CONTENTS

Page no.
Certificate II
Acknowledgement III
Abstract IV
List of tables 2
List of figures 2
List of charts 3
Chap :1 Introduction 4
1.1 Problem summary 6
1.2 Problem specification 6
1.3 Aims &Objective of project 6
1.4 Literature Review 7
1.5 Plan of the work 10
Chap : 2 Case study 12
2.1 Company Introduction 12
2.2 Implementation of MFCA in company 13
2.2.1Target product /process selection 13
2.2.2 Data collection & compilation 15
2.2.3MFCA calculation 17
2.2.4 Calculation of Energy cost 23
Chap :3 Implementation 25
3.1 Identifying improvement solution 25
3.1.1 Cutting process 26
3.1.2 Sewing process 27
3.2 Proposed improvement solution 28
3.2.1 Reducing gap between piece of patterns 28
3.2.2 Reducing edge width of each patterns 28
3.2.3 Combination of both solution 29
3.3 Implementing and evaluating improvement plans 29
3.4 Comparison of results 32
Chap : 4 Summary of the result 33
Chap : 5 Conclusion 34
Chap : 6 Appendix 35
List of tables:
Table no. Description Page no.
1 Raw material used in target product 15
2 Machines, and workers. in each process 15
3 Cost of material 15
4 Amount of waste occurred in QC3 18
5 Cutting process calculation 19
6 Sewing process calculation 19
7 Quality inspection calculation 20
8 Packing process calculation 20
9 Product cost analysis %wise based on material cost 21
10 Time taken during sewing process 23
11 comparison between the material costs of the 25
12 negative product
Comparison of MFCA
costs result 32

List of figures:

Figure No. Description page no

1 Traditional t-shirts 13
2 Process diagram 13
3 Evaluation of all cost 22
4 Cause effect diagram 26
5 Existing layout pattern system 26
6 Existing system in sewing process 27
7 Improvement in layout of patterns 28
8 Improvement in cutting fabric after sewing process 28
9 Evaluation of cost after implementation 29
Of solution 1.
10 Evaluation of cost after implementation 30
Of solution2.
11 Evaluation of cost after implementation 31
Of solution 3.
12 AEIOU Canvas 35
13 Empathy mapping canvas 36
14 Ideation canvas 37
15 Product development canvas 38
16 Business model canvas 39
2
List of Charts:

Chart No. Description page no

1 Plan of the work 10
2 Material positive &negative cost 21

3
 Chapter: 1 Introduction
Now a day, any type of industry wants to profit. Which result in the reputation of the industry
in the market and so to maximize the profit of the industry, the best solution is the MFCA.
MFCA concept is used in industry for the cost reduction, lead time reduction and
minimization of the waste. Material Flow Cost Accounting (MFCA) is developed for the
organization or industries and the better understanding of this concept and effect on the
environment can be done by applying this to industries and organization. This concept is
developed for the organization for the better understanding of the cost, energy, and finance
used.
MFCA analysis includes the cost of raw material, labour cost, energy consumption .Due to the
MFCA decrease the waiting time which result in the decrease the lead time of production that
ensures the increase in profit. Also, Floor space is one of the important factors for any
organization. MFCA analysis helps in the better utilization of floor space which results in the
increase the store capacity of the material which reduce the shortfall of material.
Based on MFCA concept, the cost can be classified as; material cost (cost of both direct and
indirect material), system cost (cost of operating production system), energy cost (cost of
energy used in the production system) and waste management cost (cost of waste treatments).

MFCA is the analysis in which positive product and negative product are accounting. The
Negative product is the one type of waste which produces by the processes in the industry. This
negative product ensures the loss of the industry. MFCA concept helps in improving the
financial in the organization, which result in the increase the productivity of the industries.
Negative or material loss cost is the cost of loss from each process. Positive or product cost is
the cost attached with the output of each process. Cost allocation between positive and negative
cost is carried out based on the portion from material balancing between input and output
materials. Finally, the operations with high negative cost are identified and improved in order
to reduce negative cost.

