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MATERIAL UTILIZATION SYSTEM IN MANUFACTURING ENTERPRISE. (A CASE STUDY OF ASABA TEXTILE MILL LIMITED ASABA)

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 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 85 ::   Attributes: Data Analysis,abstract, table of content, references ::   29 people found this useful

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PROPOSAL

Objective of study: The objective of this study is to access the material utilization system in the manufacturing enterprise. It is also to ensure the users of (both local and foreign) of materials usage in the manufacturing enterprise are use in structurally uniform and meaningful.Significance of study: the study, development of material utilization system in manufacturing enterprise is suited to benefit members of the enterprise, so they will be able to carryout their materials wage work effectively and efficiently.Limitation of the study: The sample size is restricted to Asaba textile mill only, though the study went beyond the natural boarders.Source of data: The information to be sued is the research will be drawn from primary and secondary source.  Well prepared questionnaire and organized interview will serve as primary source while textbooks, Journals Newspaper already made research work will serve as secondary source. The researcher also hope to review the records and report of manufacturing enterprise and company in order to gather the necessary information.

TABLE OF CONTENTS

CHAPTER ONE

1.0              Introduction

1.1                                      Statement of Problem

1.2                                      Purpose of Study

1.3                                      Hypothesis 

1.4                                      Significance of study

1.5                                      Limitation

1.6                                      Delimitation

1.7                                      Definition of terms

CHAPTER TWO

2.0              Review of Related Literature

2.1                                      Source and Nature of Raw Material

2.2                                      Planning material requirement

2.3                                      Material utilization

2.4                                      Need for material utilization

2.5                                      Organizational responsibility for material utilization

2.6                                      The purchasing policy of the mill

2.7                                      Receiving and storage

2.8                                      Stock taking method

2.9                                      Stock level.

2.9.1                                                        Ordering cost

2.9.2                                                        The Economic Order Quantity (EOQ)

2.9.3                                                        The lead time

2.9.4                                                        Re- Order level (ROL)

2.9.5                                                        Minimum stock level

2.9.6                                                        The Re-order Quantity

2.9.7                                The Re-order Quantity

2.9.8                                The inventory quantity

2.9.9                                Valuation of inventory

CHAPTE THRE

3.0              Research methodology

3.1                                      Source of data

3.1.1 Primary data

3.1.2                                  Secondary data

3.1.2                                  Population and sample size

3.1.3                                  Methodology used

CHAPTER FOUR

1.0              The analysis of data and discussion

1.1                                      Empirical Research into the manufacturing enterprise

1.2                                      Discussion

CHAPTER FIVE

5.1              Summary of results

5.2              Summary of findings

5.3              Conclusion

5.4              Recommendation

5.5              Appendix A: Organization chart of Asaba.

Textile mill Ltd

Appendix B: Percentage waste computation of material input in the processing/finishing department

Appendix C: Specimen of questionnaire used

CHAPTER ONE

1.0              INTRODUCTION: A history of Bendel Textile mill Ltd as it was

called in the then defunct Bendel state but now renamed Asaba Textile mill Ltd immediately after the splitting of the state into Edo and Delta states in 1991, was incorporation in 1965.

It was located on the eastern side of the town, Asaba, the headquarters of Delta state. It is cited close to the Lagos-Onitsha Express way for easy accessibility. The mill was created to assist in the relief of unemployment and to reduce rural migration of people to urban areas.

Amongst other objectives of the firm are the manufacturing of textile fabric (100% cotton), modernization and expansion. However, the product line of the company is Africa print with a planned production capacity of 4000 metres per day. Crey cloth which is 10,560, 000 matres per annum taking twenty –two working days in a month. Both the production capacities so far achieved are 30,000 metres per day Grey baft that is 7920,000-metre p.a. The slack in the full capacity achievement is due to insufficient supply of raw material (R/M), high labour cost, high labour turnover mostly in the spinning and weaving departments at the beginning of every year and also the demechanization of machines. The company has to cannibalize to put some machines into operation and a colossal amount is spent on the importation of German expatriates to carry out the job of machine cannibalism.

Moreso, the mill has staff strength of 840 comprising Administration, factory workers, security unit and labourers. It has a total sale of over eighty million Naira (N80m) p.a.

The raw materials used by the mill are; cotton hint, chemical and dyestuff. Some are sourced locally while some are imported. Indian expatriates own the mill.

