Group Project Related To A Case Study (Production & Operations Management Class)
Crowley Cheese Factory Semi-fictional Mini-case Problem for MGT 602 – Production & Operations
Crowley Cheese has been in operation since 1824, and has been making cheese in its current location
since 1882 in Healdville, Vermont, (postal address of Mount Holly, which is in the Northeast part of the
United States). Crowley Cheese is located about “four hours from NYC and three hours from Boston”.
https://www.crowleycheese.com/ Along with the immediate vicinity in Vermont, New York City and
Boston are prime market areas for this high-quality award-winning all-natural artisan cheese. Additional
claims include that it is the “oldest continuously operating cheese factory in America”.
Cheeses currently produced by Crowley Cheese are hand-made American Colby styles of cheese.
Different flavorings and aging (“sharpness”) provide product variety for products produced at Crowley.
Crowley produces cheese with very little technology or automation. These cheeses are considered all-
natural with no additives or preservatives: “…the same recipe since 1827”. Because of its high quality
and all-natural production, this type of artisan cheese is in high-demand and commands higher retail
prices compared to mass-manufactured cheeses. The company website touts that their cheeses are “all
natural with no additives or preservatives” and “certified hormone free”. Currently, cheeses from
Crowley are available in nine (9) states in the northeastern United States (the “New England” states of
Connecticut, Main, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island,
and Vermont) plus remote retail locations in California, Florida, Georgia, Ohio, and Montana, where a
handful of select retailers have specific interest in carrying products from Crowley. Additionally,
Crowley sells cheese from its own website, and from a small variety of other online retailers. Additional
detailed information about retail locations and online sales are available at:
https://www.crowleycheese.com/retail.html , and https://store.crowleycheese.com/ .
Currently, all products are distributed directly from the main manufacturing facility in Healdville (Mount
Holly), Vermont, out to the various retail locations (and online retail outlets) shown on the Crowley
Cheese website. Please see the Appendix C materials for details about current weekly product demand
and distribution to these retailers.
Your consulting team has been hired to help evaluate operations at Crowley Cheese and assist
management in an investigation to optimize its current distribution efforts, expand operations and
distribution within its current sales region, and possibly expand distribution into the southeast and
midwest United States. Many of the current retailers (both online and traditional retailers) often stock-
out of the Crowley Cheese products, and so they receive inconsistent re-supply due to the high demand
for this high-quality product. Occasionally, demand orders from retailers exceed available supply at the
Crowley warehouse. During the 2020 Covid pandemic, some retail sales shifted to online retail, but this
was not a real change in overall production demand; this was a shift in distribution and retail channels
Additionally, as part of your analysis and report to management at Crowley Cheese, you are expected to
map/flowchart and analyze the current production processes and discuss potential improvement
opportunities, with details following below. Another consulting team’s notes on their production
processes after visiting Crowley Cheese are included. Expectations for your written report to
management also are detailed below.
Case Notes from another analysis team
Details of the current production process:
Currently, the company operates one shift per day, six days per week. This current level of production
makes one batch of product per shift, with four employees providing direct labor. In one daily batch,
4000 pounds of milk is transformed into about 400 pounds of cheese (minus scrap, about 365 lbs
sellable), which is sold to various retailers for a total wholesale price of about $4106 per batch (approx.
$11.25 per pound, wholesale). During any one season of the year, Crowley produces their primary
product (mild Colby), and an additional five seasonal varieties (six varieties total, per season). The
seasonal varieties vary throughout the year. For six production batches per week, three batches are
dedicated to producing the primary product (mild Colby), which constitutes 50% of the demand for one
week. The remaining three batches of production are dedicated to one of the five other seasonal
products (one unique seasonal product per batch or per shift). On average, demand for the five seasonal
varieties is split evenly among the varieties available. Customers and retailers have requested a greater
variety of products throughout the year. Current annual cheese-related revenue for Crowley is
estimated at about: (48 weeks/year) * (six batches / week) * ($4106 revenue/ per batch) = $1,182,600
per year gross revenues .
