done-chapter 4 pp 84-110 (1)

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CHAPTER 4

The Technical Aspect

This chapter presents the production aspect as it refers to the

whole operation of the business. It is concerned with estimating the total

product cost and enumerating the major items of the capital cost. This

aspect also includes the discussion of the planned specifications, raw

materials, manufacturing process, buildings and facilities, machinery and

equipment, labor requirements for production, plant and office location

with layouts, production schedule and annual production capacity, utilities

needed, methods of waste disposal, and unit production cost.

Objectives of the Technical Aspect

1. To determine the components needed to produce the product.

2. To determine the steps in manufacturing the product.

3. To identify the machines are required for production.

4. To know the facilities required by the business.

5. To establish the factorys layout where the production will be

facilitated.

6. To determine the schedule of production.

7. To identify where the raw materials come from.

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85Technical Specifications of the Product

The product, MaiSpot, a biodegradable shopping bag, will take the

usual form of those plastics that are already available in the market which

has rectangular shape with a handle on one edge of the plastic as it

deemed to be the most efficient design. 60 pieces of biodegradable

shopping bags will compose a pack and it will be placed in another

packaging bag. This comes in different colors like red, blue, green and

yellow depending on the order of the customer. The size also depends on

the order of the customer; small, medium, large are all available.

Raw Materials

The process of making biodegradable plastics is the same as the

process of making a non-biodegradable plastic. The proposed product

only differed in its main content which is starch, in order to make the

plastic biodegrade. The proposed product in a simple saying is a starch

bag. The raw materials needed in making biodegradable shopping bags

from corn kernels are the following:

1. Corn Kernels

Granules are in light yellow and come in cylinder and round

shape obtained from the plant corn. It has starch, protein and fiber

content rich in polylactid acid (PLA), an essential part of a starch-

based plastic.

2. Sulfuric Acid

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86This extends the time for corn kernels to be heated which

loses bond within the kernel breaking it down to starch, protein and

fiber.

3. Ethylene Vinyl Acetate (EVA)

Ethylene vinyl acetate (also known as EVA) is theco-

polymer ofethylene andvinyl acetate. The weight percent vinyl

acetate usually varies from 10 to 40%, with the remainder being

ethylene. Synthesis means that "something is put together," and

synthetic materials are made of building blocks that are put

together in factories. EVA will stand as the Synthetic Polymer. Such

properties as density and molecular weight, and they can be made

into a huge variety of plastic products. A number of Ethylene will

create a polyethylene.

It is apolymer that approacheselastomeric materials in

softness and flexibility, yet can be processed like

otherthermoplastics. The material has good clarity and gloss, low-

temperaturetoughness, stress-crack resistance, hot-

meltadhesive water proof properties, and resistance toUV

radiation

4. Water

It is used to mix all the dried ingredients at the desired level

of concentration.
http://en.wikipedia.org/wiki/Heteropolymerhttp://en.wikipedia.org/wiki/Heteropolymerhttp://en.wikipedia.org/wiki/Ethylenehttp://en.wikipedia.org/wiki/Vinyl_acetatehttp://en.wikipedia.org/wiki/Polymerhttp://en.wikipedia.org/wiki/Elastomerhttp://en.wikipedia.org/wiki/Thermoplastichttp://en.wikipedia.org/wiki/Toughnesshttp://en.wikipedia.org/wiki/Adhesivehttp://en.wikipedia.org/wiki/UV_radiationhttp://en.wikipedia.org/wiki/UV_radiationhttp://en.wikipedia.org/wiki/UV_radiationhttp://en.wikipedia.org/wiki/UV_radiationhttp://en.wikipedia.org/wiki/Adhesivehttp://en.wikipedia.org/wiki/Toughnesshttp://en.wikipedia.org/wiki/Thermoplastichttp://en.wikipedia.org/wiki/Elastomerhttp://en.wikipedia.org/wiki/Polymerhttp://en.wikipedia.org/wiki/Vinyl_acetatehttp://en.wikipedia.org/wiki/Ethylenehttp://en.wikipedia.org/wiki/Heteropolymerhttp://en.wikipedia.org/wiki/Heteropolymer