1.2       STATEMENT OF PROBLEM

. The mill has chains of problems as regards the utilization of materials. A lot of problems of wastage are being suffered in the mill conspicuous amongst which are:

i.                    Drops of cotton on the factory floor in the spinning department. This is of a common sight. As the bales of cotton are being put into the bale opener (machine) and to the scotcher where it forms laps which is taken to the cording machine to form sliver, raw cotton are seen everywhere littering on the floor. The propping cottons should be swept up or hand picked by the workers. Also workers should be provided by the with apron for keeping the dropped picked up good cottons and should be sent back to the scotecher to form a new lap.

ii.                    Roving waste: In the speed frame section the shiver is turned in roving. Lots of waste occurs have as a result of machine rejects.

Solution: The roving waste should be sent back to the roving machine which turns the roving into raw cotton which should then be sent back to the below room for lapping.

iii.                Half Weft: Wefts (wound prins) are normally in full. But in the pirn winding section, it is not uncommon to see half weft, which is automatically a waste, as machine will reject them.

Solution: To avoid pirn wastage, pirns should not have a double end as this amount to waste. Also the supervisors should constantly monitor the operators and machines should be maintained to avoid mechanical fault.

iv.                Overdrawn Beams: Beams are supposed to be equal. But cases of overdrawn beams are rampant in some unsophisticated textile industries. This often results to waste.

Solution:  Wharping the section where beams are made should be highly controlled.

v.                   Waste yarn and pirn: This comes as a result of the left over of beam, when a beam finishes, the left over beams a waste. The left over is a result of the breaking of shuttle. This squeezes and breaks the pirn inside it. Through the left over of the beam when there is a breakage of shuttle or squeezes is used in knotting and could as well be sold to outsiders as weak. It should be controlled.

Solution: The machine should be checked and serviced to ensure that there is no mechanical fault that could cause a squeeze or a brake of the shuttle.

vi.                Knotting: At the finish of every pirn, where a new pirn replaces,. There is bound to be a waste as the old and the new pirns are knotted together

Solution: Workers should be warned against the use of unnecessary             lengths for joining or correction

Vii       Weft Float and warp float: This is gap found in back grey. It occurs           when the anticrack motion in the loom is not functioning well. It also          results to thick bar.

            Solution: the anticrack motion should always be put in operation.

Viii Overlaps: This is a waste, which occurred during processing           department.

ix.                   During bleaching or measuring waste occurs as a result of cloth getting hooked up at the joints casing great squeezes. Also in the event of power cut for undue long time and if there is no water to wait the jar box for washing all the input material turns a waste. The effect is disastrous.

Solution: Building a standby tank for t he storage of water and also a standby plant for power supply in the event of power failure to avoid the material becoming weak.

x.                     Steam merger: The machine is used for the fixation and fastening of colours to avoid bleaching waste occurs if the steam is not dried completely. Drops of water in the steam merger unsteam colours out which causes the grades of cloth; grade A to grade C depending on the extent of the bleeding done by the drop of water.

Solution: These should be a fabric run-out/85 crooning of a waste material first on the steam merger before the actual steaming.

1.3              PURPOSE OF STUDY:

Material cost or inventory cost constitute large portion of  total cost. Being one of the largest elements of cost, it therefore calls for a great emphasis on its full utilization.

Every channel should be employed and exploited in ensuring for the maximum utilization of materials particularly in the areas of quality, quantity, prices and other attendant cost.

The effective utilization of materials has been on ebbs hence the clamour for appropriate objective measures for tier maximum utilization. Abnormal wastage of material could cause a stock out and the effect. Excessive set-up cost, high ordering cost and processing cost. Therefore, the utilization of material for wealth maximization in any establishment calls for a great concern.

However, to control the cost and enhance the effective utilization of material the following points are deemed relevant:-

(a)                Only the quantity of material and of the quality ordered should be accepted for production.

(b)               Ensuring that all materials ordered and paid for are actually received and used in production.

(c)                Proper and adequate physical control of material should be in extent in the firm. This minimizes pilferage and deterioration.

(d)                All issues from stores should be properly accounted for

(e)                Waste due to evaporation and power cut should be minimized

(f)                Giving workers adequate training and proper orientation use of materials and handling of machine should reduce scraps.

1.4       HYPOTHESIS

Quite distinct from the view and the operation standard of the past the following reasons have been hypothesized as the cause of the under-utilization of raw material.

(a)                The absence of sound standard costing in manufacturing enterprises.

(b)               The negligence of the use of method study.

(c)                Improper layout of stores.

(d)               Carelessness of the use of colour tags and coding 

(e)                The unskilfulness of workers.

(f)                Ignorance of raw material mixture or substitution

(g)               Unavoidance of production hold-up

1.5       SIGNIFICANCE OF STUDY

            The motivating factors behind this study of material utilization is to identify ways by which materials is being wasted and also to spell out possible solutions for improvement.

