deeper. The packaged produce is packed on a count or weight basis. The approxi- mate capacity of the containers is given in table 5. A new container, developed for tray-packaged preduce, incorporates most of the principles of 18 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE 23 x 17" OR 29 x 17” INSIDE CLEAR DEPTH 634” SIDES 4¥)" (INSIDE DIAMETER AT BASE) Ficure 11.—Reusable warehouse-to-store container for tray-packaged produce. good design and has many good handling features. It is a polyethylene container, 29 X 17 inches at the inside base and 684 inches of clear stacking depth. Sliding bails are incorporated in the curved mold- ing at each corner. They are moved toward the center of the container for stacking and are re- cessed in the end molding for nesting. The con- tainers are partly open at the sides and can be perforated to provide ventilation when they are used to display the product in a refrigerated dis- play case. The empty weight is approximately 5 pounds and the cost (depending on quantity pur- chased) is approximately $5. The recommended dimensions for the container are given in figure 11. Configuration 1. The container should have nesting ability when empty and should not wedge so that it is difficult to obtain single containers. 2. The container, when full, should stack with- out any danger of slipping or falling into the lower container. 3. The container should have flush interior lines without bulky interior bracing to achieve maxi- mum space utilization. 4. The container should not have any recesses that would trap dirt. 5. The container should be designed to incor- porate features that will give secondary usage such asa display container. 6. The container should provide for coding (if necessary) and identification of contents. 7. The container should be compatible with other containers so that they can nest or stack together. Material 1. The container should be lightweight, to max- imize the ratio of product to total weight. 2. The container should be able to withstand temperature extremes without cracking or sagging. 3. The container should have a long life, with- stand handling abuses, and have a uniform weight for tare purposes. 4. The container should have the approval of the Food and Drug Administration for food handling. 5. The container should be strong enough to support a stack which utilizes the full interior height of the delivery vehicle, generally 84 inches. Materials handling system 1. The container must be an integral part of the firm’s delivery system. 2. The container should fit on the warehouse pallet without any loss of space. 3. The container should contribute to overall savings from warehouse packaging to display in the store and savings at one level should not be more than offset by higher costs at another. a PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 19 Displaying Produce in the Shipping Containers A method of displaying produce on large pans or flat containers, called “tray display” (2), has been developed to avoid handling of individual packages and to encourage product rotation. Under certain conditions, shipping containers for centrally packaged fruits and vegetables can be used for tray display by placing the whole con- tainer in the display case. These conditions are that the containers be of proper size and construction, that the containers retain reasonably good appear- ance, and that the packages in the container be properly arranged. The 17- by 29-inch containers can be used lengthwise in the case or two contain- ers can be placed, one in front and one in the back, in the “checkerboard” fashion. A lengthwise dis- play is illustrated in figure 12. The old containers are removed from the dis- plays, new containers placed on display, and the merchandise in the old containers checked and re- turned to the top of the display to help insure rotation. The use of trays for display is recommended where a reasonably large amount of display space for produce is available. Tray display can also be used for featured items. Use of this method would result in a saving at the retail store of 1.19 minutes per full container of packages or 0.06 minute per package or 0.30 cent per package (table 6). A firm with an annual volume of 5 million trayed-produce A. Containers stack when full and nest when empty packages per year has a potential saving of $15,000 from the use of this method. TaBLe 6.—Labor requirements to display packaged tray produce in the returnable warehouse-to-store container and when individual packages are displayed by hand} Display Display Item individual packages packages in by hand container Time per master container: Minutes Minutes Place packages on display__ 125 0. 52 Rotate, rearrange, police___ . 66 . 44 Other display handling ____ a2 . 24 (Baked owiise = sa Sa see . 41 . 19 Vedisp la yaa == ee . 23 SES Total time per container__ 2. 76 1. 57 Time per package?__________ . 138 . 078 Cent Cent Cost per package 3___________ . 69 . 39 1 For additional details, see Anderson and others (2). 2 At 20 packages per container. 3 At $3 per hour. Pe B. Lengthwise display in refrigerated counter BN—32328, BN-32329 Figure 12.—Displaying package produce in warehouse-to-store returnable containers. 20 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE COSTS OF PACKAGING AT THE STORE AND CENTRAL WAREHOUSE This cost analysis of retail and warehouse pack- aging is developed to help answer the question of where and how to package. Costs of warehouse packaging are developed for overwrapping with polyvinyl chloride two-way shrinkable film on all items. Trays were used for all items except beans, grapes, and tomatoes, which were placed in folding boxes suited for these items when packaged by machine. This study does not evaluate the many different materials available for produce pack- aging but only those in widest use both at the store and central warehouse. Costs of packaging at the store are based on using three methods and three packaging films. The Costs of Packaging at Costs of packaging at the central warehouse in- clude materials, packaging labor (both direct and indirect), equipment, containers, and warehouse rent, utilities, and insurance (sometimes called warehouse burden). Materials costs The costs of materials for warehouse packaging are based on using trays for all items except beans, grapes, and tomatoes. A folding box was used for first method studied was overwrapping with cello- phane; the second, overwrapping with polyvinyl chloride stretch film; and the third, sleeve wrap- ping in polyvinyl] chloride one-way shrinkable film. Trays were used in all three methods. Costs of materials and equipment are based on manufacturers’ stated prices at the time the study was conducted. No discounts for volume or other reasons are considered. Labor costs are based on the wage rates stated. Summary data on costs and detailed costs in the appendix are presented in such a way that individual firms may develop their own costs by substituting their wage rates and current materials costs. the Central Warehouse packaging grapes and beans since these items have a tendency to overhang the tray which creates problems in the wrapping machine and for pack- aging tomatoes to increase protection from bruis- ing. Average cost of this combination of trays and folding boxes was 1.07 cents per package. Poly- vinyl chloride two-way shrinkable film was used on all items. Average cost of film for warehouse packaging was 0.61 cent per package. Total costs of materials ranged from 2.46 cents per package for beans to 1.23 cents for plums. Average cost for materials was 1.76 cents per package (table 7). TaBLE 7.—Costs of materials for overwrapping selected trayed produce items in polyvinyl chloride 2-way shrinkable film at the central warehouse ! Percent- Tray or box Film Total Item age of ————————_ Label? material movement Size No. Cost Size? Cost Percent Inches Cents Inches Cent Cent Cents Apples, oranges, peaches, pears, AA) Reb Uo excl So. 2 0.79 15x16 0. 72 0. 08 1. 59 6-pack.! IB CANIS eee he Aare ete ee a ee lee Vice Sexio lo xcldgs 2 = eee 1.84 12x15 . 54 . 08 2. 46 Corn eoteCalse soe eee 5reSix), xabe > 5 228 .79 14x16 . 67 . 08 1. 54 Gray esearan er ae eae Ree CRS PS) UY aexed Ve xa eee 1.43) 12 x3 47 . 08 1. 98 lemons; 5=-pack_ 22224222322 Oe ere 4 Yee lleneees Sn 14 .69 12x14 50 . 08 1. 27 blums; 82packeaaso se. = a Se BS XO oek lee ee ee 1% 65 12x15 50 . 08 1. 23 S.Cuais laa a oar see ee era AL (8x5 U6sxule we woes 2 79 15x15 68 . 08 1. 