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87TABLE 4.1

Raw Materials Required for Annual Production

Description Quantity Unit Cost

(per kilo)

Total Cost

Corn Kernels 48,000 kgs Php 11.58 Php 555,840.00

Sulfuric Acid 24,000 kgs 10.78 258,728.00

VinylAcetate/Ethylene

24,000 kgs 60.00 1,440,000.00

TOTAL Php 2,254,568.00

Manufacturing Process

Below is the manufacturing process for producing the product:

1. Preparation of Raw Materials

Corn pellets must be prepared first. In order to have corn

pellets, the corn kernels should be heated with water with

sulfuric acid with more than 100 degrees. This will make the

kernels loose a tight bond breaking it down to fiber, protein and

starch.

2. Material Blending

After the corn kernels

have been heated up, it will

be mixed with ethylene vinyl

acetate and some water

afterwards making it a liquid

mixture.

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883. Corn Pellet Making

When the mixture is

done, it will be put inside a

pellet mill to make it look like

pellets that will be used for

the production of the

shopping bags. The pellets

now contain all the materials

needed to produce the plastic

films.

4. Extrusion

The corn pellets will be

treated into molten form at

high temperature. It goes out

at the shape of a bubble full of

cool air that comes from the

air ring. This air stream helps

to blow the bubble up and cool

down the plastic. The step is very important because it can

affect the strength, thickness consistence and transparency of

the film. The bubble goes through cooling tower of 25 - 35 feet

tall. At the top of the tower, it is guided to be flattened gradually

to form flat shape. The lay-flat film travels over a number of

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89rollers. With simple bag, it is often printed, sealed and

perforated at the same time of extrusion.

The device used in this step is called an extruder, it

forces softened plastic through a shaped dye from which it may

emerge in almost any form, including a circular rod or tube, and

a wide, flat sheet. The driving force is supplied by a screw which

provides constant pressure. All extrusion products have a

regular cross section. A variation on this method is extrusion

blow molding, in which a plastic tube produced by extrusion is

sealed around a blowing tube and expanded to the shape of a

mold with compressed air.

5. Printing

The films will be

printed right away after it

has gone extrusion because

it is a 2 in 1 extruding and

printing machine. It will be

printed with its brand name

MaiSupot. The plastic bag

will be treated by flexo- printing because its just in small

quantity. Flexo printing is a form ofprinting process which

utilizes a flexiblerelief plate, it means that it will be embossed

on the shopping bag. It is essentially a modern version of
http://en.wikipedia.org/wiki/Printinghttp://en.wikipedia.org/wiki/Relief_printhttp://en.wikipedia.org/wiki/Relief_printhttp://en.wikipedia.org/wiki/Printing

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90letterpress which can be used for printing on almost any type of

substrate, including plastic, metallic films, cellophane, and

paper.

6. Plastic Bag Shaping

Here, the printed plastic films are shaped into a bag with

their corresponding sizes, small, medium and large.

7. Quality Control Inspection

Each product will pass through inspection. The

acceptance or rejection of plastic bags will take place here

through the production supervisor. This will depend on how the

plastic bag looks like, its durability, appearance, etc.

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918. Packaging

The workers are needed to be packaged in the plastic

shopping bags considering 60 pieces of plastic bags per pack. It

will be put inside a recycled paper and ready for purchase or

delivery

9. Storing

The plastic shopping bags will be stored in the storage

room after it has been packaged and assured of good quality.

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92

FIGURE 4.1

Production Process Flowchart

Building and Facilities

The proposed company will be renting a one-story building located

at Doa Remedios Trinidad Highway, Baliuag, Gitnang Luzon. The

proponents will rent the building with a monthly rental fee of Php50,000.

The floor area is 324 square meters. The manufacturing site is an old one

so it will undergo renovation. The renovation will require lumber, plywood,

Preparation of RawMaterials

Materials Blending

Corn Pellet making

Extrusion

Printing

Plastic Bag Making

Quality ControlInspection

Packaging

Storing

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93cement, bricks, sand and gravel, window, door, electrical wire and outlet,

sink and faucet, and toilet bowl. Dividers will be used to construct the

different offices and rooms. A stock room for raw materials and finished

goods will be located beside the office area together with the machines,

preparation, sanitary area, toilet and wash area which is main plant site.

