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2.

ANALYSIS AND METHODOLOGY


Methodology: Line balancing method has been used with different heuristic to
explore various ways of improving the production process efficiency and
reducing the unit cost.

Increasing the no. of shift per day is the second method used to reduce the
cost per unit and increase the overall efficiency of the process plant.

Existing Process- Process Diagram

CIP
(Set up 1)

Raw Materials
Blending &
preparation (Set Up 2)

Distribution

Carton
Gluing

UHT system

Carton
Filling

Aseptic filling
machine

Carton
Opening

Coding
Machine

Shrink
Wrapping

Straw
applicatio
n

2.1. EXESTING PROCESS


The Production Process for Premium Mango Juice
The Production process at ACME Agrovet & Beverages is pretty much the
same for the 250ml, 500ml, and the 1 liter size of Premium Mango Juice.
The sequence of the production process for the 250ml is:
2.1.1

Before commencing the actual production, there is CIP-

Cleaning in Process: the cleaning of the entire production process with


a solution of cleaning agents dissolved in water which is preheated to
850C. The cleaning process takes 1.5 hours.
2.1.2

Then the production process commences, form one side, mango

pulp is extracted from cans and poured into a hopper which leads to a
mixing vessel. At the same time, sugar, citric acid, and aseptic acid are
dumped directly into the mixing vessel.
2.1.3

In the mixing vessel (of capacity 200kg), batches of 200kg of the

mixture is taken and fed into the blending tank There is a continuous
recycling between the mixing vessel and the blending tank. In the
mixing vessel, the mixture is mixed with water preheated to 55 0C
(enabled by using heat exchangers), Glucose is added in this mixture
separately. In the blending tank, the final 10 minutes is used for mixing
by the agitator.
2.1.4

From the blender, samples are taken for quality testing, if the

mixture to conform to specification, then the mixture goes through


filtration pipes, where fibers & suspended matter are removed.
2.1.5

Then the mixture is cooled initially then fed into the Buffer Tank

where it is further to cooled to 20-22C. Here the Balance Tank Device


(BTD), having sensors that enable it to supply any deficiency in the
supply of juice being fed into the Buffer Tank. The capacity of the
Balance Tank Device is 250 ltr. This is the beginning of the Ultra
Heating Treatment (UHT) process.
2.1.6

The mixture then goes to the preheating stage in the tubular

heat exchanger, where it is heated to 60-70C, capacity = 2,200 l/hr.

2.1.7

Next the mixture is subjected to a pressure of 180 bar in the

homogenizer. Capacity = 2,200 l/hr.


2.1.8

Then there is the final heating which is in the holding tube,

where the mixture is heated to 95C. Capacity = 2,200 l/hr.


2.1.9

The mixture is then precooked to 52-60C.

2.1.10

Then the mixture goes through final Cooling to Ambient (Room)

temperature (25-30C).
2.1.11

The mixture is then fed into the filling aseptic tank. Here the tetra

Pak machine pours the juice into individual packs. Here about 10% of
the juice is returned through the preheating stage to supply the BTD
with juice. Here the juice and the packets are further subjected to
quality checks. The packs are subjected to leakage tests.
2.1.12

Then the quality-passed packets of juice are cooled by the

cooling machine.
2.1.13

Next the straw application machine attaches a straw to each

juice packet.
2.1.14

Next, the Shrink wrapping machine groups the individual juice

packs into batches of 6 .


2.1.15

Next, there is the cartooning process, where the 6-packs are

further put into carton sizes.


2.1.16

From here the cartons are manually trolleyed to store for

distribution.
198 liters of juice is blended and mixed in one batch . This way 40 batches of
juice are mixed and blended in setup time 2 and stored in the Buffer tank
before the production process starts. Each batch of juice mix which comes out
as 22 cartons of finished juice pack is considered as unit of production for
ease of calculation. Each cartons consists of 36 tetra pack juice of 250ml.
Normally 880 cartons of juice is produced from 40 batches of juice mix
everyday and the weekly production is 5280 cartons.