The following describes the production process for a daily batch of cheese. Some cheese-making videos
exist on the internet, and could be helpful in understanding the processes. Please review this video for a
couple of the visual details related to the detailed written notes below:
If you rent or buy it from Amazon.com, the Crowley Cheese episode of Dirty Jobs with Mike Rowe is very
instructional. Season 1, Episode 12, at about 13:00 min into the episode. It is a good view of what your
other team members witnessed, when they visited Crowley Cheese. Data and analysis from their site
tour is below.
1. At the beginning of each shift, all four workers thoroughly clean the steam-table vat, the curd sink,
and various fixtures with a chlorine solution: (requires 60 minutes). This requires all four employees.
After completion of cleaning, three of the employees attend to finishing the previous day’s batch of
cheese (see notes on the other process steps below, (e.g steps #4 and #19, 20, 21).
2. Next, the lead cheese artisan (Ken) pumps/pours about 4000 pounds of raw whole milk into the
steam-table vat from the dairy tank. Currently, Crowley receives one 4000 pound delivery per day. The
dairy tank can be unloaded in about 15 minutes to fill the steam table. One gallon of milk weighs about
8.6 lbs, so 4000 pounds of raw whole milk is approximately 465.1 gallons.
3. Ken turns-on the steam table to begin heating the milk up to 70 degrees F. This takes about 60
4. Throughout the day, during wait times, and during product heating times (in parallel to the cheese
production process), three employees are dedicated to other tasks, such as: the cheese molds are
cleaned, prepped, and lined with cheesecloth. After the previous day’s cheese is un-molded, the “other
three employees” spend their time cleaning and prepping the reusable metal molds for the next batch
of cheese. This occurs in-parallel; these tasks occur while other processes are ongoing, such as while
waiting for the milk to warm, and etc. It takes about five minutes to clean and prep each mold, and
approximately 100 molds are prepped each day for one 400-lb batch of cheese. The cheese molds will
be packed with cheese curds toward the end of the cheese-making process. Each 2.5 lb cheese wheel
requires about one sq. foot of cheesecloth, for a total of about 250 sq. feet per batch. Other larger
molds do not use cheesecloth.
5a. When the mixture in the steam table reaches 70 degrees F, a bacterial culture (lactobacillus) is
added and raked (stirred) thoroughly into the mixture. This takes about 10 minutes to completely rake-
in the culture.
5b. It takes about 20 additional minutes after raking for the batch to reach 88 degrees F. When the
mixture reaches 88 degrees F, the steam to the steam table is shut-off.
6. After the steam table is turned-off, it takes about 15 more minutes for residual heat from the process
to slowly bring the mixture up to a final temperature of 90 degrees F.
7. When the mixture reaches 90 degrees F, 15 oz of liquid rennet (enzyme that promotes coagulation of
the proteins and fat) is added to the mixture and raked (stirred) again, thoroughly. This process
promotes solidification of the mixture, and thus the creation of curds. Adding the rennet and raking
takes about 10 minutes.
8. After raking the rennet into the mixture, the batch rests for about 40 minutes, and the mixture begins
congealing into a semi-solid, to approximately the consistency of custard or very soft tofu. A
visual/manual test verifies that the process is ready for the next step.
9. The lead cheese maker (Ken) begins separating the curds from the whey by slicing through the
mixture with the cheese knife made from a metal frame and fishing line. This takes about 10 minutes to
cut through all areas of the cheese mixture twice. The separation process is called syneresis.
10. After cutting, Ken allows the mixture to rest again, waiting 15 minutes to keep from damaging the
newly cut curds.
11. Then the steam is turned back “on”, and the lead worker (Ken) rakes the mixture continuously until
the mixture reaches 102 deg F. This takes about 45 minutes.
12. After the mixture reaches 102 degrees F, the steam table is turned off again, and the mixture is
allowed to rest again, this time for about 60 minutes, to allow the curds to toughen-up. The mixture is
raked occasionally during that hour. The curds strengthen from the consistency of a “jellyfish” to about
the strength of a “pencil eraser”.
13. After the curds are toughened, all four workers help drain away and save about ¾ of the remaining
whey (via a gravity drain), which takes about 30 minutes. Currently, this portion of the whey (about 323
gallons per batch) is stored and saved. Currently, this recovered whey is used to fertilize the pasture
land around the factory. Other uses have not yet been fully explored.