TABLE 4.2

Materials Required for Renovation

Description Quantity Unit Cost Total Cost

Lumber 10 Php 100 Php 1,000

Ply Wood 15 250 3,750

Cement 3 1,250 3,750

Bricks 30 80 2,400

Sand and Gravel 5 250 1,250

Window 15 230 3,450

Door 8 500 4,000

Electrical Wire 5m 20 100

Electrical outlet 10 20 200

Sink 5 200 1,000

Faucet 5 70 350

TOTAL Php 21,250

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94

FIGURE 4.2

Office (Front View)

FIGURE 4.3

Manufacturing Site (Side View)

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95Machinery and Equipment

The following are the machineries and equipment needed to

manufacture the biodegradable plastic shopping bag.

TABLE 4.3

Office Supplies


Ball Pen 1 box (50pcs) Php 137.50 Php 137.50

Bond Paper (short) 1 ream (500pcs) 155.00 155.00

Bond Paper (long) 1 ream (500pcs) 175.00 175.00

Column Journal 2 pads 25.00 50.00

Columnar Ledger 2 pads 22.00 44.00

Fastener 2 boxes 25.00 50.00

File Folder (short) 25 pcs 3.50 87.50

File Folder (long) 25 pcs 4.00 100.00

Packaging Tape 6 rolls 25.00 75.00

Paper Clip 2 boxes 8.00 16.00

Pencil 1 box (12pcs) 68.75 68.75

Permanent Marker 3 pcs 39.00 117.00

Puncher 1 pc 85.00 85.00

Record Book 2pcs(1000leaves)

80.00 160.00

Scotch Tape 3pcs 20.00 60.00

Staple Wire 3 boxes 5.00 15.00

Stapler 3 pcs 45.00 135.00

Scissor 3 pairs 16.00 48.00

Yellow Paper 3 pads 22.00 66.00

TOTAL Php 1,644.75

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96TABLE 4.4

Office Equipment


Desktop Computer(HP Compaq)

1 Php 10,000.00 Php 10,000.00

Printer (CanonPIXMA Ip2770)

1 2,195.00 2,195.00

Calculator 3 150.00 450.00

TOTAL Php 12,645.00

TABLE 4.5

Office Furniture and Fixtures


Air Conditioner(Abenson)

1 Php 11,000.00 Php 11,000.00

Computer Tableand Chair

1 1,115.00 1,115.00

Filing Cabinet 1 1000.00 1000.00

Fire Extinguisher 1 1,500.00 1,500.00

Office Chair 4 500.00 2,000.00

Office Table 4 1,000.00 4,000.00

Plastic Chairs 3 100.00 300.00

Trash Can 1 75.00 75.00

TOTAL Php 20,990.00

TABLE 4.6

Factory Equipment


Knives 3 pcs Php 100.00 Php 300.00

Weighing Scale 2 pcs 2500.00 5,000.00

Corn Kernels 4000 kgs(160sacks)

11.58 (per kilo) 46,320.00

Sulphuric Acid 2000 kgs 10.78 (per kilo) 21,560.00

VinylAcetate/Ethylene

2000 kgs 60.00 (per kilo) 120,000.00

TOTAL Php 193,180.00

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97TABLE 4.7

Factory Machinery

Description Quantity Unit cost Total cost

Blending Machine 1 Php60,000.00 Php60,000.002 in 1 Plastic FilmBlowing Extruderand PrintingMachine

1 400,000.00 400,000.00

Plastic Bag MakingMachine

1 134,000.00 134,000.00

Pellet Mill 1 43,000 43,000


TABLE 4.8

Factory Furniture and Fixtures


Ceiling Fan 3 Php 800.00 Php 2,400.00

Exhaust Fan 2 500.00 1,000.00

Fire Extinguisher 1 1,500.00 1,500.00

Plastic Chairs 3 100.00 300.00

Working Table 1 500.00 500.00

TOTAL Php 5,700.00

TABLE 4.9

Factory Supplies


Gloves 12 pairs Php 25.00 Php 300.00

Face Mask 12 pieces 25.00 300.00

TOTAL Php 600.00

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98

FIGURE 4.4

Factory Machinery

Blending Machine Big cooling tank Double speed motor Electric heating

Total Volume(L) 300/1000

Stirring Speed(rpm) 475/950/80

Pellet Mill

No water/binder/drying

Hydraulic/physical press

High strength/pressure

Dimension (l*w*h)(mm)

