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OPERATIONS MANAGEMENT OF ABC INCORPORATED: BASIS FOR IMPROVEMENTS
A Thesis in IE523 INDUSTRIAL RESEARCH PROJECT Presented to the Faculty of the Industrial Engineering Department Cebu Institute of Technology - University, Cebu City, Philippines
In Partial Fulfilment of the Requirements for the Degree BACHELOR OF SCIENCE IN INDUSTRIAL ENGINEERING
By: CHARRY A. ARONG JESSA RONA C. CEPADA JEENA DIVINE E. GRAFIA
October 2012 i
ACKNOWLEDGEMENT
We would like to extend our deepest gratitude to our beloved Almighty God the Father for giving us wisdom, guidance, strength and enlightenment in making this project.
To our beloved parents and families who remained patient and understanding to us and for their unending moral and financial support.
To Engr. Alein B. Navares, for the encouragement and the knowledge he imparted to us.
To Engr. Anna Marie L. Arnoco, for guiding and helping us in analyzing and in generating ideas especially in times of confusions.
To our Batch mates, for encouraging and helping us and other researchers believe that we all can make it until the very end of this study.
To ABC Incorporated for allowing us to conduct a study in their company and for showing their support by providing us the data needed in making this research.
The RESEARCHERS
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DEDICATIONS
This study is dedicated to my greatest inspirations in lifemy hardworking and supportive parents, my second family CITAA IE Batch 1986, my siblingsand to the highest creator in heaven, Our Almighty Fatheryou are truly the source of my strength, wisdom and passion for this project. -Cha I dedicate this study, first of all to our Almighty God for giving me the strength to push through, to my parents for their unending support and for serving as my encouragement and the person who had made a great impact in my life and lastly to my special someone for the understanding. -Rona This study is dedicated, first and foremost, to God Almighty for guiding, strengthen, and enlighten my mind in making this research. To my beloved family for always being there to show their moral support and most especially for providing me their financial support. And to all those people who encouraged and helped me in making this project. -Jeena
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TABLE OF CONTENTS
CHAPTER I
Title Acknowledgements Dedications Table of Contents .. List of Tables List of Figures ............. List of Exhibits . THE PROBLEM AND ITS SCOPE 1.1 Introduction Rationale of the Study .. Conceptual Framework . Theoretical Background Flow of Research Process 1.2 The Problem Statement of the Problem .. Statement of Assumptions . Scope and Delimitation . Significance of the Study . 1.3 Research Methodology Research Environment .. Research Respondents . Research Instrument . Research Procedures . 1.4 Definition of Terms PRESENTATION AND ANALYSIS OF DATA 2.1 Descriptive Phase Company Profile .. Historical Background .. Facility .. Organizational Structure . Geographic Location . Product Lines . Pareto Table .. Pareto Chart .. 2.1.2 Facilities Planning and Design 2.1.3 Capacity Planning . 2.1.4 Methods Improvement .. 2.1.5 Finished Goods Inventory Management ...... 2.2 Diagnostic Phase
ii iii iv vi ix x PAGE 1 2 4 12 13 14 14 15 16 17 17 18
II
22 22 24 24 25 26 26 28 30 41 67 86
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III
IV
2.2.1 Problem Selection 2.2.2 Root Cause Analysis Matrix 2.2.3 Cause and Effect Diagrams .. 2.2.4 Formulation of Options . PROPOSALS FOR IMPROVEMENT OF OPERATIONS MANAGEMENT 3.1 Summary of Proposals . 3.2 Operation Development Scheme 3.3 Overall Project Implementation .. 3.4 Comparative Analysis .. SUMMARY, FINDINGS, AND RECOMMENDATION 4.1 Summary 4.2 Findings .. 4.3 Recommendations .
94 96 97 110 147 148 149 153 168 169 172 xi xiii xxi
Bibliography Appendices . Curriculum Vitae ..
LIST OF TABLES Table

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Titles Page Research Respondents 17 Business Market of ABC Incorporated 23 Pareto Table of Product Lines 27 Input Process Output Framework of Special Biscocho.. 30 Manufacturing Process Type Checklist .. 31 Process Sequence. 33 From-to-Chart for Distances............ 34 From-to-Chart for Number of Trips.... 34 Total Transportation Cost per Batch.. 35 Different Areas and its Descriptions . 40 Existing Operating Time................... 42 Summary of Allowance Factor.......... 46 Biscocho 150g Processes and Processing Time. 51 Operation Non-Value Added Activities 52 Workers Summary of Available Operating and Standard 53 Processing Time.............................. Overall Effectiveness Equipment for Spiral Mixer 56 Overall Effectiveness Equipment for Volumetric Machine. 57 Overall Effectiveness Equipment for Dough Molder.. Overall Effectiveness Equipment for Dough Rounder Overall Effectiveness Equipment for Oven . Overall Effectiveness Equipment for Bread Slicer. Overall Effectiveness Equipment for Continuous Sealer Total Number of Machines and its Capacity. Energy Utilization Cost Machine Utilization Cost (1 Batch).. Standard Time Value Analysis of Molding Process.. Productive and Non-Productive Time of Molding Process.. Productive and Non-Productive Time of Proofing Process.. Productive and Non-Productive Time of 1 Baking Process.. Productive and Non-Productive Time of 1st Cooling Process.. Productive and Non-Productive Time of Slicing Process
st
58 59 60 61 62 62 63 64 73 74 75 76 76 77 77
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33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Productive and Non-Productive Time of Banya Process Productive and Non-Productive Time of 2 Productive and Non-Productive Time of 2
nd nd
78 79 79 80 81 81 82 83 84 88 88 89 94 95 96 104 105 106 111 112 115 116 117 118 119 120 121 123 125 125 131
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Baking Process.. Cooling Process
Productive and Non-Productive Time of Packing Process. Productive and Non-Productive Time of Sealing Process. Productive and Non-Productive Time of Final Packing.. Summary of Non-Productive Time . Summary of Opportunity Loss per Process .... Pareto table of Non-Productive Time ABC Analysis.... Unit Cost and Unit Price of FG-Pasalubong... Output, Sales, and Unsold FG per Month Summary of Problem Options Standard Selection Criteria for AHP Root Cause Analysis Matrix Ideal and Actual Number of Workers Summary of Ideal and Existing Number of Workers . Summary of Existing and Ideal Number of Labor Cost per Day . From-to-Chart of Proposed Layout Total Transportation of Cost per Batch of Proposed Layout . From-to-Chart of Proposed Layout (Option 2) .. Total Transportation of Cost per Batch of Proposed Layout (Option 2) . Labor and Energy Cost in Option 1 .. Total Processing Time of 11 Workers .. Labor and Energy Cost of Option 2 . Processing Time After Transferring the Workers .. Total Processing Time After transferring the one excess worker. Total Processing Time After transferring the one excess worker. Cost Benefit Analysis of Non-Productive Time in Banya Option 1 Reduction of Unproductive Work Content in Banya Process Cost Benefit Analysis of Non-Productive Time in Packing Process.
64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80
Reduction of Unproductive Work Content of Packing Process Proposed Forecasting Model Sheet . Ave. Ending Inventory after Using Exponential Smoothing Model .. Selection Criteria .. Generic Five Point Impact Scale Solution Criteria Solution Prioritization Matrix Summary of Proposals . Precedence Table .. Comparative Analysis of Distance and Time . Comparative Analysis of the Ideal and Existing Manpower Comparative Analysis of Machine Utilization .. Comparative Analysis of Processing Time of Slicing Area .. Comparative Analysis of Processing Time of Sealing Area Comparative Analysis of the Existing and Proposed Performance Index Comparative Analysis of Finished Goods Inventory Management Additional Cost and Losses Comparative Analysis Cost Benefit Analysis
132 139 140 144 145 146 147 150 156 158 159 160 160 161 162 163 166
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LIST OF FIGURES Figure 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Titles Conceptual Framework Flow of Research Process Organizational Chart.. Pareto Chart of Product Lines.. Process Flowchart General Process Flow. Pareto Chart Line Graph of Demand of Pasalubong Items Receiving Procedure Releasing Procedure Cause and Effect Diagram of Facilities Planning and Design Cause and Effect Diagram of Capacity Planning . Graphical representation for the Ideal and Existing Number of Worker .. Cause and Effect Diagram of Methods Improvement.. Cause and Effect Diagram of FG Ending Inventory .. Standard Process in Banya . Operation Development Scheme .. Overall Project Implementation. Network Diagram. Gant Chart Problem 1 Comparative Analysis in Distance and Time Problem 5 Comparative Analysis .. Problem 6 Comparative Analysis .. Comparative Analysis for Plant Layout Comparative Analysis for Capacity Planning .. Comparative Analysis for Methods Improvement Comparative Analysis for Inventory Management Page 2 12 24 28 48 68 84 88 91 92 97 100 105 107 108 127 148 149 151 152 157 161 162 164 164 165 165
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LIST OF EXHIBITS
Exhibits 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Titles Facility of ABC Incorporated. Vicinity Map .. Product Lines of ABC Incorporated. Raw Materials................................... Workflow Diagram of the General Process Workflow Diagram in Processing Area. Functional Areas and its Description. Allowances for Various Classes of Work (in percentage) Process Schematic Diagram................ Finished Goods Warehouse................... Proposed Layout of Workstations.......... Proposed Layout in the Production Area-Option Two. Arrangement of Banya and Slicing Area .. Kanban Card for Materials .. Kanban Card for Ingredients.. Proposed Workstation Design.. Proposed Work Instruction in Packing Process Kanban Card .. Proposed Job Specification and Description in Hiring Material Controller Sample Template for Exponential Smoothing Model..
Page 23 24 25 28 31 32 37 72 86 110 113 126 129 129 131 133 135 136 142
CHAPTER I THE PROBLEM AND ITS SCOPE 1.1 INTRODUCTION 1.1.1 Rationale of the Study The Philippine Association of Flour Millers Inc. (PAMFIL) conducted a local study, said that 85 percent of Filipinos prefer to eat bread instead of rice for breakfast. As the Philippines produces about 1.4 million metric tons of flour annually, the country sources wheat, the prime raw material for flour, from other countries. It imports about 2.4 million metric tons of wheat mostly from the United States. Mainly, these inputs account 50% for pan de sal or any salt bread, 20% for loaf bread and 30% for other varieties.
(http://www.txtmania.com/trivia/economy.php) In order to compete with the changes occurring globally, Philippine industries adopt changes by improving the machineries, methods, quality at the source , processes and generally the layout. Operations plan is very essential and needs consideration and attention from the very beginning so as to avoid subsequent problems. With more than 10,000 baking industry in the country, Cebu is one of the cities producing wide variety of bakery products that are sold in local and global market. In fact, these types of industries have fundamental need to make and sell their products, satisfy their customers and the means to satisfy the customers in the future. Most significantly, these core operations functions are necessary to work
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effectively for the fulfillment of the customers requests. In practice, this reality looks promising, hence, this study arise to understand and address companys operations need and help them to satisfy these needs. Furthermore, this study concentrates on the four areas recognized by the company such as plant layout, methods improvement, capacity planning and inventory management and to come up possible solutions and recommendations that can significantly contribute to the operation of the company.
1.1.2 Conceptual Framework
METHODS IMPROVEMENT
FACILITIES PLANNING AND DESIGN
INVENTORY MANAGEMENT
CAPACITY PLANNING
OPERATIONS MANAGENT OF MAGIC MELT FOODS INC: BASIS FOR IMPROVEMNTS
Figure 1: Conceptual Framework
ABC Incorporated determined the four (4) problem areas in operation. The areas are the plant layout, methods improvement, capacity planning, and inventory management.
Operations Management
Operations management is the activity of managing the resources that are devoted to the production and delivery of products. The operations function is to make the resources available that suffice the current and future operations in the company. This encompasses by having a forecasting method in projecting the number of bakery products to be produced in a day. The balance of the number of manpower required in producing baked goods so as in planning or scheduling what products should be made every day. Moreover, the production manager, production plan control, quality assurance, production supervisor and others monitor operations functions in bakery industry. They are responsible to manage inventories (finished goods inventory is the primary focus) , assuring a best taste of bakery products, motivating workers, deciding where to locate facilities, and more.
(Stevenson, 2002: 4)
Theoretically, operations management is the same for any size of organization. However, in practice, managing operations in micro or small size organization has its own set of problems. Large companies may have the resources to dedicate individuals to specialized tasks but smaller companies often cannot, so people may have to do different jobs as the need arises. On the other hand, for the case of ABC Incorporated, classified as a medium enterprise can decide to allocate workers in a specialized task. By personalizing the task, cycle time will be reduced and there will be an increase in the productivity.
Indeed, this is not just a challenge but a promising reality that embodies all aspects of the business process to unite in order to create an efficient resourceful procedure. Moreover, many businesses have come to realize that the operations function is just important to their firm as finance and marketing and it shows firms now realize that in order to effectively compete in a global market they must have an operations strategy to support the mission of the firm and its overall company strategy. The organization strategy provides the overall direction for the organization. It is broad in scope, covering the entire organization. Operations strategy is narrower in scope, dealing primarily with the operations strategy relates to products, processes, methods, operating resources, quality, cost, lead times and scheduling. It is define as the approach, consistent with the organization strategy that is used to guide the functions.
(Stevenson, 2002: 43)
1.1.3 Theoretical Background Plant Layout
A plant layout is the placing of the right items coupled with the right place and the right method, to permit the flow of production process through the shortest possible distance in the shortest possible time.
Layout is one of the key decisions that determine the long run efficiency of operations. Layout has numerous strategic implications because it establishes an
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organizations competitive priorities in regard to capacity, processes, flexibility and cost, as well as quality of work life, customer contact and image. An effective layout can help an organization achieve a strategy that supports differentiation, low cost, or response. Layout decisions include the best placement of machines (in production settings), offices, and desks (in office settings). An effective layout facilitates the flow of materials, people, and information within and between areas.
Batch Processing
This method is used in producing any product in groups, or batches where the products in the batch go through the whole production process together. In bakery, with the aid of this method, there are different types of breads produces separately and each bread is not produced continuously. This technique is suited when there is a need for quantity balance.
Cycle Time
Cycle time is the maximum time that a product is allowed at each workstation. This concept gives an idea that units required per day (demand or production rate) divide into productive time available per day.
Cycle time Ideal Number of workstation Efficiency
Production time available per day units required per day Production time available per day Cycle time ___Total Task times_____________ Actual number of workstations * Largest assigned cycle time
Material handling and moving

This is another factor to consider in plant layout design. Material handling is the very critical part of the design and the needs of a
manufacturing facility. Materials such as racks, tables, bread crate, trays and machines need to be properly stored and transported to and from work
station/centers with a view towards minimizing the movement and avoiding backtracking and repetitive travel along the process. The cost of this being
implemented incorrectly could be devastating to the profitability of the business and also could jeopardize the job as well as to the workers who performed the job. The design of the material handling system is an important component of the overall facilities design. Moving a material is costly if a material travels long distance, backtrack or on cross traffic. Having a continuous flow of movement guarantees a short processing time to move the material from one place to another. Movement does not only involve in moving the material but can be also done in the worker or man as well. Aside from material handling machines, man can also be a material handler. In plant layout, proper width of aisles should be observed so that man and machines could pass through without being congested. Another factor that is considered in facilities planning and plant layout is waiting.
(CEO: Operations/ Manufacturing, 2003:wwww.ceoadvice.com)

Capacity planning This is a process of determining the production capacity needed by an company to meet changing demands for its products.In the context of capacity
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planning, "design capacity" is the maximum amount of work that an organization is capable of completing in a given period, "effective capacity" is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, machine breakdown and others. A discrepancy between the capacity of the company and the demands of its customers results in inefficiency, either in excess workers, under-utilized resources( machines or workers) or unfulfilled customers. The goal of capacity planning is to minimize this discrepancy. Demand for company's capacity varies based on changes in production output, such as increasing or decreasing the production quantity of an existing product, or producing new products to meet and satisfy customers. Better utilization of existing capacity can be accomplished through improvements in overall equipment effectiveness (OEE). Capacity can be increased through introducing new techniques, equipment and materials, increasing the number of workers or machines, increasing the number of shifts, or acquiring additional production facilities. The idea of capacity planning is to balance the purchase of resources, the maintenance of production facilities, the hiring of labor, and the final output so that consumers have a steady supply of the products they desire. At the same time, capacity planning also seeks to increase profits by eliminating unnecessary waste, including the overproduction of any good or service.
(http://www.wisegeek.com/what-is-capacity-planning.htm)
Capacity is calculated: (number of machines or workers) (number of shifts) (utilization) (efficiency). From a scheduling perspective it is very easy to determine how much capacity (or time) will be required to manufacture a quantity of parts. Simply multiply the Standard Cycle Time by the Number of Parts and divide by the part or process OEE %. Capacity Available If considering new work for a piece of equipment or machinery, knowing how much capacity is available to run the work will eventually become part of the overall process. Typically, an annual forecast is used to determine how many hours per year are required. To calculate the total capacity available, we can use the formula from our earlier example and simply adjust or change the volume accordingly based on the period being considered. The available capacity is difference between the required capacity and planned operating capacity. (Krajewski &Ritzman, 2005) (Lazowska, 1984)
Methods Improvement This is significantly used in the study as a measure of systematic recording and critical examination of existing and proposed methods of doing work, as a means of developing and applying easier and more effective methods and reducing costs. In practical, this sort of study is usually done through the use of time study
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sheet, clipboard, and stopwatch. On the other hand, work measurement is the process of establishing the time for qualified workers at a defined level of performance, to any of the every process. In this sense, performance is primarily the turner head of work measurement which entails the task of output which qualified workers will achieve without over-exertion as an average over the working day provided they are motivated to apply themselves to their work. A time study procedure involves timing a sample of workers performance and using it as standard. A trained and experience worker can establish a standard by following the basic steps in conducting time study. Below shows the computation of the standard time. Average Observed Time Normal Time Standard Time Sum of the times recorded to perform each element number of observations Average observed time x performance rating factor Normal time ( 1 + Allowance factor)
Process improvement is a systematic approach to improve a process. It involves documentation, measurement and analysis for the purpose of improving the functioning of the process. Typical goals include the customer satisfaction, reducing waste, achieving higher quality, reducing cost, increasing productivity and reducing process time. (Stevenson, 2002: 477).
Methods Analysis
This focuses on how a task is accomplished. Whether controlling the machine or assemble components, how a task is done makes a difference in performance, safety and quality. This is useful in office environment and production/ factory environment. Methods technique are used to analyze: 1. Movement of individuals or material. The analysis is performed using schematic diagrams and process charts with varying amounts of detail. 2. Activity of worker and bakery equipment. This analysis is presented by tracking the productive, non-productive times. Non-productive time is categorized as necessary and not necessary.
Schematic Diagram
This is one of the methods analysis tool used to investigate the movement of people or material. This shows the flow of the process.
Process Chart
This is chart showing the process that uses symbols to help understand the movement of people or material. In this way, movement and delays can be reduced and operations made more efficient.
Activity Chart
This chart is use to study and improve the utilization of an operator and a machine or some combination to record the present method through direct observation and then propose the improvement on a second chart. (Heizer &Render, 9th Edition)
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Inventory Management Inventories are materials stored, waiting for processing, or experiencing processing. They are everywhere throughout all sectors of the economy. Observation of almost any company balance sheet, for example, reveals that a significant portion of its assets comprises inventories of raw materials, components and subassemblies within the production process, and finished goods. Most managers do not like inventories because they are like money placed in a drawer, assets tied up in investments that are not producing any return and, in fact, incurring a borrowing cost. They also incur costs for the care of the stored material and are subject to spoilage and obsolescence. Almost all industry is aiming at reducing inventory levels and increasing efficiency on the shop floor. Among the types of inventory, finished goods inventory is considered as critical because this accounts or converts to money and once stocked for a span of time this may be considered as lost sales. Worst of all, if the nature of the product is perishable then there is a chance of losing or reducing companys profit. ABC Incorporated is practicing the First-Expiry, First-Out method in which they endorsed or shipped products that expire first. (Russell &Taylor, 2003.) Inventory represents an important decision variable at all stages of product manufacturing, distribution and sales, in addition to being a major portion of total current assets of many businesses. Inventory often represents as much as 40% of total capital of industrial organizations (Moore et al., 1993). It may represent 33% of company assets and as much as 90% of working capital (Sawaya Jr. & Giauque,
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1986). Since inventory constitutes a major segment of total investment, it is crucial

that good inventory management be practiced to ensure growth and profitability. Inventories occur whenever the time an individual enters is different than when it leaves. During the intervening interval the item is part of the inventory.
1.1.3 Flow Process