14. The curds and the remaining whey are manually transferred from the steam table into the curd
sink/table (lined with cheesecloth) with large metal scoops. This takes four employees about 20 minutes
to transfer the curds to the curd sink. This curd sink is lined with about 150 sq. feet of cheesecloth.
15. All four employees continuously stir and crumble the curds in the curd sink by hand, to keep the
curds small, and to keep them from clumping together. To keep the curds separated, continuous stirring
and de-clumping by hand is required for about 30 minutes. A quality-check occurs (several times) as the
cheese is checked for acidity. Due to the previous biochemical reactions, acidity continuous to increase
until the cheese curds are rinsed.
16. When the cheese is at the correct acidity level, spring water is used to rinse the remaining whey
from the cheese curds. This combination of rinse-water and whey also is drained and saved separately.
Usually, this waste stream also is used to fertilize the pastureland around the factory.
Including the rinse time, additional manual stirring, handling, and de-clumping of the drained curds
continues for 30 minutes. During this time, salt is added as a natural preservative and flavor enhancer.
About ¼ pound of salt is added for each 10 pounds of cheese. Other additional flavors could be added at
this point in the process as well (such as chives, garlic, etc.) to produce the various seasonal flavored
17. Cheese curds are weighed and packed into molds, and the molds are loaded onto the cheese steam-
press. This requires about 60 minutes of total time. For the smallest cheese wheels, it takes 3 pounds of
cheese curds to produce a final product that will weigh 2.5 pounds. For a full production batch that
started with 4000 gallons of whole milk, and produced 400 pounds of cheese, the cheese is packed into:
88 molds for the 2.5 lb wheels of cheese, plus
3 molds to make 40 lb blocks of cheese, plus
1 large mold to make one large 25 lb block of cheese.
Thus, the net sellable weight averages 365 lbs. The larger blocks of cheese are cut into smaller bricks of
various sizes, then sealed and packaged for retail sales or custom sales. The average difference between
actual final production weight and the initial weight: (400 – 365) = 35 lbs of cheese become scrap. This is
due to a combination of draining the remaining whey from the cheese molds during pressing, and
occasional accidental loss of curds during the production processes.
18. The cheese press equipment is adjusted properly and set for operation. The cheese press squeezes
the remaining extra moisture (whey) out of the cheese molds. After the press is turned on, the molds
will remain under pressure overnight, or for a minimum of approximately 8 hours.
19. The cheese molds are unpacked the next morning (beginning of the next shift) by three employees,
after prep operations for the next batch are completed (after the steam-table and other equipment has
been cleaned and sanitized). While the lead employee (Ken) starts production on the new batch of
cheese for the day (process step #2 above) the other three employees unpack the cheese wheels and
blocks from the molds, and move the new cheese to the drying room, where the cheese will rest and dry
for about four days, per batch. It takes about 120 minutes to unpack the cheese from the molds and
store it in the drying room. At this point, the empty molds need to be cleaned and prepped for the
current day’s batch of cheese production (which has already begun).
20. Each batch of cheese production rests in the drying room for four days.
21. After drying for four days, small wheels (2.5 lb wheels) are sealed in a melted mixture of paraffin and
bees wax (220 degrees F), in a manual dipping process. Larger blocks of cheese are cut into smaller
pieces and bricks, to be sold at various sizes / weights. These smaller pieces and bricks are either hand-
dipped in wax or vacuum sealed and labeled. Some pieces are custom-cut and vacuum sealed for
specific customer orders. It takes about 120 minutes to seal the entire batch, including cutting, blocking,
and sealing the larger pieces. At this point, cheese labeled as “mild Colby” or similar flavored varieties
are ready for immediate sale. Some varieties require additional aging to achieve “sharp” flavor variety
status (up to 3 ½ years). Each batch of cheese uses about 10 pounds of the paraffin/bees-wax mixture.
For the purposes of this case, we will not consider the additional production processes associated with
the aging time and processes for “sharp” varieties that are sold.
Currently, Crowley ships product to retailers twice per week, on Mondays and Thursdays.
Cost of Production & Distribution Overview
Currently, weekly production consists of six batches per week, at 365 pounds of sellable cheese per
batch. This currently produces a total of 2190 pounds per week, and a total of 105,120 lbs per year.
Spread across 12 months of sales per year, this is an average of 8760 lbs of sellable product per month.
