amore frozen food case study

Amore Frozen Foods

Macaroni and Cheese Fill Targets 

Tom Jenkins, manager of qualify services at Amore s frozen foods plan? m Cori- 
IejkL Ncv. York, thought the summer of 1984 might be the lime to return the fill 
target for Amorc s Bounce frozen macaroni and cheese pit to 8.22 ounces 
A more had been filling each aluminum lin to an uncharacteristically high target 
of 8.44 ounces em since problems with underweight macamni and cheese ap- 
peared in Ne* York City jn L9^S. The higher target had protected Amore from 
fines levied against several producer; for Lands ru eight product, but ar the gipcns e 
of an c.ira 022 ounces of macaroni and chees e in each pie 

Cortland Production Facility 

The production facility in Contend. New York, was originally a cold storage 
warehouse for locally grown apples and peaches, When these forms of agricul- 
ture dwindled, a former Cortland StaK University student associated with the 
Duncan Packing Company of Louisville. Kentucky, suggested that The company 
purchase and convert the warehouse for use as a frozen foods production and 
storage facility The Duncan Packing Company had been founded in 1940 and 
prospered as a supplier of canned goods lo the United States military. With the 
end of World War 1 1, the company decided to expand into frozen foods and chose 
the Cortland apple and peach storage facility as pari of that expansion 

By !954. Duncan Packing Company sales of frozen meai and fruit pies 
reached Si I million. The company employed 925 people in its facilities in Cort- 
land * 126,000 square feet > and Webster City. Iowa 1 1 16.000 square feet]. Duncan 
was acquired a year later, 1955. by the American Baking Company, which 
changed she name to Duncan Frozen Foods. The Internationa! Communications 
Corporation acquired American Baking in 1968 and in 1981 sold Duncan io the 
Amore Corporation i a subsidiary of K. J. Kyburg Industries. Inc. i. At thai nme. 
Duncans annual sales of SI 87 million represented a significant expansion by the 
Amore Corporation ^ primarily involved m canned foods i into the higher- 
margined areas of processed and frozen foods. 

By 1984, ihe Cortland facility had frown to 500.000 square feet andempioyed 
1 250 people It produced 30,000 cases a day of finished products that earned the 
names Amore. Duncan, and Won Ton Exhibit I lists the products made in the 
Cortland facility 

Macaroni and Cheese Product ton 

The Cortland facility produced 60.000 dozen &- ounce frozen macaroni and 
cheese pics each month on a line staffed with 25 workers making about S6 an 
hour. When this line was not making macaroni and cheese. ]i produced any 
number of other similar products. 

Raw materials entered the preparation area where the cheese sauce wai made 
and the macaroni cooked and cooled. The two were then blended in horizontal 
misers and pumped to the filling line. At the filling line the aluminum trays were 
placed on a conveyor, mechanically fiDcd with Trie macaroni and cheese, and 
then placed in cartons The product was then cased (24 pies to the casej. frozen, 
and placed in storage for distribution The line operated at a speed of 1,000 doien 
pies every 20 minutes, [i took nine minutes for the mixed macaroni and cheese to 
end up packaged, cartoned, and cased, and another 40 minutes to freeze the 
cased product. 

Exhibit 2 gives [he standard cost breakdown for a dozen 8 -ounce macaroni 
and cheese pies as estimated by the account deparirnenl Pies sold at a whole- 

sale pnee of S4 50 per dozen. SI .50 above the S3 00 standard cost per dozen 
Fill Targets 

The practice in the food and beverage industry was lo set a tajgei weight of 
volume to which each container or package was filled Because of the v^riabilit> 
associated with the physical mechanism? that actually filled each package. Ml 
targets were always sei above ihe amount stated on the package Indus in praettce 
was to set targets at one standard deviation above the package amount so about 
S5 percent of all packages would be in compliance. Exhibit 3 gives a detailed 
tabic of normal probabilities used to determine the percental^ of underweight 
packages. The filling device for macarom and cheese at Amore's Cortland plant 
could till amounts thai were normally distributed around the target value with a 
sta ndard deviation of 0.22 ounc es Industry practice would then dictate a fi3l 
target for an 8-ounce macaroni and cheese pie of £ 22 ounce s. 

During the energy en sis of the late 70s. Amore 'then Duncan Frozen Foods » 
discovered tha t eosi- conscious supermarkets were turning off their freezer* when 
they wem home for the evening. The effect on frozen macaroni and cheese 
to cause a softening of the product and a subsequent weight loss due to dehydra- 
tion Local government inspectors discovered several examples of underweight 
macaroni and cheese for which some producers were fined scvtral thousand 
dollars In particular, inspectors from the Bureau of Weights and Measures of 
New York City levied fines of up n £15 for ea ch 8 -ounce packag e of frozen 
macaroni and cheese found to be substantiate underweight L Uespne the indus- 
try s presentation of evidence thai improper storage of the product led to dehydra- 
tion thai caused the underweight products the fines were no* rescinded. In 
response to these problems. Amore quickly raised the target to £.44 our,: .7 - 
1078. a full two standard deviations above the package weight. This unusually 
high target protected Amore from most of the problems brought on by the energ) 
ensis, In 1084. with energy costs ai normal levels, fines for substantially under- 
weight frozen macaroni and cheese were virtually nonexistent in the industry. 

Weight Control System 

The United States Food and Drug Admi nisi ration (FDAi was the arm of the 
federal government responsible for monitoring the practices of the food and be^ 
erage industry One part of the PDAs activities required each food packager to 
submit a program designed to ensure thai packages contained the stated amount 
i weights i of rrroduci. 

For Amore 's macaroni and cheese pies, the FDA had approved a weifht con- 
trol system that required a sample of five pies be taken every 10 minutes. The hue 
pies were selected consecutively at the beginning of a 20-minute run b a quality 
control technician. »ho then spent almost the entire 20 minutes weighing and 

checking vinous attributes of the sample. The technician cost the coin pans close