DESCRIPTIVE PHASE
OPERATIONS MANAGEMENT
Facilities Planning and Design Capacity Planning Methods Improvement Inventory Management
Document Analysis Interview Observation Questionnaire DIAGNOSTIC PHASE Data Analysis and Interpretation of Results Data Presentation
PRESCRIPTIVE PHASE Proposals for Improvement of the Operations Management of ABC Inc.
INPUT
PROCESS
Figure 2: Flow of Research Process
OUTPUT
Flow of research process shows how the study is conducted systematically by the researches. This served as a guide to the researchers to evaluate and assess the four areas of operations management. Most significantly, every area has its own problem to which proposals for improvement must be imparted. The data needed were gathered with document, interview, observation and questionnaire. After
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collecting and recording the data, these were then analyzed. This is when difficulties or problem areas were identified. Therein, results of analyses where then interpreted and discussion of possible options are presented. The study will be presented to the company and proposals for improvement served as the output of this study.
1.2 THE PROBLEM 1.2.1 Statement of the Problem The study was launched to determine and evaluate the problem areas of interest of the core operation functions of operations management at ABC Incorporated. In this study, the researchers prophesied improvements that can help the company improve its current performance in inventory management, facilities planning and design, capacity planning and methods improvement. Furthermore, this study specifically aimed to provide answers to the following queries: What is the existing setup of the companys facilities planning and design, capacity planning, methods improvement, and inventory management? What are the problems met in the areas identified as perceived by the management, workers and the researchers? What are the possible recommendations that can be put forward to solve the recognized problems in the aforementioned areas?
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1.2.2 Statement of Assumptions 1. The Reliability of the data gathered used in this study is based on the sincerity of the answers of the production managers, human resource officer, and costing officer and production workers. 2. Rate of holding cost is 5% per month based on interview and observation. 3. The process starts in mixing process since premix area is not considered due to strict confidentiality. 4. The profit values are assumed due to confidentiality. 5. The labor of all workers are equal and in minimum wage. 6. In methods improvement, the time of an average worker is considered to be the processing time regardless of the number of workers assigned in each workstation or process.
1.2.3 Scope and Delimitation
Subject Delimitation
The study focuses on the areas of concern in operation of ABC Incorporated that needs improvement. These areas are the inventory management, methods improvement, facility layout, and capacity planning. These areas were selected by the management of the said company.
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Place Delimitation
The study is conducted at ABC Inc. Cebu Philippines, 6014 It is located at Bankal, Lapu-Lapu City,
Time Delimitation
This study is conducted in the month of June up to the month of October for the academic year 2012-2013.
1.2.4 Significance of the Study This study is conducted for the following beneficiaries:
Company
In this study it can help the company to evaluate the current performance considering the application of operations management from the different areas and to come up proposals for improvement as a result, will help the company more productive, profitable, survive and have a competitive advantage.
Employees
With this study, the workers can benefit as they are an integral part of the operations management. Through this study, the task of the workers will be simplified and make their job more efficient through eliminating the non-value added activities. Also, through this research study, the convenient working environment can be achieved and smooth flow of production.
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Customer
This study can help in finding ways on how to improve their operation management of the ABC Inc. which can help the customers have a consistent satisfaction level with regards to the management. Customers can be satisfied of their performance directed by the company that enables to meet the customers expectation of the performance render by the workers.
Researchers
This study helps the researchers apply their knowledge regarding to the operation management. Also, it will help the researchers to enhance their capability and skill in making such research study and to come up a proposal that will help the company to improve their methods improvements. Through this study, the researchers can have a better view of what the food industry is like.
Other Researchers
This will serve as a reference for the other researchers for the future studies in connection to operation management. This can provide them background information out from results as guide for their research.
1.3 RESEARCH METHODOLOGY 1.3.1 Research Environment ABC Incorporated was founded in 1999 as a small, home-scale business specialty bakeshop catering mostly the local demands on Labangon, Cebu City by the Lumakang family, an enterprising family who built their fortune from the lumber
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trade. And one of the facilities of ABC Incorporated is located in Bancal, Lapu-Lapu City, Cebu. ABC Incorporated expands their market not just in the Philippines but they also compete globally to meet customer demands. Their market is geographically divided into five segments which include Metro Manila, Visayas Cebu, Institutions, Mindanao and International.
1.3.2 Research Respondent NAME OF RESPONDENTS Plant Manager Production Supervisor Plant Auditor PPIC Head Maintenance Supervisor Finance Manager HR & Admin. Head POSITION / AREA 1 1 1 1 1 1 1
Table 1: Research Respondents
INSTRUMENT USED
Interview, Observation and Document Analysis
Interview
This is the list of employees or workers in the company who were the subject of theinterview. They were the ones, who provided us the information about the entire operation in the company, and who gave us the documents necessary in the study.
1.3.3 Research Instrument

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These are methods used by the researchers in getting data from the respondents identified. The data are gathered through document analysis, interview, observation, questionnaire and time study. In document analysis, data are obtained from the existing records of the company. Documents are necessary to analyze and interpret for this can give accurate data. Interviews are used to get data that are based on the experiences and knowledge of the people who involved directly on the production. Observation is used in the study for this involves assessing the areas in the operations. Questionnaire was also used to acquire particular data as perceived by the workers involved directly in the operations and it contained interrelated questions to be answer by the management of the company. Time study is used in gathering the process time on each area on the production.
1.3.4 Research Procedures Data Gathering Procedure In gathering of data, the researches first looked for a company whether a small or a micro business. Upon the approval of the company, getting data was then followed. The researchers then went to the company to gather data through conducting interview with the human resource manager, production manager and costing personnel, observing the working area and the actual operations through having document analysis well. Treatment of Data
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The needed data in facilities planning and design, capacity planning, methods improvement, and inventory management were gathered through conducting interview, observation, document analysis, questionnaire and time study. These were then presented and analyzed. Cause and Effect diagram was used to validate the correctness of the interpreted data and understand the root causes of the problems occurring to the 4 areas of concern. Through this diagram, the researchers determined the effect of these problems to the efficiency of the workers and the overall productivity of the company. 1.4 Definition of Terms
Banya
It is a margarine toppings which will put at the top of the sliced bread, in order to have a deliciously taste.
Banyador
It refers to a person that is responsible in putting the banya to the slice buns.
Bottleneck
Refers to a delay caused when one part of the process is slower than the other processes and hinders overall progress.
Cost of Ordering
These are the costs incurred in ordering the materials needed in the production.
Economic Order Quantity (EOQ)

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This refers to the ideal quantity of materials or items ordered to avoid overstocking and under stocking.
Expeditor
This refers to a person that is assigned in cooling and proofing area. This person is responsible in putting the buns to the proofing and cooling area. The expeditor are the one who will check the buns if it is ready in cooking, slicing, and packing.
Holding Cost
Holding cost refers to the cost incurred in handling the materials.
Master Box
This refers to a box used in storing the finished goods for final packing.
Material Handling
Material handling refers to the movement of materials from one place to another.
Pilferage Cost
This is the reduction in inventory caused by reject, or petty thievery by the employees.
Proofing
It means that the dough will be place to an area with standard temperature and let the yeast grow.
Sansan
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This is refers to a person who is responsible in putting the shape dough to the trays.
Stock Out
This refers to the period where in there is no available stocks of materials or finished product.
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CHAPTER II PRESENTATION AND ANALYSIS OF DATA
2.1 Descriptive Phase 2.1.1 Company Profile Company Name Company Address Contact Person Position : ABC Incorporated : Bankal, Lapu-Lapu City : Carolyn Go : Proprietor
Telephone Number : (6332) 340-8619; 495-8903 Products Email Address Website : Special ensymadas, breads, cakes : sales@abcincorporated.com : www.abcincorporated.com
Historical Background ABC Incorporated was founded in 1999 as a small, home-scale business specialty bakeshop catering mostly the local demands in Labangon, Cebu City by the Lumakang Family, an enterprising family who built their fortune from the lumber trade. Armed with their time-tested recipe for their carrier product, ensaymada (brioche), the family grew the business to its successful form today. The first commercial products began to reach the USA and Canada in 2005, and it was then that the company was incorporated into ABC Incorporated. With the
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incorporation, it joins the successful Budget Builders Group of Companies owned by the Lumakang Family. As its export orders grew, the company also outgrew its Labangon facility. So in 2009, marking its 10th year in the business, ABC Company built the first and only industrial-scale, export processing baking facility in Cebu. Located strategically in the heart of Bancal, Lapulapu City, a few minutes from the airport, it serves all the snacks and breakfast items that millions of Filipinos around the world enjoys. A second facility to cater to its franchise orders in Metro Manila was constructed in the same year, along Eusebio Ave in Maybunga, Pasig City, to meet the ever growing demands of the Metro Manila market. Business Market INTERNATIO NAL USA
METRO MANILA MRT (Metro Rail Transit) Ayala station, Makati LRT (Light Rail Transit) station, Balintawak, Quezon City Pasig Commissary outlet Victory Mall, Caloocan City
VISAYAS CEBU Salinas Pasalubong Center, Lahug SM City, Mandaue Robinsons Cybergate, Fuente Fooda, Consolacion
INSTITUTIONS KFC Hotdog On Sticks
MINDANAO Butuan
Canada
Mang Inasal Flame-It
Hongkong Singapore and Dubai
Table 2: Business Market of ABC Incorporated
ABC Incorporated expands their market not just in the Philippines but theyalso compete globally to meet customer demands. Their market is
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geographically divided into five segments which include Metro Manila, Visayas Cebu, Institutions, Mindanao and International. Facility
Exhibit 1: Facility of ABC Incorporated
This is one of the facilities of ABC Incorporated where it is located in Bancal, Lapu-Lapu City. It has an estimated area of 50,000 square meter and 100 meters from the road. Organizational Structure
Figure 3: Organizational Chart
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Vicinity Map
ABC Incorporated Bankal, Lapu-Lapu City
Exhibit 2:Vicinity Map
The exhibit illustrates the location of the business. The highlighted portion is the totality of the facility which is considered as the manufacturing site of the business. As shown, more than 50% of the total area is not yet utilize but this is subject for expansion.
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2.1.6 Product Lines

PASALUBONG ITEMS
BREAD
PASTRIES
Ensaymada Biscocho Brownies
Loaves/Big Pack
Mamon Tostado
Health Bread Exhibit 3: Product Lines of ABC Incorporated
Otap
ABC Incorporated is offering different products with good quality taste and with affordable price in order to meet customer demands. These products are categorized into three segments namely the famous breads, pastries,
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pasalubongitems. These products have varied flavours and sizes in order to provide
differentchoices to the demanding customers. Pareto Table Product Code SBIS150 MT100 OU200 OR200 RO200 HB10 BS BIS100 BIS45 BB06 EU01 EY02 SR EU03 CC B100 BB15 BB IEO BBBS DR HBJ60 HB06 Product Name Special Biscocho 150g Mamon Tostado 100g Otap Ube 200g Otap Regular 200g Rosquillos 200g Hotdog Bun *10 HOS Brownies small Biscocho 100g Biscocho 45g Burger Bun with oats *6 Ensaymada Ube EnsaymadaYema s Siopao Regular Ensaymada Regular/plain Cheese Cupcake Bayan 100g Burger Bun *15 Basic Burger Inday Esper Otap Basic Burger bun with Seeds Dinner Roll Hotdog Buns Jumbo 60g Hotdog Bun *6 January to July Volume 43,532.80 40,216.82 27,581.66 26,613.96 24,237.12 225,878.00 46,513.00 25,367.00 34,691.20 54,694.01 15,134.00 15,174.00 17,312.00 17,942.00 16,881.00 20,252.00 48,315.00 39,217.00 29,885.07 36,016.00 50,174.00 15,941.00 18,632.00 Unit Cost
30.03 30.00 41.44 35.09 38.02 3.00 11.60 15.86 9.50 5.40 17.59 17.27 14.90 14.06 12.07 9.28 3.00 3.30 4.16 3.25 2.2 3.85 3.15
January to July Sales Volume 1,307,289.98 1,206,504.60 1,142,983.99 933,883.86 921,495.30 677,634.00 539,550.80 402,320.62 329,566.40 295,347.65 266,207.06 262,054.98 257,948.80 252,264.52 203,753.67 187,938.56 144,945.00 129,416.10 124,321.89 117,052.00 110,382.80 61,372.85 58,690.80
% Sales Volume 13.16 12.15 11.51 9.40 9.28 6.82 5.43 4.05 3.32 2.97 2.68 2.64 2.60 2.54 2.05 1.89 1.46 1.30 1.25 1.18 1.11 0.62 0.59
% Cumulative 13.16 25.31 36.81 46.22 55.49 62.31 67.75 71.80 75.11 78.09 80.77 83.41 86.00 88.54 90.59 92.49 93.95 95.25 96.50 97.68 98.79 99.41 100.00
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Table 3: Pareto Table of Product Lines
The result of the pareto is presented in table 3, which entails that the highlighted product lines are responsible for the large percentage of the priorities. However, the researchers selected only one product to focus in addressing the problems in plant layout, capacity planning and methods improvement because they are likely viable and gives significant impact to the other product lines. Moreover, the top-most product selected which is considered as the fast moving product is the special biscocho 150 grams that represents the other products. Pareto Chart
Figure 4: Pareto Chart of Product Lines
The pareto chart shows the combined barchart and line diagram based on cumulative percentages of each product. A vertical bar chart is constructed, from left
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to right, in order of magnitude, using the percentages of each product and the percentage assigned for each totals 100%. The product lines that appear to the left of the break point known as vital fewaccount for the bulk of the effect which is emphasized in a square form. However, the products that appear to the right of the break point account for the least effect or known as trivial many. This graph, clearly establish 80% prioritiy and the to-most priority that provides the mechanism to control and direct effort by fact using sales volume as one of the baseline measure. Raw Materials
SUGAR
FLOUR
FLOUR
SUGAR
MILK
Exhibit 4: Raw Materials
The major materials that are used in making the special bisocho 150 grams are flour, milk, yeast, water, and sugar. This served as inputs in the production.
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2.1.2 Facilities Planning and Design

INPUT MATERIALS Flour, Yeast, Condensed Milk, Iodized salt Dough 2 3 4 5 6 7 8 9 10 11 12 13 Cut dough, Oil molder/plancha/ tray Rack Tray mover gloves Bread trays Bread container Plastic Bun wiper Margarine Tray mover gloves Bread tray, printed cellophane, Rack Oven Baking Cooling Weighing scale Continuous sealing machine Packing Sealing Pre-packed biscocho Sealed biscocho crumbs and bites Baked biscocho EQUIPMENT Spiral Mixer 1 Knife Volumetric Machine Dough Molder PROCESS Mixing Cutting Shaping Sansan Proofing Baking Cooling Bread Slicer Slicing Banya OUTPUT PRODUCT WASTE sack, Dough cartoon, plastic Cut Dough Shaped dough Proofed Dough Baked bun Cooled bun Sliced bun Flavoured bun crumbs used plastic, margarine packaging
Rack Oven
ABC Box and Scotch Final tape Platform truck tape Packing holder Table 4: Input Process Output Framework of Special Biscocho
Input process output framework mapped the flow from inputs of raw materials and equipment to processand converting these inputs to product. These inputs are mediums in the conversion process in which different procedures are performed to produce outputs that are categorized into product and waste. Special biscocho, the fast selling product and is the focus of this study, considered waste
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when it is being rejected or not included in packing due to crumbs and bites and inappropriate methods in transferring the baked product.
Characters Type of Product Type of Customer Product Demand Demand Volume No. of Different Products Production System Project Unique One-at-a-time Infrequent Very Low Infinite Variety Long-Term Project Batch Production Made-to-Order Few individual customers Fluctuates Low to medium Many, Varied Discrete, Job Shop Job order processing General Purpose Fabrication Wide range of Skills Flexibility, Quality Costly, Slow, Difficult to manage 0 Mass Production Made-to-Stock Mass Market Stable High Few Repetitive, Assembly Lines Continuous Production Commodity Mass Market Very Stable Very High Very Few Continuous Process Industries
Equipment Primary Type of Work Worker Skills
Varied Specialized contracts Experts, Craftsperson Custom work, Latest technology Non Repetitive, Small Customer Base, Expensive
Special Purpose Assembly Limited level of Skills Efficiency, Speed, Low Cost Capital Investment, lack of Responsiveness 3
Highly Automated Mixing, Treating, Refining Equipment Monitors Highly Efficient, Large Capacity, Ease of Control Difficult to change, Limited Variety
Advantages
Disadvantages Total
Table 5: Manufacturing Process Type Checklist
The manufacturing process type that ABC Incorporated practicing is the batch production wherein groups of the same products are process by batch. The checklist presented in table 5 supports and presents the characteristics of a batch production.
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Master Floor Plan

8 BS1
BS2 BS3 BS4 PM1 PM2
RHEON
6 12
10
CD
DC
SM2
9
Sheeter BS5
DM DR
11
4 3
DD
PASADA
SM3 SM1
13
CS1
2
CS1 CS1
VM
SWM
14
Powder Area
Premix Area
Wet & Premix Area
Exhibit 5: Workflow Diagram of the General Process
The diagram shows the flow of the process in which this highlights the backtracking (illustrated in kaizen burst) from process 8 to 9. Aside from the backtrack movement of material, the existing layout of the company point up cost disadvantage because the material travels a long distance from slicing to banya stations (8 to 9). However, having a continuous flow of material guarantees a short processing and this should be observed in the facility of ABC Incorporated. Processing Area The diagram shows the flow of the process passing every workstation in the processing area. The process starts from mixing using a spiral mixer machine
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and will be processed to volumetric machine to dough molder until the dough is placed in the tray. The latter are the process being observed in the processing area.
PM1
PM2
Table
Table Table
Table
Table
Cake Depositor
Rack
Table Table
Machine
Table Table
Table Table
Machine
Spiral Mixer2 PM2
Dough Cutting
1' 6" Rise: 18' Run
Table Table
Table
Table
Sheeter Dough Divider
6
Table Table
4 5Dough Moulder 3
Dough Rounder
PASADA
Dough Molder
Table
Spiral Mixer3 Spiral Mixer1
2
Volumetric Machine
Ice Maker
Ice Maker
Rack
Exhibit 6: Workflow Diagram in Processing Area
Process Sequence
Process Sequence 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6 6 to7 7 to 8 8 to 9 9 to 10 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 Process Description From To Mixing Cutting Cutting Shaping Shaping Sansan Sansan Proofing Proofing Baking Baking Cooling Cooling Slicing Slicing Banya Banya Baking/ Toasting Baking/ Toasting Cooling Cooling Packing Packing Sealing Sealing Final Inspection Final Inspection Total Storing Distance (m) 4.4 5.2 8.4 7.2 21.6 32.0 5.0 7.2 11 10.4 4.0 7.01 123.41m Table 6: Process Sequence Travel time (min) 0.253 0.000 0.000 0.218 0.318 0.260 1.132 5.000 0.549 0.260 0.894 0.812 0.146 1.040 10.88min 33 Rank 10 13 14 11 7 8 2 1 6 9 4 5 12 3
The table shows the distances and travel time of each process in producing Biscocho 150g and tese processes were ranked. It shows that the distance between slicing and banya constitutes the highest distance and the time travelled. Thus, the researchers focus on the process from slicing to banya. From-to-Chart Distance between Locations (meters)
From To 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 4.4 3 4 5 6 7 8 9 10 11 12 13
5.2 8.4 -
5.0
14.4 21.6 32.0 -
11
10.4 -
4.0 -
7.01 -
Table 7: From-to-Chart for Distances
Number of Trips per Batch between Centers

From To 1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 1 1 1 3 4 5 6 7 8 9 10 11 12 13
2 -
1 -
1 1 1 1 -
1 -
Table 8: From-to-Chart for Number of Trips 34
Legend
Process Number 1 2 3 4 5 6 7 8 9 10 11 12 13 Description Mixing Cutting Shaping Sansan Proofing Baking Cooling Slicing Banya Packing Sealing Final Inspection Storing
Transportation Cost per Batch