55 Tomatoes, 4-pack_____________- Lh Aa cies eB Aces 2 ee eae 1.56 10x15 45 . 08 2. 09 Total or weighted average_ MOOK 25-5 ees eos reraree ee 10,5 AGUi aL eee eee 1. 76 1 Polyvinyl chloride shrinkable film 0.50 mil biaxially oriented at 3 cents per 1,000 square inches. 2 Film yields are based on a 1%-inch overlap on package width. A bottom seal is used on the package ends except for beans, grapes, and tomatoes which are packed in the folding box and the ends sealed. 3 Outside printed label at $1.91 per roll of 2,340 labels. Preprinted labels used on top labeler for even-weight packages are 75 cents per thousand. 4 6-pack is the most typical package. To provide a variety of package sizes, some firms package 4- and 8-pack units. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 21 Direct labor Direct labor costs include the costs of line dump- ing, tray filling, and packout. Weighing, labeling, and wrapping were performed automatically, and machine adjustments were made by members of the direct labor crew. Production output was ad- justed to reflect delay—time lost for cleanup, changeover, equipment breakdowns, and other de- lays. The production speed of 26 packages per minute was adjusted to 23 packages per minute to reflect these delays. At 23 packages per minute, daily output from the crew arrangement shown in table 8 would be about 11,000 packages per 8-hour day or 2,750,000 packages per year with the product mix used in this report. A single packaging line could, there- fore, handle this volume if peak production were maintained. However, to allow for seasonality of some items, the effective output of one line should be figured at 2.5 million packages per year. The average crew size was 714 workers, 2 full- time males and 5 females plus a male line loader intermittently. Crew size ranged from a high of 13.5 workers for beans to a low of 5 for corn. If the central warehouse also has a bagging line, per- sonnel can be shifted to assist on tray filling for slow items such as beans. A smaller crew may be used, but this would decrease line speed. Since this analysis of warehouse tray packaging is based on an annual output of 3 million packages, a second line would be required. The second line would be manned only part of the time and part- time personnel would be used or personnel shifted from the bagging line to achieve the desired out- put. Cost for corn included trimming at a separate work station. While some firms in centralized packaging used a corn-trimming machine, the au- thor believes that the use of such a machine would not be justified at this volume level. The same labor time for trimming corn was used for both the warehouse and store labor analysis. Direct labor for the packaging line averaged 0.882 minute per package and costs per package 1.83 cents (table 8). Indirect labor There are other members of the packaging crew who devote a part of their time to the packaging of tray-type items. The forklift operator devotes ap- proximately one-half of his time to line-filling; a mechanic spends an estimated hour daily on repair and preventive maintenance; and the foreman de- votes all his time to supervision. Average costs for indirect labor are as follows: Forklift operators, 18 hours per week at $3.49 | OX 00 be ee a el Se ecm ee ne Se $63 Mechanic, 6 hours per week at $3.94 per hour_____ 24 Foreman, 40 hours per week at $4.30 per hour____-_ Ne 2 Costipersweck= se sae a= ae ae ane 259 Costopet, year sss sss ee 13, 468 Cost per package_________-________ eent____ 0. 45 TaBLE 8.—Direct labor costs per package for the packaging of selected trayed produce items at the central warehouse Production rate Allow- Crew size ance for Total Average Total Percent- Packages per Line Labor personal labor wage direct Item age of minute time per per and per rate per labor move- ———————————- Male Female package package fatigue package minute? cost per ment Actual Ad- (10 per- package justed ! cent) Apples, oranges, Man- Man- Man- pears, and Percent Number Number Number Number Minute minute minute minute Cents Cents peaches, 6-pack _ _ 44 30 26 2210) 4.0 0. 038 0. 228 0. 023 Of 251 4.7 1.18 Beanseseuue aes” * 15 20 18 155 12.0 . 056 . 784 . 078 . 862 4. 4 3. 79 Cornmenmere ss 2 5 30 26 2.0 3.0 . 038 . 190 . 019 . 209 4.8 32.74 Grapesw cei 13 20 18 2.0 6. 0 . 056 . 448 . 045 . 493 4.6 2. 27 emonssie ee" 9 30 26 1.5 4.0 . 038 . 201 . 021 . 222 4.6 1. 02 plums #4 3 30 26 2.0 5. 0 . 038 . 266 . 027 . 293 4.6 1. 35 NSKGULCENGS os | ee a 4 20 18 15 6. 0 . 056 . 420 . 042 . 462 4.5 2. 08 Tomatoes________- ih 25 22 2. 0 4.0 . 045 . 270 . 027 . 297 4.7 1. 40 Total or weighted = everage a 100 26 23 alee) 5. 5 . 044 . 847 . 0385 . 882 4.6 1.83 1 After allowances for cleanup, changeover, and equipment breakdowns, the effective workday is approximately 7 hours. ? Based on an average hourly wage (including 15 percent fringe benefits) of $3.50 for male and $2.50 for females. 3 Includes 0.30 minute per package at 5.8 cents per minute for corn trimming. DY) MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE Equipment costs The costs of equipment are based on a double- line installation with automatic packaging ma- chines, automatic weighing and labeling, feed tables, and a shrink tunnel. Costs include acces- sories such as the turntable, conveyors, a forkhft truck at one-third usage, freight, installation, miscellaneous costs, depreciation, interest, and scale maintenance. Total annual costs were $10,483 and the average cost per package at an annual output of 3 million packages was 0.35 cent per package (table 9). A suggested arrangement for this equip- ment is presented in figure 13. Container costs The cost of containers in this report consists of depreciated cost of the containers, interest on in- vested capital, loss of space in delivery vehicles, cost of warehouse storage space, and the labor cost to return the empty containers to the packaging line. A tray-packaging operation for produce in a central warehouse with an estimated annual vol- ume of 3 million packages would require a mini- mum of 1,923 containers. These containers would make an average of 114 round trips per week from the warehouse to the store and back. An allowance of 20 percent for peak volume periods would in- crease the requirements to 2,308 containers.®? With an estimated cost of $5 per container depreciated over a 5-year period, the cost per year would be $2,308 and per package, 0.077 cent. The interest on the capital investment of $11,540 is calculated at a rate of 6 percent for one-half the life of the equipment and prorated for the 5 years. This gives a cost per package of 0.011 cent. When nest-and-stack containers are shipped to the store there is a theoretical loss of space in the delivery vehicles which is especially critical when shipping to out-of-town stores. In one test, receiv- ing units per cubic foot were compared with ship- ping units per cubic foot to determine utilization. Receiving units per cubic foot is the density of nonpackaged produce in conventional shipping (grower-to-warehouse) containers. Shipping units per cubic foot is the density of packaged produce in warehouse-to-store containers. In one test, the loss of space was equal to 9.3 percent of trailer ca- pacity. This is equivalent to 13,950 containers per year at 5.1 cents per container trip and adds a cost of 0.025 cent per package. Another cost assigned to warehouse produce packaging is the warehouse space required to store temporarily the reserve inventory and the empty °3 million packages - 52 weeks ~ 20 packages per container + 1.5 trips per week x 120 percent = 2,308 containers. TABLE 9.—Annual cost of equipment for a 2-line installation for the central warehouse packaging of trayed produce items * Item Initial cost EQUIPMENT Line I: Dollars Automatic packagers se sos sa eee eee 7, 125 Topimechanicall tampers= a= see see 425 Plastic: film sealing unit=—] === 55252 e2e = 1, 250 Infeed extension, with 20-foot table and CONVEYOR ai ase ee see see eee are 5, 108 Top dabeleruniteesa. se = ee 1, 975 Sidejdischarge(conveyors == oes ee ea ae 525 Electronic computing scale______---_--_-- 4,990 Automatic laibelers = aes ae eee 2, 550 Commodity inserts and rack ?