            On this ground, the author has tried in his research work to fish out factors that could enhance the material utilization in a company. The following amongst others are the benefits that occur to any user of this project work especially the manufacturing sectors, which may implementation, the recommendation as contained.

i.                    Increase profitability: The reduction of waste, scraps, deterioration, ordering cost could facilitate a break through in profit maximization.

ii.                  Avoidance of production hold-up, if the preventive measures such as the provision of a standby plant, ensuring that these is no stock-out occurrence by maintaining a buffer stock and proper maintenance of machines are implemented a lot of wastage would be reduced, time would be saved and budgeted effective machine hour would be guaranteed.     

1.6              DEFINITION OF TERMS

(a)                Raw material: This is inventory which consist of goods that have been purchased from outside vendors and that will subsequently be manufactured into finished products. These may be basic commodities such as cotton steel or pip iron or they may be manufactured pasts that will become components of finished product as for example spark plugs and tiles in automobile manufacture. (John Deardan – Cost Accounting and financial control system)

(b)               Inventory: A schedule of items held at a particular point in time. Americans use it to mean stock, which intends consumable materials, work in progress (WIP) and finished goods.

(c)                Work in progress (WIP): These are materials in the factory, which are partially converted into finished goods.

(d)               Economic order quantity (EOQ): This is the optimum quantity of material in which purchases of such particular direct material should be made.  it is determined by weighing inventory carrying costs (storage, insurance, interest) etc. and the potential loss due to shock being out pradin p. sha page 238).

It is determined by using. The formular

                           2cd 

                           h           

 Where:

C – Stands for Cost

D = Stands for consumption per annum.

(e)                Re-Order Level (R.O.L): This is the point at which an order for replenishing the stock of a particular material; should be placed so that the stock will be replenished by the time it reaches the safety stock level or the buffer stock. In determining there-order level and lead time for preaching material should be considered (p.p. sha page 238)

(f)                Maximum stock level: This is that above which stock should not normally be allowed to rise. it is fixed by considering:

(i)           Rate of consumption of material

(ii)                lead time

(iii)             availability of capital

(iv)             Risk of obsolesce and deterioration

(v)               Economic ordering quantity etc.

  (Wheldon’s Cost Accounting And Costing Method 11th Edition) page 2.

(g)               Minimum Stock Level: This is that below which stock falling below it portrays a danger storage of supplies Wheldon’s cost Accounting page

(h)               Supply Stock: These are materials for office use and for repairs e.g. fulscap, Bin cards, serews, shuttles etc.

(i)                 Buffer Stock: This is regarded as safety stock lead time or the demand during the lead-time (T Lucy page 36).

(j)                 Bin Card: This is the storekeepers’ record of movement. “IN and OUT” of the materials under his control. It should show in the balance column the actual quantity of the particular material in stock at that time. It is used not only for detailing receipts and issue of material but also to assist the storekeeper to control the stock.. Wheldon’s Cost Accounting and Costing method 11th Edition page 43)

(k)               Lead-Time: This is the time, which elapses between the period of placing an order and the actual receipts of the material ordered.

(l)                 Perpetual Inventory: this is a system of record maintained by the controlling department, which reflects the physical movement of stocks and their current balances. It is different from continuous stock taking while the former is the checking of those records with actual stock. J Butty – Cost and management Accounting for students page 422.

(m)             Weighted Average price: This is a price which is calculated by dividing the total cost of materials in the stock from which the material to be priced could be drawn, by the total quantity of material in the stock J. Batty.

(n)               First In First Out (FIFO): This is a system where the unit costs of the earliest purchased materials still in inventory are used first to cost the materials consumed during the period when the material consumption is sufficient to exhaust the earliest purchase costs, additional usage of materials are cost using unit cost of second purchase during the period.

(o)               Last In Fist Out (LIFO) This is the opposite of FIFO. Here issues of material during a period of time are costed  at the ;latest purchased cost, then the next latest purchased cost

(Backer & Jacobson page 74 & 75).

(p)               Replacement price: The price at which these could be purchased assets identical to that which is being replaced or revalued J. Batty.

(q)               Cannibalism: Breaking one old machine down into spare parts so as to repair and keep running all other sewing machines. Bernard Brooks – Principles of management Accounting page 39.         

(r)                Scrap: A product of little commercial value. the revenue from its sales is usually credited to the processing account or if even less significant to a subsidiary income account. Bernard Brook, page 22.

(s)                    Waste: Signifies less of direct materials during their handling, storage, issue or production. Examples are shrinkage of yarn, evaporation of dyes and damage to yarn.

P.P.sha cost control and information system page 232. Waste is defined also by Bernard brooks as A residual of no value or a reduction in value or weight of the input i.e. evaporatio


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Attribute:Data Analysis,abstract, table of content, references
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