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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
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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.
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MARKETING RESEARCH REPORT 827, U.S. DEPT. OF AGRICULTURE
34
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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
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