____________- 159 Motaliline/ sles Bee ee eee 23, 907 Line IT: Same as line I except for top labeler___-_-__ 21, 932 OTHER EQUIPMENT Turntable; 6:footidiameter 222) 25 8no2eeeeee 400 Discharge belt 124in. by 1l0ifts2 223 ee esses 325 Shrink \tunnel’2e2 = 2=) =e ee eee 800 Takeaway belt 18 in. by 10 ft-___--_-_-_---- 425 Packout, tare-weight scales, 2 at $860__-__---- 1, 720 Reserve electroniciscales= = =22- === ssa 4, 990 Corn-trimming device and work station __--__- 400 Mreiohts 22 2s 2 ee ee ee oer 750 Installation’ 2220" ee ae 2, 000 Wheel-type conveyor 88 ft_---_-------------- 760 Horkliftstru Ck 32 ey ares eee eer 2, 000 Miscellaneous nae e es eel eee 1, 000 Notalvinitialicost= =e. 2s eee 61, 409 OTHER COSTS Depreciation sss. 22 een ee ee 7, 676 Seale: maintenance; 3:at $305___ = === eee 915 Initeres (32) .22 32a oe ee eee 1, 842 Total -annualtcost= ae. -2 55s sees 10, 433 Cent Costiperspackapet:== 22s =ees= aaa aes . 35 1 All equipment at list price. 2 Rack cost $50 plus 80 inserts at 90 cents and 20 special inserts at $1.85. : 3 A forklift truck cost $6,000 but is only required for about 20 hours per week. 4 All equipment is depreciated to zero in 8 years. 5 Total initial investment is $61,409. Interest on invested capital is at a rate of 6 percent and is calculated for one- half the life of the equipment and prorated over 8 years. 6 Based on 3 million packages per year. containers. Approximately one-third of the con- tainers (769) will be stored temporarily in the warehouse on 10 pallets racked three high and oc- cupying 56 square feet of space at a cost of $2.25 23 PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE vooswe ‘BuISvyovd AVI] VSNOYOIVA IOF INOAV] VUIL-e[|qnop W—'eT aunory Ol S 0 as ese] gee aa Sa 1434 40 41V)9S INIHDVW ONIddVuM q1aVi G3994 .02 @ Inn JILVWOLNY 1NOWIVd YOs 31VIS ¥31d9Vv1 \ B divos JILVWOLAY —_—_—_— SYOAJANOD L411Vd 13A31 40014 | (eaiaoreet rear | LE oe 4 ee atin areas — A1aVININL le eames Onan cae a . (enema al pe ee LNONIVd YOd LNOAVT IVNOILdO 43148V1 8 31V0S DILVWOLNY 9 y SA9WNIVd Od 1NOXIVd YO4d 31VIS ¥41davi dol J1VIS JAYISIY ANIHDVW ONIddVaM J19V1l d344 .02 { INIT JILVWOLNY 24 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE per square foot. (See section on warehouse costs, below.) This cost per package is 0.004 cent. After display of packaged produce, the contain- ers must be returned to the warehouse. The labor required to handle the empty containers from the store to the truck and from the truck to the ware- house is 0.147 man-minute per container. The cost for this labor amounts to 0.04 cent per package (table 10). Based on these considerations, the total cost of warehouse-to-store containers is 0.157 cent per package. Cost Item per package Cent Wontainereee see ne Fee es ew ae ee eee 0. 077 ATG OT OS bee sa ee terest oy ae eee . O11 Weossiottrailer: spaces sso see sane sees. =) eee . 025 Warehouse storage space____________________- . 004 labor tophandless 2 aes oss asses eee . 040 Total cost per package. =. =. --.222.-- 157 Warehouse costs The typical warehouse charge for rent, utilities, and insurance was $2.25 per square foot. An area of 3,150 square feet for processing and storage is adequate for two packaging lines with a capacity of 5 million packages per year. At an average annual output of 8 million packages, warehouse charges are 0.24 cent per package (3,150 X 2.25 + 3,000,000). This charge represents only the cost of the additional space for produce packaging, since the produce must be handled through the produce warehouse whether it is packaged or not and the cost of space for stacking the empty containers has already been considered. Total cost of warehouse packaging To determine total costs for warehouse pack- aging, labor (both direct and indirect), materials, equipment, burden, and container costs were ap- plied to each item packaged. The equipment and TABLE 10.—Cost of returning empty produce contavners to the warehouse Labor element Per con- tainer Man-minute Move containers to dock_.__.-.__..._-2-._-=- 0. 018 Hoadpinetrarler sya. se see ee eee . 046 Unloadat warehouses=2—_ 22) ss. see eee 070 Transport to prepack line.__________________- 013 Total time per container trip_-___________ 147 ent Labor cost at an average wage rate of $3.28 per own ee ee a ea 0. 81 Costiperipacka peso sate ee 04 1 Composite of retail labor at $3 per hour and warehouse labor at $3.50 per hour. burden were charged to each item on the basis of the packaging line time per package. For example, an item with a line time of 0.05 minute per package would be charged half as much equipment and burden charges as an item with a line time of 0.10 minute per package. The item incurring the most costs when pack- aged at the warehouse was beans because of the extensive time required for tray filling, increased materials cost due to the use of the folding box, and above average equipment and burden changes. The total cost for beans was 7.62 cents per package. The lowest cost item was lemons (38.41 cents), which had the lowest labor cost of any item and below average materials cost. The average cost per package of all items pack- aged at the warehouse was 4.80 cents (table 11). Since equipment costs are based on 3 million pack- ages per year and the facility capable of produc- ing about 5 million packages (depending on the items packaged), there would be a potential reduc- tion in equipment costs of 0.14 cent per package, a reduction of 40 percent, if maximum output were achieved. At this rate, total costs would average 4.66 cents per package. Costs of Packaging at the Retail Store Costs at the store level include materials, labor, equipment, and space. These costs are based on packaging 1,000 trayed items weekly in stores with an average weekly produce volume of $3,000. Materials costs Regardless of whether trayed items are over- wrapped or sleeve wrapped, the same size of tray is used. Firms using the sleeve-wrap technique typically use the pulp tray. This type of tray is better suited for sleeve wrapping than the paper- board tray because it is more rigid. Costs of the two types are identical, ranging from 0.65 cent for the No. 114 to 0.79 cent for the No. 2. The average cost, 0.75 cent, was determined by weighting costs of various sizes of trays by the frequency of use. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 25 TaBLE 11.—Total costs per package for packaging selected trayed produce items at the central warehouse Percent- Line Costs per package age of _ time per Item move- pack- Mate- Labor Ware- ment age! rials 2. ———_—_—______—_—_ Equip- Con- house Total Direct? Indirect ment® tainers® charges? cost Apples, oranges, peaches, Percent Minute Cents Cents Cent Cent Cent Cent Cents and pears, 6-pack_ ~~~ _-- 44 0. 038 1. 59 1..18 0. 45 0. 30 0. 16 0. 21 3. 89 Beans sees Se ee ee ah 15 . 056 2. 46 3. 79 . 45 . 45 a6 Sal Fa62 Wormysiears=-=------ = == | 5 . 0388 1. 54 2. 74 . 45 . 30 . 16 .21 5. 40 Crapesmeeneer eee 13 . 056 1. 98 2. 27 . 45 . 45 . 16 oil 5. 62 Icemionsy 5-pack. == _=____ 9 . 038 Is 7ACf 1. 02 .45 . 30 . 16 _ 21 3. 41 IBlums ss S-pack= Wesel se! 3 . 038 1. 23 1. 35 . 45 . 30 . 16 av Al 3. 70 Squasheee snap fas 22 of. 4 . 056 1. 55 2. 08 ~45 . 45 6 OL 5. 00 Tomatoes, 4-pack__-__----- 7 . 045 2. 09 1. 40 . 45 . 36 . 16 . 25 4.71 Total or weighted ANCTAg Cases = == 100 . 044 1. 76 1. 83 . 45 . 35 . 16 . 24 4. 80 1 Line time per package is used as a basis for prorating equipment and warehouse charges. Using the formula: Line time per minute per package= equipment cost per package average line time per package For example: For the 6-pack equipment charge: 0.038=X X=0. 30 cents. 0, 044 0.35 2 See table 7, p. 20. 3 See table 8, p. 21. 4 See p. 21. 5 See table 9, p. 22. 6 See p. 22. 7 See p. 24. Costs of film for overwrapping with cellophane are based on using a diagonal wrap, the nest tech- nique (7), a hand iron for sealing, and current costs for second-quality sheets at 3.4 cents per 1,000 square inches.’° Average film costs for overwrap- ping the typical package with cellophane was 0.69 cent. Total materials costs for the cellophane-over- wrap operation including the label cost was 1.52 cents (table 12). The second method studied was overwrapping with a polyvinyl chloride stretch fiim. The film costs for overwrapping in polyvinyl chloride stretch film are based on film yields achieved with the packaging device, using roll stock and _hot- wire cutoff, described earlier in this report. Aver- age film costs were 0.45 cent per package and with an average tray cost of 0.75 cent. Total cost of materials was 1.28 cents (table 12). The third method analyzed was sleeve wrap- ping with polyvinyl chloride one-way shrinkable film. A band of film was placed around the pack- age, the film cut on the hot wire and the bottom sealed on the hot plate. The ends of the package were left open and the film on each end overhung the package about an inch. The package was then ” The choice of using the hand iron or the hotplate for sealing is up to the individual operator. Previous research (7) indicated that the hand iron will produce better film yields than the hotplate. On the other hand, labor costs are slightly higher when using the hand iron. average equipment cost per package. passed through a shrink tunnel and the film shrunk. Since this technique is not suited for either beans or grapes, these items were completely over- wrapped in the less costly stretch-type polyvinyl chloride. Costs of materials for sleeve-wrapping were 0.75 cent for the tray, 0.41 cent for film, and 0.08 cent for the label. Total costs were 1.24 cents for the average package. TaBLE 12.