2.2.1. Process Data


Setup time 1 = 90 minutes
Setup Time 2 = 90 minutes

2.2.2. Precedence Diagram Table 2


Task
a
b
c
d

Task Time
(min)
2.5
6.3
6.3
6.3

6.3

6.3

6.3

h
i
j

3
3
3

Description
UHT
Aseptic Filling Machine
Coding Machine
Straw Applicator (Glue
Filling)
Straw Applicator (Straw
Filling)
Shrink Wrapping (Plastic
Feeding)
Shrink Wrapping (Wrapping
Check)
Carton Opening
Carton Filling
Carton Gluing

Preceding
Sequence
---a
b
c
d
e
f
g
h
i

2.2.3. Precedence Diagram - Existing Process

2.5

6.3

6.3

6.3

6.3

6.3

6.3

2.2.4. Heuristic: The precedence relationship should not be violated and cycle time should not be exceeded.
Existing System: Initially the cleaning in process (Setup1) is started. After that four labor prepares the raw material and Mixing-blending
process (Setup 2) is done. After setup 1 and setup 2 is completed, the main process started. For each task one worker is engaged.
Theses workers work hourly basis. There are also some permanent staff that look after the overall quality, production, packing and
distribution. Total Task Time: 49.3 Minutes, Cycle Time: 6.3 Minutes, Theoretical minimum no. of stations = 49.3/6.3 =7.83 ~ 8. So
there is still scope of improvement in this present system. The following table details the data about the salary.
Table 3
Positions
Daily labor
QC Manager
QC Supervisor
Production Manager
Production Supervisor
Packing and Distributor Manager
Packing Supervisor
Distribution Supervisor

2.2.5. Existing System


No. of stations: 10
Cycle time: 6.3 min

Monthly Salary
100/labor/day
15,000
5,000
20000
7,000
15000
7,000
7,000

Numbers
variable
1
1
1
2
1
2
1

Total Salary
Variable
15,000
5,000
20,000
14,000
15,000
14,000
7,000

Total Task Time: 49.3min

2.2.6. Summary of Existing System Table 4


Stations
Task Assigned
Activity Time
Idle Time

1
a
2.5
3.8

2
b
6.3
0

3
c
6.3
0

4
d
6.3
0

5
e
6.3
0

6
f
6.3
0

7
g
6.3
0

8
h
3
3.3

9
i
3
3.3

10
j
3
3.3

2.2.7. Efficient and Idle Time


Efficiency = (Sum of the activity times) / (Number of Stations)(Cycle time)
= 49.3/ (10 x 6.3) x 100%
= 78.3%
Efficiency = 78.3%
Idle Time = 100% - Efficiency = 100% - 78.3% = 21.7 %
Fig 1: Pie Chart of Efficient and Idle Time

Total time for one shift = Setup time 1 + Setup time 2 + Time for 1 st shift
production ( throughput time of first batch + CTx39)
= 90min + 90min + (49.3+ 39 x 6.3) min
= 90 min + 90 min + 295 min
= 475min.

2.2.8. Cost analysis:


Cost, variable =

i) electricity = Tk. 273,175/month


= Tk. 10,507/day = Tk. 437.8/hr
ii) Gas = Tk. 46,200/month = Tk. 1,638.5/day
= Tk. 68.27/hr
iii) Labor, hourly = Tk. 1000/day = Tk. 125/hour (working

hours 8 hrs/day)
iv) Labor Cost, fixed

= Tk. 90,000/month = Tk.

3,461.54/day
v) Depreciation = Tk. 283,602 = Tk. 9453.4/day ( 30
days in a month)
NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.
Hourly Variable cost =Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 125
= Tk. 631.07/hr

Time in 1st shift = 475min 60 = 7.92hrs


Variable Cost for 1st shift = 7.92hrs x Tk. 631.07 = Tk. 4998.07
Variable Cost for weekly production (6 days) = Tk. 4998.07 x 6 = Tk.29988.42
Fixed labor cost per week = 3461.54 x 6 =Tk 20769.24
Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8

Total Cost per week = Variable Cost + Fixed labor cost + Depreciation cost
= Tk(29988.42 + 20769.24 + 66173.8)
= Tk 116931.46
Weekly production = Daily Production x no. of days = 880 x 6 = 5280 cartons
Unit Cost/Carton = Tk. 116931.46/5280 = Tk. 22.15/carton

