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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Technical 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 starchbased plastic.

2. Sulfuric Acid

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This 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 the copolymer of ethylene and vinyl 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 a polymer that approaches elastomeric materials in softness and flexibility, yet can be processed like

other thermoplastics. The material has good clarity and gloss, lowtemperature toughness, melt adhesive water radiation 4. Water It is used to mix all the dried ingredients at the desired level of concentration. proof stress-crack properties, and resistance, resistance hotto UV

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TABLE 4.1 Raw Materials Required for Annual Production Description Corn Kernels Sulfuric Acid Vinyl Acetate/Ethylene TOTAL Quantity 48,000 kgs 24,000 kgs 24,000 kgs Unit Cost (per kilo) Php 11.58 10.78 60.00 Total Cost Php 555,840.00 258,728.00 1,440,000.00 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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3. 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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rollers. 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 of printing process which utilizes a flexible relief plate, it means that it will be embossed on the shopping bag. It is essentially a modern version of

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letterpress 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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8. 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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Preparation of Raw Materials Materials Blending

Corn Pellet making

Extrusion

Printing

Plastic Bag Making Quality Control Inspection Packaging

Storing 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,

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cement, 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 Lumber Ply Wood Cement Bricks Sand and Gravel Window Door Electrical Wire Electrical outlet Sink Faucet TOTAL

Quantity 10 15 3 30 5 15 8 5m 10 5 5

Unit Cost Php 100 250 1,250 80 250 230 500 20 20 200 70

Total Cost Php 1,000 3,750 3,750 2,400 1,250 3,450 4,000 100 200 1,000 350 Php 21,250

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FIGURE 4.2 Office (Front View)

FIGURE 4.3 Manufacturing Site (Side View)

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Machinery and Equipment The following are the machineries and equipment needed to manufacture the biodegradable plastic shopping bag. TABLE 4.3 Office Supplies Description Ball Pen Bond Paper (short) Bond Paper (long) Column Journal Columnar Ledger Fastener File Folder (short) File Folder (long) Packaging Tape Paper Clip Pencil Permanent Marker Puncher Record Book Scotch Tape Staple Wire Stapler Scissor Yellow Paper TOTAL Quantity 1 box (50pcs) 1 ream (500pcs) 1 ream (500pcs) 2 pads 2 pads 2 boxes 25 pcs 25 pcs 6 rolls 2 boxes 1 box (12pcs) 3 pcs 1 pc 2pcs (1000leaves) 3pcs 3 boxes 3 pcs 3 pairs 3 pads Unit Cost Php 137.50 155.00 175.00 25.00 22.00 25.00 3.50 4.00 25.00 8.00 68.75 39.00 85.00 80.00 20.00 5.00 45.00 16.00 22.00 Total Cost Php 137.50 155.00 175.00 50.00 44.00 50.00 87.50 100.00 75.00 16.00 68.75 117.00 85.00 160.00 60.00 15.00 135.00 48.00 66.00 Php 1,644.75

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TABLE 4.4 Office Equipment Description Desktop Computer (HP Compaq) Printer (Canon PIXMA Ip2770) Calculator TOTAL Quantity 1 1 3 Unit Cost Php 10,000.00 2,195.00 150.00 Total Cost Php 10,000.00 2,195.00 450.00 Php 12,645.00

TABLE 4.5 Office Furniture and Fixtures Description Air Conditioner (Abenson) Computer Table and Chair Filing Cabinet Fire Extinguisher Office Chair Office Table Plastic Chairs Trash Can TOTAL Quantity 1 1 1 1 4 4 3 1 Unit Cost Php 11,000.00 1,115.00 1000.00 1,500.00 500.00 1,000.00 100.00 75.00 Total Cost Php 11,000.00 1,115.00 1000.00 1,500.00 2,000.00 4,000.00 300.00 75.00 Php 20,990.00

TABLE 4.6 Factory Equipment Description Knives Weighing Scale Corn Kernels Sulphuric Acid Vinyl Acetate/Ethylene TOTAL Quantity 3 pcs 2 pcs 4000 kgs (160sacks) 2000 kgs 2000 kgs Unit Cost Php 100.00 2500.00 11.58 (per kilo) 10.78 (per kilo) 60.00 (per kilo) Total Cost Php 300.00 5,000.00 46,320.00 21,560.00 120,000.00 Php 193,180.00