 Material :
Material refers to any raw material, auxiliary material, component, catalyzer, or part that is
used to manufacture a product. Any material that does not become part of the final product is
considered material loss. In any process, waste and resource loss occur in different steps of the
process, including:
- Material loss during processing, defective products, impurities
- Materials remaining in manufacturing equipment following set-ups
- Auxiliary materials such as solvents, detergents to wash equipment, water
- Raw material that becomes unusable for any reason.

 Flow
MFCA traces all input materials that flow through production processes and measures products
and material loss (waste) in physical units using the following equation:
Input = Products + Material loss (waste)
The starting point of MFCA is to measure amount of material losses based on mass balance.
The concept is illustrated in above figure. In this case, the amount of the material loss (30 tons)
is calculated based on the amount of total input and products in a selected part of a process in
which the inputs and outputs are quantified. This part of the process is defined as a quantity
center in MFCA.

4
  Cost Accounting:
Under MFCA, the flows and stocks of materials within an organization are traced and
quantified in physical units (e.g., mass, volume) and then assigned an associated cost. Under
MFCA, four types of costs are quantified: material costs, system costs, energy costs, and waste
management costs. Each cost is defined as follows:

1 Material cost:
Cost for a substance that goes through a quantity center (measurement unit of input and output
for MFCA analysis). Typically, the purchase cost is used as material cost.

2 Energy cost:
Cost for energy sources such as electricity, fuels, steam, heat, compressed air.

3 System cost:
Cost incurred in the course of in-house handling of the material flows, excluding material cost,
energy cost, and waste management cost.

4 Waste management cost:

Cost for handling material losses.

5
1.1 Problem Summery

In industry, the problem is to minimize the waste; it can be improved by the identifying critical
point. MFCA is the effective tools in identifying the critical point that should be improved in
the production system. Moreover, when MFCA is applied, the interpretation of the
improvement in existing process /system and easy to be understood by management peoples as
well. This concept helps us to improve the efficiency of the system.

1.2 Aim and objectives of the project

MFCA aims to:

Increasing transparency regarding material and energy flows and the respective costs
supporting organizational decisions in areas such as process engineering, production planning,
quality control, product design and supply chain management Improving coordination and
communication on material and energy use within organizations.

Objective:

The objective of this project is to present the application of MFCA by identify in emissions
and waste within process in cost and physical terms in “Swastik jute & textile” as a case study.
The company currently does not realize the magnitude of the amount of production waste from
the production process. On a daily process, a big amount of material waste is generated
and the company has to resolve this waste as the company’s inventory that utilizes the
production area with no addition in value. To display this waste via economical measurement
using MFCA allows the company to clearly see the expense. Finally, suitable improvement
solutions are provided for the company to make the required decision based on the company’s
limitations.

1.3 Problem Specifications

Material Flow Cost Accounting (MFCA) is a management tool that promotes the efficient use
of material more effectively, contributing to reductions in waste emissions and non-products.
MFCA can provide internal and external benefits, enabling an organization to make generate
profit with loss environment impact. A typical internal benefit is the strengthening of an
organization’s competitiveness, since MFCA delivers both increased profits and material
productivity.
.

6
1.4 Literature review

Sr Author and year Type of Country Contribution

no. of publication industry
1 Research Sheet metal japan
Katherine L. working MFCA within organizational
Christa, & Roger functions and segments increases its
L. Burrittb trial ability while keeping risk of
unsuccessful trials to a minimum.
The literature examined and
arguments presented suggest
MFCA is now well placed as an
environmental management
accounting tool to persuade take-up
by managers
2 Michiyasu Plastic product Germany Cost reductions on supplier
Nakajima & manufacturing networks that use company-
Asako Kimura integrated cost management are
possible. These activities result in
the formation of business units for
which collaboration between buyers
and suppliers is the root source of
their competitive power, a supply
chain can be created that much more
rapidly and effectively maximizes
resource productivity
3 Chompoonoot Sheet metal Malaysia To reduce the cog of negative
kasemsetet product is the key concept of
al.(2014) MFCA; it is not only mean to
effectively use every material in
production section. But also how to
design product and process to
reduce wastes. The results from the
MFCA analysis showed that the
cogs of the positive and negative
products were 84.26% and 15.74%
and after implementation the cost of
the negative product reduced to
11.27%.