2.3. OPTION ONE


Heuristic: The precedence relationship should not be violated and cycle
time should not be exceeded.
Cold Start
Total Task Time: 49.3 Minutes
Cycle Time: 6.3 Minutes
Theoretical minimum no. of stations = 49.3/6.3 =7.83 ~ 8.
So there is opportunities to increase the efficiency of the system. In this
alternative, no. of stations has been reduced to 9. Carton Filling and Carton
Gluing tasks have been assigned to only one station instead of two. Thus
efficiency is increased to 86.95% and idle time is reduced to 13.05%. As no.
of work stations is reduced, the variable labor cost is also reduced. So the
Cost/carton is reduced to 22.03 from 22.15

2.3.1. Precedence Diagram Table 5 (Option ONE)


Task
a
b
c
d

Task Time
(min)
2.5
6.3
6.3
6.3

6.3

6.3

6.3

h
i
j

3
3
3

Description
UHT
Aseptic Filling Machine
Coding Machine
Straw Applicator (Glue
Filling)
Straw Applicator (Straw
Filling)
Shrink Wrapping (Plastic
Feeding)
Shrink Wrapping
(Wrapping Check)
Carton Opening
Carton Filling
Carton Gluing

Preceding
Sequence
---a
b
c
d
e
f
g
h
i

2.3.2. Precedence Diagram Option ONE

2.5

6.3

6.3

6.3

6.3

6.3

6.3

2.3.3. Summery of Option ONE Table 6

Stations
Task Assigned
Activity Time
Idle Time

1
a
2.5
3.8

2
b
6.3
0

3
c
6.3
0

4
d
6.3
0

5
e
6.3
0

6
f
6.3
0

7
g
6.3
0

8
h
3
3.3

9
i,j
3+3=6
0.3

2.3.4. Efficient and Idle Time


Efficiency = Total task time / (No. of stations x cycle time)
= 49.3/(9 x 6.3) x 100%
= 86.95%
Idle time = 100% - Efficiency
Pie Chart of Efficient and Idle Time

Output = 880 cartons (22 x 40 batch) of 36 pack of 250ml Premium juice (per t
shift) = 22 cartons/Batch
Total time for shift = 475min.

2.3.5. Cost analysis


Cost, variable =

i) electricity = Tk. 273,175/month


Tk. 10,507/day Tk. 437.8/hr
ii) Gas = Tk. 46,200/month Tk. 1,638.5/day
Tk. 68.27/hr
iii) Labor, hourly = Tk. 900/day Tk. 112.5/hour (working

hours 8 hrs/day)
Labor, fixed

= Tk. 90,000/month Tk. 3,461.54/day

NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.
Depreciation = Tk. 283,602 Tk. 9453.4/day ( 30 days in a month)
Hourly variable cost =Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 112.5)
= Tk. 618.57/hr
Time in 1st shift = 475min 60 = 7.92hrs
Cost for 1st shift = 7.92hrs x Tk. 618.57 = Tk. 4899.07
Variable Cost for weekly production (6 days) = Tk. 4899.07 x 6 = Tk.29394.42
Fixed labor cost per week = 3461.54 x 6 =Tk 20769.24
Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8

Total Cost per week = Variable Cost + Fixed labor cost + Depreciation cost
= 29394.42 + 20769.24 + 66173.8
= 116337.46
Weekly production = 5280 cartons
Unit Cost/Carton = Tk. 116337.46/5280 = Tk. 22.03/carton

2.4. Option TWO


Heuristic: The precedence relationship should not be violated and cycle
time should not be exceeded.
If Cycle time is taken as 12.6 minutes.
Theoretical minimum no. of stations =Total task time/Cycle time
=49.3/12.6
=3.91 ~ 4
In this option effort is made to reduce the no. of stations by increasing the
Cycle time. Here it can be seen that the work stations are unbalanced with no.
1 stations having 10.1 minutes of idle time while no. 2,3 and 4 having zero idle
time. The efficiency of the process is also reduced to 78.25 which is less than
the existing process. The unit cost could be reduced to Tk 21.58 in this option
which is 2.6% lower than the existing cost per carton.