—Average cost of materials per package for selected produce items when wrapped by 3 methods at the retail store ! Cost per package for— Method Tray Film Label Total materials Overwrapping with Cent Cent Cent Cents cellophane and the nest technique_-_-_----- 0.75 0.69 0.08 1. 52 Overwrapping with poly- vinyl chloride stretch film and a wrapping devices ama a= eae 75 45 08 1. 28 Sleeve wrapping with polyvinyl chloride one- way shrinkable film and a wrapping device. .75 .41 . 08 1. 24 1 See tables 19-21 for detailed costs. 26 MARKETING RESEARCH REPORT Labor costs Labor costs for the three packaging methods in- clude obtaining merchandise, tray filling, wrap- ping, w eighing and labeling, trash handling, and other misc cellaneous activ ities directly concerned with packaging. Costs of performing these func- tions were developed through time- study tech- niques. In addition to the reoular elements such as tray filling, wrapping, w eighing, and labeling, time per package was also determined for the ir- regular elements, such as moving product to the wrapping stations, master container and empty box handling, and miscellaneous wrapping ele- ments." The highest cost item from a labor cost standpoint was beans and the lowest was tomatoes. The average labor cost per package was 5.27 cents for overwrapping with cellophane, 4.13 cents for overwrapping with polyvinyl chloride stretch film, and 4.10 cents for sleeve wrapping with poly- vinyl chloride one-way shrinkable film (table 13). Equipment costs The costs of equipment for store-level packag- ing were developed for the three methods of pack- ™ See table 25 for the irregular packaging elements. 827, U.S. DEPT. OF AGRICULTURE aging using straight-line depreciation over an 8- year period with no salvage value. An interest charge of 6 percent per year for one-half of the life expectancy prorated over the total life expect- ancy was also applied. Total equipment costs in- cluding interest and scale maintenance was 0.98 cent per package for overwrapping with cello- phane, 1 cent for overwrapping with polyvinyl chloride stretch film, and 1.14 cents for sleeve wrapping with polyvinyl] chloride one-way shrink- able film (table 14). Burden for store packaging The average new supermarket in 1965 had aver- age sales of approximately $2 million and an aver- age area of 20,000 square feet (8, p. 23). The aver- age charge for rent, utilities, and insurance in food stores was 2.56 percent of sales (4, p. 69). An area of 160 square feet is required for the tray-pack- aging operation in a $3,000 produce department packaging 1,000 trays per week. This evaluation assumes that the space released, when packaging is removed from the store, can be utilized for other store functions. The burden charge used was $2.56 per square foot.’? This charge amounts to $410 per year for the tray packaging area, or 0.79 cent per package ($410+52,000 packages). *® $2,000,000 X 2.56 percent=$51,200+20,000 square feet. TaBLE 13.—Average time requirements and labor cost per package for 3 methods of wrapping selected produce items in the retail store ! Overwrap with Overwrap with Sleeve wrap with Percentage sheeted polyvinyl chloride polyvinyl chloride Item of move- cellophane stretch film shrink film ment = Time Cost ? Time Cost ? Time Cost 2 Apples, oranges, peaches, Percent Minutes Cents Minutes Cents Minutes Cents pears;/6-pack.224 222-22 2222 44 0. 989 4. 94 0. 782 3.91 0. 774 3. 87 Beanst ce aout aca eee ao eee 15 1. 407 7. 04 1. 041 5. 20 1. 041 3 5. 20 Corn, orearsit2 ea es 5 1. 136 5. 68 1. 063 5. 32 1. 055 5. 28 Grapese = ao 62s Ase ae eee 13 1. 108 5. 54 . 854 4, 27 . 854 34,27 HemOns wo=p ack = ae ae ea 9 . 910 4,55 . 642 3. ZL . 634 Salil Plums 8-pack==. == sen. 5- 8.5 3 . 962 4.81 . 761 3. 80 . 153 3.77 SQUASH ee ose se oe ee ee 4 1. 107 5. 54 . 919 4. 60 .911 4. 56 Tomatoes, 4-pack_____________ 7 . 750 3. 75 . 634 3.17 . 626 3. 13 Total or weighted AVITAL Cranes eee oe 100 1. 055 5. 27 . 826 4.13 . 820 4.10 1 Table 22 shows labor requirements for cellophane; 23, for polyvinyl chloride stretch film; 24, for polyvinyl chloride one-way shrinkable film; 25, irregular elements for cellophane. 2 Average cost of labor, including fringe benefits, was $3 per hour. 3 Labor cost for beans and grapes are based on a complete overwrap. 4 Costs for corn include 0.30 minute per package for trimming. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 27 TaBLe 14.—Annual cost of equipment for packaging trayed produce items using 3 methods of wrapping at the retail store Cost of equipment! Cost per year : Number Overwrap Sleeve = Type of equipment required Per Per Overwrap with wrap with item year with polyvinyl polyvinyl cellophane chloride one-way stretch shrinkable film film Dollars Dollars Dollars Dollars Dollars aGkapam pata lesizae eres one ee et 2 150 38 GONG oe Sade ae eee Overheadiitray storage rack 2.-_.____-___2_ 222 .2- 2 30 8 Site: ae eee nag Old erie eine he a ee 2 15 4 A ee Wier oihin Pe lal le zee mts ene een pe Se 1 50 6 6 6 6 IDISDlayECA te enna. A et eee 2 50 12 12 ALP 12 Cooler storage rack for packaged produce_________ 1 90 ib alg 11 ial (Convey Orss eeeeteres fe Bes ee ee ees os antte= 200 25 25 25 25 AC Kaen Opt use ee eee ee eee Se eg 4() 3 15 as 15 15 Label printer and projected reading scale__________ 1 1, 795 224 224 224 224 ihabelvapplicators = os 2 = 1 100 12 12 12 12 Commodity inserts and rack *____________________ 1 209 26 26 26 26 Roll film packaging device (table model—3 rolls) __ 1 128 Ls pees Seer 16 16 Stand for roll-film device____________-_--__-____- 1 50 G22e See 6 6 Roll-film packaging stand with film automatically WOSION GCM Se 8 1 285 3 Ome 36 36 SCHLeeIaIN LCN AN CO ls meant 2 as Sel Ee fle ee escee os 36 36 36 36 36 iHeat-shrinkstunnel= _--_-___ -_________-_=_---=-- 1 500 625 S225 De eet eee 62 Imiterestronsinvestedscapital.®2--___ ==. _______=_-___2.2--2--42_- == == e_- 91 93 108 PRO CAME CUI Meh tCOS Ue sss eee es ee ees 508 518 595 Cent Cents Cents Average equipment cost per package at 52,000 RACKAPCSED CUR COT me wera ea 2 Le ee ete S28 SS oe Lesa ee . 98 1. 00 1.14 1 All equipment at list price and all equipment is depreciated to zero in 8 years. 2 For details of equipment design and construction, see MRR 278 (7). 3 20 feet of 18 inch wide wheel-type conveyor with 4 “‘H’’-type stands. 4125 commodity inserts at $0.90 and 25 inserts at $1.85 ($159) and commodity insert racks ($50). > Annual maintenance charge is $39.95 with the first year free. 6 Interest is based on a rate of 6 percent for one-half the life of the equipment prorated over 8 years. Initial equipment investment is approximately $3,048 for cellophane overwrap, $3,112 for stretch-type polyvinyl chloride overwrap, and $3,608 for the one-way shrinkable polyvinyl chloride sleeve wrap. Total cost of store packaging To determine the total cost for the three store- packaging systems, the materials, labor, equip- ment, and burden costs were applied to each item packaged. The equipment and burden were charged to each item on the basis of the time required for packaging as was done in the analysis of ware- house packaging. The lowest cost system for store packaging, which amounted to 7.20 cents per package, was overwrapping with stretch-type polyvinyl chloride film. Costs ranged from 9 cents per package for corn to 5.67 cents for tomatoes. The next lowest cost method was sleeve-wrap- ping with one-way shrinkable polyvinyl] chloride film. Costs averaged 7.28 cents per package and ranged from 9.04 cents per package for corn to 5.65 cents for tomatoes. While labor costs for the sleeve-wrap method were lower than for the polyviny] stretch film over- wrap, 4.10 cents per package as compared with 4.13, and materials cost was lower, 1.24 cents against 1.28 cents, these savings did not offset the higher equipment costs of 1.14 cents for the sleeve wrap as compared with 1 cent for the overwrap. This difference is due to the cost of the shrink tun- nel required for the shrink film used on the sleeve wrap. The highest cost system studied was overwrap- ping with cellophane, which had higher costs for labor and materials than the “soft film” systems. Costs per package averaged 8.56 cents and ranged from 11.03 cents for beans to 6.35 cents for toma- toes (table 15). MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE TaBLE 15.