iron ore company of ontario

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Iron Ore Company of Ontariocase study

Case summary:Iron Ore Company of Ontario is engaged in the business activity of extracting and processing iron ore. In the given case study, it is mentioned that the company wants to audit its operation in order to:

Improve productivity Decrease idle time of labor and machines Remove bottlenecks from the process Keep the cost of operations as low as possible

The process of iron ore extraction and processing is as follows:

1. Large drills cutting 12 meter holes into solid rock2. These holes were then filled with explosives3. Shovels move into position and start loading the trucks4. Trucks then unloaded the muck at the crusher (where the ore was broken into smaller pieces) /

or at the stock pile (if the crusher was already occupied) / or at a location outside the mine (in case of the muck being waste)

5. The crushed ore then passed through concentrator where it was further crushed6. The final product was then ultimately loaded on a ship and exported.

Iron Ore Company of Ontario

Drilling 12-mt holes using drills

Explosive Filled and blasted to shatter solid

Loading loose muck onto trucks

Waste material to dumps

30% ore taken to

Crushed ore taken by conveyor belt to concentrator

66% ore ready for transportation

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Further information given in the case study:

Capacities Shovels TrucksNumber Owned 11 41Number available at any given time 7 28

Cubic meters per load per unit 11.5 36Cubic meters per hour per unit 480 128

Also one m3 of ore weighs 3.03 tons & one m3 of waste weighs 2.37 tons

1. Bottleneck:

Bottleneck is said to occur at the place which takes the maximum time in doing its work i.e. the slowest process.

According to information provided in the case:-

Each shovel takes 11.5m3/load with 480m3/hr = 0.024 hr/load or 1.44 min/load

Each Truck takes 36m3/load with 128m3/hr = 0.28 hr/load or 16.88 min/ load – (1)

Loading a truck (36m3/load) with a shovel (480m3/hr) = 0.075 hr/load or 4.5 min/load

Each crusher takes 4710 tons/hr or 78.5 tons/min

Capacity per truck of ore = 36m3 x 3.03tons = 109.08 tons

Capacity per truck of waste = 36m3 x 2.37 tones = 85.32 tons.


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From this we find that Total time taken by truck :

Time of loading truck by shovel (4.5 min/load)+ Time Taken by truck from shovel to crusher + Time it takes for dumping (1.7 min – given)

+ Time for truck to drive from crusher to shovel . = 16.88 min (1)

Or, trip from shovel to crusher = trip from crusher to shovel = 5.34 min /load **

**assuming weight has no impact on speed of the truck

Mean Down time:

Given in the exhibit 8 in the case, summary statistics are as follows:-

Mean Delay = 12.86 minutes

Number of Delays = 332

Sampling interval = 120 days

Mean Down time = (332 x 12.86)/ (120 x 8) = 4.5 min per hour per shift.

At Shovel:

Each Shovel can support 4 trucks. Cycle time for trucks at any Shovel (say ‘X’). Consider, operations started at t=0 following are times after that. Arrows show the sequencing of trucks at shovel

Truck X1 Truck X2 Truck X3 Truck X4

Operation Start 5.34 9.84 14.34 18.84

Departure 9.84 14.34 18.84 23.34

Arrival after 1st trip 22.22 27.84 32.34 36.84

2nd Departure 27.84 32.34 36.84 41.34

Truck X1 arrives after 1st trip after 22.22mins but Truck A4 leaves only after 23.34min

Hence, each round of four trucks introduces time delay = 23.34- 22.22 = 1.12 min Throughput Time = Cycle time + Idle time

= 16.88 + 1.12 = 18 min


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OPERATING CYCLE AT CRUSHER:

As truck’s cycle time is 18mins, we can assign 3 shovels for each crusher sequenced to arrive at 1.7mins interval. Crusher capacity is 78.5 tons/min.

Arrival Time

Trucks Total oreAdded (Ton)

Already present

Consumption before next truck (Ton)

Time interval for next truck

Idle Time before next truck (min)

15.18 Truck X1 Truck Y1 218.16 0 133.5 1.7 016.88 Truck Z1 109.08 84.66 219.5 2.8 0.33119.68 Truck X2 Truck Y2 218.16 0 133.5 1.7 0 21.38 Truck Z2 109.08 0 219.5 2.8 0.331 24.18 Truck X3 Truck Y3 218.16 0 133.5 1.7 025.88 Truck Z3 109.08 84.66 219.5 2.8 0.33128.68 Truck X4 Truck Y4 218.16 0 133.5 1.7 0 30.38 Truck Z4 109.08 0 219.5 2.8 0.331

Idle time for crusher is = 0.331 min every 4.5 min interval or 4.41min/ hr which will get compounded when delay because of 1.12min /load shovel-truck cycle is also considered.