Processes 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 6 7 to 10 10 to 11 11 to 12 12 to 13 Distance (m) 4.4 5.2 8.4 7.2 21.6 32.0 5.0 11 10.4 4.0 7.01 No. of trips/batch 1 1 1 2 1 1 1 1 1 1 1 Total Distance (m) 4.4 5.2 8.4 14.4 21.6 32.0 5.0 11 10.4 4.0 7.01 Travel Time (min) 0.25 0.22 0.32 0.26 1.13 5.00 0.55 0.89 0.81 0.15 1.04 Labor Cost per min Total Cost (Php) 0.160 0.141 0.205 0.166 0.723 3.20 0.352 0.570 0.518 0.096 0.666 Php6.80
Php0.64
Total
Table 9: Total Transportation Cost per Batch
The table shows the total cost incurred in transporting the products from the first process to the last process. It takes a total cost of Php6.80 per batch.
Moreover, the highlighted part is the process being emphasized since it contributes
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the longest distance with the highest cost among all process, and that the researcher will consider this in evaluating the production layout of the company.
Computation
Total Cost = (No. of trips per batch) x (Travel Time) x (Labor cost per min) = (1 x 5.00 min x Php0.64) Total Cost = Php3.20 per batch = Php3.20 x (8batches/week) x (52 weeks/year) = Php1,331.20 per year
Total Cost = Php6.80 per batch = (Php6.80) x (8 batches/week) x (52weeks/year) = Php2,828.80 per year
Functional Areas Raw Materials Storage This is the area where the raw materials, used in producing the goods, after receiving.
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Pre-Mixing Area This is a restricted area where topsecret ingredients are combined and formulated to obtain the best taste of ABC Inc. products.
Molding Area
This is where the raw materials are being converted into different forms of dough may it be a bread, a pastry and a pasalubong item using varied forms of mixers and molders.
Proofing Area
This is area is allocated for proofing process that is set at a standard temperature that allows the dough to stretch or grow.
Baking Area The pans enter a tunnel oven where there are standard parameters set to completely baked the pans.
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Cooling Area Baked goods are transferred in this area in which 30 minutes is the minimum time the goods stayed and kept cool.
Slicing and Packaging Area The bread continues to cool as it moves from oven to cooling area. In this area, baked products such as breads, pastries and pasalubong items are packed but some mustbe sliced before it will be packed. Finished Goods Area Finished goods are packed in cartoons and these are piled in the finished goods area. Prior
Exhibit 7: Functional Areas and its Description
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Area and its Measurement Area and Description RECEIVING AREA This is the loading and unloading area where raw materials and finished goods are endorsed to production and for shipment respectively. PROCESSING AREA 4 1 2 1 1 1 2 1 1 1 1 1 1 3 1 1 15 2 1 3 1 1 Spiral mixer Dough molder Volumetric machine Dough divider Dough rounder Planetary mixer Ice maker Rheon Pasada Sheeter 0.97 x 0.61 1.20 x 0.59 0.68 x 0.64 3.08 x 0.53 1.45 x 0.67 1.89 x 2.13 0.57 x 0.53 0.60 x 0.63 0.99 x 0.89 1.88 x 1.76 1.88 x 1.76 1.22 x 0.88 2.35 x 2.98 1.37 x 0.94 2.44 x 1.13 1.83 x 1.11 2.36 x 1.79 3.19 x 0.60 1.60 x 0.60 1.53 x 0.71 1.68 x 0.42 1.00 x 0.61 0.35 x 0.25 1.10 x 0.50 2.13 x 1.2 Total 0.53 1.07 0.36 0.36 0.62 x x x x x 0.59 0.98 0.27 0.44 0.44 Materials and Equipment Measureme nt (m) Total Measureme nt (m) 51.98
Qty
FUNCTIONAL AREA
This area is composed of different machines where majority of them are used in mixing and molding process. Baker and helper operate this area where there is only one baker and an average of two helpers per product lines.
Table
Rack Compressor Cake depositor Tray container
183.79 2.3670 0.7080 0.4352 1.6324 1.9430 4.0257 0.3021 0.3780 1.7620 3.309 3.309 1.0736 7.003 1.2878 2.7572 6.0939 4.2244 1.9140 14.40 2.1726 0.7056 1.8300 0.0875 0.5500 2.5608 66.83 0.3127 1.0486 0.0972 0.1584 0.0756 39
KITCHEN This area is the cooking area for topping and filling. This can function as washing area for baker and helper. As observed, there are
1 1 1 1 1
Steamer Master Cooker Emulsifier Banana Slicer Grinder
machines and containers that were not utilized and placed in this area.
1 1 7 1
Stove Washing Table Barrel Push track
0.68 2.31 0.32 0.68
x x x x
0.43 0.53 0.32 0.53 Total 2.00 2.00 3.20 1.00 Total 0.20 0.22 0.22 0.24 0.23 0.19 0.24 0.71 0.24 0.67 0.19 0.25 0.67 0.44 0.75 Total
BAKING AREA 1 1 5 2 PACKING AREA 2 1 4 1 3 1 1 3 14 1 1 1 1 1 1 Aircon Cabinet Bread Slicer Sink Continuous Sealer Printing Machine Shrink Wrap Machine 0.25 0.19 0.24 0.24 0.23 0.53 0.63 0.44 0.63 0.67 0.53 0.47 0.57 0.41 0.38 x x x x x x x x x x x x x x x Rotary oven Oven Rack Oven Table 2.40 2.00 11.6 1.70 x x x x
The bread continues to cool as it moves from oven to cooling area. In this area, baked products such as breads, pastries and pasalubong items are packed but some must be sliced before it will be packed.
Table
mach.. Machine
OTHER AREAS
EMPLOYEES ENTRANCE LOCKER GIFT SHOP LOBBY HAND WASHING AREA PROOFING AREA COOLING AREA FINAL PACKING RAW MATERIALS WAREHOUSE FINISHED GOODS WAREHOUSE Table 10: Different Areas and its Descriptions
0.1849 1.2243 0.7168 0.3604 4.179 133.76 4.80 4.00 37.12 3.400 49.32 374.4 0.050 0.042 0.212 0.058 0.159 0.101 0.151 0.936 2.114 0.449 0.101 0.118 0.382 0.18 0.285 5.288 2.89 23.90 16.60 26.97 47.41 16.8 20.72 21.28 11.72 341.44 136.06
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2.1.3 Capacity Planning Capacity Planning or also known as Head Count Analysis helps to determine the ideal number of workers in producing product. The ABC Incorporated adapts the piece rate method in quantifying the actual outputs of the workers, and determining the salary of the workers. Every end of their shift the worker will list the number of outputs they finished, and the supervisors will check it if it is exact or not. At the end of the week, the worker will receive their salary. In this case , there is no specific number of output that required by the company to be produced by the worker, as long as the workers in every department will finish the number of outputs per batch, and as long as the materials are all available.
Available Time
The company applies the Legislation in Section 9 Basic Conditions of Employment Act it is stated that those establishments that are implementing piece rate method must also adapt the 8-hour work. The ABC Incorporated operates 24 hours, but this company has three (3) shifts; 4am-1pm, 1pm-10pm and 7pm-4am. Every shift has 1 hour meal break, and 30 minutes short break: 15 minutes every 4 hours, but the Biscocho 150g is scheduled from 7pm- 4am.
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Existing Available Operating Time

Operating Time (hours) Operating Time (Sec) 21 888 24 300 24 300 23 760 23 220 23 760 24 300 20 268 24 300 23 760 24 300 24 300 24 300 21 911.14 306 756
Worker 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Job Description
Mixing 6.08 Cutting Shaping 6.75 Sansan 6.75 Proofing 6.60 1stBaking 6.45 st 1 Cooling 6.60 Slicing 6.75 Banya 5.63 2ndBaking 6.75 nd 2 Cooling 6.60 Packing 6.75 Sealing 6.75 Final Inspection 6.75 TOTAL 85.21 AVERAGE 6.09 Table 11: Existing Operating Time
Computations: Available Operating Time
Formula:
Operating Time= (Regular time- Downtime) x Allowance Scheduled Break time= 1.50 hour MIXING and CUTTING
Description Percent Allowance
5 3 9 2
Personal Allowance Fatigue Allowance Variable Allowance Standing Allowance Total Allowance
Personal Necessity Muscular Pain Lifting, pushing and pulling Standing up
Remarks
19 42
Ideal Operating Time
= (Regular Time Scheduled Downtime) x Allowance
Mixer and Cutter Operating Time= (9 hours 1.50 hour) x 0.81 = 6.08 hours SHAPING
Personal Allowance Fatigue Allowance Standing Allowance Abnormal Position Allowance Total Allowance
Description
Percent Allowance
5 3 2 2
Personal Necessity Muscular Pain Stand-up Lifting, pushing and lifting
Remarks
12
Ideal Operating Time Shaper Operating Time
= (Regular Time Scheduled Downtime) x Allowance = (9 hours 1.50 hour) x .88 = 6.60 hours
SANSAN
Personal Allowance Fatigue Allowance Standing Allowance Total Allowance
Description
Percent Allowance
5 3 2
Personal Necessity Muscular Pain Stand-up
Remarks
10
Ideal Operating Time Sansan Operating Time
= (Regular Time Scheduled Downtime) x Allowance = (9 hours 1.50 hour) x 0.90 = 6.75 hours
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BAKING
Personal Allowance Fatigue Allowance Standing Allowance Variable Allowance Total Allowance
Description
Percent Allowance
5 4 2 3 14
Personal Necessity Muscular Pain Stand-up Lifting, Pushing, Pulling
Remarks
Ideal Operating Time Baker Operating Time
= (Regular Time Scheduled Downtime) x Allowance = (9 hours 1.50 hour) x 0.86
= 6.45 hours SLICING BUNS

Description
Percent Allowance
5 3 2
Remarks
Ideal Operating Time Slicers Operating Time
10
= 6.75 hours BANYA

Description
Percent Allowance
5 3 2
Remarks
10
Banyadors Operating Time = (9 hours 1.50 hour) x 0.90 = 5.63 hours

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BAKING
Description
Percent Allowance
5 3 2
Remarks
Ideal Operating Time Bakers Operating Time
= (Regular Time Scheduled Downtime) x Allowance = (9 hours 1.50 hour) x .90
10
= 6.75 hours PACKING

Description
Percent Allowance
5 3 2
Remarks
10
Ideal Operating Time Packer Operating Time
= 6.75 hours
SEALING Personal Allowance Fatigue Allowance Standing Allowance Total Allowance
Description
Percent Allowance
5 3 2
Remarks
10
Ideal Operating Time Sealer Operating Time
= (Regular Time Scheduled Downtime) x Allowance = (9 hours 1.50 hour) x .90
= 6.75 hour
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FINAL PACKING
Description
Percent Allowance
5 3 2
Remarks
10
Inspector Operating Time = (9 hours 1.50 hour) x .90 = 6.75 hour
Summary of Allowance Factor

Personal Allowanc e Basic Fatigue Allowance Variable Allowance Total Allowan ce
Process
Operator
A 2 2 2 2 2 2 2 2 2 2 2 2 2 2
B
1
B2
C
1
C2 9
C
3
Allowance factor
Mixing Cutting Shaping Sansan Proofing Baking Cooling Slicing Banya Baking Cooling Packing Sealing
Final Inspection
Baker helper 1 helper 2 &3 Oven man Oven man Bread Slicer Banyador Oven man Oven man Packer Sealer Inspector
5 5 5 5 5 5 5 5 5 5 5 5 5 5
3 2 3 3 2 4 2 3 3 4 2 3 3 3
2 3 3 3
19 9 12 10 12 14 12 10 10
0.81 0.91 0.88 0.90 0.91 0.86 0.88 0.90 0.90 0.86 0.88 0.90 0.90 0.90
3 3
14 12 10 10 10
Table 12: Summary of Allowance Factor
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1. BASIC FATIGUE ALLOWANCE..4 2. VARIABLE ALLOWANCE A Standing Allowance2 BAbnormal Position Allowance B1 Awkward (Bending, over extent of the arms)..2 B2 Very awkward (lying, stretching).2 C Lifting, Pushing, Pulling (Weight exerted in pounds) C1 20.3....3 C2 40.99 C3 60.17.17
Exhibit 8: Allowances for Various Classes of Work (in percentage)
Source:Niebel.,and A. Frievalds. Methods, Standards, and Work design, 11th ed.(New York:
Irwin/McGraw-Hill,2003).
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Processes and Responsible Person
START
MIXING
CUTTING
SHAPING
SANSAN
SLICING
1st COOLING
1ST BAKING
PROOFING
BANYA
2ND BAKING
2ND COOLING
PACKING
END
FINAL PACKING
SEALING
Figure 5: Process Flowchart
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It shows the process flowchart in producing Biscocho 150g. With this flowchart you will be able to determine who are responsible in a certain process. The table below shows the legend. It shows the colour, processes and the responsible person.
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Legend
COLOR PROCESS Mixing and cutting Shaping Sansan and Proofing 1st Baking and 1st Cooling Baker 2
nd
RESPONSIBLE Mixer Helper 1 Helper 2
Baking and 2 Slicing Banya
nd
Cooling Slicers Banyador Packers Sealers Inspectors
Packing Sealing Final Packing
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Biscocho 150g Processes and Processing Time

Product Line Process Number 1 2 3 4 5 6 BISCOCHO 7 8 9 10 11 12 13 14 Number of Machines 1 Spiral Mixer 1 Volumetric Machine None None None 1 Oven None Bread Slicer None 1 Oven None 1 1 2 1 1 1 1 3 1 1 Existing number of workers Standard processing time (mins) Standard processing time (sec)
Process Description Mixing Cutting (Putting the dough to the volumetric machine) Shaping Sansan Proofing (Checking the buns) 1stBaking (Pulling in and out the rack to the oven and checking the breads and pastries) st 1 Cooling (Pulling in and out the rack to the cooling area) Slicing Banya nd 2 Baking(Pulling in and out the rack to the oven and checking the breads and pastries) 2ndCooling(Pulling in and out the rack to the cooling area) Packing
18.13 14.80 16.94 16.80

30 37 1 day 72.15
1087.80 888.00
1016.40 1008.00
91.32 --67.12 69.05 49.52
4329.00 5479.20 --4027.20 4143.00 2971.12
1 Weighing scale 3 1 Continuous Sealing 1 Sealer Final Packing None 1 Table 13: Biscocho 150g Processes and Processing Time
Note:
The sansan worker is responsible in putting the sansan dough in proofing area.
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The researchers conducted a TMS (Time Motion Study) in producing the Biscocho 150g. As you can see the table above, there are processes that have a longer process time compare to the other process. These processes are slicing the buns, packing and baking, because this processes needs to entails precise work. It shows the processes in making the Biscocho 150g as well as the processing time.
Operation Non-Value Added Activities

Process Mixing Cutting Set up Quality Concern Baking Put the Rack Process Downtime Process Downtime Machine Set-up Quality Concern Non Value Added Activities Set up Remarks Adjust the machine Fix the machine, Weigh the dough Inspection Position the rack Get container and place the slice buns. Get the baked breads Turning on the machine Adjust the speed Observed Time (Minutes) 0.363 0.169 0.501 0.371 6.28 6.12 2.00 2.00
Slicing Packing Sealed
Table 14: Operation Non-Value Added Activities
It shows the non-value adding activities involve in each process area. This nonvalue adding activities are necessary in production of biscocho, since it is needed to maintain the quality of their product.
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Workers Summary of Available Operating and Standard Processing Time

AVAILABLE OPERATING TIME (sec) STANDARD PROCESSING TIME (sec) STANDARD PROCESSING TIME per 8 Batch (sec)
PROCESS
MIXING 1087.80 8702.40 21 888 CUTTING 888.00 7104.00 SHAPING 24 300 1016.40 8131.20 SANSAN 24 300 1008.00 8064.00 PROOFING ---BAKING ---COOLING ---SLICING 24 300 4329.00 34632.00 BANYA 20 268 5479.20 43833.60 BAKING ---COOLING ---PACKING 24 300 4027.20 32217.60 SEALING 24 300 4143.00 33144.00 FINAL PACKING 24 300 2971.20 23769.60 Table 15: Workers Summary of Available Operating and Standard Processing Time
Computations:
Ideal number of workers:

Mixing = Standard Processing Time/Available Operating Time = 8 702.40 sec/21 888 sec = 0.40 workers Cutting = Standard Processing Time/Available Operating Time =7104.00 sec/21 888 sec =0.32 workers
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Shaping = Standard Processing Time/Available Operating Time = 8131.20 sec/24 300 sec =0.35 workers Sansan = Standard Processing Time/Available Operating Time = 8064.00 sec/24 300 sec =0.33 workers Slicing = Standard Processing Time/Available Operating Time =34632.00sec/ 24 300 sec =1.43 workers Banya = Standard Processing Time/Available Operating Time =43833.60sec/20 268 sec =2.16 workers Packing = Standard Processing Time/Available Operating Time =32217.60sec/24 300 sec =1.33 workers
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Sealing = Standard Processing Time/Available Operating Time =33144.00sec/24 300 sec =1.36 workers Final Packing = Standard Processing Time/Available Operating Time =23769.60sec/24 300 sec =0.98 workers
MACHINE CAPACITY OEE stands for Overall Equipment Effectiveness evaluate and indicate how effectively a manufacturing operation is utilized. This can be at a job level, shift level or overall level. There are three main factors make up the OEE calculation, these are Availability, Performance and Quality, and these are expressed in percentage. OEE= Availability x Performance x Quality Availability takes into account Down Time Loss, and is calculated as:
Availability = Operating Time / Planned Production Time

Performance takes into account Speed Loss, and is calculated as:
Performance = Ideal Cycle Time / (Operating Time / Total Pieces)

Quality takes into account Quality Loss, and is calculated as:
Quality = Good Pieces / Total Pieces
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OEE is used to find the greatest areas of improvement and start with the area that will provide the greatest return on asset. The OEE formula will show how improvements in changeovers, quality, machine reliability improvements, working through breaks and more, will affect the bottom line. OEE is simple and practical, takes the most common and important sources of manufacturing productivity loss,and places them into three primary categories and distils them into metrics that provide an excellent gauge for measuring where you are and how you can improve. (www.exord.com/docs.pdf) Overall Equipment Effectiveness for Spiral Mixer
Spiral Mixer Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time Total batch Reject Planned Production Time Operating Time Good Output =18.13 minutes =18.13 minutes =Total kilo- reject kilo =10 =1 batch =Operating Time/Planned Production Time =18.13 minutes/18.13 minutes =100% =Ideal Cycle Time/(Operating Time/ Total Good Output) =18.13 minutes/(18.13 minutes/ 1batch) = 100% = Good Output/Total Output = 50/50 =100% = Availability x Performance x Quality = 100% x 100% x 100% =100% 9 hours = 540 minutes 30 minutes 60 minutes 0 minutes 18.13 minutes 1 batch None Data
Availability
Performance
Quality
OEE
Table 16:Overall Effectiveness Equipment for Spiral Mixer 56
Overall Equipment Effectiveness for Volumetric Machine

Volumetric Machine Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time Total Good Output Reject Planned Production Time 14.80 minutes Data 9 hours = 540 minutes 30 minutes 60 minutes 0 minutes 14.80minutes 1 batch None
Operating Time
=Planned Production Time- Downtime =14.80 minutes-0 minutes =14.80 minutes =Total Good Output- Reject Output Good Output = 1 batch 0 =1 batch =Operating Time/Planned Production Time Availability = 14.80 minutes /14.80 minutes =100% =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance = 14.80 minutes/(14.80 minutes /1 batch) = 100% = Good Output/Total Output Quality = 1batch/1batch =100% = Availability x Performance x Quality = 100%x 100%x 100% OEE =100% Table 17:Overall Effectiveness Equipment for Volumetric Machine
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Overall Equipment Effectiveness for Dough Molder

Dough Molder Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time per 3 pc Total Good Output Reject Planned Production Time =7.751minutes Data 9 hours = 540 minutes 30 minutes 60 minutes 0 minutes 7.75 minutes 1 batch None
Operating Time
=Planned Production Time- Downtime =7.75minutes-0 minutes =7.75 minutes =Total Good Output- Reject Output Good Output = 1 batch 0 =1 batch =Operating Time/Planned Production Time Availability = 7.75 minutes /7.75 minutes =100% =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance = 7.75minutes/(7.75 minutes/1 batch) = 100% = Good Output/Total Output Quality = 1batch/1batch =100% = Availability x Performance x Quality =100% x 100% x 100% OEE =100% Table 18:Overall Effectiveness Equipment for Dough Molder
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Overall Equipment Effectiveness for Dough Rounder

Dough Rounder Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time per batch Total Good Output Reject Planned Production Time =12.41 minutes Data 9 hours = 540 minutes 30 minutes 60 minutes 0.23 minutes 12 minutes 1 batch None
Operating Time
=Planned Production Time- Downtime =12.41 minutes-0.23 minutes =12.18 =Total Good Output- Reject Output Good Output = 1 batch 0 =1 batch =Operating Time/Planned Production Time Availability = 12.18minutes/12.41 minutes =98.14 % =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance = 12minutes/(12.18 minutes/1 batch) = 98.52% = Good Output/Total Output Quality = 1batch/1batch =100% = Availability x Performance x Quality =98.14 %x98.52% x 100% OEE =96. 69% Table 19:Overall Effectiveness Equipment for Dough Rounder
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Overall Equipment Effectiveness for Oven

Oven Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time Total Good Output Reject Planned Production Time =35 minutes Data 9 hours = 540 minutes 30 minutes 60 minutes 0 minutes 35 minutes 1 batch None
Operating Time
=35 minutes
=Total Good Output- Reject Output Good Output = 1 batch 0 =1 batch =Operating Time/Planned Production Time Availability =35 minutes/ 35minutes =100% =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance =35 minutes/(35 minutes/ 1 batch) = 100% = Good Output/Total Output Quality = 1 batch / 1 batch =100% = Availability x Performance x Quality OEE =100%x 100% x 100% = 100% Table 20:Overall Effectiveness Equipment for Oven
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Overall Equipment Effectiveness for Bread Slicer

Bread Slicer Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time Total Good Output Reject Planned Production Time =72.15 minutes =Planned Production Time- Downtime Operating Time =72.15 minutes - 3.68 minutes =68.47 minutes =Total Good Output- Reject Output Good Output =1 batch 0 =1 batch =Operating Time/Planned Production Time Availability =68.47 minutes/72.15minutes =94.90% =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance =67.86 minutes /(68.47 minutes / 1 Batch) =99.11% = Good Output/Total Output Quality = 1 Batch/ 1 Batch =100% = Availability x Performance x Quality OEE =94.90% x 99.11% x 100% =94.06% Table 21:Overall Effectiveness Equipment for Bread Slicer Data 9 hours = 540 minutes 30 minutes 60 minutes 3.68 minutes 67.86 minutes 1 Batch None
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Overall Equipment Effectiveness for Continuous Sealer

Continuous Sealer Item Shift Length Short Break Meal Break Downtime Ideal Cycle Time Total Output Reject Planned Production Time =17.46 minutes Data 9 hours = 540 minutes 30 minutes 60 minutes 0.27 minutes 17.66minutes 312 packs 165 packs 150 packs
=Planned Production Time- Downtime Operating Time = 17.46 minutes- 0.27 minutes =17.19 minutes =Total Good Output- Reject Output Good Output = 312 150 = 165 packs =Operating Time/Planned Production Time Availability = 17.19minutes/17.46 minutes =98.45 % =Ideal Cycle Time/(Operating Time/ Total Good Output) Performance =17.46 minutes/(17 minutes/ 312 packs) = 99.21 % = Good Output/Total Output Quality = 780/780 =100% = Availability x Performance x Quality OEE =99% x99.21 % x 100% =98.22% Table 22:Overall Effectiveness Equipment for Continuous Sealer
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Total Number of Machines and its Capacity

BISCOCHO NAME OF MACHINE QUANITY CAPACITY
Spiral Mixer Dough Molder Dough Rounder Volumetric Machine Oven Bread Slicer Continuous Sealer
4 50 kg 1 1 batch 1 1 batch 1 780 pcs 4 780 pcs 4 3 pc at a time 3 Table 23:Total Number of Machines and its Capacity
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Energy Utilization Cost

No. of hours used 24 hours 24 hours 24 hours 24 hours 24 hours Power (Kilowatt ) 0.075 0.186 0.00005 0.040 0.00005 Rate/Kilowatt -hour (pesos) Php7.95 Php7.95 Php7.95 Php7.95 Php7.95 Energy Cost (pesos) Php14.3 1 Php35.4 9 Php0.00 1 Php7.63 Php0.00 1 Total Energy Cost (pesos) Php28.62 Php141.96 Php0.012 Php442.54 Php0.012
Material/Equip ment Used Electric Fan Aircon CCTV Cameras Fluorescent Telephone
Qty
2 4 12 58 1
TOTAL Php613.44 Table 24: Energy Utilization Cost
Machines Utilization Cost (1 Batch)