4 Farizah Sulong et Automotive Malaysia After MFCA implementation in

al. parts company Alpha industry can provide
opportunities for reducing costs,
enhancing environmental
performance and improving the
bottom line.

7
5 Rungchat wood products Thailand MFCA is therefore able to highlight
Chompuin wai et industry the costs associated with materials
al. losses, plus the inefficiencies
inherent in a process and decreased
waste material by 14 %.The MFCA
and DOE practices introduced at the
case study company will be subject
to the effectiveness of its continuous
improvement plan.

6 Pouya Ghadimi et Aluminum flat Australia Sustainability manufacturing

al.(2014) rolled enhancement approaches such as
machining process control and integrated
material and energy flow
optimization.
7 Luo and Jin Automotive parts Canada The material waste, labor costs and
energy loss are hidden in the
traditional cost accounting, whereas
MFCA makes them visualization in
the form of physical and, which can
help managers accurately identify
the improving points. As an
environmental management tool,
MFCA can expose the companies
waste hidden, and encourage
enterprises to improve the
efficiency of resource use, and
promote development of enterprise
low carbon.
8 Yongchao Sun Furniture works Russia The modified MFCA can trace
and Mei Sun easily negative cost by integration
(2014) with ERP to make MFCA widely
applied in the future, advanced
technologies are necessary to make
the input and calculation of data
faster and easier. With the update of
technologies, traditional costing
may be replaced by MFCA.
9 A. Schmidt et al. Anodizing of Germany Material Flow Cost Accounting is a
(2014) aluminum very promising identification
parts inefficiencies consequences.
Instrument regarding the and
communication of and their Due to
its nearly unique focus on losses and
separate reporting of their costs,
MFCA directs the attention of
managers and engineers to the
corresponding inefficiencies and the
economic relevance of losses

8
10 Schmidt, A. & Forging parts Germany
Hache, B. & It proves to be useful for the flow
Herold,F&. structure modelling, quantification
Götze, U. of material flows, modelling and
analysis of cost flows and
presentation of the overall results of
Material Flow Cost Accounting
thus ecological and economic
evaluations on the base of specific
material flow networks

9
1.5 Plan of the work

• Preparation
• Data collection and compilation
• MFCA calculation
• Identifying improvement requirements
• Formulating improvement plans
• Implementing improvements
• Evaluating improvement effects
Chart 1

Preparation
During the preparation step, target products, lines, and processes should be clearly
identified. Then, a rough analysis of the target processes and the determination of the
quantity centers and the scope of the MFCA study are determined. Finally, the material
used in the target process/product is listed and the data collection is planned.

Data collection & compilation

During this process, the data collection and the compilation of the material types, the
determination of the input and the waste quantities in each process, and the
computation of the data regarding the system cost and the energy cost are carried out.
Thereafter, the allocation rules for the system and the energy costs are determined

MFCA calculation

During this step, an MFCA calculation model is established and the collected data are
inputted. The cost of positive and negative products can be allocated based on mass
balancing concept. The cost of positive product is the cost that put into process product
released to the next process while the cost of negative product is the cost that put into
wasted or recycled items. The results from MFCA calculation are confirmed and analyzed
to indicate negative product costs and their causes by process.

10
Identifying improvement requirements

The requirements for improvement, including material loss and cost reduction, are
identified and listed during this step.

Formulating improvement plans

To set up the improvement plan, the examination of the extents and possibilities of
material loss reduction of each alternative should be carried out. After that, the cost-cutting
effect calculation and assessment through material loss reduction (MFCA calculation) are
carried out to determine the priorities for improvements and formulating the improvement
plans.

