Post on 13-Dec-2015
Bus 378Milk Processing Project
Team Cash Cow:Todd Martin, Jesse Dyer, Charlie May
Curtis Penney, Scott DeFriez
Todd Martin
Project Overview
Todd Martin
Goal: Generate a feasibility analysis that proposes the best way to process milk from UI's dairy herd.
Project summary: To research whether there is a more cost-effective way to process and provide milk to the U of I, while reducing the university’s carbon footprint.
Project Scope
Todd Martin
Identifying processing alternatives for raw milk produced by the UI dairy herd.
Performing feasibility analysis on alternatives
We were not responsible for implementing any of the proposed alternatives or contracting with potential business partners.
Sponsors
Todd Martin
Darin SaulSustainability Coordinator
University of Idaho
Tracie LeeAcademic Faculty
University of Idaho
Major Risks
Curtis Penney
Lack of information from key sources (inability to complete analysis)
Inability to find a local partner for milk pasteurizing
Inability get an inspector before deadline
Scope Creep
Project Constraints
Curtis Penney
Time (two months) 5 team members –
all with additional academic, work, and family responsibilities
Availability of needed information from key sources
Limited knowledge of the dairy industry
UI CampusDaily Milk Consumption
Curtis Penney
Location Gallons Consumed/YearDays Open/Academic
Year
6th Street Marketplace 1,536 192
Java Nook(admin) 384 160
Joes (Sub) 640 160
Law Coffee Shop 160 160
Bobs 17,920 224
Common Grounds 9,600 160
Common Cafeteria 480 192
Total Gallons 30,720
1,248 Average Cost Milk Consumed (per gallon) $ 2.80
Total Cost of Gallons Consumed
$ (86,016.00)
UI Dairy Daily Raw Milk Production-General Expenses
Jesse Dyer
Facilities Estimate
Remolding of Dairy (10x10 addition) $ (20,000)
Cool Storage $ (10,000)
Production Costs
Yearly Labor (2 Workers for Production and Delivery) $ (62,400)
Packaging (5 Gallon Bags) $ (36,610)
Yearly Milk Production $ (270,598)
Licensing (Grad A Processing Licensing-Free)) $ -
Delivery Service
Delivery Vehicle (Intial Cost) $ (30,000)
Delivery Costs(fuel, repairs, etc.) $ (7,800)
Total General Expenses $ (437,407)
Processing Options
Jesse Dyer
1. McDonald Option2. Shumway Option3. Refurbished Option4. WSU Creamery Option
McDonald Option
Scott DeFriez
Scott McDonald Option Estimate
Equipment $ (19,000.00)
Repair and set up $ (21,700.00)
Transportation to U of I $ (400.00)
Total Intial Expense $ (41,100.00)
Total Sales of all Milk Year 1 Gain/Loss Year 2 Gain/Loss
Sell @$1.50 per gallon $ (155,482.10) $ (54,382.10)
Sell @$2.00 per gallon $ (47,807.10) $ 53,292.90
Sell @$2.50 per gallon $ 59,867.90 $ 160,967.90
Sell @$3.00 per gallon $ 167,542.90 $ 268,642.90
Shumway Option
Scott DeFriez
Afton, Wyoming Option Estimate
Equipment $ (60,000.00)
Repair and Install $ (20,000.00)
Transportation to U of I $ (1,000.00)
Total Intial Expense $ (81,000.00)
Total Sales of all Milk Year 1 Gain/Loss Year 2Gain/Loss
Sell @$1.50 per gallon $ (195,382.10) $ (54,382.10)
Sell @$2.00 per gallon $ (87,707.10) $ 53,292.90
Sell @$2.50 per gallon $ 19,967.90 $ 160,967.90
Sell @$3.00 per gallon $ 127,642.90 $ 268,642.90
Refurbished Option
Jesse Dyer
Schier Company-Refurbished Estimate
Equipment $ (100,000.00)
Repair and Install $ (20,000.00)
Transportation to U of I $ (1,000.00)
Total Intial Expenses $ (121,000.00)
Total Sales of all Milk Year 1 Gain/Loss Year 2 Gain/Loss
Sell @$1.50 per gallon $ (235,382.10) $ (54,384.10)
Sell @$2.00 per gallon $ (127,707.10) $ 53,292.90
Sell @$2.50 per gallon $ (20,032.10) $ 160,967.90
Sell @$3.00 per gallon $ 87,642.90 $ 268,642.90
WSU Creamery
Todd Martin
Fixed Variable Total Del'dProduct Size Ingred Pkg OverHeadOverHead Labor Ship Costs Cost
Homo Gal 1.280 0.56 $0.51 $0.15 $0.92 $0.15 $3.602HG 0.640 0.41 $0.32 $0.10 $0.58 $0.10 $2.150Pt 0.160 0.31 $0.11 $0.03 $0.20 $0.03 $0.856HP 0.080 0.23 $0.06 $0.02 $0.12 $0.02 $0.531
B'Milk Gal 1.400 0.56 $0.64 $0.19 $1.15 $0.15 $4.122HG 0.700 0.41 $0.45 $0.13 $0.81 $0.10 $2.610
Chocolate Gal 1.620 0.56 $0.64 $0.19 $1.15 $0.15 $4.343HG 0.810 0.41 $0.45 $0.13 $0.81 $0.10 $2.721Pt 0.202 0.31 $0.19 $0.06 $0.35 $0.03 $1.148HP 0.101 0.23 $0.10 $0.03 $0.17 $0.02 $0.652
Recommendation
Scott DeFriez
Shumway Option @$2.50 Already passed inspection
Ready to go for operation
Old equipment, but has been kept in good condition
Profitable in first year Year 1=$19,967 Year 2=$160,967