No. of hours used 0.25 0.21 0.21 0.21 0.58 1.31 0.29 Rate/Kilowatthour (pesos) Php7.95 Php7.95 Php7.95 Php7.95 Php7.95 Php7.95 Php7.95 Energy Cost (pesos) Php3.31 Php4.17 Php4.17 Php4.17 Total Energy Cost (pesos) Php3.31 Php4.17 Php4.17 Php4.17
Machines Used Spiral Mixer Volumetric Machine Dough Rounder Dough Molder Oven Bread Slicer Continuous Sealer
Quantity
Power (Kilowatt) 1.3 KW 2.5 KW 2.5 KW 2.5 KW 3KW 0.37 KW 0.5 KW
4 1 1 1 4 4 3
Php13.83 Php13.83 Php3.85 Php1.15 Php3.85 Php1.15
TOTAL Php48.48 Table 25: Machine Utilization Cost (1 Batch) 64
It shows the machine utilization cost per batch. As you can see it the table above, the total cost in one (1) batch is only Php33.92 which already includes the spiral mixer, volumetric machine, dough rounder, dough molder, oven, bread slicer and continuous sealer. This cost is needed in diagnostic phase. Computations: Formula:
ENERGY COST=usage per day x energy cost per KWH x wattage

ENERGY COST (MACHINE)
Continuous Sealer =usage per day x energy cost per KWH x wattage =0.294 x Php7.95 x 0.5 KW
=Php1.17
Bread Slicer =usage per day x energy cost per KWH x wattage =1.31 x Php7.95 x 0.37 KW =Php3.85 Spiral Mixer =usage per day x energy cost per KWH x wattage = 0.32 x Php7.95 x 1.3 KW
=Php3.31
Oven =usage per day x energy cost per KWH x wattage =0.50 x Php7.95 x 3 KW
= Php13.83
Volumetric Machine =usage per day x energy cost per KWH x wattage = 0.21 x Php7.95 x 2.5 KW
=Php4.17
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Dough Mixer =usage per day x energy cost per KWH x wattage = 0.21 x Php7.95 x 2.5 KW
=Php4.17
Dough Rounder =usage per day x energy cost per KWH x wattage = 0.21 x Php7.95 x 2.5 KW
=Php4.17
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2.1.4 Methods Improvement The ABC Incorporated is concerned about Methods Improvement significant analysis on the process on how the job is being performed effectively and efficiently. Methods and time element are factors used to evaluate the existing performance of the production of Special Biscocho 150grams. As explained in the pareto, the researchers selected the top most priority which is the fast moving product because this would represent other products that are included in the 80% range. The new plant and its management look forward on the techniques of scientific management which they believe can help in their operations. The philosophy of job standardization is rigorously applicable in the production. Significantly, every job or process in making the product is carefully analyzed using methods study principles to achieve maximum efficiency and smooth flow production. In this study, jobs are timed using stopwatches and the details of jobs were asked critically. Moreover, it is important to identify the productive and nonproductive activities because wasted elements in the job should be eliminated and is one of the bases for improvement. The term came as follows:
Productive and Non-Productive Time

A given task performed by the workers can be considered to consist of productive work and non-productive work. The productive and non-productive work is based on one batch processing time. The productive work content is the useful work required to accomplish the task in a given time while non-productive work in the task are the extra physical and mental actions performed by the worker that do
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not add any value associated with manufacturing operations. This increases the cycle time per batch because it adds to the productive time to make up the total time needed to perform the task. General Process Flow
Start MIXING MOLDING PROOFING 1ST BAKING COOLING
PACKING
COOLING
2ND BAKING
BANYA
SLICING
SEALING
FINAL PACKING
End
Figure 6: General Process Flow
Process Description
Mixing
The ingredients are placed in a mixing bowl and mixed-up in the spiral mixer.
Molding/Forming
This involves three processes such as cutting, shaping and placing the dough to the molder. To start, the mixed ingredients will be transferred to the volumetric machine and will be cut to its pre-determined size. The cut dough will be dropped to the dough molder and forms a bun. Finally is the placing or transferring of buns to the molder.
Proofing
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The rack containing trays of dough will be placed in the proofing area to regain the elasticity lost during fermentation and its the resting period.
1st Baking
The dough will be placed in the oven area and bake at 160C for 35 minutes.
1st Cooling
After baking, the baked product will continued to cool for about 1 day in the cooling area until the temperature of the product reaches less than 28C.
Slicing
Here vertical serrated blades move up and down at great speeds, slicing the bread into consistently sized pieces. The baked bun will be sliced twice that can make 4 pieces of its bun.
Banya
The sliced bun will be treated with margarine toppings to give a good a taste. This process is done manually using a margarine spreader, a tool used in putting the tasty margarine on the top most part of sliced buns (pieces).
2nd Baking
The baked goods will put to the oven area for the second toasting but this time it should be bake for 40 minutes at 100C
2nd Cooling
After baking, the baked product will be continued to cool for 30 minutes in the cooling area until the temperature of the product reaches less than 28C.
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Packing
The baked products are wrapped with printed transparent cellophane. Labeling of the product is part in this process.
Final Packing
The expiration date, PER number, and the quality of container of the product will be examined by the quality control in-charge.
Storing
The products will be endorsed to the finished goods area by the production clerk/supervisor.
Shipping
The product from storage area will be shipped in accordance to the schedule of shipment.
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Process Schematic Diagram
Materials preparation
Mixing
Cutting
Shaping
Cooling
Baking
Proofing
Sansan
This process uses a slicing machine to split the buns into four pieces. The ratio is 1:1, one machine to one worker.
Slicing
Banya
Toasting/ Baking
Cooling
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Packing
Sealing
Exhibit 9: Process Schematic Diagram
Packed Special Biscocho 150g
At normal condition, the production of special biscocho (150grams) has an average of 8 batches per week and it is always made in the evening or in night shifts. Computation: 1 batch= average of 39 trays 1 tray = 20 pcs of dough No of pcs per batch = (No of trays per batch) x (No. of pieces per tray) = 39 x 20 = 780 pcs per batch
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Time Study Results

Process Mixing Molding Proofing 1st Baking 1st Cooling Slicing Banya 2nd Baking 2nd Cooling Packing Sealing Final Packing Standard deviation 1.26 1.41 0 0 0 1.68 1.53 0 0 1.38 1.14 1.50 Trial1 18.21 48.12 30.00 35.00 30.00 74.12 99.09 42.00 30.00 212.10 70.14 54.45 Average time 16.25 46.43 30.00 35.00 30.00 75.39 96.52 42.00 30.00 209.73 68.98 52.35 Trial2 16.32 48.34 30.00 35.00 30.00 74.23 97.13 42.00 30.00 210.11 69.34 54.23 Trial3 17.38 46.22 30.00 35.00 30.00 76.10 97.03 42.00 30.00 211.03 68.54 52.23 Trial4 15.19 44.10 30.00 35.00 30.00 78.02 98.02 42.00 30.00 209.08 70.55 51.02 Normal Time 15.77 42.25 65.59 83.01 190.85 62.77 45.02 Trial5 15.03 46.56 30.00 35.00 30.00 77.58 95.03 42.00 30.00 210.08 67.56 52.10 Allowance factor 1.15 1.15 1.10 1.10 1.10 1.10 1.10 Trial 6 17.01 45.60 30.00 35.00 30.00 75.11 95.34 42.00 30.00 209.15 69.12 51.25 Standard time 18.13 48.59 30.00 37.00 1day 72.15 91.31 42.00 30.00 209.94 69.05 49.52 Trial 7 16.29 47.03 30.00 35.00 30.00 74.54 95.53 42.00 30.00 208.13 69.29 50.34 Trial 8 14.58 45.45 30.00 35.00 30.00 73.45 95.01 42.00 30.00 208.18 67.32 53.18
Process Mixing Molding Proofing 1st Baking 1st Cooling Slicing Banya 2nd Baking 2nd Cooling Packing Sealing Final Packing
Performance Rating 0.97 0.91 0.87 0.86 0.91 0.91 0.86
Confidence Interval 17.26 19.00 47.61 30.00 37.00 0.00 70.99 90.25 42.00 30.00 208.98 68.26 48.48 49.57 30.00 37.00 0.00 73.31 92.37 42.00 30.00 210.90 69.84 50.56
Table 26: Standard Time
Table 26 shows the raw data of the time study conducted in processing the special biscocho. This is composed of 8 trials in which the average time taken is
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adjusted with the performance rating to get the normal time. However, an allowance factor is set in order to obtain the standard time. Moreover, standard deviation is calculated in order to determine the variation or dispersion of the time taken for the 8 trials. Note: Z =1.96 @ level of confidence =95% ; n =8 The following data further elaborates the sub-process of each process: Mixing Process
Productive Work Content Time/batch Symbol Process (min) Load ingredients: sugar and water Machine run 0.05 1.12 Unproductive Work Content Time/batch Process Symbol (min) 0.35 Load flour 0.11 2.00 18.13 Load ingredients 0.05 0.18 Machine run Unload dough Total 13.07 0.10 14.50 0.18 Adjust the machine Get ingredients Search tools: e.g. knife Total Move to get flour -
Process time
3.18
Table 27: Productive and Non-Productive Time of Mixing Process
Table 27 shows the steps in mixing process wherein the total time that directly adds value is around 15 minutes while the non-productive time is almost 4 minutes of the processing time. Thus, the mixing time takes 18.13 minutes per batch. It is indicated that all of the time were taken per batch.
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Molding Process
Productive Work Content Time/batch Symbol Process (min) Load dough to volumetric machine Machine run Load dough to molder Transfer formed dough to the table 0.21 9.03 8.15 10.42 48.59 Process time Unproductive Work Content Time/batch Process Symbol (min) 0.85 7.21 Load dough to tray 10.11 2.00 Total 38.53 Put oil to dough molder Put margarine to trays Place trays to the rack Total -
10.06
Table 28: Productive and Non-Productive Time of Molding Process
The highlighted time specifies the productive and non-productive time in the process. This non-value added activity includes transportation and delays and it incurs around 11 minutes of the total processing time. About 49 minutes to complete the molding process in every batch. The non-productive time obtained is used in identifying the bottleneck process because the activities comprised of this time element should be eliminated if proven that it greatly affects the efficiency of the process.
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Proofing Process
Productive Work Content Time/batch Symbol Process (min) Keep dough in proofing area Total 30.00 30.00 Process time Unproductive Work Content Time/batch Process Symbol (min) Total -
30.00
Table 29: Productive and Non-Productive Time of Proofing Process
The time to let the dough stayed in the proofing area in a batch is considered as one of the companys standard proofing time that is 30.00 minutes. This process does not have non-value-adding activity because no worker/s involve in this process.
1st Baking Process

Productive Work Content Time/batch Symbol Process (min) Load the rack to oven Machine run Unload the rack Total 0.15 35.00 0.15 35.30 37.00 Process time Unproductive Work Content Time/batch Process Symbol (min) 1.00 0.30 Inspect Total Set up -
1.30
Table 30: Productive and Non-Productive Time of 1st Baking Process
This process utilizes one rack oven for special biscocho because the remaining ovens are used for other bakery products. The total processing time is 37 minutes per batch with the standard baking time of 35 minutes that reaches a temperature of 160C.
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1st Cooling Process

Productive Work Content Time/batch Symbol Process (days) Keep dough in cooling area Total 1 day 1day Process time Unproductive Work Content Time/batch Process Symbol (min) Total -
1 day
Table 31: Productive and Non-Productive Time of 1st Cooling Process
The standard cooling time is 1day wherein zero (0) minute of unproductive time. Cooling time is one of the corporate plan and technique in order to get the desired level of moisture present on the baked bun.
Slicing Process
Productive Work Content Time/batch Symbol Process (min) Get baked bun Load baked bun Machine run: Slice the bun Unload sliced buns and set aside Total 4.05 2.00 56.10 2.00 64.51 Process time Unproductive Work Content Time/batch Process Symbol (min) 5.00 3..00 8.00 Set up Walk to get the container Total -
72.15
Table 32: Productive and Non-Productive Time of Slicing Process
The total processing time to slice 3,120 (780 x 4) pieces of baked bun in a batch is around 73 minutes wherein about 8 minutes is the non-productive time that comprised of the movement or transferring of sliced buns from the machine to its container. Based on actual observation and time study, the researchers computed
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the number of buns moved per trip and the number of times the worker moved from the slicing machine to the sliced bun container. Number of workers in slicing area: 1 slicer Average quantity of buns to slice per batch = 780 buns 1 bun = 4 pcs of biscocho Quantity of buns moved per trip= 12buns to slice Formula: Frequency of buns sliced per batch = (Average quantity of buns to slice
per batch / Quantity of buns moved per trip) = (780/12) = 65 times Banya Process
Productive Work Content Time/batch Symbol Process (min) Get the sliced bun Put margarine to the bun and place it on the tray Total 18.28 42.00 60.28 91.31 Process time Unproductive Work Content Time/batch Process Symbol (min) 4.11 20.12 4.12 2.27 31.03 Position the tray Take and place tray to the rack Search bread tray Walk to get margarine due to run out Total
Table 33: Productive and Non-Productive Time of Banya Process
Table 33 shows the time in each activity per batch. The total time of this process in a batch is around 92 minutes that holds approximately 31 minutes of non-value-adding activities. These activities with time measure will be used in identifying the process that causes bottleneck in the production of special biscocho.
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Table 34 shows the symbols for transportation and delay that determines the nonvalue adding activity in the process.
2nd Baking Process

Productive Work Content Time/batch Symbol Process (min) Load the rack to oven Machine run Unload the rack Total 0.15 40.00 0.15 40.30 42.00 Process time Unproductive Work Content Time/batch Process Symbol (min) 1.00 0.30 Inspect Total Set up -
1.30
Table 34: Productive and Non-Productive Time of 2nd Baking Process
This process utilizes one rack oven for special biscocho because the remaining ovens are used for other bakery products. The total processing time in finishing the 2nd baking process is 42 minutes per batch with the standard baking time of 40 minutes that reaches a temperature of 160C.
2nd Cooling Process

Productive Work Content Time/batch Symbol Process (min) Keep dough in cooling area Total 30 30.00 Process time Unproductive Work Content Time/batch Process Symbol (min) Total -
30.00
Table 35: Productive and Non-Productive Time of 2nd Cooling Process
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The standard cooling time is 30 minutes after the 2nd baking process wherein zero (0) minute of unproductive time. Cooling time is one of the corporate plan and technique in order to get the desired level of moisture present on the baked bun.
Packing Process The total processing time that special biscocho can be packed is around 210 minutes per batch per worker. However, there are three workers assigned in this process yet the same activities being followed. The packing time per batch is around 70 minutes per worker wherein this is categorized into productive and non-productive time. The non-productive activities in this process are observed in the operations chart; these are inspection such as examining or correcting the required weight for each pack of biscoho); transportation such as move material by carrying and material downtime. Thus, the total non-productive time is around 63 minutes.
Productive Work Content Symbol Process Get packaging Insert biscocho Weigh the biscocho Load to bread crate Total Time/pack (min) 0.06 0.33 0.05 0.03 Time/ batch (min) 18.42 101.31 18.42 9.21 147.36 209.94 Process time Time/ batch (min) 3.14 15.35 36.84 7.25 Unproductive Work Content Time/ pack Process (min) Move to get the packaging Separate good and 0.05 defective biscocho 0.11 Adjust the number of biscocho to 150grams Transfer the container of biscocho Total
Symbol
62.58
Table 36: Productive and Non-Productive Time of Packing Process 80
Sealing Process
Productive Work Content Time/batch Symbol Process (min) Get the pack Feed the pack to continuous sealer machine Machine run Total 3.05 26.00 36.00 65.05 Process No. 1 2 3 69.05 Unproductive Work Content Time/batch Process Symbol (min) 2.00 2.00 4.00 Set up Adjust the speed Total -
Table 37: Productive and Non-Productive Time of Sealing Process
The total processing time the baked goods will be sealed using continuous sealer machine in a batch is around 70 minutes wherein it has a non-productive time of 4 minutes.
Final Packing Process

Productive Work Content Time/batch Symbol Process (min) Get the master box Put and arrange packs of biscocho in the box Put packaging taoe Total Process No. 1 2 3 49.52 Unproductive Work Content Time/batch Process Symbol (min) 5.05 Sear or find packaging taoe Total -
1.07 28.09 15.31

44.47
5.05
Table 38: Productive and Non-Productive Time of Final Packing
The total processing time that 307 packs of biscocho will be placed in the container is approximately 50 minutes wherein it has a non-productive time of about 6 minutes.
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Non-Productive Time
Process Mixing Molding Proofing Baking Cooling Slicing Banya Baking Cooling Packing Sealing Final Packing 6,240buns 6,240buns 6,240buns 6,240pcs 24,960pcs 24,960pcs 24,960pcs 24,960pcs 2,456packs 2,456packs 136boxes Total Output per week NON-PRODUCTIVE TIME min/ batch/ mins/ batch week year 3.18 8 1322.88 10.06 0.00 1.30 0.00 8.00 31.03 1.30 0.00 62.58 4.00 5.05 126.50 8 8 8 8 8 4184.96 0.00 540.80 0.00 3328.00 12, 908.48 540.80 0.00 26, 033.28 1664.00 2100.80 52624.00 Processing time 18.13 48.59 30.00 37.00 1day 72.15 91.31 42.00 30.00 209.94 69.05 49.52 No of workers 1baker 1baker,2helpe rs 1ovenman 1slicer 3banyadors 1ovenman 3packers 1sealer 1final packer Average Time per worker 18.13 16.20 30.00 37.00 1day 72.15 30.44 42.00 30.00 69.98 69.05 49.52
Table 39: Summary of Non-Productive Time
Note: For biscocho production, only one oven man is assign in the baking area to prepare, load, check and unload the rack from the oven. Note: 1 batch = 780 buns; 1 bun =4 pcs ;Average number of pieces per pack = 10 pcs. Table 39 shows the summary of non-productive time of each process per year. As shown in the table, the average time per worker is obtained coming the quotient of processing time and the actual number of workers in the existing production of biscocho. Below shows the sample computations of the total unproductive time per year:
Sample Computation: Banya

Total Unproductive Time = (Unproductive time/batch) (no. of batch per week) (no. of weeks per year) = 31.03 mins/batch * 8batches/week * 52weeks/year = 12, 908.48 minutes = 215.14 hours
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Opportunity Loss
Process Mixing Molding Proofing Baking Cooling Slicing Banya Baking Cooling Packing Sealing Final Packing Total
Unproductive per year 1322.88 4184.96 0 540.8 0 3328 12908.48 540.8 0 26033.28 1664 2100.8 52624.00 Output per year 127,712 127,712 127,712 127,712 127,712 127,712 127,712 127,712 127,712 127,712 127,712 127,712 Processing Time per year 149,760 149,760 149,760 149,760 149,760 149,760 149,760 149,760 149,760 149,760 149,760 149,760 Opportunity loss per yr (packs) 1, 128 3, 569 0 461 0 2, 838 11, 008 461 0 22, 201 1, 419 1, 792 44, 876.58 Unit profit (Php) 15 15 15 15 15 15 15 15 15 15 15 15 Opportunity Loss per year (Php/yr) 16,921.84 53,532.61 6,917.73 42,570.67 165,120.97 6,917.73 333,009.04 21,285.33 26,872.73 673,148.67
Table 40: Summary of Opportunity Loss per Process
Table 40 shows the summary of opportunity loss per year in each process. Opportunity loss is computed based on the conversion of time to the number of packs that lost due to unproductive process then this will be multiplied to its cost per unit. Sample computation is presented below:
8batches/wk = Average of 307 packs of biscocho Output per year = (2456 packs/week) x (52weeks/yr) = 127,712packs/yr Process Time of 8batches = 2days = 48 hours Process Time of 8 batches/year = (48hr/week) x (60mins/hr) x (52weeks/yr) = 149,760mins/yr By Interpolation: let x = opportunity loss in terms of packs per yr. x______ = 12, 908.48mins/yr 127, 712 packs/yr 149, 760mins/yr
X 11, 008 packs per year

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Opportunity Loss = Loss production units x Profit per unit = (11, 008 packs/yr) * (Php15.00/pack) = Php165, 120.00 per year Banya process Pareto Table
Opportunity loss per year (Php/yr) 333,009.04 165,120.97 53,532.61 42,570.67 26,872.73 21,285.33 16,921.84 6,917.73 6,917.73 673,148.67 Percentage Contribution 49.47% 24.53% 7.95% 6.32% 3.99% 3.16% 2.51% 1.03% 1.03% 100% Cumulative Percentage 49.47% 74.00% 81.95% 88.28% 92.27% 95.43% 97.94% 98.97% 100.00% Pareto Analysis 80%
Process Packing Banya Molding Slicing Final Inspection Sealing Mixing 1at Baking 2nd Baking
20%
Table 41: Pareto table of Non-Productive Time
Table 41 shows the cumulative percentage of the opportunity loss per year in each process because of unproductive time. It is indicated that 80% of the largest cost incurred are found in the packing and banya process. This entails that the process are subject for improvement. Pareto Chart
Top Priority
Figure 7: Pareto Chart
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The pareto chart visually shows the graph of percentage value which is expressed in opportunity loss per year relative to its cumulative value. This chart identifies what processes that need to be prioritized and require methods improvement. As highlighted in the figure, banya and packing process are the subject for improvement.
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2.1.5 Finished Goods Inventory Management Inventory is the stock of items or resources used in the company. Inventory Management is responsible for planning and controlling the inventory from the raw material to finished goods and to the customers. Inventory Management of the company includes raw materials, equipment, energy, work-in-process, and finished goods. However, the researcher focus only on the finished goods since it is the area where the company experience challenges as perceived by the management. The proceedings present the current finished goods inventory management of ABC Inc.
Finished Goods Warehouse