Implementing improvements
During this step, the improvement plans are implemented in the real situation. Data
collection after the improvement should be carried out to evaluate each plan in the next
step.

Evaluating improvement effects

In this step, the identification of the quantities of the input and the wasted materials
following the improvement are completed, and the MFCA calculation is carried out
again to compare the improved process with the previous one. The overall costs and the
negative product costs following the improvement are calculated, and used in the
evaluation of the improvement effects.

11
 Chapter: 2 Case Study

2.1 COMPANY INTRODUCTION:

Incepted in the year 2015, company name has achieved a niche for itself in this highly
competitive industry. Company is engaged as a manufacturer of traditional-style t-shirts,
trousers, skirts, shirts, Bermuda, men’s innerwear.

It is always a conscious effort on their part to offer the goods at competitive prices and deliver
them to their respective destinations in time.
Strict inspections and testing schedules ensure flawless production at every stage.

Machine used in this firm for carrying out the product successfully:

1. Rotary fabric cutter: 2. Morse sewing machine:

12
2.2 Implementation of MFCA in company:

2.2.1 Target product/process selection:

Due to a variety of customer orders, the targeted product was selected as one type
of traditional-style t-shirt as shown in Fig. 1. The production lot size of this product
is 100 pieces per lot, and so all the calculations in the MFCA analysis were carried
out based on 100 pieces equal to one production lot size.

The operation steps of this product have been presented as Fig. 2, starting from the
release of the order and ending with the shipping of the products to the customers
From Fig. 2, it can be seen that the target processes were set as the production phase,
which includes activities such as, cutting, sewing, quality checking, and the dyeing,
buttonhole drilling, and packing processes.
After target product and process were identified, required data for MFCA analysis
were collected during the following step.

Fig 1

Fig 2

13
The main material, cotton 100% white fabric, is firstly input to the production line at the time
of the cutting process; after that, it is cut following the pattern shape. During the cutting
process, the fabric rags are identified as material waste. In the second process, sewing, there
are two new sub materials, cotton tread and spun polyester yarn, as input at this step. The
third step is quality checking process. The fourth step is dyeing and buttonhole drilling, which
are out- sourced operations. The last process is the final product packing. The finished
products are put in plastic bags and are ready to be shipped to customers.
Quantity centers (QC) are spatial or functional units which store process or otherwise transform
materials and which are connected by material flows. Here we have selected5 quantity centers.
for MFCA implementation analysis.
QC1 cutting fabric
QC: 2 sewing process
QC: 3 quality inspection
QC: 4 packing

WHITE COTTON 100% CUTTING PROCESS SEWING PROCESS

DYEING &BUTTON HOLE PACKING PROCESS

QUALITY CHECKING
DRILLING

FINISHED PRODUCT

14
`

2.2.2 Data collection and compilation:

To manufacture the target product, there are five raw materials used, as presented
in Table 1.
The details of the machines and the workers. in each production process are
presented in Table 2.
Cost of materials used in this product is listed in Table 3.

Table 1 (Raw material used in target product)

Fabric Cotton 100% White fabric

Sewing thread White cotton 100% thread
Knitting & weaving yarn White spun polyester Yarn
Button Coconut shell button
Packing Plastic bags

Table 2 (Machines &workers. in each process)

Process Machine Workers.