—Total cost per package for 3 methods of wrapping selected trayed produce items in the retail store ' Cost per package Sleeve wrap Percent- Overwrap with Item age of | Overwrap with polyvinyl movement with cel- polyvinyl chloride lophane chloride one-way stretch film shrinkable film Apples, oranges, peaches, Percent Cents Cents Cents pears, 6-pack= 22-2 = 22 o 2 - 44 8. 23 6. 98 7. 02 Beans Soe sone eae eats 15 11. 03 8. 80 8. 99 Corne3icars 2a eee 5) 9. 08 9. 00 9. 04 Grapes! 22 S222 ee eee 13 8.75 (PR 7. 37 Ibemonsy O=pack=ows = eases see 9 7. 38 5. 72 5. 71 Plums s8-pack= 2 eee salsa 3 le. UC 6. 54 6. 62 Squashe esse = suena eee eee 4 8. 89 7. 93 8. 00 Tomatoes; 4-pack-2= --=__ 2 2- — 7 6. 35 5. 67 5. 65 Weighted average________________- 8. 56 7. 20 7. 28 ' Detailed costs for the 3 methods are presented in appendix tables 26-28. 2 Includes 1.50 cents per package for trimming corn. Comparison of Store and Warehouse Packaging Costs The final cost comparisons in this report are based on the various costs of labor, film, burden, and other costs shown and the product mix pre- viously given. Costs and product mix of individ- ual firms will probably vary from these. For in- dividual firms to obtain a more accurate evaluation of costs, each should substitute its own costs and product mix where available. Comparison of costs on a per package basis The lowest cost method of packaging at the store was overwrapping with polyvinyl chloride stretch film—7.20 cents per package. Costs of warehouse packaging at a volume of 3 million packages per TABLE 16.—Comparison of lowest cost store level packaging method uth central warehouse packaging Savings from Packaging costs warehouse packaging Percent- Item age of Lowest Percent- movement _ store Ware- Per age of method house package store costs Apples, oranges, peaches, pears, Percent Cents Cents Cents Percent OG packies kets ae a Soe ere 44 6. 98 3. 89 3. 09 44, 27 Beans = ae = es eer eens eer 15 8. 80 7. 62 1,18 13. 41 Corn 3 7CaTS is ens kee amass 5 9. 00 5. 40 3. 60 40. 00 (GEA DES Ees ek ata oe ee ot eae nae oe 13 Th Pa 5. 62 1. 59 22. 05 emons (o-pacCkies see ae een eee 9 5S 3. 41 2. 31 40. 38 Plum ss8=p ac kas eee 3 6. 54 3. 70 2. 84 43, 42 Squash seh 355 32 Ole ee ee 4 7.95 5. 00 2.95 37. 11 Tomatoes, 4-pack______________- 7 5. 67 4.71 . 96 16. 93 PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE year was 4.80 cents per package, a difference of 2.40 cents or a reduction of 33 percent in packag- ing costs over retail store packaging. cerings ranged from 3.60 cents per package for corn to 0.96 cent per package for tomatoes (table 16). Costs of materials were higher for warehouse packaging, 1.76 cents per package compared with 1.28 cents at store level and the warehouse also had container costs of 0.16 cent per package. Savings through warehouse packaging are due to: (1) A higher level of productivity and slightly lower labor rates, $2.76 per hour for warehouse labor as compared with $3 per hour for store labor. Labor costs for store packaging was 4.13 cents per pack- 29 age compared with 2.28 cents at the warehouse. (2) Lower equipment costs—0.35 cent per pack- age at the warehouse and 1 cent at store level. (3) Less burden costs—9.24 cent per package for the warehouse and 0.79 cent at the store (table 17). Savings through warehouse packaging Annual savings from shifting packaging from the store to the warehouse ranged from $7,575 annually for a single-line operation producing 750,000 packages to $141,000 for a double line with an output of 5 million packages (table 18). TABLE 17.—Average costs per package for warehouse packaging and the lowest cost store method Item Materials Labor Equip- Burden Con- Total ment tainers Cents Cents Cents Cent Cent Cents Store packaging. _______-___-_ 1. 28 4.13 1. 00 OM Oe ae 7. 20 Warehouse packaging. ______ 1. 76 2. 28 . 35 . 24 0. 16 4, 80 Difference in favor of warehouse--_-_-_-_-_- —.48 +1.85 +. 65 +. 55 —. 16 +2. 40 Taste 18.—Annual savings through central warehouse packinging at different levels of volume Costs of packaging at— Savings Packages per year (thousands) §©=£<@——2___——/—§ —____________- Store } Ware- Per Per year house ? package Single-line operation: Dollars Dollars Cents Dollars (5 Of ses Sei 5 a Ne a 54, 000 46, 421 1. 01 (EENES TU SOY 010) ee 72, 000 55, 796 1. 62 16, 200 1525 () ee ees 30) Pg 90, 000 65, 171 1. 98 24, 750 STE) () () Beemer egestas Ls (ert a cle 108, 000 74, 546 2. 23 33, 450 Le CESS as le ee On gre 126, 000 83, 921 2. 40 42, 000 PAA OO) 0 es a ee Sar ele 144, 000 93, 296 2. 53 50, 600 255 OR oe Nate Ree 180, 000 112, 046 2.71 67, 750 Double-line operation: BE) () (Rpg Ee nabs Or 180, 000 124, 738 2. 21 55, 250 3100 0 Reread s 216, 000 143, 488 3 2. 42 72, 600 30 (Bees re ho at 252,000 162, 238 2. 56 89, 600 AN) 0 Sees re ee oa a a 288, 000 ~=—-180, 988 2. 68 107, 200 CULO OY Oi expla Ss eh 324, 000 199, 738 2. 76 124, 200 BSS (OY OT ae ee ag 360, 000 =218, 488 2. 83 141, 000 1 Polyvinyl chloride stretch film overwrap at 7.20 cents per package. 2 Direct labor, materials, and container cost per package times number of pack- ages plus indirect labor, warehouse burden, and equipment costs. 3 Previous savings reported for this level of volume was 2.40 cents per package. The difference is due to using 2 place accuracy in cents per package for indirect labor, warehouse burden, and equipment cost in previous tables. 2.42 cents is the more precise figure. 30 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE a5 25 SINGLE LINE 2.53 2.0 — SAVINGS PER PACKAGE, Cents 0 1,000 2,000 DOUBLE LINE 2576),4 2:83 ee 2.68 2.56 2.42 2.21 3,000 4,000 5,000 PACKAGES PER YEAR, Thousands FIGURE 14.—Savings per package from central warehouse packaging at different volume levels. Savings per package decline when annual pro- duction exceeds an annual volume of 2.5 million packages because at this point a second line would be required but not fully utilized (fig. 14). Addi- tional savings per year are achieved with higher volume but at a decreased rate. But after the 4 million package level is attained, savings per pack- age continue to increase up to 5 million packages. At this point a third line would be required. Break-even costs To determine the break-even point, store and warehouse packaging costs developed in this study were substituted into a break-even formula (see exhibit A, p. 39). The break-even point between the polyvinyl chloride overwrap operation at the store and warehouse packaging was at an annual volume of 898,202 packages for a double-line in- stallation at the warehouse. However, a single packaging line can produce up to 2,500,000 pack- ages annually. Equipment costs for the single-lne operation were $6,240 annually as compared with $10,433 for a double line.t? The break-even point for a single-line operation was 530,319 packages per year (fig. 15). * See table 29, p. 38, for equipment costs for a single- line installation. —————————— ht tlhe PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 31 150 125 100 Break-even point (898,202) 1a] So COST PER YEAR, $ Thousands N ro ™ Break-even 25 point (530,319) 0 500 1,000 1,500 PACKAGES PER YEAR, Thousands FicurE 15.—Comparison of the lowest cost method of store packaging with the costs of single- and double-line ware- house packaging. 