1 .
Some FG placed in the Hallway Exhibit 10: Finished Goods Warehouse
The exhibit shows the existing set up and layout of the finished goods warehouse. If the FG Warehouse is full, some of the finished goods are temporarily placed in the hallway.
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Classification of Inventory
Product Code SBIS150 MT100 OU200 OR200 RO200 HB10 BS BIS100 BIS45 BB06 EU01 EY02 SR EU03 CC B100 BB15 BB IEO BBBS DR HBJ60 Product Name Special Biscocho 150g Mamon Tostado 100g Otap Ube 200g Otap Regular 200g Rosquillos 200g Hotdog Bun *10 HOS Brownies small Biscocho 100g Biscocho 45g Burger Bun with oats *6 Ensaymada Ube EnsaymadaYemas Siopao Regular Ensaymada Regular/plain Cheese Cupcake Bayan 100g Burger Bun *15 Basic Burger Inday Esper Otap Basic Burger bun with Seeds Dinner Roll Hotdog Buns Jumbo 60g January to July Volume 43,532.80 40,216.82 27,581.66 26,613.96 24,237.12 225,878.00 46,513.00 25,367.00 34,691.20 54,694.01 15,134.00 15,174.00 17,312.00 17,942.00 16,881.00 20,252.00 48,315.00 39,217.00 29,885.07 36,016.00 50,174.00 15,941.00 Unit Cost 30.03 30.00 41.44 35.09 38.02 3.00 11.60 15.86 9.50 5.40 17.59 17.27 14.90 14.06 12.07 9.28 3.00 3.30 4.16 3.25 2.2 3.85 January to July Sales Volume 1,307,289.98 1,206,504.60 1,142,983.99 933,883.86 921,495.30 677,634.00 539,550.80 402,320.62 329,566.40 295,347.65 266,207.06 262,054.98 257,948.80 252,264.52 203,753.67 187,938.56 144,945.00 129,416.10 124,321.89 117,052.00 110,382.80 61,372.85 % Sales Volume 13.16 12.15 11.51 9.40 9.28 6.82 5.43 4.05 3.32 2.97 2.68 2.64 2.60 2.54 2.05 1.89 1.46 1.30 1.25 1.18 1.11 0.62 B Class
Source: Finance Managers Records on Sales, and Interview
Table 42: ABC Analysis
The company offers different types of finished goods. ABC Analysis is used in order to divide the on-hand finished products based on the companys sales volume from January to July 2012. The highlighted parts are the class A category which accounts the 70% of the sales volume from January to July. These are the top
pasalubong items of the company. The researchers only considered these among all
their products since pasalubong items were the only products that are made-tostock. Breads and pastries are made-to-order.
87
Product Code SBIS150 MT100 OU200 OR200 RO200 BIS100
Product Name Special Biscocho 150g Mamon Tostado 100g Otap Ube 200g Otap Regular 200g Rosquillos 200g Biscocho 100g
Unit Cost (Php) 30.03 30.00 41.44 35.09 38.02 15.86
Unit Price (Php) 31.00 33.00 47.00 39.00 40.50 17.00
Table 43: Unit Cost and Unit Price of FG-Pasalubong (Class A)
The table shows the class A pasalubong products of ABC Inc. and the unit costs and unit prices of each aforementioned products.
88
Output, Unit Sales, and Unsold FGper month Based on our interview with the company, demand of pasalubong items per month varies. The management set their monthly projection based on the past months sales volume. projection of the total quantity to be produced in particular month.
May
Product Name Special Biscocho 150g Mamon Tostado 100g Otap Ube 200g Otag Regular 200g Rosquillos 200g Biscocho 100g
Total Output Unit Sales Ending Inventory Total Output
This situation also resulted to have inaccurate
June
Accum. Total Goods Unit Sales Ending Inventory Total Output
July
Accum. Total Goods Unit Sales Ending Inventory
Ave. Ending Inventory 23,938 36,307 38,706 40,960 6,604 6,088 152,604
Total Output 56,242 70,166 71,690 69,486 19,039 17,864 304,487
8325 11838 6040 13606 9278 7055
5323 4590 3607 2988 2712 2641
3002 7248 2433 10618 6566 4414
33606 44433 54990 46549 740 2897
36608 51681 57423 57167 7306 7311
6218 5745 3940 3801 3462 2534
30390 45936 53483 53366 3844 4777
14311 13895 10660 9331 9021 7912
44701 59831 64143 62697 12865 12689
6279 4095 3940 3801 3462 3615
38422 55736 60203 58896 9403 9074 TOTAL
Source: PPIC Personnels Records of Output, Finance Managers Record on Sales, and Interview
Table 44: Output, Sales, and Unsold FG per Month
This represents the total output quantity, and the total unit sales per months of the aforementioned pasalubong products. It shows that 50% of the total finished goods per months are unsold. This can be computed as follows:
89
Percentage of Unsold FG = (Ave. Ending Inventory per month/Total FG Produced)x100 = {(152,604)/(304,487)} x 100 = 50%
Based on table 40, it can be seen that there are more products produced than demanded. According to the company, this is because they will also provide products as buffers for urgent orders to meet customer demand. Products that stayed longer as inventory and reached one to three months before its expiry date are no longer delivered to different stores. Instead, they will bargain it with 50% reduction to its unit prices.
9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Jan Feb Mar April 2012 May June July B150g MT100g OU200g OR200g R200g B100g
Figure 8: Line Graph ofDemand of Pasalubong Items
The graph shows the behavior of demand for pasalubong items from the month of January to July 2012. It shows that there is a dramatic up and down of demand of the
90
aforementioned products. The researchers conservatively assume that the company has normal production, i.e., there is no peak seasons for pasalubong items.
FG Receiving and Releasing Control Procedure

FINISHED GOODS AREA RECEIVING PROCEDURE
FG Personnel
Documents Checking
Receive products per Product Endorsement Report (PER)
Product Endorsement Report (PER) or other accountable forms
Risk
Time (min)
Loss or Lack of Information
Updating
Fill up stock card with the date and PER series number, etc
Wrong input of Records
Double check product endorsed per document and actual
No
Variances between records and actual
Document data equal to actual
Counting Error
Verifying
Yes
Store to racks
Rack Allocation
Material Handling Error
120
Figure 9: Receiving Procedure
91
FINISHED GOODS AREA RELEASING PROCEDURE

FG Personnel
Prepare Product per SO or other accountable forms
Risk
Time (min)
Wrong Product 400 Misplaced Documents
Preparing
Sales Order(SO) or other accountable forms
Updating
Update stock card per outgoing transaction
Input Error
Double check product before release
No
10
Releasing Checking
Orders equal to actual?
Yes 10
Release Products
Figure 10: Releasing Procedure
This is the companys finished goods inventory procedure. There is a maximum of two personnel assigned in this area. There were different documents accountable
in order to receive or release goods and that would also be the bases to update the stock card to maintain its accuracy. For receiving, the Production Endorsement Report (PER), Stock Return Slip (SRS), Repacking Endorsement Report (RER), and Warehouse Receiving Report (WRR). While, in the releasing process includes delivery
receipt/charge invoice, manual delivery receipt, delivery receipt, and Product Requisition Slip (PRS). Furthermore, according to the Plant Auditor, there is 3% undocumented
92
or unrecorded differences between the actual and the recorded or updated data in the stock card.
93
2.2Diagnostic Phase 2.2.1 Problem Selection Summary of Problem Options

Operations Management Aspect Facilities Planning and Layout Reference/s Problem Areas Total Unproductive Time Excess number of manpower in producing Biscocho 150g Capacity Planning Characteristics Travel time Measure Minutes of travel time per year Cost of Labor per day and number of workers Performance Level 2080 minutes travel time per year from Slicing to Banya Excess of two workers having Php610.00 labor cost per day Table/ Figure Figure 10 Title Cause and Effect Diagram of Facilities Planning and Design Page Numb er 102
Number of manpower in sansan and packing area Number manpower in slicing area Number manpower in sealing area Non-Productive Time Non-Productive Time Level of unsold finished
Lacking of manpower in producing Biscocho 150g
Minutes of processing time Minutes of processing time Hours of nonproductive time per year Hours of nonproductive time per year % of Unsold finished goods per month
577.20 minutes processing time in slicing 552.40 minutes processing time in sealing 215.14 hours of nonproductive time per year 433.89 hours of nonproductive time per year 50% Unsold finished goods per month
Figure 11
Cause and Effect Diagram Capacity Planning
104
Methods Improvement
Banya Process Time Packing Process Time Finished goods ending inventory per month
Figure 13
Cause and Effect of Methods Improvement
111
Inventory Management
Figure 14
Root Cause Analysis of FG Ending Inventory
112
Table 45: Summary of Problem Options 94
Problem Prioritization
Selection Criteria Problem Areas Poor Performance Level 2080 minutes travel time per year from Slicing to Banya Excess of two workers having Php610.00 labor cost per day 577.20 minutes processing time in slicing 552.40 minutes processing time in sealing 215.14 hours of non-productive time per year 433.89 hours of non-productive time per year 50% Unsold finished goods per month
Urgency Effect on Operations Criticality to Survival Customer Satisfaction
25% Total Unproductive Time Excess number of manpower in producing Biscocho 150g Number manpower in slicing area Number manpower in sealing area Non-Productive Time Non-Productive Time Level of unsold finished 4 3 4 4 3 2 2
35% 3 3 3 4 3 3 3
10% 4 2 4 3 2 2 2
30% 3 2 4 2 2 2 1
Weighted Rating 3.35 2.60 3.65 3.30 2.60 2.35 2.05
Rank
2 4 1 3 4 5 6
Table 46: Operations Management Problem Areas
Problems are rated in selection criteria and ranked according to their weighted value. Based on interview from the management, they want these problems to be analyzed and come up proper solutions accordingly. Thus, the researchers will addressed these problems and every problem will be prioritized based on the ranked number presented in table 50. Plant layout will be the first priority then follows capacity or head count analysis, methods improvement and inventory management aspect.
95
2.2.2 Root Cause Analysis Matrix

Problem Probable Root Cause Validation tool used Observation, Time Study Interview and Observation Interview and Observation Interview and Observation Interview, Time study, observation, Interview , Time study, observation, Forecasting model Findings Transportation time adds up to the processing time in producing the biscocho. The location of the workstations is not arranged according to the process sequence Inaccurate basis in calculating the manpower Inaccurate basis in calculating the manpower Inaccurate basis in calculating the manpower No standard work instruction and there are unnecessary steps in the process No standard work instruction and there are unnecessary steps in the process
Validity Controllability
2080 minutes of travel time Php610.00 labor cost per day in packing and sansan area 577.20 minutes processing time in slicing 552.40 minutes processing time in sealing 215.14 hours of nonproductive time per year in banya 433.89 hours of nonproductive time per year in packing 50% Finished Goods Ending Inventory
Improper arrangement of workstations
Valid
Controllable
Improper manpower distribution Improper manpower distribution Improper manpower distribution Unnecessary steps or movement of material in the process Unnecessary steps or movement of material in the process Forecast Based on Previous Month Sales
Valid Valid Valid
Controllable Controllable Controllable
Valid
Controllable
Valid
Controllable
Inaccurate Projected Quantity
Valid
Controllable
Table 47: Root Cause Analysis Matrix
96
2.2.3 Cause and Effect Diagram Facilities Planning and Design

Problem 1: 2080mins travel time per year from slicing to banya
Cause
Problem
Effect
Improper arrangement of workstations
2080mins travel time per year from slicing to banya
Php199,680
Opportunity Loss per year
Figure 11: Cause and Effect Diagram of Facilities Planning and Design
The figure shows the cause of the identified problem in the companys layout and the effects it contributes. As shown, it has Php199,680opportunity loss per year.
Computation
Standard Time = 30.44mins Output per batch = 3070 pcs x (10pcs per pack) = 307 packs Standard time per unit (banya) = = = = (standard time/batch) x (1 batch/3070 pcs) (91.32mins/batch) x (1 batch/3070pcs) 0.03min per pc x (10pcs per pack) 0.30min per pack
Standard time per unit (banya) Unit Output in 5mins (banya) Unit Output in 5mins (banya)
= travel time x (1 pack/0.30min) = 5mins x (1 pack/0.30min) =16 packs
Opportunity Loss per year = (Unit Output per travel time) x (Unit Cost) x (batch per week) x (weeks per year) = (16 packs/batch) x (Php30.00) x (8batches) x (52weeks per year)
97
Opportunity Loss per year
=Php199,680
98
Capacity Planning Problem 1: Php610.00 labor cost per day in producing Biscocho 150g
ROOT CAUSE
CAUSE
PROBLEM
EFFECT
Improper manpower distribution
Excess number of manpower in packing area and sansan area
Php610.00 labor cost per day in packing and sansan area
Excess of Labor cost per year Php222, 650.00
Problem 2: 585.20 minutes processing time in slicing

ROOT CAUSE CAUSE PROBLEM EFFECT
Lacking one manpower in slicing area
577.20 minutes processing time in slicing
Opportunity Loss of
Php371, 685.60
99
Problem 3: 552.40 minutes processing time in sealing

ROOT CAUSE CAUSE PROBLEM EFFECT
Lacking one manpower in sealing area
552.40 minutes processing time in sealing
Opportunity Loss of
Php127, 795.20
Figure 12: Cause and Effect Diagram Capacity Planning
It shows the cause and effect diagram of capacity planning. The figure shows the cause of the identified problem in the companys layout and the effects it contributes. As shown, the first problem it has an exceed labor cost of Php222, 650.00. The problem number two (2) has an opportunity loss of Php371, 685.60 yearly. And the last problem of the capacity planning has an opportunity loss per year of Php127, 795.20.
100
Computations:
Computation for Problem one

Excess Number of Workers
Packing (Existing)
= excess number workers x rate per day = 1 worker x Php305.00 = Php305.00
Sansan (Existing)
= excess number workers x rate per day = 1 worker x Php305.00 = Php305.00 Exceed Labor Cost per Year: = [(No. of exceed Workers x Rate per day) x (Days in a year)] = [(2 worker x Php305.00)x (365 days)]
= Php222, 650.00
Computation for Problem two
NUMBER OF WORKERS 1 2 NO. OF BUNS NO. OF SLICES
1 BATCH (minutes) 72.15 36.08 780 3 120 slices
8 BATCH (minutes) 577.20 288.60 6 240 24 960 slices 101 9 hours and 03 minutes 5 hours and 35 minutes
Idle Time
=Available Operating Time Processing Time (2 Workers) =7 hours and 25 minutes 5 hours and 35 minutes =1 hour and 50 minutes = 110 minutes
Standard Time per slice of buns = (Standard Time) / (Number of Buns) = (577.20 minutes) / (6 240 packs) =0.0925 minute/pack No. of buns to be slice in Idle Time = (Idle Time)/ (Standard Time per buns) = (110 minutes)/ (0.0925 min/buns) = 1189.19 buns No. of Slice buns buns) = (No. of buns to be slice in Idle Time) x (No. of slice per = (1189.18 buns) x (4 slice/ bun) = 4765.76 slices No. of Packs = (4765.76 slices)/ (10 slices/ pack) =476.58 packs
Opportunity Loss per year = (No. of Pack Produce in Idle Time) x (Profit) x (No. of weeks per year) = (476.58 packs) x (Php15.00) x (52 weeks) = Php371, 685.60
Computation for Problem three
NUMBER OF WORKERS 1 2 NO. OF PACKS
1 BATCH (minutes) 69 34.5 78 packs
8 BATCH (minutes) 552.40 276.20 624 packs 9 hours and 35 minutes 5 hours
102
Idle Time
=Available Operating Time Processing Time (2 Workers) =7 hours and 25 minutes 5 hours =2 hours and 25 minutes = 145 minutes = (Standard Time) / (Number of Packs) = (552.40 minutes) / (624 packs) =0.885 minute/pack
Standard Time per Pack
No. of Pack Produce in Idle Time = (Idle Time)/ (Standard Time per Pack) = (145 minutes)/ (0.885 min/pack) = 163.84 packs Opportunity Loss per year = (No. of Pack Produce in Idle Time) x (Profit) x (No. of weeks per year) = (163.84 packs) x (Php15.00) x (52 weeks) = Php127, 795.20
103
Ideal and Actual Number of Workers

PROCESS NO. 1 2 3 4 5 BISCOCHO 150g 6 7 8 9 10 11 12 13 14 MIXING PROCESSING STANDARD TIME PER BATCH (SEC) 1087.80 1 1 2 ---1 3 --3 1 1 0.72 ~ 1 0.35 ~ 1 0.33 ~ 1 ---1.43 ~ 2 2.16 ~ 3 --1.33 ~ 2 1.36 ~ 2 0.98 ~ 1 EXISTING NUMBER OF WORKERS IDEAL NUMBER OF WORKERS
PRODUCT LINE
PROCESS
CUTTING(Putting the dough to the 888.00 volumetric machine) SHAPING 1016.40 SANSAN 1008.00 PROOFING(Checking the buns) 1800 1stBAKING(Pulling in and out the rack to the oven and checking the breads 2220 and pastries) 1stCOOLING(Pulling in and out the rack 1 day to the cooling area) SLICING 4329.0 BANYA 1826.40 2ndBAKING(Pulling in and out the rack to the oven and checking the breads 2820.00 and pastries) 2ndCOOLING(Pulling in and out the 1800.00 rack to the cooling area) PACKING 4027.20 SEALING 4143.00 FINAL PACKING 2971.12 Table 48: Ideal Number of Workers
104
Summary of Ideal and Existing number of worker
MIXER
CUTTER 1
SHAPING 1 0.35 1
SANSAN 2 0.33 1
SLICING 1 1.43 2
BANYA 3 2.16 3
PACKER 3 1.33 2
SEALER 1 1.36 2
FINAL PACKER 1 0.98 1
Existing number of workers Ideal number of workers Actual Numbers of Ideal Workers
0.72
1
TOTAL NUMBER OF ACTUAL WORKERS TOTAL NUMBER OF IDEAL WORKERS LACKING OF WORKERS IN SLICING AND SEALING AREA EXCESS WORKERS IN PACKING AND SANSAN AREA
13 13 2 2
Table 49: Summary of Ideal and Existing number of Workers
3.5 3 2.5 2 1.5 1 0.5 0 Existing number of workers Ideal number of workers
Figure 13: Graphical representation for the Ideal and Existing Number of Worker
105
SUMMARY OF EXISTING AND IDEAL NUMBER OF LABOR COST PER DAY
PRODUCT LINE
NO. OF WORKERS PROCESSES Mixing and Cutting Existing 1 1 2 1 3 3 1 1 13 workers TOTAL COST PER DAY Ideal 0.72 0.35 0.33 1.43 2.16 1.33 1.36 0.98 Actual 1 1 1 2 3 2 2 1 13 workers
EXISTING Labor Cost (Php) 305.00 305.00 610.00 305.00 915.00 915.00 305.00 305.00
IDEAL Labor Cost (Php) 305.00 305.00 305.00 610.00 915.00 610.00 610.00 305.00
BISCOCHO 150g
Shaping San San Slicing Banya Packing Sealer Final Inspection
TOTAL
Php3965.00
Php3965.00
Table 50: Summary of Existing and Ideal Number of Labor Cost per Day
106
Methods Improvement Problem 1: 215.14 hours of non-productive time per year in Banya ROOT CAUSE PROBLEM EFFECT
Unnecessary steps or movement of material in the process
215.14 hours of non-productive time per year
Php165,120.97 Opportunity loss per year.
Problem 2: 433.89 hours of non-productive time per year in Packing
Unnecessary steps or movement of material in the proces
433.89 hours of non-productive time per year
Php333,009.04 Opportunity loss per year
Figure 14: Cause and Effect of Methods Improvement
Based on pareto analysis, banya and packing process need to be prioritized because the highest non-productive time occurs in these processes. Using the cause and effect diagram, the researchers found out that wasted time is usually delays and unnecessary movement of material in the process. The researchers computed the effect of these losses in the company because the opportunity to produce within time and cost estimates are not achieved by the workers.
107
Finished Goods Inventory Management Problem 1: 50% Finished Goods Ending Inventory ROOT CAUSE CAUSE PROBLEM EFFECT
Php 3,118,182.60 worth of FG Holding Cost per year
Forecast Based on Previous Month Sales
Inaccurate Projected Quantity
50% Finished Goods Ending Inventory
Figure 15: Root Cause Analysis of FG Ending Inventory
As mentioned above, more than half of the finished goods produced per month are unsold. In this situation, the quantity of items held in stock increases and thus, increases the holding cost. 5% rate of holding cost is assumed based on interview and observation. Computations of the finished goods ending inventory holding cost are as follows: Finished Goods Ending Inventory Holding Cost Refer to table x and table x for the quantity of unsold products and its unit cost respectively. Finished Goods Ending Inventory Holding Cost = {(FG Ending Inventory) x (Product Unit Cost)} x (Holding Cost Rate per Month) = {(23,938pcs of SBIS150 x Php30.03/unit) + (36,307pcs of MT100 x Php30/unit) + (38,706pcs of OU200 x Php41.44/unit) + (40,960pcs of OR200 x
108
Php35.09/unit) + (6,604pcs of RO200 x Php38.02) + (6,088pcs of BIS100 x Php15.86)} x (5%) = Php 259,848.55 per month Per year = Php 259,848.55/month x (12 months/year) = Php 3,118,182.60/year
Note: Holding cost rate of 5% was based on interview given by the Production Planning Inventory Control
109
2.2.4 Formulation of Options Facilities Planning and Design Problem 1 Cause Option 1 : 2080mins Travel Time per year from Slicing to Banya : Improper arrangement of workstations : Re-layout of slicing and banya workstations. The workstation of
banya is transferred to the packing area near the entrance from the said area to the oven area. Moreover, the slicing machine is also relocated and placed beside the banya workstation.
R1
BS2 BS3 BS4
10 8
Table
6
SM2
9
DC
12
Table
BS1
Sheeter
CD
PM1
PM2
RHEON
BS5
DD
PASADA
12 13
SWM
CS1 CS1 CS1
DM DR
7 11
4 3
VM
SM3 SM1
13
14
Powder Area
Premix Area
Wet & Premix Area
Exhibit 11: Proposed Layout of Workstations
Exhibit 10 illustrates the proposed location or arrangement of banya and slicing workstations. In this proposal, the banya station is located close to the slicing machine
110
and this creates a zero distance of the workstations. This proposal is realistic because there are enough spaces in the entire packaging area wherein the banya station can be relocated. The slicing machine has the area of 0.053m2 (0.24 x 0.22 meter), however the table has an area of 0.118m2 (0.47 x 0.25 meter).
From-to-Chart Distance between Locations (meters)