Due to the high-demand from retailers, as well as back-orders from many retailers, upper management
guesses that the current network of retailers easily could receive and sell between 1.5 times to 2 times
the current volume of production. The first decision alternative is to do nothing (status quo) and not
However, upper management estimates that the current facility could accommodate a two-shift
operation if a 2nd cheese press and a 2nd set of cheese molds were purchased and installed (and if four
additional employees were hired for a 2nd shift). Modifications to the existing building plus increased
steam capacity for the boiler system would expect to cost about $250,000. An additional set of cheese
molds is estimated to cost $3,500, with an additional cheese press priced at about $18,000. Basic cost of
labor and materials per batch should not change for a two-shift operation. The two-shift operation
would expect to produce a net sellable total of 4380 pounds of product per week (two batches daily, six
days per week), with an average monthly production of 17,520 pounds per month. Current product
demand, allocation and distribution of 9,285 pounds per month is shown with retailers and their
locations in Appendix C. Currently, not all retail demand is met. Crowley must allocate production to
retailer orders as best possible when demand is greater than supply. The allocation of scarce inventory is
a challenging decision and it has not been done in a consistent manner.
As a last alternative, management at Crowley also is considering the possibility of a significant expansion
of distribution along the East Coast of the U.S., to take advantage of current retail distribution in Georgia
and Florida, with likely expansion away from the New England states and into South Carolina, North
Carolina, Maryland, Delaware, Virginia, and the District of Columbia. This level of expansion would
require a significant increase in production capacity, likely greater than simply moving to a two-shift
production schedule in Healdville (Mount Holly). The management team estimates that significant
expansion would require construction of a new manufacturing facility, at a cost of $20,000,000 including
land, equipment, and start-up costs. Although variable materials and labor costs of production would
expect to remain similar with a new facility, overhead costs would expect to increase from $500 per
batch to $750 per batch due to costs associated with servicing the additional debt from construction and
start-up of the new facility. Based on the planned design of a new facility, Crowley would be able to
produce up to five batches per day, at 500 pounds of product per batch, for a total of up to 2500 pounds
per day. At this point, the current plan would be for the existing factory in Vermont to be
decommissioned and turned into a museum. However, upper management seems open to other
suggestions if you have any.
A number of alternatives are available for economical disposal or re-use of the by-product whey.
Currently, (as noted above) the relatively low production volume of a single batch of cheese per day
produces only about 323 gallons of recoverable whey per batch. This is currently used for fertilizing
grasslands and pasture surrounding the Crowley Cheese facilities, and thus saves Crowley from a more
expensive upgrade to its waste-water disposal process. However, larger production volumes of cheese
(either from a 2nd shift production at the current facility, or from a new facility that could produce 5
batches per day) will produce significantly more excess whey, which will require appropriate processing
and/or proper disposal. The local waste-water plant is not currently equipped to handle this additional
(and unexpected) load of waste water. Upper management is interested in potential solutions or other
uses for this high-quality whey byproduct, as part of an overall solution to their growth challenges.
Luckily, your research staff (summer intern) has provided a jump-start on this challenge with a handful
of documents that could provide a head-start on possible solutions (see Appendix A materials below).
Your Client’s Expectations and Your Scope of Work
A. Prepare a one-to-three-page stand-alone Executive Summary of the full report that could be
understood both by savvy board members and by the Crowley shop-floor employees. This could serve as
the first several pages of your full report, but it should be able to stand on its own.
B. The complete full report should address the following challenges:
1. During conversations with upper management, it became evident that much of the knowledge of the
internal production process exists only in the memory of the lead cheese maker Ken and his employees,
and thus these processes are not well-documented. This is obviously an organizational risk. For that
reason, management has requested that you produce i) a process flow diagram, ii) a process chart
highlighting key process activities, and iii) a high-level value stream map. Additionally, these diagrams
should help identify improvement opportunities for all processes (waste elimination of all types) related
to the current production and delivery processes.
2. Evaluate the economic alternatives associated with three production and distribution scenarios: 1)
status quo with one shift per day, 2) expansion of the current location to a two-shift operation, and 3)
expansion to a new facility capable of producing five batches per day.
