Inbound wheat railcar loading optimization: an opportunity cost study for ConAgra Mills

Abstract

The objective of this thesis is to examine the opportunity cost, both financial and efficiency, of inbound railcars of wheat that are not optimally loaded and shipped to ConAgra Mills’ facilities. In performing an analysis of data showing actual versus optimal weights, a cost will be assigned to determine how much “dead freight” or extra freight is being paid to railroads for space not utilized. Throughout the analysis, it can be determined which shippers are lacking efficiencies in loading as well as those who are meeting ConAgra Mills’ expectations. To accomplish this objective, data were extracted from various sources for an entire fiscal year and 22,351 data observations were analyzed. The information was specific to both individual railcars as well as the shipments as a whole. These data points were analyzed in two ways, financial and capacity/efficiency. Financially, a cost was assigned to each railcar that was under the railcar’s goal weight. From a capacity perspective, railcars were analyzed on a shipment basis to indicate if equipment could be saved by more efficient loading. The study determined that savings could be found in every situation analyzed. It was determined that in addition to inbound shipments from outside shippers, inter-mill shipments between ConAgra Mills facilities were affected by loading inefficiencies. There could be an opportunity for further analysis to determine the full scope of savings beyond the limitations of this study. The main limitation of this thesis was the primary source of data.