6 7 8 9 10 11 12 13 From To 1 2 3 4 5 1 - 4.4 2 3 4 - 5.2 5 - 8.4 6 - 14.4 7 13.0 11 8 0 9 7.2 10 - 10.4 11 4.0 12 - 7.01 13 -

From 1 2 3 4 5 6 7 8 9 10 11 12 13 To 1 2 1 1 1 3 4 5 6 7 8 9 10 11 12 13
2 -
1 -
1 1 1 1 -
1 -
Table 51: From-to-Chart of Proposed Layout 111
Legend
Process Number 1 2 3 4 5 6 7 8 9 10 11 12 13 Description Mixing Cutting Shaping Sansan Proofing Baking Cooling Slicing Banya Packing Sealing Final Inspection Storing

Processes 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 6 7 to 10 10 to 11 11 to 12 12 to 13 Distance (m) 4.4 5.2 8.4 7.2 13.0 0 7.2 11 10.4 4.0 7.01 No. of trips/batch 1 1 1 2 1 1 1 1 1 1 1 Total Distance (m) 4.4 5.2 8.4 14.4 13.0 0 7.2 11 10.4 4.0 7.01 Travel Time (min) 0.25 0.22 0.32 0.26 1.13 0.40 0.55 0.89 0.81 0.15 1.04 Labor Cost per min Total Cost (Php) 0.160 0.141 0.205 0.166 0.723 0.256 0.352 0.570 0.518 0.096 0.666 Php3.85
Php0.64
Total
Table 52: Total Transportation Cost per Batch of Proposed Layout
Computation
Total Cost
= (No. of trips per batch) x (Travel Time) x (Labor cost per min) = (1 x 0.40min x Php0.64) Total Cost = Php0.26 per batch = Php0.26 x (8batches/week) x (52 weeks/year) = Php108.16 per year
112
Total Cost
= Php3.85 per batch = (Php3.85) x (8 batches/week) x (52weeks/year) = Php1,601.60 per year
Cost of Relocating
Time Consumed in relocating = 4hrs estimated time Labor Cost = (Rate per minute) x (Relocating Time) x (No. of workers) = (Php0.64/minute) x (240 minutes) x (4 workers) Labor Cost = Php614.40
Note:

Labor cost is assumed to be at minimum Time incur in relocating the workstation is assumed to be 4 hours
Option 2
: Transfer the slicing workstation in the production area, just beside the
banya workstation.
PM1
PM2
Table
Table
Table
Table
Table
Cake Depositor
Rack
Table Table
Machine
Table
Table
Machine
Spiral Mixer2
Table for Banya
Dough Cutting
1' 6" Rise: 18' Run
Table Table
Table
PM2
Table
Slicing Machine
Table
Dough Rounder
Table
Dough Divider
Sheeter
Table
PASADA
Dough Molder
Dough Roller
Table
Table
Spiral Mixer3 Spiral Mixer1
Volumetric Machine
Ice Maker
Ice Maker
Rack
Exhibit 12: Proposed Layout in the Production Area-Option Two 113
The exhibit shows the proposed lay out for option 2 to which is to transfer the slicing machine to the production area just beside the banya workstation. The
highlighted area is where the two workstations were placed. The slicing machine has the area of 0.053m2 (0.24 x 0.22 meter), however the table has an area of 0.118m2 (0.47 x 0.25 meter).
BS2 BS3 BS4
Table
Table
10
CD
Table
Table
PM1
PM2
RHEON
Table
9 12
Table
BS1
DC
SM2
8
DM DR
Sheeter
BS5
DD
PASADA
11
4 3
VM
SM3 SM1
SWM
CS1 CS1 CS1
13
Powder Area
14
Premix Area
Wet & Premix Area
Exhibit 12: Proposed Work Flow of Option Two
Here, the exhibit shows the proposed flow of the process after relocating the slicing machine in the production area.
114
From-to-Chart Distance between Locations (meters)

From To 1 2 3 4 5 6 7 8 9 10 11 12 13 1 - 4.4 2 3 4 - 5.2 5 - 8.4 6 - 14.4 7 16.0 11 8 0 9 5.0 10 - 10.4 11 4.0 12 - 7.01 13 -

From 1 2 3 4 5 6 7 8 9 10 11 12 13 To 1 2 1 1 1 3 4 5 6 7 8 9 10 11 12 13
2 -
1 -
1 1 1 1 -
1 -
Table 53: From-to-Chart of Proposed Layout
115

Processes 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 6 7 to 10 10 to 11 11 to 12 12 to 13 Distance (m) 4.4 5.2 8.4 7.2 16.0 0 5.0 11 10.4 4.0 7.01 No. of trips/batch 1 1 1 2 1 1 1 1 1 1 1 Total Distance (m) 4.4 5.2 8.4 14.4 16.0 0 5.0 11 10.4 4.0 7.01 Travel Time (min) 0.25 0.22 0.32 0.26 1.90 0.40 0.55 0.89 0.81 0.15 1.04 Labor Cost per min Total Cost (Php) 0.160 0.141 0.205 0.166 1.216 0.256 0.352 0.570 0.518 0.096 0.666 Php4.35
Php0.64
Total
Table 54: Total Transportation Cost per Batch of Proposed Layout
Computation
= (No. of trips per batch) x (Travel Time) x (Labor cost per min) = (1 x 0.40min x Php0.64) Total Cost = Php0.26 per batch = Php0.26 x (8batches/week) x (52weeks/year) = Php108.16 per year Total Cost = Php4.35 per batch = (Php4.35) x (8 batches/week) x (52weeks/year) = Php1,809.60 per year Total Cost
Cost of Relocating
Time Consumed in relocating = 4hrs estimated time Labor Cost = (Rate per minute) x (Relocating Time) x (No. of workers) = (Php0.64/minute) x (240 minutes) x (4 workers) Labor Cost = Php614.40
Note:

Labor cost is assumed to be at minimum Time incur in relocating the workstation is assumed to be 4 hours
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Capacity Planning Problem 1 : Php610.00 Labor cost per day in producing Biscocho 150g Cause Option 1 : Excess of manpower in packing area and sansan area :Remove excess worker in packing area and sansan area
Processing Time (min) LABOR Rate Rate per per day Batch (Php) (Php) 11.52 1 14.80 16.94 16.80 1 1 2 72.15 91.32 1 3 2 2 1 1 305.00 915.00 45.85 174.08 305.00 305.00 305.00 9.40 10.76 10.68 POWER per Batch Equipment Used Spiral Mixer Volumetric Machine None None None Oven None Bread Slicer None Oven None None Continuous Sealer None No. of hours consumption 0.32 0.21 ---0.58 -1.31 -0.58 --0.29 -Php40.14 Php463.07 Energy Cost (Php/Kwh) Php3.31 Php4.17 ---Php13.83 -Php3.85 -Php13.83 --Php1.15 --
Processes
No. of Workers
Mixing Cutting Shaping Sansan Proofing 1st Baking 1st Cooling Slicing Banya 2nd Baking 2nd Cooling Packing Sealing
18.13
67.12 69.05
610.00 305.00 305.00
85.29 43.88 31.47
Final 49.52 Packing TOTAL OVER ALL TOTAL
Php422.93
Table 55: Labor and Energy Cost in Option 1
Note
Proofing and Cooling processes are not included in computing the labor and energy cost because these are does not involve in any operations. Sample Computations: Formula Rate per batch = [(labor rate/ day) / (No. in minutes in a day)] x (Processing Time)
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Energy Cost Mixing
= usage per day x energy cost per KWH x wattage
= [(Php305.00) / (480 minutes)] x 18.13 minutes) = Php11.52 Energy Cost of Spiral Machine = usage per day x energy cost per KWH x wattage = 0.32 x Php7.95 x 1.3 KW =Php3.31 Cutting = [(Php305.00) / (480 minutes)] x 14.80minutes) = Php9.40 Energy Cost of Volumetric Machine =usage per day x energy cost per KWH x wattage = 0.21 x Php7.95 x 2.5 KW =Php4.17 Processing Time of 11 workers
Processes No. of workers Existing processing time (minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes New processing time (minutes) 18.13 14.80 16.94 33.60 72.15 91.32 100.68 69.05 49.52 466.19 minutes
Mixing Cutting Shaping Sansan Slicing Banya Packing Sealing Final Packing
1 1 1 1 1 3 2 1 1 TOTAL PROCESSING TIME
Table 56: Total Processing Time of 11 Workers
It shows the total processing time of the 11 workers. Through this data, it will helps the researchers to compare between the existing processing time and the new processing time. The table above shows that there is an increase of 50.36 minutes if there are only 11 workers.
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Option 2: Transfer the 2 excess worker in packing area and sansan area to the slicing and sealing area
Processing Time (min) LABOR Rate Rate per per day Batch (Php) (Php) 11.52 1 14.80 16.94 16.80 1 1 2 72.15 91.32 2 3 2 2 2 1 610.00 915.00 91.69 174.08 305.00 305.00 305.00 9.40 10.76 10.68 Volumetric Machine None None None Oven None Bread Slicer None Oven None None Continuous Sealer None 0.21 ---0.58 -1.31 -0.58 --0.29 -Php41.29 Php553.93 Php4.17 ---Php13.83 -Php7.70 -Php13.83 --Php2.30 -POWER per Batch Equipment Used Spiral Mixer Mixing Cutting Shaping Sansan Proofing 1st Baking 1st Cooling Slicing Banya 2nd Baking 2nd Cooling Packing Sealing 18.13 No. of hours consumption 0.32 Energy Cost (Php/Kwh) Php3.31
Processes
No. of Workers
67.12 69.05
610.00 305.00 305.00
85.29 87.76 31.47
Final 49.52 Packing TOTAL OVER ALL TOTAL
Php512.64
Table 57: Labor and Energy Cost of Option 2
It shows the labor cost and energy cost in making the Biscocho 150g. As you can see it there is an increase of labor cost Php610.00 in slicing area and sealing area. Since the slicing and sealing area are lacking 1 worker. The sansan helper is assigned in slicing area and packer is assigned in sealing area.
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Comparison of the Processing Time

Processes No. of workers Existing Processing Time (Minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes New Processing Time (Minutes) 18.13 14.80 16.94 33.60 36.56 91.32 100.68 34.53 49.52 396.08 minutes
1 1 1 1 2 3 2 2 1 Total Processing Time
Table 58: Processing Time after Transferring the Workers
The table 62 shows the new processing time after transfering the excess workers to the area of slicing area and sealing area. After transferring the workers, the new processing time is 396.08 minutes. There is an decreased of 19.75 minutes. Proposed Job Description for Slicer and Sealer
Slicer
Prepare the breads to be sliced Clean the bread slicer machine after using Deliver the sliced bread to the banya area Responsible in getting the breads at the cooling area
Sealer
Seal the packed biscocho 150g Gives the sealed biscocho 150g to the final packer
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Problem 2 : 585.20 minutes processing time in slicing Cause : Lacking one manpower in slicing area
Root Cause : Improper manpower distribution Option 1

area
:Transfer one (1) excess worker from the sansan area to the slicing
Total Processing Time After Transferring the One Excess Worker

EXISTING NO. OF WORKERS 1 1 1 2 1 3 3 1 1 TOTAL PROCESSING TIME IDEAL NO OF WORKERS 1 1 1 1 2 3 3 1 1 EXISTING PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes NEW PROCESSING TIME (Minutes) 18.13 14.80 16.94 33.60 36.01 91.32 67.12 69.05 49.52 396.49 minutes
PROCESSES
Table 59: Total processing time after transferring the one excess worker
It shows the comparative analysis between the existing and the new one. After reassigning the sansan helper as a slicer, there is a decreased in total processing time. The existing is 415.83 minutes and the proposed one is 397.04 minutes. There is a difference of 19.34 minutes. Proposed Job Description for Slicer
Slicer
Prepare the breads to be sliced Clean the bread slicer machine after using Deliver the sliced bread to the banya area
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Responsible in getting the breads at the cooling area
Cost of Orientation/ Training = [(Trainers Rate) + (Enery Cost (Php/KWh)) x (No. Of hours) ] x (No. Of Days) = [(Php500.00) x (Php7.70/KWh) x (8 hours) ] x (1 day) = Php561.60
Note:
The trainers rates are just assumptions. Savings = (Existing Cost Proposed Cost) = Php371,658.60 Php561.60 = Php371, 097.00 per year = __________Proposed Cost___________ Existing Cost
Payback period
= ____________Php561.60_____________ Php371, 658.60 = 0.002 year
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Problem 3 : 552.40 minutes processing time in sealing Cause :Lacking one manpower in sealing area
Root Cause :Improper Distribution of Manpower Option 1 :Transfer one (1) excess worker from the packing area to the sealing area Total Processing Time after Transferring the One Excess Worker
EXISTING NO. OF WORKERS 1 1 1 2 1 3 3 1 1 TOTAL PROCESSING TIME NEW NO OF WORKERS 1 1 1 2 1 3 3 2 1 EXISTING PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes NEW PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 36.56 91.32 100.68 34.53 49.52 379.28 minutes
PROCESSES
Table 60: Total processing time after transferring the one excess worker
After the worker of the packing area has been transferred to the sealing area, the table shows that there is a decreased of the total processing time in producing the biscocho 150 g. Proposed Job Description for Sealer
Sealer
Seal the packed biscocho 150g Gives the sealed biscocho 150g to the final packer
Cost of Orientation/ Training (Sealer) = [(Trainers Rate) + (Enery Cost (Php/KWh)) x (No. Of hours) ] x (No. Of Days)
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= [(Php500.00) + (Php2.30/KWh) x (8 hours) ] x (1 day) = Php518.40
Note:
The trainers rate are just assumptions. Savings = (Existing Cost Proposed Cost) = Php127, 795.20 Php518.40 = Php127, 276.80 per year Payback period = __________Proposed Cost___________ Existing Cost
= ____________Php518.40_____________ Php127, 795.20 = 0.004 year
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Methods Improvement Problem 1 : 215.14 hours of non-productive time per year Cause Option 1 : Unnecessary steps or movement of material in the process. : Reduce 50% Process time of each Unproductive Work Content by
Standardizing the Process relative to Arrangement of Workstation in Banya and Slicing process.
Cost Benefit Analysis

Hours Non Productive Time (NPT) Production unit Unit Profit Opportunity Cost 11, 008 packs Php15.00 Php165,120.97 per year
215.14 Table 61: Cost Benefit Analysis of Non-Productive Time in Banya Process of Option 1
Banya Process
Productive Work Content Symbol Process Get the sliced bun Put margarine to the bun and place it on the tray Total Time/batch (min) 18.28 42.00 60.28 91.31 Process time. Unproductive Work Content (also known as NP steps) Time/batch Process Symbol (min) 4.11 20.12 4.12 2.27 31.03 Position the tray Move to place tray to the rack Search bread tray Walk to get margarine due to run out Total
Table 62: Reduction of Unproductive Work Content in Banya Process
Reduced Non-Value Added Time = Unproductive Work Content x 50% = 31.03 * 50% = 15.52 minutes
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4'-6"
3'-9"
67 cm
23cm
5'-0"
67cm
QC table
Shrink Wrap Machine
Sealer Machine 1 Sealer Machine 2
Sealer Machine 3
STAGING AREA
14'-9"
189 cm
PASALUBONG LINE
PASTRIES LINE SLICING AREA
BREAD LINE RACK 100cm

2'-9"
3
RACK
4'-7 3/16"
220cm
BANYA
1
3'-0"
2
40'-0"
63 cm
8'-3 1/2"
1,500cm
13'-0" 440cm
61cm 2'-3"
Exhibit 13: Arrangement of Banya and Slicing Stations
Exhibit 13 highlights the arrangement of workstation relative to relocate the banya and slicing stations. This illustrates the process flow in banya arrangement of workers, the table and racks.
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so as the
42'-6"
2590cm
Functions and Description of Process Owners and Process Slicer 1. Slice the buns using slicing machine 2. Put the sliced buns to the banya station more specifically to the trays arranged in the table
Banyador 1 1. Receives the sliced bun 2. Put margarine mixture to the buns (1 trays = 20 sliced buns with margarine toppings) 3. Forward the trays containing sliced buns with banya to banyador 2 4. Forward the trays containing sliced biscocho without banya to banyador 2
Banyador 2 1. Receives the trays containing sliced biscocho without banya to banyador 2 2. Put margarine mixture to the buns (1 trays = 20 sliced buns with margarine toppings) 3. When trays reaches to 4, put the trays to the rack (In the existing process, if two trays are finished, they will put it on the rack)
1
Place the sliced buns to the banya station
2
Put margarine mixture to the buns
3
Move to place tray to the rack
18.28 min
40.00 min
Figure 16: Standard Process in Banya
10.06 min
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Cost of Option 1: Orientation: Attendees: 4 workers (2banyadors and 2 slicers) + Production supervisor and Plant manager Day of Implementation: half (1/2) day Labor Cost = [(Php305/day*2) + (Php400/day + Php500/day)] * 0.50d day =Php755.00 Materials: Copy of Standard Process Material Cost Printing Cost = 10 pcs * Php0.50/pc = Php5.00 = Php3.00/pc x 1pc = Php3.00 Total Cost of Improvement = Php755.00 + Php5.00 + Php3.00 Savings = Existing Cost Proposed Cost = Php165, 120.97 - Php763.00 = Php164, 357.97 Payback period = Proposed Cost Savings = Php763.00 Php164, 357.97 = 4.64 x10-3 yr = Php763.00
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Option 2: Proposed Kanban System in the Production A kanban card is a small laminated card containing information about a specific material in the production. Through this method, it signals the material controller to move, acquire, or use of a material for production.
Material Description TRAYS Qty: LT:
Material Location Kitchen Order Date Due Date Process

5
Pull by:
3.50
160
Line
8 batches
8/6 8/13
Marlon
Special Biscocho 150
Banya
Exhibit 14: Kanban Card for Materials
Ingredient Description MARGARINE SPREAD Qty: LT:
Ingredient Location Pre-Mix Area Order Date Due Date Process 8/6 8/13
Pull by:
10
Line
8 batches
Jimmy
Banya
Exhibit 15: Kanban Card for Ingredients
Kanban card functions: 1. Signals the need to move materials within a manufacturing or production 2. Signals that there is a depletion of materials (packaging, trays, ingredients and etc.), when received the kanban will trigger the replenishment of material downtime.
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Cost of Option 2: Training and Orientation: Attendees: 14 production workers (including oven man) + 4 Quality Assurance + 4 Production supervisor and 1 Plant manager Day of Implementation: half (1) day Average wage per worker : Php305/day Labor Cost = [(Php305/day*14) + (Php350/day * 4) + (Php400/day * 4) + =Php7, 770.00 Printing Cost Source: Green Frog Lamination Cost = Php60.00/pc * 1 pc = Php60.00 Source: Peoples Supplies Total Cost of Improvement = Php7, 770.00+ Php3.00 + Php60.00 = Php7 833.00 Savings = Existing Cost Proposed Cost = Php165, 120.97 - Php7 833.00 = Php157, 287.97 Payback period = Proposed Cost Savings = Php7, 883.00 Php157, 287.97 = 0.05 yr = Php3.00/pc * 1 pc = Php3.00 (long sized bond paper) Php500/day * 1] * 1 day
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Problem 2 : 433.89 hours of non-productive time per year Cause Option 1 : Unnecessary steps or movement of material in the process : Proposed Workstation Arrangement
The better way of minimizing material movement is by organizing the workstation through proper placing of tools and materials or simply practicing 5S in the workplace. However, this will be enhanced by improving the workstation design which will adhere to the process flow. Moreover, it is a better practice to create an organized workstation. This will be one of the solutions in improving the workplace as well the process (minimizing unproductive steps). This proposal will be effective if there is a thorough employee involvement. Below shows the proposed workstation design