Hence, we find both Truck and Crusher experience idle time of 1.12 min/ cycle and 4.41 min/ hr even as shovel works at full capacity making shovel the bottleneck.


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Deploying the shovels:

In 24 hours, One crusher operates for 8hrs day shift while both operate for 16hrs of afternoon and night shift. As shown in above problem 1 crusher can support 3 shovels optimally.

Total ore to be moved in a day is 128000 tons. Total 5 crusher-shifts are available (1in day, 2 each in afternoon and night).

Dividing total load in 5 shifts we get = 128000/5 = 25600 tons/ shift

During 480 mins of Shift each shovel can accommodate (480/18) = 26 truck trips

But subsequent 3 trucks will have intervals of 4.5 mins and fourth truck will have only 25 trips totaling to 103 truck trips in a shift.

Total ore transported in a shift by 1 shovel = 103 x 109.08 = 11235.24 tons.

Hence optimal assignment will be

Assigning 2 Shovels for the single crusher during day shift,

Assigning 4 Shovels for 2 crushers during Night shift (2 to each Crusher), and

Assigning 5 Shovel for 2 crusher during Afternoon shift (2 to one Crusher and 3 to other)


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Should IOCO stockpile ore? When? How much?

Considering the inefficiency of the operation, the superintendent started a stockpile 120 meters from the crushers. Loaded ore trucks dumped at the stockpiles, instead of returning loaded to the mine when both crushers were down. It was thought to be cheaper to station a shovel, which would otherwise be spare at the stockpiles and move the ore from the stockpile to the crusher later, than to send loaded ore trucks back to the mine.

Here we will consider the opportunity cost of starting stockpile. We know that Stockpile was useful for ensuring a continuous flow of ore to the crushers during the 30 minutes each day that the mine was clearing for blasting.

As calculated above the crusher capacity is 78.5 tonnes per minute. So in the 30 min,it would be

= 30 x 78.5 = 2355 tonnes

With the help of statistics given in the exhibit 8, we can find the mean downtime during one shift.

(332 x 12.86)/120 = 35.579

For 3 shifts, the downtime will be 3 x 35.579 = 106.737min

Minutes Idling cost of truck ($ per min)

Idling cost of shovel ($/min)

Total cost of idling ($/min)

Running cost ($)

1 0.379 0 0.437 1.141.12 0.425 0 0.49 1.141.78 0.673 0.466 1.14 1.142 0.758 0.976 1.753 1.143 1.137 2.086 3.223 1.144 1.516 3.195 4.711 1.14

As we calculate in the first question that it took trucks to 5.34 minute to cover 1500 meters.So here the distance is only 120 x2 ( to and fro to stockpiles and crusher) meter which will be covered in 240*5.34/1500 = 0.854 min.

As given in the exhibit 7, cost of operation of trucks is $80 per hour. So the cost of running the above distance is

0.854*80/60 = 1.138 = $1.14

Idle cost of truck is $22.74 per hour. Per minute it would be $22.74/60 = $0.379.


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Idle cost of shovel

Under normal circumstances, the idle time for the shovel is 1.12 min. Thus the time over and above that time will be considered for cost calculation.

For example, if the shovel is idle for 3 min then the cost of idle would be

(3-1.12)*$66.56/60 = $2.086

For different amount of time, the cost is time is mentioned in the above table.

So at 1.78 minute, the cost of running and idle is equal. Therefore, during crusher downtime the truck should wait for 1.78 min, before proceeding towards stockpile.

Particulars No of Truck Loads No of Crushers Truck loads to stockpile

Total Stockpile(in Ton)

Day shift 35.57 x 3 / 4.5= 23 1 23 2508.84Afternoon shift 35.57 x 1 / 4.5=7 2 14 1527.12Night shift 35.57 x 2 / 4.5=15 2 30 3272.4

Assuming maximum of 35.57 min downtime per shift per crusher, the total no. of truck loads going to stockpile can be given as follows.We assume that the second crusher starts operating 1.7 min after the first crusher. This will help in diverting truck from one shovel of downtime crusher to the running crusher without any waiting. The stockpile = 7308.36 ton Thus, a stockpile of 7308.36 ton should be placed at 120 m from the crusher.Hence the decision taken by Mr. George Sharp to place the stockpile at a distance of 120 m from the crusher has proved to be a favorable one.


iron ore company of ontario

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