Cutting Rotary fabric cutter 2
Sewing Sergers sewing machine 14
Quality checking 2
Dyeing & buttonhole Outsourcing
drilling
Packing Iron 5

Table 3 (cost of material)

Polyester yarn 400M Rs. 24.44

Cotton thread 400M Rs. 20.16
Cotton thread 1000M Rs. 70
( BUTTONING &GACH)
White fabric 1M Rs. 75.03
Buttons 1000 nos. Rs. 324
Plastic bag 2 nos. Rs. 9.2

15
Equipment used for carrying out data

1) Measuring tape:

2) Stop watch:

16
2.2.3 Calculation

Fabric used for making 1 t-shirt =2.724m2

(L=2.018m [80.72inch] & B=1.35m [54inch])

Total material taken for 100 t-shirts is 272.4m2

Total cost of input material is RS.15135.05

Quantity center 1:
Material input: 272.40 m2
Waste fabric generated from 1 t-shirt material =
[Area of 1 t-shirt patterns – area of 1tshirt fabric material]
=2.724m2-2.2783m2
=.4457m2

Waste fabric generated from 100 t-shirt material =44.57m2

Quantity center 2:
In this process newly input material is white cotton thread &white spun polyester yarn.

Firm has purchased 60 & 50 rolls of white cotton thread& white polyester yarn costing of
Rs.1210& Rs.1222.

Total input of white cotton thread is 5000m.

Total input of spun polyester yarn is 5000m.

Waste cotton thread generated during intermediate stage of sewing process is 420m.
Waste spun polyester yarn during sewing process is 55.8m.
Extra fabric after sewing process is the negative product

17
Quantity center 3:
In this quantity center there is no newly input material.
Worker pulls out the extra thread from the t-shirts in order to make defect free product.

Table4. Amount of waste occurred during this process.

Negative product Positive product
White cotton thread 204.7m 4375.3m
Spun polyester yarn 18.653 4925.35m

Quantity center 4:
In this process newly input material is buttons, polythene bags, white cotton thread.
No waste is generated during this process.

18
Table 5 ( CUTTTING PROCESS)

MAJOR UNIT INPUT UNIT Negative UNIT Positive UNIT

MATERIAL MATERIAL product product
USED
Cotton Quantity 272.40 M2 44.57 M2 227.83 M2
white
fabric
Cost 15135.05 Rs. 2476.4 Rs. 12658.65 Rs.

Total 15135.05 Rs. 2476.4 Rs. 12658.65 Rs.

Total 100 % 16.36 % 83.64 %
quantity
percentage

Table 6 ( SEWING PROCESS)

Cotton Quantity 227.83 M2 14.7 M2 213.12 M2

white
fabric
Cost 12658.65 Rs. 817.3 Rs. 11841.35 Rs.
White Quantity 5000 M 420 M 4580 M
cotton
thread
Cost 252.1 Rs. 21 Rs. 231.1 Rs.
White Quantity 5000 M 55.8 M 4944.2 M
spun
polyester
yarn
Cost 305.5 Rs. 3.4 Rs. 302.08 Rs.
Total 13216.3 Rs. 841.7 Rs. 12374.5 Rs.
Total 100 % 6.37 % 93.63 %
quantity %

19
 Table 7 (QUALITY INSPECTION PROCESS)
MAJOR UNIT INPUT UNIT NEGATIVE UNIT POSITIVE UNIT
MATERIAL MATERIAL PRODUCT PRODUCT
USED
Cotton white Quantity 213.12 M2 0.00 M2 213.12 M2
fabric
Cost 11841.35 Rs. 0.00 Rs. 11841.35 Rs.
White cotton Quantity 4580 M 204.7 M 4375.3 M
thread
Cost 231.11 Rs. 10.5 Rs. 220.6 Rs.
White spun Quantity 4944.2 M 18.65 M 4925.3 M
polyester
yarn
Cost 302.8 Rs. 1.14 Rs. 300.9 Rs.
Total 12374.5 Rs. 11.64 Rs. 12362.8 Rs.
Total 100 % .09 % 99.9 %
quantity %

Table8( PACKING PROCESS)

Plastic bag Quantity 2 Bag 0.0 Bag 2 Bag

Cost 9.2 Rs. 0. Rs. 9.2 Rs.
Buttons Quantity 1000 No. 0.0 No. 1000 No.
Cost 324 Rs. 0.0 Rs. 324 Rs.
Cotton white Quantity 213.12 M2 0.00 M2 213.12 M2
fabric
Cost 11841.35 Rs. 0.00 Rs. 11841.35 Rs.
White cotton Quantity 5590.3 M 0.0 M 4375.3 M
thread
Cost 305.6 Rs. 0.0 Rs. 305.6 Rs.
White spun Quantity 4925.3 M 0.0 M 4925.3 M
polyester
yarn
Cost 300.9 Rs. 0.0 Rs. 300.9 Rs.