Hours Production unit Non Productive Time Cost per Unit Php15.00 Opportunity Cost Php333,009.04 per year
433.89 22, 201 Table 63: Cost Benefit Analysis of Non-Productive Time in Packing Process
Proposed Workstation Design
Weighing scale Packer2
8cm
12cm
Biscocho container
Packer1 Printed cellophane 30cm
50cm Printed cellophane 131
Exhibit 16: Proposed Workstation Design
The new design of workstation shows a straight path that follows the flow of the product. Workstation design modifies the location of the container and placement of the printed cellophane. The exhibit shows the proposed design of workstation where the container is placed beside the two packers that promotes within reach movement or be it accessible for both of them. Packing process
Productive Work Content Symbol Process Get packaging Insert biscocho Weigh the biscocho Load to bread crate Total Time/pack (min) 0.06 0.33 Time/ batch (min) 18.42 101.31 209.94 Process time Unproductive Work Content Time/ Time batch /pack Process Symbol (min) (min) 3.14 15.35 0.05 Move to get the packaging Separate good and defective biscocho Adjust the number of biscocho to 150grams Transfer the container of biscocho Total
0.05
18.42
36.84
0.11
0.03
9.21 147.36
7.25
62.58
Table 64: Reduction of Unproductive Work Content of Packing Process
Reduced Non-Value Added Time = Unproductive Work Content x 50% = 62.58min/batch * 50% = 31.29 minutes Cost of Option 1: Labor Cost Attendees: 2 Packing-in-charge Rate of Packing-in-charge /day: Php176.64 Span of work: 2hours
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Labor Cost Labor Cost Savings
= (rate/day) x (number of packers) x (span of work) = (Php176.64/day) x (2packers) x (0.25 day) = Php88.32 (cost of improvement)
= Existing Cost Proposed Cost = Php333, 009.04 - Php88.32 = Php332 920. 72 Payback period = Proposed Cost Savings = Php88.32 Php332 920. 72 = 2.65 x 10-4 yr Option 2: Proposed Standard Work Instruction and Kanban Card By providing Standard Work Instruction, workers will be guided in conforming to standard and let them recognize the proper operations to be done in packing process.
ABC Incorporated
Bankal, Lapu-lapu City
PROPOSED WORK INSTRUCTION IN PACKING PROCESS: Special Biscocho 150grams 1. Get packaging material. Materials and tools should be placed within reach. The required number of packaging must be placed in the workplace and should conform to the lead time of the kanban card. 2. Insert an initial 10 pcs of biscocho in the packaging.
**The average number of biscocho to be inserted is 10. This was taken from the 50 samples of the three batches ** Exhibit shows the actual volume or number (pcs) per pack of special biscocho**
3. Weigh the biscocho. Release the biscocho on the weighing scale, Do NOT hold while weighing. 4. Load to bread crate. Bread crates are placed beside the workers to allow easy access to the container. Process owner: Packer Number of Packer: 2 packers 133
Exhibit 17: Proposed Work instruction in Packing Process
The proposed Work Instruction will be placed in the packing station so that packers are guided and well-informed about the appropriate steps on how to perform the packing process. In connection to this proposal, a kanban card should be implemented to achieve a smooth flow without any interruptions e.g. material downtime, in the production, Sample Points in Determining the Average Number of Biscocho per Pack
Kanban card
Average Number of packs/yr
10.02
10.20
10.20
10pcs/pack
134
Material Description BISCOCHO PACKAGING Qty: LT:
Material Location Printing Station Order Date Due Date Process 8/6 8/13
Pull by:
2456
Line
8 batches
Jimmy
Packing
Exhibit 18: Kanban Card Cost of Option 2 Activity: Orientation of Packingin-charge Attendees: 2 Packingin-charge + 2 production supervisor + 1 plant manager Day of Implementation: half (1/4) day Average wage per worker : Php250/day Labor Cost = [(Php250/day*2) + (Php400/day*2) + Php500/day * 1] * 0.25day =Php350.00 Printing Cost Source: Green Frog Lamination Cost = Php60.00/pc * 1 pc = Php60.00 Source: Peoples Supplies Total Cost of Improvement = Php350.00+ Php3.00 + Php60.00 Savings = Existing Cost Proposed Cost = Php339, 009.04 - Php413.00 = Php332,596.04
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= Php3.00/pc * 1 pc = Php3.00 (long sized bond paper)
= Php413.00
Payback period
= Proposed Cost Savings = Php413.00 Php332,596.04 = 0.001 yr
Supplementary Option: Hire material controller from the outside resource This option will support the implementation of kanban card in the production. The company will hire a material controller that is responsible only in monitoring the materials as required by the downstream operation e.g. all bakery production
ABC Company Bankal, Lapu-Lapu City
MATERIAL HANDLER
-----------------URGENT HIRING ----------------
APPLY NOW!
Job Specification/Qualifications:
At least 21yrs old At least high school graduate Willing to work under pressure and with less supervision With a strong personality and has initiative Willing and open-minded to work with other people
Job description:

Monitor the materials needed in the production Responsible in synchronizing the materials Control the flow of material based on the production schedule Monitor Check and monitor the status of material
Exhibit 19: Proposed Job Specification and Description in Hiring Material 136 Controller
Contact us: xxxx-yyyy or email at abccompany@yahoo.com look for Mr. Undang
Salary of the Material Controller
= Daily rate x no. of working days in a month = Php305.00 x 23 days =Php7, 015.00
Note: Assumptions for hiring material controller

Referral from internal employees in hiring material controller Production supervisor will conduct the orientation
Cost of Supplementary Option
Cost of Hiring
Orientation = (Duration of orientation x Labor of Supervisor that conducts the orientation) = 180 min x (Php2, 500/week x 1 week/5days x 1day/480min) = Php187.50 (cost if improvement)
Savings
= Existing Cost Proposed Cost = Php332,920.72 - Php187.50 = Php332, 320.22
Payback period
= Proposed Cost Savings = Php187.50 Php332, 320.22 = 0.0006 yr
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Finished Goods Inventory Management Problem 1 : 50% of Finished Goods Ending Inventory per month Cause Option 1 : Inaccurate Projected Quantity : Create a manual forecasting model sheet and proposed a most accurate
forecasting model that would be applicable in the companys production. Proposed Forecasting Model Sheet This would help the company to make projections more accurate and with less error. This would also serve as companys documentation in every projection they
made. The production manager will make the projection and this will be given to the Production Planning Inventory Control (PPIC) Head to make and plot the schedule for production.
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ABC Incorporated
Bankal, Lapu-Lapu City, Cebu Special Biscocho 150g Demand Forecast
Actual Monthly Demand in pieces
6318 5270 7402 7532 5232 6218 6279 6318 5270 7402 7532 5232 6218 -1048 2132 130 -2300 986 61 1098304.00 4545424.00 16900.00 5290000.00 972196.00 3721.00 11926545.00 2,385,309 1,987,758 5794 6336 7467 6382 5725 1608 1196 -2235 -164 554 2585664.00 1430416.00 4995225.00 26896.00 306916.00 9345117.00 2,336,279 1,869,023 5689.2 6549.2 7480 6152 5823.6 1712.8 982.8 -2248 66 455.4 2933683.84 965895.84 5053504.00 4356.00 207389.16 9164828.84 2,291,207 1,832,966 6318 6004 6423 6756 6299 6274 -1048 1398.4 1108.88 -1523.78 -80.6488 4.54584 1098304 1955522.56 1229614.85 2321917.68 6504.23 20.66 6611883.99 1,322,377 1,101,981
Nave
Forecast Error e2
2months Moving Average

Forecast Error e2
2months Weighted Moving Average

Forecast Error e2
Exponential Smoothing
Forecast Error e2
Year
Month
January February March
2012
April May June July
e2 MSE MAD
Table 65: Proposed Forecasting Model Sheet
This is the proposed forecasting model sheet. There are four types of forecasting model use namely, Nave, 2months Moving Average, 2-months Weighted Moving Average with 60% weight given to the most recent month and 40% percent to the other month, and Exponential Smoothing with 30% as a smoothing factor. Based on the computation, exponential smoothing is the forecasting model which has lesser error. Material Cost = (Number of sheets generated per month) x (Cost per sheet) = (1 sheet for each pasalubong item) x (6 pasalubong items) x (Php0.50/sheet) = Php3.00 per month
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Ending Inventory using Exponential Smoothing

May Product Name
Total Output Unit Sales Ending Inventory Total Output
June
Accum. Total Goods Unit Sales Ending Inventory Total Output Accum. Total Goods
July
Unit Sales Ending Inventory
Ave. Ending Inventory 1,485 2,798 1,676 2,091 1,214 1,938 11,203
Total Output
Special Biscocho 150g Mamon Tostado 100g Otap Ube 200g Otag Regular 200g Rosquillos 200g Biscocho 100g
6756 6607 4819 4720 3871 3992
5323 4590 3607 2988 2712 2641
1433 2017 1212 1732 1159 1351
6299 6002 4455 4200 3523 3587
7732 8019 5667 5932 4682 4938
6218 5745 3940 3801 3462 2534
1514 2274 1727 2131 1220 2404
6274 5925 4301 4080 3505 3271
7788 8199 6028 6211 4725 5675
6279 4095 3940 3801 3462 3615
1509 4104 2088 2410 1263 2060 TOTAL
19,329 18,534 13,575 13,000 10,899 10,850 86,187
Table 66: Ave. Ending Inventory after using Exponential Smoothing Model
This is the forecasted total output quantity, the total unit sales per month, and the average ending inventory of the aforementioned pasalubong products. After using the exponential smoothing model, it shows that only 13% of the total finished goods per months are unsold (see appendix D for details). This can be computed as follows:
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Percentage of Unsold FG = (Ave. Ending Inventory per month/Total FG Produced)x100 = {(11,203)/(86,187)} x 100 =13%
FG Ending Inventory Holding Cost using Exponential Smoothing Refer to table 40 and table 39for the quantity of unsold products and the unit cost respectively. Finished Goods Ending Inventory Holding Cost = {(FG Ending Inventory) x (Product Unit Cost)} x (Holding Cost Rate per Month) = {(1,458pcs of SBIS1550 x Php30.03/unit) + (2,798pcs of MT100 x Php30/unit) + (1,676pcs of OU200 x Php41.44/unit) + (2,091pcs of OR200 x Php35.09/unit) + (1,214pcs of RO200 x Php38.02) + (1,938pcs of BIS100 x Php15.86)} x (5%) = Php17,372.17 per month Per year = Php17,372.17/month x (12 months/year) = Php208,466.04 per year
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Option Number Two: Use Microsoft Excel Spread sheet in forecasting the demand. Proposed MS Excel Template
=F7^2
=D7 E7
=(0.30*D7)+(0.70*E7) Sheet for every Pasalubong items
=SUM(G7:G17) =COUNT(G7:G17) =G18/(G19 1) = G18/G19
Exhibit 20: Sample Template for Exponential Smoothing Model
This is the sample template in forecasting the monthly demand of pasalubong items using MS Excel, applying the exponential smoothing model with 30% as a smoothing factor. This excel format will be used by the production manager in order to have more accurate projection for the quantity to be produced. Since the company has
142
computers already, this would help them to have ease in forecasting and perform faster. Below is the energy cost incurred in installing the template. Cost of Installation of the MS Excel format
Computer Energy Cost

Estimated time to install the excel spreadsheet: thirty minutes Wattage = 300watts x (1Kwatt/1000watts) = 0.30Kwatts Electricity Usage = 0.30Kwatts x (8hrs/day) x (Php10.44/Kilowatts) = Php25.06/day or Php601.44/month = Php25.06/day x (day/8 hours) = Php3.13/hour x (1 hour/60 minutes) = Php0.052/minute
Per minute basis
= Php0.052/minute x 30mins = Php15.60 Total Cost of Installation = Php15.60 PPIC Head = 1 Duration of forecasting = 1hr Labor Cost = Php400 x 1 = Php400 x 0.125 day = Php50.00 per month Cost of Improvement Cost of Improvement
Energy cost
Savings
Payback Period
= Materials cost + Installation cost + Labor Cost = Php3.00 + Php15.60 + Php50.00 = Php68.60 per month x (12) = Php823.2 per year = (Existing Cost Proposed Cost) = (Php3,118,182.60 Php823.20) = Php3,117,359.40 = Proposed Cost / Savings = Php823.20 / Php3,117,359.40 = 0.0002 day
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2.2.4. Evaluation of Options
Solution Selection Criteria

Selection Criteria Cost Effectiveness Impact to the overall operations development Operational viability Company response improvement Top Management Stakeholder Middle Management Rank and File Total Count 2 2 2 3 9 Weight 22.22% 22.22% 22.22% 33.33% 100%
Table 67: Selection Criteria
Cost Effectiveness the probable solution incur minimal cost in its implementation but significantly impact to the development of the operations of the organization Impact to the overall operations development this affect the overall development of the operations Operational viability the company is capable to implement the probable solution of the problem considering their available resources Company response improvement this importantly magnify the companys ability to innovate and introduce new product lines; produces variety of products; and changing the level of outputs that improves reliability in making and delivering the demand of the customers
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Solution Prioritization Generic Five Point Impact Scale Solution Criteria Score 1 2 3 4 5 Level of Impact Low impact Some impact Moderate Impact High Impact Very high Description The proposal does not contribute any impact on operation The proposal contributes negligible impact on operation The proposal contributes significant impact on operation The proposal contributes important solution to operation The proposal directly comply company need; the improvement contributes to productivity/profitability
Table 68: Generic Five Point Impact Scale Solution Criteria
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Solution Prioritization Matrix
Weight
Problem
Root Cause
Options
22.22%
22.22%
22.22%
33.33%
2080mins Travel Time per year from Slicing to Banya
Improper arrangement of workstations Improper manpower distribution Unnecessary movement of material in a process Unnecessary movement of material in a process
1 2 1 2
Relocate of slicing and banya workstations Transfer slicing workstation to production area Remove excess worker in packing area and sansan area Put the 2 excess worker in packing area and sansan area to the slicing and sealing area Reduce 50% Process time of each Unproductive Work Content by Standardizing the Process relative to Arrangement of Workstation in Banya and Slicing process Proposed Kanban System in the Production Proposed Workstation Arrangement Proposed Standard Work Instruction and Kanban Card Hire material controller from the outside resource Create a manual forecasting model sheet and proposed a most accurate forecasting model that would be applicable in the companys production. Use Microsoft Excel Spread sheet in forecasting the demand.
3 3 3 3
3 3 4 4
4 3 3 3
3 3 3 4
3.22 2.99 3.22 3.55
2 Excess manpower in packing and Sansan area 215.14 hours of nonproductive time per year 433.89 hours of nonproductive time per year Unnecessary movement of material in a process 50% of Finished Goods Ending Inventory per month
1 2 1 2 3
3 3 4 4 4
4 3 3 3 3
3 3 4 4 4
3 3 4 4 4
3.22 2.99 3.77 3.77 3.77
Forecast Based on Previous Month Sales
3.66
3.99
Table 69: Solution Prioritization Matrix
146
Rank
Cost Effectivene ss
Impact of Overall Operations Development
Operational Viability
Company response improvement
1
2 2
1
1 2
1 1 1
CHAPTER III PROPOSALS FOR IMPROVEMENT OF OPERATIONS MANAGEMENT OF ABC INCORPORATED 3.1 Summary of Proposals
Area of Concern Current Performance Level Data Reference
Reference Title Page No.
Recommendations
Responsible Key Person

A B C D
Facilities Planning and Design
2080mins Travel Time per year from Slicing to Banya 2 Excess manpower in packing and Sansan area
Figure 10
Cause and Effect Diagram of Facilities Planning and Design Summary of Ideal and Existing number of Workers Cause and Effect Diagram of Capacity Planning Cause and Effect Diagram of Capacity Planning Summary of Nonproductive Time
102
Re-layout of slicing and banya workstations Put the 2 excess worker in packing area and sasnsan area to the slicing and sealing area Transfer one (1) excess worker from the sansan area to the slicing area Transfer one (1) excess worker from the packing area to the sealing area Reduce 50% Process time of each Unproductive Work Content by Standardizing the Process relative to Arrangement of Workstation in Banya and Slicing process. Proposed Workstation Design Proposed Standard Work Instruction and Kanban Card Hire material controller from the outside resource Use Microsoft Excel Spread sheet in forecasting the demand
Table 53 Figure 11 Figure 11
109 104 104
x x x
x x x
Capacity Planning
585.20 minutes processing time in slicing 552.40 minutes processing time in sealing 215.14 hours of nonproductive time per year in banya 433.89 hours of nonproductive time per year in packing 50% of Finished Goods Ending Inventory per month
Table 39
80
Methods Improvement
Table 39
Summary of NonProductive Time Output, Sales, and Unsold FG per Month
80
FG and Inventory Management
Table 45
87
Legend: A- Plant Manager, B- Production Supervisor, C-PPIC (Production Planning Inventory Control Head), D-Maintenance Supervisor
147
Table 74: Summary of Proposals
The proposals provided by the researchers on each problem of the operations management aspect selected by the company was evaluated and rated by the management. The selected options on each problem are based on the highest weight which declared as the first rank. Highlighted above are the options being selected.
3.2 Operation Development Scheme
Phase 4: Establish FG Inventory Management
Phase 3:
Ensure
Methods Improvement
Phase 2:
Standardize
Capacity Planning
Phase 1: Improve
Facilities Planning and Design
Figure 16: Operation Development Scheme
The figure shows the processes on how the researchers were able to determine the possible improvements in the operations. It starts with the establishment of FG inventory management to the improved facilities planning and design
148
3.3 Overall Project Implementation Organizational Structure

CEO (Head Committee on Project Implementation)
PLANT MANAGER Methods Improvement Coordinator
MAINTENANCE SUPERVISOR Facilities Planning and Layout Coordinator
PRODUCTION SUPERVISOR Capacity Planning Coordinator
PPIC HEAD Inventory Management Coordinator
Figure 18: Overall Project Implementation
Job Descriptions:
CEO (Head Committee) Initiates the implementation of the project Evaluates and monitors the implementation
Plant Manager (Methods Improvement Coordinator) Ensures the implementation for the improvement of companys methods in production Evaluates and monitors the effectiveness of the proposals after implementation
Maintenance Supervisor (Facilities Planning and Design Coordinator)
149
Responsible in implementing the proposals for the improvement of facilities planning and design
Evaluates and monitors the effectiveness of the proposals after implementation
Production Supervisor (Capacity Planning Coordinator) Responsible in implementing the proposals for the improvement of capacity planning Evaluates and monitors the effectiveness of the proposals after implementation
PPIC Head (Inventory Management Coordinator) Responsible in implementing the proposals for the standardization of the Finished Goods Inventory Management Evaluates and monitors the effectiveness of the proposals after the implementation Precedence Table
Activity Description Presentation and orientation of the study Approval for Implementation Assigning for the person in charge in implementing Transferring the workstation of slicing and banya in packing area Relocating the 2 excess workers in packing and sansan area to the slicing and sealing area Establish standard operating procedure for banya processing Duration on days 1 2 1 2 1 1 Precedent Activity A A B D E
A B C D E F
150
G H I J K L
Move and Rearrange the workstation in packing Proposed Standard work instruction and kanban card
1 2 3 1 1 2
E G H I J K
Hire material controller from the outside resource

Install Microsoft spread sheet in forecasting the demand Orientation of the changes Evaluate and Monitor
Table 71: Precedence Table
The activities to be completed are shown in table 62 that presents the sequence of processes to recognize the goals of the project plan. The duration of each activity is done in days. Critical Path Method
1 2 1 1
C
1
I
3
J
1
K
1
L
2
Figure 19: Network Diagram
Paths and its Time Duration

PATH 1: PATH 2: PATH 3: PATH 4: A-C-D-E-F-J-K-L A-C-D-E-G-H-I-J-K-L A-B-D-E-F-J-K-L A-B-D-E-G-H-I-J-K-L = 10 days = 15 days = 11 days = 16 days
151
The activity implementation will be completed within 16 days based on the critical path identified in the network diagram which consists of time per activity. The activity follows one straight path which is called the critical path.
Gantt chart
Activity A B C D E F G H I J K L Legend
Working days
February
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Sundays
Figure 20: Gantt Chart
The researchers assumed that the proposal will be implemented starting February 2013. The date started is on February 4, 2013 which falls on Monday, and the completion date is on February 20, 2013.
152
3.4 Phases of Implementation Phase 1: Improve Layout One solution on how to improve the productivity and efficiency of the company is through improving its layout by rearranging the machines as well as the workstations. With this, the researchers recommended to relocate or transfer the banya process in the packing area near the slicing machine to avoid back tracking. Phase Objective: Minimize transportation time and the distance traveled Reduce transportation cost
Through this proposed layout shown in exhibit 10, the management would be able to reduce the time incurred in transporting as well as the distance between processes in manufacturing products. Thus, improve the companys productivity.
Phase 2: Standardize Capacity Planning Capacity Planning is one of the critical areas in Operations Management as well as in the existing setup of the company. The company is incurring cost due to
inconsistency of the number of workers assigned to a particular process. Standardizing the number of workers in every process in production will have a great effect on the capacity planning. A proposal being made by the researchers such as relocating the two excess workers from packing and sansan area to slicing and sealing area is one way to have improvement on the capacity planning and to have equal work load among
153
workers. Thus, proper distribution of workers will make the production efficient and productive.
Phase 3: Ensure Methods Improvement One significant factor to have easier and more effective methods in doing work and at the same time can reduce cost is to ensure the effectiveness of methods improvement. Process improvement is an approach to improve a process. Proposals given by the researchers such as standardizing the process relative to rearranging the workstation, establishing kanban system, hiring of material controller in the packing area are ways to make sure that different processes in the company are efficient and thus, improve its productivity as well as its profit. Phase Objectives Provide customer satisfaction Reduce process time and cost Achieve higher quality products Increase productivity and efficiency
Phase 4: Establish FG Inventory Management One way to maximize the profit of the company is to satisfy the customers. In inventory, making the products or goods available whenever the customer needs is one of the measures in inventory management effectiveness. Moreover, the company
should keep investment on inventory to be at minimum at any time possible.

