Date of this Version
This project was assigned to research the feasibility and value of implementing a dairy processing facility on the campus of the University of Nebraska-Lincoln. The facility would process milk produced from cows under the same roof and will serve as an educational experience for Nebraska dairy farmers, UNL students, and K-12 students in the Lincoln-Lancaster County area. If the project is successful and replicated across the state, this facility could have a significant impact on the reduction of milk transportation costs in the Nebraska dairy industry.
The project began with researching milk processing methods and steps from production to consumption. Shortly after this step, information on milk consumption patterns was collected from UNL Dining Services to determine demand on campus. Every unit operation requires certain equipment to effectively ensure the safety and quality of the final product, and mass balances from UNL milk consumption data were used to size equipment and storage capacity. Engineering firms were then consulted to gather information on equipment specifications and prices. Equipment costs and operating costs (estimated with the help of Dr. Howell and other university dairy operations) were entered into a Monte Carlo simulation to analyze return on investment and a breakeven point.
The results from the costs section showed that the fixed costs (equipment and engineering) for the milk processing would be about $1.2 million. The Monte Carlo simulation showed that the project would not turn a profit for 10-12 years, and approximately 2.25 million gallons of milk would need to be processed and sold to recover initial costs. Overall, the project successfully displays data that can be interpreted by the client to decide whether to move forward with the project and the appropriate scale for the project at UNL.