2,000 Gross profit performance The gross profit of the produce department will be somewhat lower when shifting to prestore pack- aging since warehouse labor, equipment, materials, and burden charges are added to the store’s cost price for produce. However, the net profit of the retail department may actually increase. Stores converting to central prepackaging should, there- fore, make adjustments in gross margin to reflect this difference. A previous report (6) illustrates a method of adjusting gross profit at store level to reflect the added value of packaging. Removing the tray packaging function from a $3,000 produce department selling 1,000 packages per week will lower store costs $72 per week, or 2.4 percent of sales for the entire department. A box of produce that costs the retailer $5.46 de- livered and yields 20 packages that will sell for 39 cents each ($7.80 a box) provides a gross margin of 30 percent. However, packaging costs of 7.2 cents per package ($1.44 a box) leaves only 4.5 cents a package to cover other costs (90 cents a box). If the warehouse packages this item at a cost of 4.5 cents a package (90 cents a box), the product would cost the retailer 31.8 cents a package ($6.36 a box). If the product still sold for 39 cents, this would leave the retailer the same 4.5 cents to cover other costs plus 2.7 cents added profit. Here the gross margin has been reduced to 18.5 percent, but the retailer actually gained 54 cents per box. DISCUSSION This study assumes that the savings in equip- ment and space released at the store through shift- ing to warehouse packaging can be fully realized. For future stores, the savings as reported could be fully realized since the initial expenditure for equipment and space could be eliminated to a large extent. Older stores often need additional frozen food storage coolers or similar equipment. During remodeling particularly, additional space can be used. However, old equipment often has a low re- sale value and frequently space saved is so located it cannot be utilized for other uses in the short run. If we assume that no savings will occur for existing stores in equipment and space, savings through warehouse packaging would decrease 1.8 cents per package or net savings for existing stores of about 0.61 cent per package at a volume of 3 million packages per year. If the savings in equip- ment and space are completely discounted, the break-even point for a single-packaging line would be about one million packages per year." “ Using the equation in exhibit B, p. 39: 0.0541P (labor and materials at store) = 0.0315P+18,296 (warehouse costs for a single line) P = 1,102,169 packages per year. 32 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE Another factor for consideration is that store level costs for labor and materials were based on good work methods and proper use of materials. Since many produce departments use part-time unskilled help, store packaging costs typically are higher than those reported. This is particularly true for costs of packaging film. Excessive use of film at store level resulting from too much overlap on the packages, choice of the incorrect size of film, and film used in rewraps or lost through improper storage can result in higher film costs at store level than those stated. On the other hand, the costs of labor and materials for warehouse packaging are usually more closely supervised and controlled. The average firm is more apt to achieve the costs as presented in this report at warehouse than at retail level. Several additional factors may accelerate the shift to warehouse packaging: 1. A continuing shortage of trained personnel for store perishable departments. 2. Increased labor costs. 3. Little likelihood that store level productivity can be further increased with packaging in the store. 4. Better control of produce quality through cen- tralization. 5. Better control of store inventories through improved ordering procedures based on past move- ment records. 6. More variety possible at store level because stores can more readily order limited quantities of slow movers, such as okra, artichoke, and eggplant. 7. Increased sales because packaged merchandise is available for maintaining full displays. 8. Less production scheduled at the store and per- sonnel can concentrate on merchandising, selling, and menu advice. 9. The potential exists for the development of a quality reputation in private label produce through centralization. Some retailers argue that produce packaging anywhere is not feasible because of customer reluctance to accept packaging. However, an analysis of items sold in these same so-called “bulk” stores reveals that more than half of the volume is sold in packaged form. One essential in- gredient for a successful packaging program is proper handling and rotation of produce at store tevei. Another is the maintenance of adequate store movement records for proper ordering. There may be further developments in the fu- ture which will improve warehouse packaging. Improvements in and standardization of shipping containers are needed. Bulk shipment by pallet containers offers a major potential savings.?? De- velopment of a lower cost folding box suitable for warehouse packaging is needed to reduce ware- house materials costs. * For example, if apples were received in pallet con- tainers containing 800 pounds, this would eliminate 20 shipping containers at 58 cents each or $11.60 per pallet. When the total cost of the pallet shipment is $3.20, the saving is $8.40 for 320 tray packs at 2.5 pounds or 2.6 cents per tray pack. LITERATURE CITED (1) ANDERSON, D., SHAFFER, P., and Hapner, F. 1957. IMPROVED METHODS OF TRIMMING PRODUCE IN RETAIL FOOD STORES. U.S. Dept. Agr. Mktg. Res. Rpt. 192, 46 pp. (2) ANDERSON, D., SHAFFER, P., and Voz, M. 1962. IMPROVED METHODS OF DISPLAYING AND HAN- DLING PRODUCE IN RETAIL FOOD STORES. U.S. Dept. Agr. Mktg. Res. Rpt. 551, 55 pp. (3) Fountain, J. B. 1962. PREPACKAGING MEDIUM-SIZE APPLES IN SHRINK- ABLE FILMS AT SHIPPING POINT. U.S. Dept. Agr. Mktg. Res. Rpt. 534, 28 pp. (4) HARDENBURG, R. E. 1954. HOW TO VENTILATE PACKAGED PRODUCE. Pre- Pack-Age 7(6) :14-17. February. (5) PROGRESSIVE GROCER MAGAZINE. 1966. FACTS AND FIGURES OF FOOD DISTRIBUTION. An- nual issue. April. (6) SHAFFER, P. 1965. PACKAGING PRODUCE AT THE CENTRAL WARE- HOUSE. U.S. Dept. Agr. Mktg. Res. Rpt. 721, 106 pp. (7) SHAFFER, P., ANDERSON, D., WISCHKAEMPER, P., and KARITAS, J. 1958. PACKAGING AND PRICE-MARKING PRODUCE IN RE- TAIL FOOD STORES. Rpt. 278, 85 pp. (8) SUPER MARKET INSTITUTE. 1962. THE SUPER MARKET INDUSTRY SPEAKS. Super Market Inst. Ann. Rpt. 14-238. (9) UNITED FRESH FRUIT and VEGETABLE ASSOCIATION. 1962. FRESH FACTS. 24 pp. January issue. Washing- ton, D.C. U.S. Dept. Agr. Mktg. Res. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE APPENDIX TABLE 19.—Cost of materials per package for overwrapping selected trayed produce items in sheeted cellophane in the retail store Per- centage Tray Film ! Total Item of =$—__________ —_———_——__—__ [abel? costs move- Size Cost Size Cost ment Apples, oranges, peaches, Percent Number Cent Inches Cent Cent Cents pears, O-pack= #2227 == 44 2 0.79 15x15 0. 76 0. 08 1. 63 Beans ewes = ates eee aL 15 2 -19 5x15 . 76 . 08 1. 63 Cormmmoieatses=== ===. = 5 2 .79 13x14 . 62 . 08 1. 49 (rapes me seme 8a ls 13 1% .65 13x14 . 62 . 08 1835 MEMOS O-pACKk=====ae a=. = 9 14 .69 13x13 Buy . 08 1. 30 plums 8-pack= === 2.7 = 3 1% .65 13x 14 . 62 . 08 1. 35 Squashweesees 22 oes Siok a 2 .79 13x14 . 62 . 08 1. 49 Tomatoes, 4-pack_________ 7 14 .69 18x13 ays . 08 1. 34 Total or weighted BVCTAC C= aes ae OO Ree a SiO) ee ne . 69 . 08 1. 52 13.4 cents per 1,000 square inches for second-quality cellophane sheets. 2 Cost of printed outside label is $1.91 per roll of 2,340 labels. TaBLE 20.—Cost of materials per package for manually overwrapping selected trayed produce items in polyvinyl chloride stretch film in the retail store Percent- Tray Film ! Item age of }$£————____— _ ——_——_———_— Jabel?_ Total move- Size Cost Size Cost costs ment Apples, oranges, peaches, Percent Number Cent Inches Cent Cent Cents and pears, 6-pack______-_ 44 2 0.79 15x18 0. 50 0. 08 iey/ Beaniceeae ee arise heh Sy 15 2 (2) ls ae 47 . 08 1. 34 @ornpoiears ee sa 5 2 79 15x18 50 . 08 BY Grapes eeree ee ee en 13 1% 65 14x 14 36 . 08 1. 09 Lemons, 5-pack_____-__---_- 9 14 69 12x 16 35 . 08 1.12 Plums; 8=pack=—=-=2_ ==. - 5 1% 65 14x 14 36 . 08 1. 09 SqUaSh meena ee SSS 4 2 (Aa ye. qaly¢ 47 . 08 1. 34 Tomatoes, 4-pack______--_- if 14 69 12x 16 35 . 08 1.12 Total or weighted average_ Ot) 2a gene ee 45 . 08 1, 28 1 At 1.84 cents per 1,000 square inches for 0.60 mil film. Overlap on the bottom of the packages averaged 3 inches. 