List and discuss the qualitative advantages and disadvantages that should be taken into
consideration among each of the three scenarios
Determine and discuss profitability and financial concerns (costs and benefits) associated with
List and discuss long-term and short-term advantages and disadvantages, as well as challenges
or potential pit-falls, associated with each of the three scenarios
3. Currently, for the retailers in Vermont and in the immediately neighboring states, the costs of direct
distribution to the retailers are paid by Crowley Cheese. Flat-rate costs to these locations/retailers are
independent of distance because of their proximity to the Crowley Cheese manufacturing facility. For
these local retailers only, transportation costs are estimated at: $0.20 per pound to retail locations in
Vermont, and $0.50 per pound to retail locations in Maine, New Hampshire, Massachusetts, and New
York. Other retailers pay their own freight/shipping costs. For retailers outside of Vermont and the
neighboring states listed above, the transportation costs are proportional both to weight/load of the
distributed product and the distance to the production facility.
For meeting ever-growing demand, additional analysis is required. Crowley would like to outsource the
transportation and distribution to a 3rd-party logistics provider such as FedEx, UPS, or others. This should
be a separate analysis and decision, and not integrated with any capacity expansion decision.
Given the current regional locations and shipping costs (immediately above), and shipping
volumes of product to various retailers in Vermont and the neighboring states: in order to not
increase current total shipping costs, what would be the maximum monthly fee that an
outsourced delivery service should charge Crowley Cheese for all deliveries to all customers in
those states? The relevant locations and order volumes (Vermont and its neighboring states) are
shown in Appendix C.
Investigate and research: could a 3rd-party logistics provider such as FedEx or UPS be able to
provide this type of service at this price/cost, or would the expected outsourced cost exceed the
current estimated costs? Provide only a couple of “worst case” or “best case” examples that
verify or justify your decision.
What qualitative criteria should be considered before outsourcing delivery of products to
retailers in these states (Vermont and its neighboring states)?
If Crowley Cheese established a distribution center to service only the retailers outside of those
in Vermont and the neighboring states: ideally where should a new distribution center be
located based on the current product allocation to those retailers?
4. Suggest a strategy with tactics for expanding product sales & distribution down the East Coast of the
United States. This assumes the need for the significant manufacturing expansion (option #3) discussed
above with the construction of a new manufacturing facility.
Research and identify likely retail outlets and locations (currently in existence) that could be
approached as possible retailers in the Crowley Cheese distribution network, in each of these
states where expansion is likely (see the previous case notes above). Review the current retailer
distribution network as a model for expansion into other potential market areas. Identify at
least 10 specific retailers in specific strategic locations (regions, cities) that you believe should
become part of the distribution network. Be careful to fit the brand with the locations.
As a new separate page / sheet in Appendix C:
o Update the Appendix C spreadsheet to include the new distribution market locations,
and volumes. Be specific about the name and location of each retailer and probable
monthly distribution to each location (based on your knowledge of the existing Crowley
retail network). Explain any assumptions.
o Assume that the existing network of retailers (as shown in Appendix C) could receive
and sell twice their current allocation of monthly cheese production (this would be twice
the current daily production at the current facility, or 2/5 of daily maximum production
at the proposed new manufacturing facility).
o Based on your new and current existing retail locations for this planned expansion (your
updated Appendix C data), along with the proposed allocation of production to all of
those locations, what would be an ideal location for a new manufacturing facility?
(When optimizing the location, assume that the new monthly product allocations and
distance to the facility are proportional to transportation costs). Assume that all
retailers, including those in Vermont and neighboring states, would be serviced from
this new facility.
Compared to current sales volumes, what would be increase in sales described above (new retail
locations and doubled sales at existing locations)?
o Could this increase in sales volume be handled by Crowley’s current online store? (and
why or why not?)
Provide feedback to Crowley’s upper management about the qualitative
benefits and disadvantages of expanding physical distribution to additional
bricks-and-mortar retail, vs. additional sales via other online strategies and
options. (think a little about this product, including at least “how, why, when
and where” cheese is usually purchased by customers).
Might there be different tactics for different Crowley product varieties?
Provide results of brainstorming to upper management on the appropriate mix
of bricks-and-mortar cheese sales vs online cheese sales.
o Compare and contrast the strengths and weaknesses of the Crowley online cheese store
(product variety, mix, prices, etc.) to the online retails sales presence a popular Kansas
competitor, Alma Creamery:
5. Design production schedules to accommodate demand from retailers and customers for more than
three flavored cheeses per season.