2.4.1. Precedence Diagram Table 7 (Option TWO)


Task
a
b
c
d

Task Time
(min)
2.5
6.3
6.3
6.3

6.3

6.3

6.3

h
i
j

3
3
3

Description
UHT
Aseptic Filling Machine
Coding Machine
Straw Applicator (Glue
Filling)
Straw Applicator (Straw
Filling)
Shrink Wrapping (Plastic
Feeding)
Shrink Wrapping
(Wrapping Check)
Carton Opening
Carton Filling
Carton Gluing

Preceding
Sequence
---a
b
c
d
e
f
g
h
i

2.4.2. Precedence Diagram Option TWO

2.5

6.3

6.3

6.3

6.3

6.3

6.3

2.4.3. Summery of Option TWO Table 8


Stations
Task Assigned
Activity Time
Idle Time

1
a
2.5
10.1

2
b,c
12.6
0

3
d,e
12.6
0

4
f,g
12.6
0

5
h,i,j
9
3.6

2.4.4. Efficient and Idle Time


Efficiency = Total task time / (No. of stations x cycle time)
= 49.3/(5 x 12.6) x 100%
= 78.25%
Idle time = 100% - Efficiency
= 21.75%
Pie Chart of Efficient and Idle Time

Output = 880 cartons of 36 pack of 250ml Premium juice (1 st shift) 22


cartons/Batch
Total time = Setup 1 = 90 min
Setup 2 = 90min
Process time/Shift = 295min (for 40 batches of 22 cartons)
Total time = 90 + 90 + 295 = 475min

2.4.5. Cost analysis


Total time for shift = 475min.
Cost, variable =

i) electricity = Tk. 273,175/month


Tk. 10,507/day Tk. 437.8/hr
ii) Gas = Tk. 46,200/month Tk. 1,638.5/day
Tk. 68.27/hr
iii) Labor, hourly = Tk. 500/day Tk. 62.5/hour (working

hours 8 hrs/day)
Labor, fixed

= Tk. 90,000/month Tk. 3,461.54/day

NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.
Depreciation = Tk. 283,602 Tk. 9453.4/day ( 30 days in a month)
Hourly variable cost =Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 62.5)
= Tk. 568.57/hr

Time in 1st shift = 475min 60 = 7.92hrs


Cost for 1st shift = 7.92hrs x Tk. 568.57 = Tk. 4503.07
Variable Cost for weekly production (6 days) = Tk. 4503.07 x 6 = Tk.27018.42
Fixed labor cost per week = 3461.54 x 6 =Tk 20769.24
Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8
Total Cost per week = Variable Cost + Fixed labor cost + Depreciation cost

= 27018.42 + 20769.24 + 66173.8


= 113961.46
Weekly production = 5280 cartons
Unit Cost/Carton = Tk. 58,436.68/5280 = Tk. 21.58/carton
Setup time 1 = 90 minutes
Setup Time 2 = 90 minutes

2.5. Option THREE


Heuristic: The precedence relationship should not be violated and cycle
time should not be exceeded.
Cold Start
Total Task Time: 49.3 Minutes
Cycle time: 6.3 Minutes
Theoretical minimum no. of stations = 49.3/6.3 =7.83 ~ 8.
Because there is fractional part, 100% efficiency is not attainable. But there is
good chance of improving the process if theoretical minimum no. of stations
could be realized. In this option precedence diagram 2 has been followed.
There is no preceding task for task h (carton opening) in precedence diagram
2. So task a and task h has been assigned in station 1 while task i and task j
have been assigned in station 8. This way it was possible to balance all the
workstations and idle time could be reduced to only 2.2%. The cost per carton
is also reduced to Tk 21.92 which is 1.04% lower than the existing cost per
carton.