Total 12781 Rs. 0.0 Rs. 12781 Rs.

Total 100 % 0.0 % 100 %
quantity %

20
Table 5,6,7,8. Shows the calculation of mass balance in each quantity center, excluding the
fourth process which is the outsourcing process. Due to the difference and difficulty in
using the real weight of each input material, we applied cost-based allocation for allocating
between positive and negative product portions.
A table combining positive and negative material costs throughout all the processes based on the
above flowchart including calculation data is called a “material flow matrix”.
Table 9: Product analysis percentage wise based on material cost

product material cost %

positive
Rs.12781.05 79.3
product
negative
Rs.3329.74 20.7
product
total Rs.16110.9 100

material cost

21%

cost of positiveproduct
cost of negative product

79%

Chart 2

From table 5,6,7,8 the quantity percentages of both the positive and the negative product costs
of all the processes can be understood. These values were subsequently used in allocating
system cost (SC), energy cost (EC), and waste management cost (WC), as presented in Fig.
3.

21
Fig 3. Evaluation of all costs.( EXISTING SITUATION)
22
2.2.4Calculation of energy cost:

QC 1:

Rotary cutter blade of diameter 45mm is of Rs. 90

 Material : steel
 Hole diameter : 8mm
 Thickness: 0.3mm

QC 2:

Time taken for sewing 100 t-shirts by 14 worker is 7470 min (79hours.)
Power rating of serger’s sewing machine is 1HP

.745*79= 58.85KWH

Price of 1KWH by Gujarat electricity board is RS. 5 therefore the cost of 58.85 KWH is
RS. 294.3

TABLE .10 time taken in sewing process

worker Time taken NO.OF TSHIRTS TOTAL

THREAD USED
OF EACH TYPE
IN SEWING
PROCESS IN
meter
1 5H 40M 7 348.12
2 5H 38M 7 346.10
3 5H 33M 7 347.18
4 5H38M 7 346.2
5 5H30M 7 348.2
6 5H34M 7 344.4
7 5H35M 7 349.2
8 5H40M 7 348.4
9 5H44M 7 359.6
10 5H48M 8 412
11 5H35M 7 345.6
12 5H30M 7 343.5
13 6H 05M 8 415.86
14 5H30M 7 345.64

23
QC 4:

Time taken for ironing 100 t-shirts is 2h 4min 48sec (2.08hours.)

Power rating of iron is 2KW.

Energy cost E1 =Rs.20.8

Time taken for buttoning 100 t-shirts is 1h40m (1.6hours.)

Power rating of buttoning machine is 0.25kw

Energy cost E2= Rs.2

Total energy cost in QC 4 is Rs.23

24
 Chap 3: Implementation

3.1 IDENTIFYING IMPROVEMENT REQUIREMENTS:

The material cost of the negative product costs was incurred due to three processes, namely;
cutting, sewing, and quality checking. Table 11 s h o w s the comparison between the
material costs of the negative product costs of all the three processes, and the results
revealed that the highest material cost of the negative product costs was incurred during
cutting process.