As described above, approximately 50% of retailer demand is for the “mild Colby” variety, with
the remaining 50% of demand assumed to be split equally among the variety of five seasonal
flavored cheeses. The current production schedule for only five seasonal flavored cheeses looks
like this below, but some retail customers cannot get the specific flavor varieties that they
Mon Tues Weds Thurs Fri Sat
Week #1 Mild Colby Flavor 1 Mild Colby Flavor 2 Mild Colby Flavor 3
Week #2 Mild Colby Flavor 4 Mild Colby Flavor 5 Mild Colby Flavor 1
Week #3 Mild Colby Flavor 2 Mild Colby Flavor 3 Mild Colby Flavor 4
Week #4 Mild Colby Flavor 5 Mild Colby Flavor 1 Mild Colby Flavor 2
Crowley Cheese would like to be able to offer a greater variety of its seasonal flavored cheeses
at any time.
o For the current one-shift schedule (one batch per day), use lean systems concepts,
(including but not limited to Heijunka and mixed-model assembly), to develop a rotating
monthly (four week) production schedule for seven seasonal flavored cheeses.
o How many weeks of production need to be planned, to have a production schedule that
produces equal amounts of each of seven seasonal flavors?
For a two-shift (two batches per day) schedule, use lean systems concepts to develop a rotating
monthly (four week) production schedule for seven seasonal flavored cheeses.
For a five-batch per day schedule (potentially at a new manufacturing facility), use lean systems
concepts to develop a rotating weekly (four-week) production schedule for seven seasonal
For any proposed production schedule, assume that the objective is to minimize excess
inventory and balance supply with demand as best possible.
6. With respect to the expected environmental challenge of how to dispose-of or better utilize the whey
produced at a new manufacturing facility: propose a solution that achieves the best overall benefit for
Crowley Cheese, considering a triple-bottom-line approach. Be specific with either an estimated cost of
disposal or possible revenue from other possible solutions (possible revenue generation). List and
describe estimated non-monetary qualitative benefits and costs of your proposal as well.
7. Summary and conclusions:
This section should include a summary of all important recommendations with justification.
It also should include suggestions for further work that your consulting group could perform for
this client (to generate additional revenue for your consulting firm).
Note #1: As noted previously, each 4000 lb batch of milk yields about 365 lbs of cheese (and 35 lbs of
cheese scrap), leaving 3600 lbs of liquid whey, of which ¾ (or 2700 lbs) of the whey is recovered in step
#13 in the cheese-making process described above. Whey has nearly the same density as water, which is
about 8.35 lbs per gallon, so about 323 gallons of whey is recovered from each 4000 lb batch of milk.
The remaining ¼ whey is rinsed away from the curds and is considered lost during step #16 of the
process. In current production, and in annual terms of one batch per shift (one shift per day), and six
shifts per week, for 48 weeks per year: 323 gallons per batch * six batches per week * 48 work-weeks
per year = 93,024 gallons of whey recovered per year, currently. Your calculations will have to be
modified if the plant expands to two shifts, or if Crowley constructs a new facility that has greater
capacity (five batches per day).
Note #2: Whey consists of about 93.5% water and about 6.5% solids (roughly 4.9% lactose and the
remaining 1.6% proteins and mineral salts). Whey can be converted into other products, such as
livestock feed, food supplements, and ethanol (ethanol only when economies of scale allow for mass
production of ethanol). Whey solids (whey that is concentrated and then dehydrated into a solid after
drying/evaporation) can be sold for about $0.40 per pound. Crowley currently does not own equipment
for whey concentration and dehydration. However, management is interested in logical proposals.
Note #3: Each batch of sellable cheese (about 365 pounds) sells for about $4106. Each ounce of rennet is
available commercially for about $2.00 per ounce. Whole milk costs are about $20 per 100 pounds.
Employee direct labor costs (including benefits) are about $19/hour. Cheese-salt costs are about $1.50
per pound. Lactobacillus bacterial colony can be kept, nurtured, maintained and stored by the cheese
maker at basically no recurring costs. Wax/paraffin mix costs are about $0.75 per pound. Cheesecloth
costs about $0.20 pe