2.5.1. Precedence Diagram Table 9


Task
a

Task Time
(min)
2.5

Description
UHT

Preceding
Sequence
----

b
c
d

6.3
6.3
6.3

6.3

6.3

6.3

h
i
j

3
3
3

Aseptic Filling Machine


Coding Machine
Straw Applicator (Glue
Filling)
Straw Applicator (Straw
Filling)
Shrink Wrapping (Plastic
Feeding)
Shrink Wrapping (Wrapping
Check)
Carton Opening
Carton Filling
Carton Gluing

a
b
c
d
e
f
--h,g
i

2.5.2. Precedence Diagram Option THREE

2.5

6.3

6.3

6.3

6.3

6.3

6.3

g
3

2.5.3. Summary of Option THREE Table 10


Stations
Task Assigned
Activity Time
Idle Time

1
a,h
2.5+3=5.5
0.8

2
b
6.3
0

3
c
6.3
0

4
d
6.3
0

5
e
6.3
0

6
f
6.3
0

7
g
6.3
0

8
I,j
3+3=6
0.3

2.5.4. Efficient and Idle Time


Efficiency = Total task time / (No. of stations x cycle time)
= 49.3/(8 x 6.3) x 100%
= 97.8%
Idle time = 100% - Efficiency
= 2.2%
Pie Chart of Efficient and Idle Time

Output = 880 cartons of 36 pack of 250ml Premium juice (1 st shift) 22


cartons/Batch
Total time = Setup 1 = 90 min
Setup 2 = 90min
Process time/Shift = 295min (for 40 batches of 22 cartons)
Total time = 90 + 90 + 295 = 475min

2.5.5. Cost analysis


Total time for shift = 475min.
Cost, variable =

i) electricity = Tk. 273,175/month


Tk. 10,507/day Tk. 437.8/hr
ii) Gas = Tk. 46,200/month Tk. 1,638.5/day
Tk. 68.27/hr
iii) Labor, hourly = Tk. 800/day Tk. 100/hour (working

hours 8 hrs/day)
Labor, fixed

= Tk. 90,000/month Tk. 3,461.54/day

NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.
Depreciation = Tk. 283,602 Tk. 9453.4/day ( 30 days in a month)
Hourly variable cost =Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 100)

= Tk. 606.07/hr

Time in 1st shift = 475min 60 = 7.92hrs


Cost for 1st shift = 7.92hrs x Tk. 606.07 = Tk. 4800.07
Variable Cost for weekly production (6 days) = Tk. 4800.07 x 6 = Tk.28800.42
Fixed labor cost per week = 3461.54 x 6 =Tk 20769.24
Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8

Total Cost per week = Variable Cost + Fixed labor cost + Depreciation cost
= 28800.42 + 20769.24 + 66173.8
= 115743.46
Weekly production = 5280 cartons
Unit Cost/Carton = Tk. 115743.46/5280 = Tk. 21.92/carton

2.6. Option FOUR


Heuristic: The precedence relationship should not be violated and cycle
time should not be exceeded.
Operating 2 shifts in one day: Setup Time 1 is required only for cold start
and Set up 2 can be done during process time of first shift. So for second
shift process time is substantially reduced. This will also allow the system to
run for only three days per week to meet the weekly demand of 5280 cartons
of mango juice. The other four remaining days in a week could be utilized for
producing 1liter and 500 ml products. Three extra supervisors are employed
for the extra shift: one quality supervisor, one production supervisor and one
packing supervisor. By using this option the cost per carton could be reduced
to Tk 21.02 which is 5.1% lower than the existing cost per carton.
Operating 2 shifts in one day
Time for 1st Operating Cycle = 475 minutes
Time for 2nd Operating Cycles = (Setup one is required only for cold start, Set
up 2 can be done during process time of first batch.),
Process time = 40 x 6.3min = 252min. ( for 40 batches of 22 cartons)
Total time for 2 shifts = 475min + 252min = 727min. 12.12hrs.
Daily output is = 880 x 2 = 1,760 cartons

2.6.1. Precedence Diagram Table 11


Task
a
b
c
d
e
f
g
h
i
j

Task Time
(min)
2.5
6.3
6.3
6.3
6.3
6.3
6.3
3
3
3

Description
UHT
Aseptic Filling Machine
Coding Machine
Straw Applicator (Glue Filling)
Straw Applicator (Straw Filling)
Shrink Wrapping (Plastic Feeding)
Shrink Wrapping (Wrapping Check)
Carton Opening
Carton Filling
Carton Gluing