Table 11. Comparison between the material costs of the negative product costs

Process Total input Negative Positive % cost of

material cost product cost product cost negative
product
Cutting (FABRIC) Rs.15135.05 Rs. 2476.4 Rs. 12658.65 16.36%
Sewing

 FABRIC) Rs.12658.65 Rs.817.3 Rs. 11841.35 6.4%

 WHITE Rs.557.6 Rs.24.4 Rs.533.19 4.37%

COTTON
THREAD &
SPUN
POLYESTER

Quality inspection
 FABRIC Rs. 11841.35 Rs. 0.00 Rs. 11841.35 0%

 WHITE Rs. 533.19 Rs.11.64 Rs.521.5 2.1%

COTTON
THREAD &
SPUN
POLYESTER

25
3.1.1 CUTTING PROCESS:

From the data collection, we observe that the material cost of the negative product costs
was incurred mainly from waste materials such as fabric rags left behind after workers.
performed cutting fabric at the cutting process and trimming fabric after finishing sewing at
the sewing process. The amount of fabric rags at the cutting process was determined to be
higher than that at the sewing process. To provide improvement solutions at the cutting
process, the cause effect diagram is applied to find the causes for the occurrence of fabric
rags. Shown in figure 4.

Fig4

The current operations in the cutting process are, firstly, pre- paring fabric, secondly, laying
out sewing pattern pieces, and, lastly, cutting fabric along the designated cutting line. The
operation of laying out pattern pieces was inferred to be the source of fabric rags because
the practice familiar to the workers. was that of laying out once for the whole body of the t-
shirt so that one t-shirt needs just one time of laying out for pattern pieces. The gap of fabric
between the pattern pieces becomes the fabric rag after this process is completed. The
details of the cutting process are as presented in fig 5.

fig. 5
26
 3.1.2 Sewing process:
The second source of the material cost of the negative product costs was the sewing process.
During the sewing process, two types of material waste are generated, namely, fabric rags
and thread rags. After sewing, edge cutting was performed with the cutting distance as 0.8
cm (Fig.6) from the outer fabric edge. The quantity of fabric rags was found to be higher
than that of thread rags, and only reducing fabric rags at this process is found to be possible.

Fig6

27
3.2 Proposed improvement s olut ion :

Three improvement solutions were proposed, as follows: (1) reducing the gap between the
pieces of the pattern, (2) reducing the edge width of each piece of pattern, and (3) employing
a new cloth-cutting table. The details of each solution are provided below:

3.2.1Reducing gap between pieces of pattern

The first solution is to lay out the pattern pieces by putting the big pieces first and the small
pieces later, as shown in Fig.7. With the use of this procedure, there remains some fabric
area that can be saved as the big part, as indicated in (Fig.7). The s a v e d fabric area has an
influence in reducing the input material, which is a key concept of MFCA.

Fig 7

3.2.2 Reducing edge width of each piece of pattern

This solution is provided in order to reduce the fabric rags occurring after the sewing
process, as shown in Fig. 8. Narrowing the edge width of each pattern from 0.8 cm to 0.3
cm (the smallest distance at which the fabric pieces can be cut by the machine) can help in
reducing the quantity of the cut fabric, and it can be implemented as soon as a new design
of cloth is ordered and a new pattern is needed. This improvement solution helps in
reducing the size of each pattern piece so that the fabric rags that occur at the cutting
process are also reduced, consequently.

Fig8

28
3.2.3Reducing gap between pieces of pattern and using a reduced edge
width pattern:
This solution is a combination of the first and second solutions, which can help in reducing
the amount of fabric rags occurring at both the cutting and the sewing processes.

3.3 Implementing and evaluating improvement p l ans :

Solution 1.

Now when this solution is applied in the firm the quantity of fabric is reduced to 233.4m2 from
272.4m2 which helps in reducing the input cost of fabric from RS.15135.05 to RS.12970.5.
This improvement solution reduces the fabric requirement of about 39m2.

Fig 9

29
Solution 2.

Now when this solution is applied in the firm the quantity of fabric is reduced to 252.96m2 from
272.4m2 which helps in reducing the input cost of fabric from RS.15135.05 to Rs.14059.2
This improvement solution reduces the fabric requirement of about 19.44m2.