2 Cost of printed outside label is $1.91 per roll of 2,340 labels. ‘(OF ‘d ‘7) Ava rod oynurw OT'O ¥e poyyour sovJ-[]NJ oy} Aq UIOD UTI 04 OUT} OY} SopNypouy z “GZ 91GB) xIpuodde vag ,; eC ‘T OOT ~"““O9BBIOAT PoJYBIOM IO [C4OT, OGL" 860 ° G9 ° G9S ° L8E €€0° 090 ° $90 © 990° cOT ° SO LE0 ° jay SEAS TS rah Td) youd-F ‘saoqyvu0y, LOT T GPT 696 ° G9G * L169 O€0 © £20 ° TSO ° O&T OPE” GE ° c£0 | A Ere MRR AIR Pa Caen Sn eo ysenbg 696 © 9CT ° 9E8 ° 9S * EAS €E0 ° F80 ° 890 660 ° I1G 210° 9F0 ° Sok > Ty etm cae Se taaaiiy aoe av youd-g ‘sun[d O16 ~ SIT” G62 ° G9S ° LEG * OFO ° 90T * €80 OZT ° OOT ° LE0° T¥0 Gases Pt ch ae abe ae eee youd-¢ ‘suowo'y SOT T SPI” £96 COS * 869° SFO 860 ° GSO ° 60T 996 ° FPO FSO of] eae a Ae See RO ee cas Reece he sodviry 9€T T SPI 886 GOG "2 E€&Pr° 9€0 ° 890 ° €L0 €20 G60 © £0 ° T¥0 Grae ak i ce meio al a car ee epee siva ¢ ‘U10D LOFT €8T BOS T 3 996° 696 ° CFO © PPI LET FOT CGP” OSO 290 Gg © Tae Ss a Si Sir = on anaemia: suvog 686 ‘0 6c. 0 098 0 92° G6¢ 0 FPO" SOOKE VZOLOL SE rOlO = ZS 0) = SrOL0= OSORO> = .bie = ae pale maunatie ae nn aimee yord-g Samu any sa aN MM any aw any ny uowg «= ‘Sava - pu ‘soyoved ‘soSuvio ‘sotddy aseyoed 1 Syuour epIse pally, = puoossg = 4sany ABIY aod 90ue our} =) [eyo], osvyord AVI} Ayduo =— oy faa quoul our} -MOT[V deim SuUISe d0VId [eos Wa uonwog ureyqg -oaour jo wo] pie qyuedied = [BO J, -yord — 99 U90 -purvyg -CT IIYYO osvyoud sed syuoupo dvim repn3exy -1dg MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE 34 IL048 [Jad ay, UL auDYydoyaa Ur swap donpold pahn.y pryoyas Burddpunsaa0 Lof abnyand sad spuamasnba L0QD)] 1010], — ZS AIAV I, ‘soyour orenbs 900‘T 10d sjyua0 Fe"] ye WTY YO}o1}s oplopyo TAurAATOd YAM deimJoAao oyo[durod & uo paseq ore sodeis puv suvaq 10} 4800) ¢ ‘SPqvy OFE'S JO [Jor Jod [61g St oquy opisyno poyurrd Jo yso;z ‘SOYOUL ¢ poFVIVAV sodvyoud oy} Jo w109j0q oy} UO depIZAG ‘soyout orenbs QQ‘ tod syuoo Gz 4e [IUL Cy’ WY oqeyuLrys poquoro Ayperxerun eploryo [AurAd]og ; v2 T 80° Use? “Qe sage eta Se ae gees rea OO OTBIIAT Po}YSIOM IO [VIOT, $0 T 80° 8S ° OI x2 69° lal fe = ee es youd-f ‘sooyeuo J, 63 'T 80° GF” AT XOT 62° G | Te Oe OR ie se rene at ah ysenbg 80 T 80° Ge ° PIXOT 9° AI Ga as wie ees youd-g ‘sung $0 T 80° 8S" 9T XZ 69° a! ie Sg a ae youd-g ‘suowaT 60 T 80° 9§ © PIX FL GQ° val Sho. Vee ee em Cana sodvin o& ‘T 80° cP" 8ST XOT 62° Zz oe” Aah ee sive ¢ “UID ve T 80° LY LEST. 1625 SG SF TONG eter eras ¢ SUBO oe TT 80 0 cP 0 8TXOL 624°0 Sj Vit. |. Wee eee Se yord-g ‘saved 8]UID Ua qUag sayour FTTEYe) LIQuingr qUIddLI pue ‘soyoved ‘sasuvio ‘satddy quoUl 4son aZIg 4sog aZIG -OAOUL wld} $4soo 2 Pqe'y jo o3¥ 1810], 1 WILT AVL, -yuodlog IL0}S [LDJIL ay) UL Ep aIQoyUrsys pm-auo aprsojya phurahjod ur sway, aonpoud paling pazoajas burddpsn-oaaas of abpyond sad sppisajpu [0 J809—'[Z AIAVY, PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE TABLE 23.—Labor requirements per package for overwrapping selected trayed produce items in polyvinyl chloride stretch film in the retail store 15 Percent- percent Standard age Regular Irregular Total personal time Item of wrap wrap wrap and per move- elements elements! time fatigue package ment allow- ance Apples, oranges, peaches, and pears, 6- Percent Minute Minute Minute Minute Minutes aC keene ee eee ees es se 4 423 0. 257 0. 680 0. 102 0. 782 IR GRINGS = ee ae 15 648 . 257 905 . 136 1. 041 Wore omeaTseae seed 222 ee ee Se 5 367 2.557 924 . 189 1. 063 CSN SS ss ca es a i eg 13 486 257 743 11 854 Wemons go=pack= == ase 2 2 22s ee eet = 9 301 257 558 . 084 642 Plums *8=packauees =. 202 25 Ee 3 405 257 . 662 099 761 SO Uals hee eee Se a eee Ee 4 542 257 799 120 919 Momatoes,4-pack=. 22.2202 22 5 2 tf 294 257 . 551 . 083 634 Total or weighted average_____-_~_- IU ee ae em he erage pe ee ee rer es ee . 826 1 Irregular elements when using the wrapping device are the same as for the cellophane overwrap, table 25, with the exception of element numbers 17, 18, 20, 24, and 30. 2 Includes the time to trim corn by the full-face method at 0.10 minute per ear (/, p. 10). TABLE 24.— Labor requirements per package for sleeve-wrapping selected trayed produce items in polyvinyl chloride one-way shrinkable film in the retail store 15 percent Standard Percent- Regular Irregular Total personal time Item age of wrap wrap wrap and per move- elements ele- time fatigue package ment ments allow- ance Apples, oranges, peaches, and pears, Percent Minute Minute Minute Minute Minutes Gaia Keine a Stone Oe ayes Bo Are SS 4 0. 416 0. 257 0. 673 0. 101 0. 774 Bean sp eeeeer = We eon ee eee Se 15 . 648 200 . 905 . 186 1. 041 Coin, 4) GaGa: ee 5 . 360 3.557 ~~ OF . 188 1. 055 CRGS- 44.2 Beek ae ae ee 13 486 . 257 . 743 Ut 854 IheMmOnS wos DAC Kehoe = he ee = 9 294 . 207 551 . 088 634 IIMS ES=paGkeas= 2292-2252 22225-55555 5 3 398 . 257 655 . 098 753 SCs Mepeeen eee ed SU ee RIS Ep oe 4 5385 . 207 792 . 119 911 Tomatoes, 4-pack__.____.___._---_------- 7 287 . 257 544 082 626 Total or weighted average_-_-=-__--- TK) Ree SE a 9 Se a ts on ee 820 1 See footnote 1, table 23. 2 Labor costs for beans and grapes are based on a complete overwrap. 3 Includes the time to trim corn by the full-face method at 0.10 minute per ear (1, p. 10). 30 36 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE TaBLE 25.—Labor requirements for the irregular elements in overwrapping selected trayed produce items in cellophane in the retail store Total Fre- Weighted elemental time per quency of time ment Item occur- occur- rence rence Per Per study package ! Move product to wrap stations: Obtain product from cooler (4 cases per Minutes Percent Minutes Minute LEIP) Oe ee ae ce ee 0. 374 25:0 #094: sae 2 Opentcontamens==2 == == =e ee . 358 100. 0 B58) 22 = eee 3 Position box on wrap table__-________-___- . 124 100. 0 124552 eee 4 Obtain supply of trays/temporary storage_- . 187 7.9 O15 22 =. SSeee 5 Obtain supply of trays/permanent storage__ . 846 220 Oi 22 eas 6 Obtain repacks for packaging-____________ . 308 5. 3 O16. 225) See 7 Walk torscale- === es ee eee . 161 42. 1 0685-3232 655 8 Obtainstub eee ee epee . 378 7.9 030n25=— Seas 9 Dump produce in tub-—-—--25-=2_=~ fees . 161 42.1 063 22 se3eeee— Total time for moving product to wrap StaliOns 222. ee eee Se oe ee ee cee . 790 0. 040 Master container and empty box handling: 10 Move full master container to conveyor___ 050 100. 0 050522 sae 11 Position empty master container on table__ . O81 100. 0 O8i, =e weeee 12 Place empty box or carton on conveyor-___ 052 100. 0 052 222s ee Total time for master container and EMP bye DOXA Ty ee er ee . 183 009 Miscellaneous wrapping elements: 13 Reposition full box on table______________ 109 66. 7 073: === 14 Position supply of trays on table________- 104 100. 0 AO, ee eee ea 15 Place excess trays in holder_____________- 089 5d 046, 22222 S2ee3 16 i traysholderses= es 52 eee ee meee 512 9. 4 048525 = eaeee ilig/ Obtain nest tray and plate____-_2_-_._==- . 088 20. 3 OLSee Saar 18 Punch holes inihilmaee 26 eee 629 17. 2 L08os aa eee 19 Clean ie Seri te a Se, Sa as eee ee 237 te? 041 22. 2 eeee 20 Reposition cellophane_______._____--___- 059 9. 4 006.2 aa 21 Rewrap packapes 225 See eee 425 28. 1 TiO) S22 See 22 Sort bad merchandise__________________- 213 23. 4 05052222 eeeeo 23 Obtain one item to fill out tray___________ 121 1.6 002) 223-2 eea= 24 Ollenw ev rio} ak es ee . 603 4.7 028: = == see 25 Remove wrappers_____._____-._--_--_-- 292 70. 3 2003 26 Remove! divid ers = 25 seas 2 eee eens 114 1083 080" == ee 20 Rearrange packages in master container___ 184 3.1 006-2335 28 Rearrange merchandise on tray___-_-______ 115 Sal 004 SSE 29 Open! poly; box liner= 222 == ee 281 6. 2 OL ese 30 Placelextractilmiasides =. 5-8 5-6 = oe . 092 6. 2 00622222 =2e2e™ 31 Wipe handse ae =.=. = ee cee es 446 10.9 049\ 32 oe 32 Check pacikcag cheeses ayaa ee . 042 1.6 001 eas Total time for the miscellaneous wrapping selementsoe a2 2 225 =e ee er 1. O11 0. 50 Weighing and labeling: 33 Ring-up and attach label 130___________-_ 2. 600 100. 0 2.600) 2a 34 Adjustiscaleiand sprinters. 9-9 oe eee 279 100. 0 3219. ee 35 Master container handling______________- 300 100. 0 300.4222 ees 36 Miscellaneous weigh elements___________- 136 100. 0 1362-225 5e Lotal'time for weighingsand labelin yess eee ene 3. 315 . 166 Total times Se ee oe a ee 5. 299 . 265 15 percent allowance for personal and fatigue: 2 a6 ss. 2 Se ee ee . 795 040 Sueiebyaelinbai= 92 6. 094 305 1 Based on 20 packages per study. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE TABLE 26.— Total cost per package for overwrapping selected trayed produce items in cellophane in the retail store ; Percent- Total item age of Labor } Mate- Equip- Bur- cost move- rials? ment? den per ment package Apples, oranges, peaches, and pears, Percent Minutes Cents Cents Cents Cents Cents 62 pac kanes ee ee ee Se Fe 44 989 4.94 1. 63 0. 92 0. 74 Sa23 IB Can S Seeeraee en ee ey ee eee era Sead 15 1. 407 7. 04 1. 63 isi 1. 05 11. 03 Cormesteatseares see eee eee a eae 5 1.136 5. 