Preceding
Sequence
---a
b
c
d
e
f
--h,g
i

2.6.2. Precedence Diagram Option FOUR

2.5

6.3

6.3

6.3

6.3

6.3

6.3

g
3

2.6.3. Cost Analysis


Cost, variable =

i) electricity = Tk. 273,175/month


=Tk. 10,507/day
= Tk. 437.8/hr
ii) Gas = Tk. 46,200/month
=Tk. 1,638.5/day
= Tk. 68.27/hr
iii) Labor, hourly = Tk. 1000/day Tk. 125/hour (working

hours 8 hrs/day)
iv) Supervisors (3) =Tk(5000+ 7000 7000)/month each =
Tk 19000/month
= Tk 730.77/day
= Tk 91.35/hr
iv)

Labor, fixed

= Tk. 90,000/month Tk.

3,461.54/day
= Tk.432.7/hr
NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.
Cost, fixed = Depreciation = Tk. 283,602 = Tk. 9453.4/day
Hourly variable cost
= Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 125
= Tk. 631.07/hr
Variable Cost per day = 12.12hrs x Tk. 631.07
= Tk. 7648.57

Weekly variable cost = 7648.57 x 3


= Tk 22945.71
Supervisors daily cost = 91.35 x 4.12
= Tk 376.36
Supervisors weekly cost= 376.36 x 3
= Tk 1129.08
Fixed Labor Cost = Tk. 90,000/month
= Tk. 3,461.54/day
= Tk 3461.54 x 6
= Tk 20769.24/week
Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8
Total Weekly Cost = weekly variable cost + Supervisors cost + weekly fixed
labor cost + Weekly Depreciation Cost
= 22945.71 + 1129.08 +20769.24 + 66173.8
= Tk 111017.83
Weekly production = 1760 x 3
= 5280 cartons
Unit cost per carton = Tk. 111017.83/5,280
= Tk. 21.02/carton

2.7. Option FIVE


Heuristic: The precedence relationship should not be violated and cycle
time should not be exceeded.
Operating 6 shifts consecutively: Setup Time 1 is required only for cold
start and Set up 2 can be done during process time of previous shift batch.
So from the second shift onwards process time is substantially reduced. This
will require the system to run for only 28.92 hours in a week to meet the
weekly demand of 5280 cartons of mango juice. The other six remaining days
in a week could be utilized for producing 1liter and 500 ml products. Six extra
supervisors are employed for the extra shifts: Two quality supervisor, two
production supervisor and two packing supervisor. Three supervisors, one
from each department will be working for 8 hours. Then the other three
supervisor will take over and work till permanent supervisors take over at
8clock in the next morning. By using this option the cost per carton could be
reduced to Tk 20.19 which is 8.85% lower than the existing cost per carton.
Time for 1st shift = 475 minutes, Time for 2nd shift = 252min, 3rd shift = 252min,
Total time for 6 shifts = 475min + 252min + 252min +252min +252min
+252min = 1,735min. 289.17 min/shift 28.92hrs.

2.7.1. Precedence Diagram Table 12

Task
a
b
c
d
e
f
g
h
i
j

Task Time (min)


2.5
6.3
6.3
6.3
6.3
6.3
6.3
3
3
3

Description
UHT
Aseptic Filling Machine
Coding Machine
Straw Applicator (Glue Filling)
Straw Applicator (Straw Filling)
Shrink Wrapping (Plastic Feeding)
Shrink Wrapping (Wrapping Check)
Carton Opening
Carton Filling
Carton Gluing

Preceding Sequence
---a
b
c
d
e
f
--h,g
i

2.7.2. Precedence Diagram Option FIVE

2.5

6.3

6.3

6.3

6.3

6.3

6.3

g
3

2.7.3. Cost analysis


Cost, variable =

i) Electricity = Tk. 273,175/month


=Tk. 10,507/day
= Tk. 437.8/hr
ii) Gas = Tk. 46,200/month
=Tk. 1,638.5/day
= Tk. 68.27/hr
iii) Labor, hourly = Tk. 1000/day Tk. 125/hour (working

hours 8 hrs/day)
iv) Supervisors (3) =Tk(5000+ 7000 + 7000)/month = Tk
19000/month
= Tk 730.77/day
= Tk 91.35/hr
iv)

labor, fixed

= Tk. 90,000/month Tk.