Fig .10

30
Solution 3.

Now when this solution is applied in the firm the quantity of fabric is reduced to 228.5m2 from
272.4m2 which helps in reducing the input cost of fabric from RS.15,13505 to RS.12,700
This improvement solution reduces the fabric requirement of about 43.9m2

Fig .11

31
3.4 comparison of the MFCA results:

During this step, 3 improvement solutions at the cutting and sewing processes were
implemented. Subsequently, MFCA calculation is carried out to evaluate each procedure.
The results are presented in Table12.
Table 12 comparison of MFCA results
Input product Positive product Negative
product
Existing RS. 23,160 RS. 19,509 RS. 3,650
situation (100%) (84.23%) (15.75%)
Solution 1. RS. 20,995 RS. 19,542 RS. 1,452
(100%) (93.07%) (6.91%)
Solution 2. RS. 22,083.3 RS. 19,796.2 RS. 2,287.1
(100%) (89.6%) (10.35%)

Solution 3. RS. 20,724.1 RS. 19,848.6 RS. 875.5

(100%) (95.77%) (4.22%)

32
 Chapter: 4 Summary of MFCA Result
Summary of the result:

Material Flow Cost Accounting (MFCA) is an emerging tool for waste identification, waste
minimization and cost saving which leads to operational and environmental performance
improvement. MFCA tool show clear CT scan image of any organization in terms of physical
and monetary units for material and material loss. From MFCA material flow model and
material cost matrix data can help to identification opportunities and solve hidden problems.
From check step possible suggestion for improvement will implemented at QC-1(pattern
layout & cutting of fabric), QC-2(sewing)
1. MFCA solution is implemented at Q C 1 by putting the big pieces first and the small
pieces later. With the use of this procedure, there remains some fabric area that can be
saved as the big part, as indicated in the saved fabric area has an influence in reducing the
input material.

2. MFCA solution is implemented at QC-2 by reduce the fabric rags occurring after the
sewing process. Narrowing the edge width of each pattern from 0.8 cm to 0.3 cm (the
smallest distance at which the fabric pieces can be cut by the machine) can help in reducing
the quantity of the cut fabric, and it can be implemented as soon as a new design of cloth
is ordered and a new pattern is needed. This improvement solution helps in reducing the
size of each pattern piece so that the fabric rags that occur at the cutting process are also
reduced, consequently.

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 Chapter: 5 Conclusion

The advantage of applying MFCA technique is to convert production losses to monetary

terms that can encourage managerial people to be aware of production losses. To reduce
the cost of negative product is the key concept of MFCA, it is not only mean to effectively
use every material in production section, but also how to design product and process to
reduce wastes without the use of MFCA application, producers will not prepare for controlling
normal loss because producers think that it is a behavior of the system process that cannot be
improved.
The result proved that it is an effective tool to be used to improve the company performance
and profitability by reducing the negative products (material loss).

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 Chap 6: APPENDIX

1. AEIOU Summary:
A User who is connected with the industries for the use of the product and pays
for it like as worker, commercial, non-commercial, packaging industries, shop-
keeper

AEIOU Summery CANVAS

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 Figure 12

2 .EMPATHY SUMMARY

Empathy Summary CANVAS

Figure 13

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 3.IDEATION:

Ideation CANVAS
Figure 14

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 4. PRODUCTION CANVAS:

Product Development CANVAS

Figure 15

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5.BUSINESS CANVAS

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 References:

1. ICF Incorporated (Ed.), 1996, Full cost accounting for decision making at Ontario Hydro: a
case study, Final review draft, Washington.
2. Higashida, A. (2008), “The Dilatation Supply Chain of Material Flow Cost Accounting”,
Corporate Accounting.
3. Nakajima, M. and Kokubu, K. (2008), “Material Flow Cost Accounting” 2nd edition, Nikkei
Inc. (In Japanese)
4. Rother, M., Shook, J., 2003, Learning to See, value-stream mapping to create value and
eliminate muda, Lean Enterprise Inst., Cambridge (Mass.).
5. Bhimani, A., Horngren, C. T., Datar, S. M., Foster, G., 2008, Management and Cost
Accounting, 4th ed., Pearson, Harlow et al.

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