68 1. 49 1. 06 . 85 9. 08 Gra pesBeeee nse ese n ee 13-1. 108 5. 54 1. 35 1. 03 . 83 Sao Memonsto-packe= =a e2 a= ees. 2= a2 9 910 4.55 1. 30 . 85 . 68 7. 38 RIUMS Spo Ckeee eee tees eset on 3 962 4. 81 1. 35 . 89 2 ene Squash ne eeenee eel ees eos 2s AP ALOT 5. 54 1. 49 1. 03 . 83 8. 89 shomatoesw4-pack= <2 25. 52224122 5 7 750 3. 75 1. 34 0 . 56 6. 35 Total or weighted average______ 1001. 055 5. 27 [E52 . 98 Sethe) 8. 56 1 Average cost of labor, including fringe benefits, was $3 per hour. 2 All materials at list price. 3 All equipment at list price (table 14). Average equipment cost per package was 0.98 cent and average burden cost per package was 0.79 cent. Equipment and burden costs are prorated to each item on the basis of the packaging time for individual items. TABLE 27.— Total cost per package for overwrapping selected trayed produce items in polyvinyl chloride stretch film in the retail store Percent- Total Item age of Labor } Mate- Equip- Bur- cost per move- rials? ment* den package ment Apples, oranges, peaches, and pears, Percent Minutes Cents Cents Cents Cents Cents G2 aC keen eae ene 2 ee = 44 0. 782 3. 91 1. 37 0. 95 0. 75 6. 98 TBXSYOY OS SS 15 1. 041 5. 20 1. 34 1. 26 1. 00 8. 80 (Corin, SCs 5 1. 063 5. 32 1. 37 1, 29 1. 02 9. 00 CTY YEAS = 5 13 . 854 4, 27 1. 09 1. 03 . 82 (6 PA HEnVONS eho a2 C Kee ee ee eg ee 9 . 642 3. 21 1.12 . 78 . 61 5. 72 Plums 8-pac ker sees eee ek 3 . 761 3. 80 1. 09 . 92 Bf) 6. 54 Sq Was hee a a eee ee 4 . 919 4. 60 1. 34 aba . 88 7. 93 pRomatoes, 4-pack-___=-_____-_--__-__ a . 634 3. 17 LER, ariit . 61 5 64, Total or weighted average_ -_-_-__- 100 . 826 4.13 1. 28 1. 00 249 7. 20 1 Average cost of labor, including fringe benefits, was $3 per hour. 2 All materials at list price 3 All equipment at list price (table 14). Average equipment cost per package was 1 cent and average burden cost per package 0.79 cent. Equipment and burden costs are prorated to each item on the basis of the packaging time for individual items. 37 38 MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE Tasip 28.—Total cost per package for sleeve-wrapping selected trayed produce items in poly- vinyl chloride one-way shrinkable film in the retail store Per- Total Item centage Labor? Ma- Equip- Burden? cost of terials? ment ? per move- package ment Apples, oranges, peaches, and pears, Percent Minutes Cents Cents Cents Cents Cents 6=pack 25: = aE ae eee eee 44 0.774 3. 87 1. 32 1. 08 0. 75 7. 02 IBeansite. = ete ees Ss ee eee 15 1. 041 5. 20 1. 34 1. 45 1. 00 8. 99 Cornyo%ears) 2223-4) os eae ee eee 5 1. 055 5. 28 1. 32 1. 47 1502 9. 04 Grapes 42. 2422 eee se eee ee 13 . 854 4. 27 1. 09 1.19 . 82 USE Isemonse b=pack= ==_ 8225 =e eee ee 9 . 634 3. 17 1.05 . 88 . 61 Biraal Blums S-packse. === se eee 3 . 753 3. 77 1. 08 1. 05 ihe 6. 62 Squashiewset sea eS eee ee 4 eeOulel 4. 56 1. 29 1. 27 . 88 8. 00 Momatoes.4-packa 21s 3--s es eee 7 . 626 3. 13 1. 05 . 87 . 60 5. 65 Total or weighted average-_-_-_--_--_- 100 . 820 4.10 1. 24 1.14 . 79 7. 28 1 Average cost of labor, including fringe benefits was $3 per hour. 2 All materials at list price. 3 All equipment at list price (table 14). Average equipment cost per package was 1.14 cents and aver- age burden cost per package 0.79 cent. Equipment and burden costs are prorated to each item on the basis of the packaging time for individual items. 4 Costs for beans and grapes are based on a complete overwrap with polyvinyl chloride stretch film. TABLE 29.—Annual cost of equipment for a single-line installation for central warehouse packaging of trayed produce items ' Initial Item Initial Item cost cost Dollars Dollars Equipment: Other equipment and charges—Continued ULOMatIC | PACKAS Cra =a = a ee 7, 125 Packout, tare-weight scales___________--_- 860 Top mechanical tamper___-_______-_____- 425 Reserve-electronic:scalels 22a 2 mee =a nee 4,990 Plastic film sealing unites 223 ee 1, 250 Corn-trimming device and work station____ 400 In-feed extension with 20-foot table and Preightiei2 oo uoe 2 aoe ee ee 375 CONV.CYi0 Tae as ge eee ee 5, 108 Tnstallation= == 232 soe a= =a ee 1, 500 op labeler unitss22 5555-22 eee ee 1, 975 Wheel-type conveyor 68 feet___----_------ 588 Side discharge conveyor___-_.--_-_------- 325 Porklittrtiruck 3) 222232 sess eae 1, 000 Electronic computing scale______________- 4,990 Miscellaneous other costs__-_-...--------- 750 Aucomaticwlapeler ses === eee 2, 550 Commodity inserts and rack ?_____________ 159 MRotalinitiall costa == 36, 320 Rotaleens = SP e na = see ee eee ere ee 23, 907 Annual cost: Other equipment and charges: Depreciation(s. ess eee ee eee 4, 540 Turntable, 6-foot-diameter_______________- 400 Scale maintenance 2 at 305___________---- 610 Discharge belt 12 in. by 10 ft__________--- 325 Interest:§x2. 2272) 20See oe eee 1, 090 lobgballen Athos nee es So Be ee ee 800 Takeaway belt 18 in. by 10 ft____________- 425 Rotalvannual*cost==-=— === 6, 240 1 All equipment at list price. > Rack cost $50 plus 80 inserts at $0.90 and 20 special inserts at $1.85. 3 A forklift cost $6,000 but is only required for about 10 hours per week. * All equipment is depreciated to zero in 8 years. > Total initial investment is $36,320. Interest on invested capital is at a rate of 6 percent, calculated for one-half the life of the equipment, and prorated over 8 years. PACKAGING PRODUCE IN TRAYS AT CENTRAL WAREHOUSE 39 Exuisit A.—Determining break-even point between manually overwrapping produce with polyvinyl chloride stretch film at store level and a 2-line warehouse packaging operation using polyvinyl chloride shrinkable film A general formula for determining the break-even point is as follows: Store costs per year Warehouse costs per year Store costs per package number of packages= Number of packages & total cost per package of materials, direct labor, and containers + cost per year of indirect labor, burden and equipment 2 Where: Dollars Store costs per package for polyvinyl chloride stretch film overwrap = 0. 0720 Warehouse materials costs, overwrap with polyvinyl chloride shrinkable film = . 0176 Direct warehouse labor per package = - 0183 Container cost per package = . 0016 Cost per year for indirect warehouse labor =13,468. 0000 Warehouse burden costs per year? = 7,088. 0000 Warehouse equipment costs per year = 10,433. 0000 P=Number of packages per year Store costs Warehouse costs 1. 0. 0720P =P (0.0176+ 0.0183 + 0.0016) + 13,468+7,088+ 10,433 2. 0. 0720P = 0.0375P+ 30,988 3. 0.0720P-0.0375P= 30,988 4. 0. 03845P = 30,988 oD: = 898,202 At 898,202 packages per year, the costs of a 2-line warehouse packaging operation would equal the costs of manually overwrapping packages with stretch-type polyvinyl chloride in the retail store. 1 3,150 square feet at $2.25 per square foot. Exursit B.—Determining break-even point between manually overwrapping produce with polyvinyl chloride stretch film at store level and a single-line warehouse packaging operation using polyvinyl chloride shrinkable film A general formula for determining the break-even point is as follows: Store costs per year Warehouse costs per year Store costs per package X number of packages—Number of packages < the total cost per package of materials, direct labor, and containers + cost per year of indirect labor, burden, and equipment Where: Dollars Store costs per package for polyvinyl chloride stretch film overwrap = 0. 0720 Warehouse materials costs, overwrap with polyvinyl chloride shrink film = . 0176 Direct warehouse labor per package = . 0183 Container cost per package = . 0016 Cost per year for indirect warehouse labor ! =7,106. 0000 Warehouse burden costs per year ” =4,950. 0000 Warehouse equipment costs per year ® =6, 240. 0000 P=Number of packages per year Stare costs Warehouse costs . 0. 0720P=P (0.0176+ 0.0183-+ 0.0016) + 7,106 + 4,950-+ 6,240 . 0.0720P= 0.0375P+18,296 . 0.0720P= 18,296 . 0.0845P= 18,296 RP = 530,319 At 530,319 packages per year, the costs of a single-line warehouse packaging operation would equal the costs of manually overwrapping packages with stretch-type polyvinyl chloride in the retail store. 1 Forklift operators 10 hours per week at $3.49 per hour or $34.90; mechanic 4 hours per week at $3.94 per hour or $15.76; foreman 20 hours per week (assuming one-half of work week will be devoted to other packaging operations) at $4.30 per hour or $86.00; total indirect labor per week $136.66, total per year $7,106. 2 2,200 square feet at $2.25 per square foot equals $4,950 per year. 3 See table 29. OUR Co hoe U.S. GOVERNMENT PRINTING OFFICE: 1969 O—321-—413