1850*1500*1650

Total Weight (t) 7-8

2 in 1 Plastic Film Blowing Extruder and

Printing Machine

Screw diameter: 50mm

Ratio: 28:1

Die head: 50-100mm

Total Power 32kw

Blow Film Motor Power 11kw

Max. Extruded Quantity 50kg/h

Plastic Bag Making Machine

High speed: 440 bags per minute

bag with Printed logo

To work in double line

Cutting thickness0.01 ~ 0.04

(single layer)

Max. Cutting length(MM):

800

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99Labor Requirements for Production

The production of biodegradable plastic shopping bag made from

corn kernels requires both direct and indirect labor together with the

designated positions, hourly rates, and required hours in month, total

salaries and total labor cost.

TABLE 4.10

Total Annual Labor Cost

Position No. HourlyRate

Hours ofWorking

(per year)

Total AnnualCost

Production Workers(Direct Labor) 6 Php 42.00 2,304 Php 580,608

Production Supervisor(Indirect Labor) 1 95.75 2,304 216,000

Total Labor Cost Php 796,608

Table 4.10 shows the total labor cost of direct and indirect workers

of the proposed business. The direct labor cost consists of six (6)

production workers who do the labor directly in the production process

while indirect labor consist of one (1) production supervisor. The direct

and indirect labor costs were computed by multiplying the hours of

working per year (8 hours per day x 6 days per week x 4 weeks per month

x 12 months per year), hourly rate and the number of the workers.

All production workers together with the production supervisor will

undergo a one-month training in order to be familiar and expert in the

production process. The training includes briefing of their jobs, details of

the companys mission & vision, familiarization of the company rules and

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100policies and also all the additional benefits and rewards that will be entitled

to them after meeting the requirements of their work.

TABLE 4.11

Labor and Machinery per step

Table 4.11 shows the various processes needed to produce the

product with the needed worker for each and the machine needed as well.

1. Preparation of Raw Materials

One (1) worker is needed to prepare the corn pellets needed

in making biodegradable plastics; one to heat the corn kernels and

one to prepare it for the next step.

2. Corn Pellet Making

Two (2) workers are needed in this step. When the mixture is

done, it will be put inside a pellet mill to make it look like pellets

that will be used for the production of the shopping bags. The

ProcedureRequirement per step

Labor Machine requirement

Preparation of Raw Material 1 worker --

Corn Pellet Making 2 workers Pellet mill

Material Blending 2 workers Blending machine

Extrusion and Printing 2 workers 2 in 1 Plastic filmblowing extruder andprinting machine

Plastic Bag Shaping 2 workers Plastic bag makingmachine

Quality Control Inspection 1 worker --

Packaging 3 workers --

Storing 3 workers --

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101pellets now contain all the materials needed to produce the plastic

films.

2. Material Blending

Two (2) workers are needed in this step. All the raw

materials with their proper amount will be mixed all together using

the blending machine to be operated by one worker and supported

and directed by the other two workers.

4. Extrusion

Two (2) workers are needed in extrusion, one will operate

the machine, and the other will be the support and the lookout of

the process. In this process, the raw materials are being

transformed into a plastic.

5. Printing

Two (2) workers are needed in the printing process, one

worker will operate the machine and the other will be the supporter

and the lookout of the process. This process includes the printing of

the brand logo in the plastic shopping bag.

6. Plastic Bag shaping

Two (2) workers are needed as well to complete the

process. The plastic are being shaped into bags in these step and

one worker will be operating the machine and the other will be the

support.

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1027. Quality Control Inspection

The production supervisor will be the one to do the

inspection; the product will be inspected and tested for its quality

assurance.

8. Packaging

When there are orders already, three (3) workers are

needed to package the plastic shopping bags considering the

proper sizes and proper number needed to be packaged. It will be

put inside a box and ready for its delivery.