3,461.54/day
NB: The cost of raw materials have been excluded due to discretionary
reasons and the fact that it varies on the average evenly with production
quantity.

Cost, fixed = Depreciation = Tk. 283,602 = Tk. 9453.4 /day


Hourly variable cost = Electricity cost + Gas Cost + Variable Labor Cost
= 437.8 + 68.27 + 125
= Tk. 631.07/hr
Variable Cost per week = 28.92hrs x Tk. 631.07 = Tk.18250.54
Supervisors weekly cost = 91.35 x 16 = Tk 1461.6

Labor, fixed

= Tk. 90,000/month Tk. 3,461.54/day


=3461.54 x 6
=20769.24

Depreciation Cost per week= 9453.4 x 7 = Tk 66173.8


Total Weekly Cost = weekly variable cost + Supervisors cost + Fixed labor
cost + Weekly Depreciation Cost
= 18250.54 + 1461.6 + 20769.24+ 66173.8
= Tk 106655.18
Weekly production = 880 x 6 = 5280 cartons
Unit cost per carton = Tk. 106655.18/5,280 = Tk. 20.19/carton

2.8. Existing Vs. Proposed Options

2.8.1. Stations, Efficient time, Idle Time, Balancing, Cost Comparison Table 13

Options

No. of Stations

Efficiency

Idle Time

Balanced/Unbalanced

Cost/Carton (Tk)

Existing
1
2
3
4
5

10
9
5
8
8
8

78.3
86.95
78.25
97.8
97.8
97.8

21.7
13.05
21.75
2.2
2.2
2.2

unbalanced
unbalanced
unbalanced
balanced
balanced
balanced

22.15
22.03
21.58
21.92
21.02
20.19

% Change in
cost/carton
0.57%
1.16%
1.04%
5.1%
8.85%

2.8.1.1. Graphical Presentation Of Stations In All Process

Efficiencies

2.8.1.2. Graphical Presentation Of Efficient Time Comparison Of In All Process

Efficiency Comparison
120
100
80

78.3

86.95

97.8

97.8

97.8

78.25

60
40
20
0
1

3
Options

2.8.1.3. Graphical Presentation of the Idle Time Comparison Of In All Process

%Idle Time

Idle Time Comparison


25
20
15
10

21.7

21.75
13.05

5
0
1

2.2

2.2

2.2

Options

2.8.1.4. Graphical Presentation of the Cost/Unit Comparison Of In All Process

2.8.1.5. Graphical Presentation of the % Change in cost/carton Comparison Of In All Process

2.8.2. Cause- and-effect diagram


Method
( Producing Juice)

Quality

Material

Mango Pulp
Water
CIP
Other Chemicals

Citric Acid

Type

Low
Productivity,
quality and
high cost

Supervision
Training

Age

Ability

Personnel

Maintenance

Machine

3. CONCLUSION AND RECOMMENDATIONS


The preceding discussions briefly covered the existing salient features of ACME
Agrovet and Beverage Limited a growing food processing local company. The
existing manufacturing process of Premium Mango Juice has been analyzed and
examined to find further improvements in cost, operational efficiency. Several
approaches/ alternatives to seek and find more efficient and cost effective line
balancing of the process. Each approach has been analyzed in terms of
percentage utilization, cycle time, throughput time, percentage idle time and cost
per unit of the products. Three line balancing approaches and followed by a two
shift and a six shift approaches have been considered. The idea was to balance
the production process by reducing the number of stations. Finally an approach
of line balancing with 97.8% efficiency has been found with minimum number of
eight stations. Thereafter in an attempts to reduce the per unit cost a two shifts
and then a six shifts have been suggested increasing the capacity per day. Here
the elimination of set up time has been found to be useful in reducing the cost
per unit.
3.1. Recommendations
Option 3 is recommended because option 3 is found to be balanced with 97.8%
efficiency and comparatively lower costs. Overall productivity enhancement by
increasing the number of shifts according to the demand per week will further
reduce the unit cost. However, option 2 is recommended for lean period of winter
season as the demand is low at that time. But low per unit cost will help capture
substantial market share by offering special discount which would in turn help
gain competitive advantage. Option 4 and 5 may also be considered during peak
season of summer when production rate is much more important than the price.

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