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TABLE 4.7 Factory Machinery Description Blending Machine 2 in 1 Plastic Film Blowing Extruder and Printing Machine Plastic Bag Making Machine Pellet Mill TOTAL Quantity 1 1 Unit cost Php60,000.00 400,000.00 Total cost Php60,000.00 400,000.00

1 1

134,000.00 43,000

134,000.00 43,000 Php 637,000.00

TABLE 4.8 Factory Furniture and Fixtures Description Ceiling Fan Exhaust Fan Fire Extinguisher Plastic Chairs Working Table TOTAL Quantity 3 2 1 3 1 Unit Cost Php 800.00 500.00 1,500.00 100.00 500.00 Total Cost Php 2,400.00 1,000.00 1,500.00 300.00 500.00 Php 5,700.00

TABLE 4.9 Factory Supplies Description Gloves Face Mask TOTAL Quantity 12 pairs 12 pieces Unit Cost Php 25.00 25.00 Total Cost Php 300.00 300.00 Php 600.00

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Blending Machine Big cooling tank Double speed motor Electric heating 300/1000 475/950/80

Total Volume(L) Stirring Speed(rpm) Pellet Mill

No water/binder/drying Hydraulic/physical press High strength/pressure 1850*1500*1650 7-8

Dimension (l*w*h) (mm) Total Weight (t)

2 in 1 Plastic Film Blowing Extruder and Printing Machine Screw diameter: 50mm Ratio: 28:1 Die head: 50-100mm 32kw 11kw 50kg/h

Total Power Blow Film Motor Power Max. Extruded Quantity

Plastic Bag Making Machine High speed: 440 bags per minute bag with Printed logo To work in double line 0.01 ~ 0.04 (single layer) 800

Cutting thickness Max. Cutting length (MM): FIGURE 4.4 Factory Machinery

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Labor 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. Hourly Rate Hours of Working (per year) 2,304 2,304 Total Annual Cost

Production Workers (Direct Labor) Production Supervisor (Indirect Labor) Total Labor Cost

6 1

Php 42.00 95.75

Php 580,608 216,000 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 a nd

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policies 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 Requirement per step Procedure Preparation of Raw Material Corn Pellet Making Material Blending Extrusion and Printing Labor 1 worker 2 workers 2 workers 2 workers Machine requirement -Pellet mill Blending machine 2 in 1 Plastic film blowing extruder and printing machine Plastic bag making machine ----

Plastic Bag Shaping Quality Control Inspection Packaging Storing

2 workers 1 worker 3 workers 3 workers

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

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pellets 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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7. 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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supplier and the plant is located in only one city and the transportation of the raw materials will not be difficult for the proponents.

CAMADA Ltd.

To Manila Dona Trinidad Remedios Highway Freeway Mitsubishi Motors Corp

To SM Baliuag

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.

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A = 324 Square Meters

FIGURE 4.5 Office and Plant Layout

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Office/ 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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Stockroom 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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workers 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 Material blending Corn pellet making Extrusion Printing Bag making Total Time allotted 15 seconds 10 seconds 10 seconds 15 seconds 10 seconds 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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Telephone 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 Telephone and DSL Connection Electricity Water TOTAL Company PLDT MERALCO BWD Monthly Bill Php 999.00 10,000.00 6,570. 00 Total (Annual) Php 11,988.00 120,000.00 78,840 Php 210,828.00

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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Unit Production Cost TABLE 4.15 Unit Production Cost Manufacturing Overhead Direct Materials (per piece) Corn Kernels Sulfuric Acid Vinyl Acetate/Ethylene Printing Cost Total Direct Labor Number of Direct Labor Number of Working Days Minimum Wage Direct Labor Cost Pieces Produced per Month Total Direct Utilities (per piece) Electricity Water Total Total Manufacturing Cost Per Piece Cost per Piece Php 0.09 0.04 0.24 0.25 Php 0.62 6 24 336 48,384 500,000 0.10 0.10 0.09 0.25 Total Cost

0.44 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 Php21,564 divided by 500,000 pieces of plastic is

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0.04. 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 Php0.24 per 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 Php48,384 per month divided 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