9. Storing

After the quality has been ensured, the plastic shopping

bags will now be stored in the storage room and ready for sale. All

the three workers are in charged for its storage.

Office and Plant Location

The location of the proposed business will be at Doa Remedios

Trinidad Highway, Baliuag, Bulacan. The place can accommodate all

production requirements as well as the office where the proponents will do

office works.

With regard to the raw materials, the proponents already contacted

the supplier for the corn kernels from Mr. Edgardo H. Cruz, a Corn and

Vegetable Dealer at 0035 National Road, Sulucan, Angat, Bulacan. The

chosen place of the proponents can be one of their advantages since the

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103supplier and the plant is located in only one city and the transportation of

the raw materials will not be difficult for the proponents.

To Manila To SM Baliuag

Dona Trinidad Remedios Highway

FreewayMitsubishi

Motors Corp

FIGURE 4.4

Vicinity Map

Office and Plant Layout

The manufacturing plant will be located at the backside while the

office will be located in front of the manufacturing plant. To ensure smooth

flow of operations, the production areas on the first floor are arranged

according to the chronological order of the manufacturing process. There

will be stock rooms for the raw materials and finished goods. There are

also wash areas for the staff. There will be fire exits and comfort rooms

located in the manufacturing plant and office.

The top and middle management will have their respective offices

in front of the manufacturing plant. There will be a lounging area for the

managers and the staff.

CAMADA Ltd.

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104

FIGURE 4.5

Office and Plant Layout

A = 324 Square Meters

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105Office/ Workers Quarter

This is a room used for business activity of the managers,

supervisors, officers and staffs. Each personnel will have his/her

corresponding area division in the office to facilitate different tasks and

responsibilities. Ordering, turnover of sales, compensation, purchasing,

business meeting, and different business transactions will be held here.

Production workers will also have separate area for resting and eating.

Production Area

This is the most important part of the site which should give a good

working atmosphere for better production of product. Most of the

machineries and equipment are here for conducting the different

production process. Each area is provided with enough space and it is

placed strategically based on the flow of production process.

Comfort Room

The comfort room will only have a toilet bowl, urinals and sink. All

the employees are obliged to properly use the comfort room for

everyones convenience.

Warehouse

This is where basically the finished product are being stored for

delivery. This is strategically placed beside the parking lot which serves as

landing dock in loading the package product to the delivery truck.

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106Stockroom

The stockroom will be divided for the raw materials: corn,

chemicals, and rejected products. The rejected product with a light defects

will be sold for a low cost. The stock room is 100 square meter and has

the capacity to store 100 sacks of corn a month.

Parking Lot

This is where the truck parks and also for loading purposes. This is

strategically placed near the warehouse for faster loading of the boxes for

the delivery. It measures 20 square meters that can occupy a truck and 3

cars.

Production Schedule

This is the area where it identifies the production capacity of the

proposed business. It also indicates the time to be consumed for every

step of the process and the total time it takes to produce a unit.

The business will start to operate from 8:00 in the morning up to

5:00 in the afternoon, with one (1) hour break, from Monday to Saturday.

A worker can produce 43 units of biodegradable shopping bags per

minute. In an 8-hour work a day, a worker can produce 20,833 units per

day (43 units per minute x 480 minutes per work day). For one year, it is

assumed to have 314 days since the company implements a 6-day work a

week. So in one year a worker can produce approximately 6,541,562 units

(20,833 units per day x 314 days in a year). Since there are 6 production

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107workers in the company and each one can produce 6,541,562 units per

year, the annual production capacity of the company is 39,249,372.

ANNUAL PRODUCTION CAPACITY

20,833 units per day x 314 days in a year x 6 workers= 39,249,372 pieces

of biodegradable shopping bags

Steps Time allotted

Material blending 15 seconds

Corn pellet making 10 seconds

Extrusion 10 seconds

Printing 15 seconds

Bag making 10 seconds

Total 60 seconds

In a minute, 43 units of plastic bags can be produced. The process

to produce the product will start at the material blending (15 seconds),

followed by corn pellet making (10 seconds), then extrusion (10 seconds),

next is printing (15 seconds), lastly, bag making (10 seconds), and the

total is 60 seconds. Each process can produce 43 units, this estimate was

from a plastic manufacturer, because in one roll of plastic film, is 430

inches, and each plastic bag (small) is 10 inches, so 43 units of plastic can

be produced in a minute.

Utilities and Waste Disposal

Operation of the business necessitates the usage of utilities.

Utilities include telephone and internet connection, power and water

consumption. These are all important requirements for the manufacturer to

operate its production.

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108Telephone and internet connection work together and are important

in a business. These are vital in every business as means of reaching out

and transacting to consumers and suppliers, and for the purpose of

promotion.

Water supply is also necessary to a business. Water will be used

for mixing of raw materials and also for cleaning and hygiene purposes.

Thus, it is essential for the production of biodegradable shopping bags

from corn kernels keeping the establishments clean.

The following are the estimated monthly utilities expense of the

business:

TABLE 4.12

Utilities Expenses

Utility Company Monthly Bill Total (Annual)

Telephone andDSL Connection

PLDT Php 999.00 Php 11,988.00

Electricity MERALCO 10,000.00 120,000.00Water BWD 6,570. 00 78,840


Zero-waste management will be observed by the proposed

business. Accordingly, Residual of material produced after the production

will be properly disposed. The Company should observe the policies and

regulations of proper waste disposal in the place. Recycled wastes such

as papers, cartons and boxes will be reused or will be bought by its

supplier for reprocessing.

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109Unit Production Cost

TABLE 4.15

Unit Production Cost

Manufacturing Overhead Costper Piece

Total Cost

Direct Materials (per piece)Corn KernelsSulfuric AcidVinyl Acetate/EthylenePrinting CostTotal

Php 0.090.040.240.25

Php 0.62

Direct LaborNumber of Direct Labor

Number of Working DaysMinimum WageDirect Labor CostPieces Produced per MonthTotal

6

24336

48,384500,000

0.10

Direct Utilities (per piece)ElectricityWaterTotal

0.100.090.25 0.44

Total Manufacturing Cost Per Piece 0.91

Manufacturing overhead consists of direct materials, direct labor

and direct utilities. The proponent have asked a plastic producer for some

estimates regarding the production of the product.

In direct materials, the raw materials are the corn kernels which

when bought will cost Php289.50 per sack. 160 sacks with the price of

Php46,320 divided into 500,000 pieces of plastic made in a month will be

equal to 0.09 as shown in the table for corn kernels. 1000 kilos of

sulphuric acid costs Php10,782. 2000 kilos are needed in a month so it is

multiplied by 2 equal to Php21,564divided by 500,000 pieces of plastic is

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1100.04. A kilogram of vinyl acetate/ethylene costs Php60 multiplied by 2000

kgs, because 2000 kgs of vinyl acetate is needed to produce 500,000

pieces of plastic shopping bags per month. This will be equivalent to

Php120,000 per month. Php120,000 was divided to 500,000 pieces per

month equal to Php0.24per piece as shown in the table. Same as vinyl

acetate, 2000 kgs of water are needed for 500,000 pieces of the product

per month. Printing cost was estimated to be Php0.25.

In direct labor, there are 6 workers that work 24 days per month

with a minimum wage of Php336, when multiplied, direct labor cost is

Php48,384per monthdivided by 500,000 pieces of product produced per

month is Php0.10 as reflected on the table above.

Lastly, for direct utilities, Baliuags water rate is Php21.90 per cubic

meter multiplied by 300 hours is Php6,570 divided by 500,000 pieces of

product produced in a month is Php0.09. For electricity, the rate is

Php2.00 per kilowatt hour. According to meralco appliance calculator

formula shown below, Php50,000 will be the cost of electricity per month

divided by 500,000 pieces per month is Php0.10.

Formula: Cost per hour = rate x (appliance wattage/1000)

Cost per hour = 2.00 x (10,000 watts / 1000)= Php50 per hour

Php50 per hour multiplied by 192 working hours per month is Php9600.

Php9,600 multiplied by 5 machines = Php48,000

Php48,000 + Php2,000 for office electricity = Php50,000

done-chapter 4 pp 84-110 (1)

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