154
In order to realize these, the researchers recommend a forecasting tool using excel spread sheet with least margin of error in establishingthe accurate number of products to be produced by the company. Since forecasts are rarely perfect in the sense that nobody can predict exactly the behavior in the market, the researchers chose the forecasting model with the least error shown in table 69, sample forecasting model sheet. Through this, it addresses the companys 50% ending inventory of finished products per month and thus, reduces the carrying cost incurred. Phase Objectives: Minimize overstocking of finished goods Reduce holding cost To establish forecasting model used in projecting
1.4
Comparative Analysis
Facility Planning and Design Problem 1: 2080mins travel time per year from slicing to banya
Existing Proposed Distance (meter) 4.40 5.20 8.40 4.40 5.20 8.40 Existing Proposed Time (minutes) 0.25 0.00 0.00 0.22 0.32 0.25 0.22 0.32
Process 1 to 2 2 to 3 3 to 4 4 to 5 5 to 6
Description Mixing to Cutting Cutting to Shaping Shaping to Sansa Sansan to Proofing Proofing to Baking
P.I% 0% 0% 0%
P.I% 0% 0% 0%
155
6 to7 7 to 8 8 to 9 9 to 6 6 to 7 7 to 10 10 to 11 13 to 14 14 to 15
Baking to Cooling Cooling to Slicing Slicing to Banya Banya to Baking Baking to Cooling Cooling to Packing Packing to Sealing Sealing to Final Packing Final Packing to Storing
7.20 21.60 32.0 5.00 7.20 11.00 10.40 4.00 7.01
7.20 13.00 0 4.50 7.20 11.00 10.40 4.00 7.01
0% -40% -100% -10% 0% 0% 0% 0% 0%
0.26 1.13 5.00 0.55 0.26 0.89 0.81 0.15 1.04
0.26 1.00 0 0.466 0.26 0.89 0.81 0.15 1.04
0% 12% -100% -15% 0% 0% 0% 0% 0%
Table 72: Comparative Analysis of Distance and Time
9 to 6 Process
4.5 5 0 32 13 21.6 0 10 20 30 40 Series2 Series1
8 to 9
7 to 8
Performance Metric (DISTANCE) in meters
156
Process Sequence
9 to 6
0.466 0.55 0 5 1 1.13 0 1 2 3 4 5 Series2 Series1
8 to 9
7 to 8
Performance Metric (TIME) in minutes
Figure 21: Problem 1 Comparative Analysis in Distance and Time
157
Capacity Planning Problem 2: Php610.00 labor cost per day in packing and sansan
Labor Cost
EXISTING PRODUCT LINE PROCESSES No. of Workers 1 1 2 1 3 3 1 1 13 workers Php3965.00 Labor Cost (Php) 305 305 610 305 915 915 305 305 No. of Workers 0.72 0.35 0.33 1.43 2.16 1.33 1.36 0.98 PROPOSED Actual No. of Workers 1 1 1 2 3 2 2 1 13 workers Php3965.00 Labor Cost (Php) 305 305 305 610 915 610 610 305
Mixing and Cutting
BISCOCHO 150g
Shaping San San Slicing Banya Packing Sealer Final Packing
TOTAL
TOTAL COST PER DAY
Table 73: Comparative Analysis of the Ideal and Existing Manpower
It shows the comparative analysis of labor cost between the existing and ideal manpower in producing the biscocho 150g. The total cost per day in existing and ideal number of workers is equal since the excess workers in packing area and sansan area is assigned at sealing and slicing area.
158
Machine Utilization Cost (Per 1 Batch)

EXISTING PRODUCT LINE PROCESSES Machine used Spiral Mixer Volumetric Machine None None Bread Slicer None None Continuous Sealer None Quantity 1 1 --1 --1 -Total Energy Cost (Php) Php3.31 Php4.17 --Php3.85 --Php1.15 -Machine used Spiral Mixer Volumetric Machine None None Bread Slicer None None Continuous Sealer IDEAL Quanity 1 1 --2 --2 Total Energy Cost (Php) Php3.31 Php4.17 --Php7.70 --Php2.30
Mixing and Cutting
BISCOCHO 150g
Shaping San San Slicing Banya Packing Sealer Final Packing
TOTAL
TOTAL COST PER DAY Php12.48 Php17.48
Table 74: Comparative Analysis of Machine Utilization Cost It shows the comparative analysis of machine utilization. As you can see above, theres an increase of Php5.00 in energy cost.
159
Problem 3: 585.20 minutes processing time in slicing
PROCESSES
EXISTING NO. OF WORKERS 1 1
IDEAL NO OF WORKERS 1 1 1 1 2 3 3 1 1
EXISTING PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes
NEW PROCESSING TIME (Minutes) 18.13 14.80 16.94 33.60 36.56 91.32 67.12 69.05 49.52 397.04 minutes
1 2 1 3 3 1 1 TOTAL PROCESSING TIME
Table 75: Comparative Analysis of Processing Time of Slicing Area The table shows the comparative analysis of processing time of slicing area. After the sansan helper has been transferred to the slicing area the processing time in slicing area has been decreased to 36.56 minutes.
Problem 4: 552.40 minutes processing time in sealing

EXISTING NO. OF WORKERS 1 1 1 2 1 3 3 1 1 TOTAL PROCESSING TIME NEW NO OF WORKERS 1 1 1 2 1 3 2 2 1 EXISTING PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 72.15 91.32 67.12 69.05 49.52 415.83 minutes NEW PROCESSING TIME (Minutes) 18.13 14.80 16.94 16.80 36.56 91.32 100.68 34.53 49.52 379.28 minutes
PROCESSES
Table 76: Comparative Analysis of Processing Time of Sealing Area
160
It shows the comparative analysis between the processing time after transferring the one excess worker from the packing area to the sealing area. There is a decreased of 36.55 minutes.
Methods Improvement Problem 5: 215.14 hours of non-productive time per year of non-productive time per year in Banya process Problem 6: 433.89 hours of non-productive time per year in Packing Process Performance Process Metric 1 2 Banya Packing Existing Proposed Time (minutes)/batch 91.31 209.94 75.79 62.58 P.I% 17% 70% Existing Proposed Production gain Units/yr 127,712 127,712 133, 217 138, 812 P.I% 9% 5%
Table 77: Comparative Analysis of the Existing and Proposed Performance Index
138, 812 127,712 2
Process
Series2 133, 217 1 127,712 Series1
110,000
115,000 120,000 125,000 Performance Metric (Time)
130,000
Figure 22: Problem 5 Comparative Analysis
161
62.58 2 Process 209.94 Packing 75.79 1 91.31 Banya
50 100 150 200 250 Performance Metric Production Loss Units)
Figure 23: Problem 6 Comparative Analysis
Finished Goods Inventory Management Problem 7: 50% of Finished Goods Ending Inventory per month Aspect Ending Inventory Holding Cost Existing 50% Php259,848.55 Proposed 13% Php17,372.17 Difference 37% Php242,476.38
Table 78: Comparative Analysis of Finished Goods Inventory Management
162
Comparative Analysis Formula used: 50% Effectiveness = O.M. area additional cost and losses per year x .50 70% Effectiveness = O.M. area additional cost and losses per year x .70 90% Effectiveness = O.M. area additional cost and losses per year x .90
Additional Cost and Losses Comparative Analysis Losses and Additional Cost Incur (Php/year)
199,680.00 222, 650.00 371, 685.60 127, 795.20 165,120.97 333,009.04
Problem Areas Facilities Planning and Design Capacity Planning
50% Efficiency
99,840.00 111,325.00 185,829.30 63,897.60 82,560.49 166,504.52
70% Efficiency
59,904.00 66,795.00 111,524.58 38,338.56 49,536.29 99,902.71
90% Efficiency
19,968.00 22,265.00 37,168.56 12,779.52 16,512.10 33,300.90
Methods Improvement Finished Goods Php3,118,182.60 1,559,091.30 935,454.78 311,818.26 and Inventory Management Table 79: Additional Cost and Losses Comparative Analysis
163
Graphical Comparison of Existing and Proposed Setup Comparative Analysis for Plant Layout
200,000.00 150,000.00 100,000.00 50,000.00 0.00 Losses and Additional Cost Incur (Php/year) 50% Efficiency 70% Efficiency 90% Efficiency 199,680.00 99,840.00 59,904.00
19,968.00
Series1
Figure 24: Comparative Analysis for Plant Layout
Comparative Analysis for Capacity Planning
Capacity Planning
Php222,650.00 Php240,000.00 Php180,000.00 Php120,000.00 Php60,000.00 Php0.00 Existing Setup 50% 70% 90% Effectiveness Effectiveness Effectiveness
111,325.00 Series1 66,795.00 22,265.00
Figure 25: Comparative Analysis for Capacity Planning 164
Comparative Analysis for Methods Improvement
Methods Improvement
Php600,000.00 Php165,120.97
Php400,000.00
250,975.73 150,585.44 50,195.15
Series1
Php200,000.00
Php0.00 Existing Setup 50% 70% 90% Effectiveness Effectiveness Effectiveness
Figure 26: Comparative Analysis for Methods Improvement
Comparative Analysis for Inventory Management
Inventory Management
Php4,000,000.00 Php3,000,000.00 Php2,000,000.00 Php1,000,000.00 Php0.00 Existing Setup 50% 70% 90% Effectiveness Effectiveness Effectiveness 1,559,091.30 935,454.78 311,818.26 Series1
Php3,118,182.60
Figure 27: Comparative Analysis for Inventory Management
165

Total Losses and Cost Incur in the Existing Set-Up (Php/Yr) 199,680.00 222, 650.00 371,658.60 127, 795.20 165, 120.97 561.60 518.40 763.00 88.32 333, 009.04 413.00 0.001 187.50 3,118,182.60 3,689,521.20 823.2 4,956.62 0.0006 0.0002 3,648,648.2 4 0.001 0.0006 0.0002 0.02 0.005 0.0003 0.005 0.0003 0.002 0.004 0.002 0.004 Total Cost of the Proposed Set-Up (Php/Yr) 1,601.60 0.008 Remove excess worker in packing area and sansan area Transfer one (1) excess worker of the sansan area to the slicing area Transfer one (1) excess worker of the packing area to the sealing area Reduce 50% Process time of each Unproductive Work Content by Standardizing the Process relative to Arrangement of Workstation in Banya and Slicing process. Proposed Workstation Arrangement Proposed Standard Work Instruction and Kanban Card Hire material controller from the outside resource Finished Goods and Inventory Management Use Microsoft Excel Spread sheet in forecasting the demand. Total 0.008 Savings (Php/Yr) Payback Period (years)
Problem Area Facilities Planning and Design
Recommendation
Re-layout of slicing and banya workstations
Capacity Planning
Methods Improvement
Table 80: Cost Benefit Analysis
166
Through the cost of the proposals and the savings generated from such proposals, once the proposals are realized or implemented it will have a payback period of all the expenses for around 1 week. Computations are shown below. Overall Payback Period = Cost Improvement Annual Saving =Php4,956.62 / 3,648,648.24 = 0.0014 yr x 52 weeks/yr =0.0706 week
167
CHAPTER IV SUMMARY, FINDINGS, and RECOMMENDATIONS
4.1 Summary The research evaluated the operations management practices of ABC
Incorporated. The researchers studied the problems in four major aspects: Facilities Planning and Design, Capacity Planning, Methods Improvement, and Finished Goods Inventory. This study desired to answer the following: 1. How satisfactory are the practices in the operations management of ABC Incorporated in terms of Facilities Planning and Design, Capacity Planning, Methods Improvement, and Finished Goods Inventory.?
2. What are the major problems encountered in the department and how much does each problem contribute to the annual losses of the company?
3. What are optimum solutions for these problems with its corresponding savings and payback periods?
The problems perceived in these aspects are then gathered through interviews with the workers and the management, questionnaires, and document analysis which are given with substantial proposals that could help the company to improve their operations management and to eliminate losses as well as to give savings to the company with its corresponding payback period.
168
4.2 Findings With the evaluation of the five selected operations management aspects of ABC Incorporated, it was discovered that there were problems in the different aspects of the study such as:
Facilities Planning and Design Travel Time Workers are spending for about 2080 minutes total travel time per year from slicing station to banya station due to improper arrangements of workstations. This travel time is the time to move the material from one workstation to the next. Given this unproductive entails certain loss in the production because the opportunity to produce the product have been distributed to its travel time. Thus, there are 16packs production loss units per batch having distance an opportunity cost of Php199,680per year.
Capacity Planning Net Difference of the Number of Workers The company is spending the excess number of workers in packing and sansan area with regards to the variability of demand. In this aspect, the company is incurring additional cost with regards to improper distribution of manpower and the cost of that is equivalent to labor cost allocation of the excess workers in packing and sansan. It
169
found out that there is one excess worker in both packing and sansan. This accumulates Php610.00 per day and a total of Php222,650.00 per year.
Methods Improvement Non-Productive Time in Banya Process Workers are spending 215.14 hours of non-productive time which is caused by the methods performed by the worker by taking unnecessary non-value adding activity in a process that accumulates an opportunity cost of Php165, 120.97. This nonproductive time creates an equivalent of 11, 008 packs of loss production units per year. Non-Productive Time in Packing Process Another is 433.89 hours of non-productive time per year which is caused by unnecessary steps or activity in the packing process that totals to an opportunity cost of Php333,009.04. This non-productive time creates an equivalent of 22, 201 packs of loss production units per year
Finished Goods Inventory Management The company has 50% finished goods ending inventory products that are unsold in the market on which this is caused by inaccurate projected quantity due to the previous month sales forecast. Having a 50% unsold items resulted to an opportunity loss amounting to Php3,118,182.60. The researchers realized that maybe one factor
170
that contributes to the problem is on their marketing aspect which is not on the scope of the study but held to be given importance by the management.
171
4.3 Recommendations
Primary Recommendations To address the problems being identified by the researchers, it is recommended that the company should: Phase I: Develop Plant Layout, Capacity Planning and Methods Improvement The physical arrangement of the workstations according to the flow of the process. Job Reassignment of excess worker from Packing and Sansan. Provide additional workers in Slicing and Sealing stations. Machines are already available yet these were not used in the production Provide an Excel format in Forecasting the Demand
Phase II: Standardize the process relative to arranging of workstation Proposed Kanban System in the Production Establish a good arrangement in the packing area Hire material controller from the outside resource
Secondary Recommendations In order to achieve productive and optimum operations of the company the researchers recommend to do further evaluation of other operations management areas of the company in which it is important in improving their operations. These operations
172
management
aspects
are
waste
management,
working
environment,
quality
management and safety management.
173
BIBLIOGRAPHY
Books: Krajewski, Lee J., Ritzman, Larry P. Operations Management: Processes and Value Chains. 2005. Upper Saddle River, New Jersey: Prentice Hall Lazowska, Edward D. Quantitative System Performance. 1984. Upper Saddle River, New Jersey: Prentice Hall Niegel Slack, Stuart Chambers, Robert Johnston, Operations Management 5th edition. 2007. FT Prentice Hall Russell, R. S., and Taylor, B. W. III.Operations Management.4th Edition. 2003. Upper Saddle River, New Jersey: Prentice Hall Stevenson, Willam J. Operations Management. 10th Edition. New York: McGraw-Hill Companies Inc., 2009 Stevenson, Willam J. Operations Management. 10th Edition. New York: McGraw-Hill Companies Inc., 2009 Electronic Sources: http://en.wikipedia.org/wiki/International_Standard_Book_Number> <http://en.wikipedia.org/wiki/Special:BookSources/0-13-746975-6 Sawaya, Jr., and Giauque.International research Journal of Finance and Economics. 2010 0-13-746975-6
xi
Unpublished Theses: Seth Aldin M. Anub, EudelynGempesao, Kenneth Jean G. Mantujac, Kae Vines G. Tanudtanud, Mariano Ralph T. Tero: Operations Management of Golden Dragon Spinning Mills, Inc: Basis for Improvements Lorfel S. Abellanosa, Jade S. Aliporo, Irish Mae E. Anoos, Mary Madeline D. Despi, Jesse R. Marasa-in: Operations Management of Renvitz Manufacturing: Basis for Improvements
xii
APPENDICES APPENDIX A
Company Letter
xiii
APPENDIX B
Company Profiling Sheet
xiv
APPENDIX C
RPF (Research Proposal Form)
xv
xvi
xvii
xviii
Appendix D Forecasted Quantity Using Exponential Smoothing

Year Month January February March April May June July Mamon Tostado Actual 5771 6395 5916 8152 4590 5745 4095 Forecast 5771 5958 5946 6607 6002 5925 Error 624 -42.20 2206.46 -2017.48 -257.23 -1830.06 e2 389376 1780.84 4868465.73 4070217.48 66169.64 3349135.05
2012
Year
Month January February March April May June July
Otap Ube 200g Actual 4153 5380 5274 4987 3607 3940 3940 Forecast 4153 4521 4747 4819 4455 4301 Error 1227 752.90 240.03 -1211.98 -515.39 -360.77 e2 1505529 566858.41 57614.40 1468893.10 265622.01 130154.78
2012
Year
Otap Regular 200g Actual 4277 4577 4885 5180 2988 3801 3801 Forecast 4277 4367 4522 4720 4200 4080 Error 300 518 657.60 -1731.68 -399.18 -279.42 e2 90000 268324 432437.76 2998715.62 159341.48 78077.32
2012
xix
Year
Rosquillos 200g Actual 4158 2248 4424 3950 2712 3462 3462 Forecast 4158 3585 3837 3871 3523 3505 Error -1910 839 113.30 -1158.69 -61.08 -42.76 e2 3648100 703921 12836.89 1342562.52 3731.13 1828.26
2012
Year
Biscocho 100g Actual 2986 4082 5623 3957 2641 2534 3615 Forecast 2986 3315 4007 3992 3587 3271 Error 1096 2308.20 -50.26 -1351.18 -1052.83 344.02 e2 1201216 5327787.24 2526.07 1825692.80 1108445.53 118350.32
2012
xx
CURRICULUM VITAE
PERSONAL BACKGROUND Name Address Date of Birth Father Occupation Mother Occupation : Charry A. Arong : Malinao, Agus Lapu-Lapu City : December 26, 1991 : Samson S. Arong : None : Paulina A. Arong : Housewife
EDUCATIONAL BACKGROUND Primary: School: Agus Elementary School Address: Agus Lapu-Lapu City Secondary: School: Marigondon National High School Address: Marigondon Lapu-Lapu City Tertiary: School: Cebu Institute of Technology Address:N. Bacalso Avenue CebuCity AFFILIATIONS Position Press Relations Officer Member Organization IE Council Society of CITAA Scholars Year 2011-2012 2011-up to present
xxi
Year Attended: 1998 2004
Year Attended: 2004-2008
Year Attended: 2008-present
PERSONAL BACKGROUND Name Address Date of Birth Mothers Name Occupation Fathers Name Occupation : Jessa Rona C. Cepada : Lower Mohon Talisay City, Cebu : December 01, 1991 : Susan C. Cepada : Buseco Employee : Jimmy S. Cepada : Farmer
EDUACTIONAL BACKGROUND Elementary Background School: Malaybalay City Central School Address: Brgy 05, Malaybalay City, Bukidnon Secondary Education School: San Isidro College Address: Impalambong Malaybalay City, Bukidnon Tertiary Education School: Cebu Institute of Technology-University Address: N. Bacalso Ave., Cebu City AFFILIATION Position Member Organization Industrial Engineering Council Year 2008-present Year: 2008-present Year: 2004-2008 Year: 2003-2004
xxii
PERSONAL BACKGROUND Name Address Date of Birth Mothers Name Occupation Fathers Name Occupation : Jeena Divine E. Grafia : Tres de Abril, Labangon, Cebu City : October 04, 1991 : Divina E. Grafia : Government Employee : Ernesto C. Grafia : Seaman
EDUACTIONAL BACKGROUND Elementary Background School: Saint Joseph College Address: Tunga-Tunga St., Maasin City, So. Leyte Secondary Education School: Saint Joseph College Address: Tunga-Tunga St., Maasin City, So. Leyte Tertiary Education School: Cebu Institute of Technology-University Address: N. Bacalso Ave., Cebu City Year: 2008-present Year: 2007-2008 Year: 2003-2004
AFFILIATION Position PRO Member Organization Industrial Engineering Council Industrial Engineering Council Year 2011-2012 2008-present
xxiii

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OPERATIONS MANAGEMENT OF ABC INCORPORATED: BASIS FOR IMPROVEMENTS

By: CHARRY A. ARONG JESSA RONA C. CEPADA JEENA DIVINE E. GRAFIA

Bibliography Appendices . Curriculum Vitae ..

LIST OF TABLES Table

Baking Process.. Cooling Process

1.1.2 Conceptual Framework

FACILITIES PLANNING AND DESIGN

OPERATIONS MANAGENT OF MAGIC MELT FOODS INC: BASIS FOR IMPROVEMNTS

Figure 1: Conceptual Framework

(Stevenson, 2002: 43)

1.1.3 Theoretical Background Plant Layout

Cycle time Ideal Number of workstation Efficiency

Material handling and moving

(CEO: Operations/ Manufacturing, 2003:wwww.ceoadvice.com)

1986). Since inventory constitutes a major segment of total investment, it is crucial

1.1.3 Flow Process

1.2.3 Scope and Delimitation

Interview, Observation and Document Analysis

1.3.3 Research Instrument

Economic Order Quantity (EOQ)

CHAPTER II PRESENTATION AND ANALYSIS OF DATA

INSTITUTIONS KFC Hotdog On Sticks

Mang Inasal Flame-It

Hongkong Singapore and Dubai

Table 2: Business Market of ABC Incorporated

Exhibit 1: Facility of ABC Incorporated

Figure 3: Organizational Chart

ABC Incorporated Bankal, Lapu-Lapu City

Exhibit 2:Vicinity Map

2.1.6 Product Lines

Ensaymada Biscocho Brownies

Health Bread Exhibit 3: Product Lines of ABC Incorporated

Table 3: Pareto Table of Product Lines

Figure 4: Pareto Chart of Product Lines

Exhibit 4: Raw Materials

2.1.2 Facilities Planning and Design

Equipment Primary Type of Work Worker Skills

Table 5: Manufacturing Process Type Checklist

Master Floor Plan

Wet & Premix Area

Exhibit 5: Workflow Diagram of the General Process

Spiral Mixer2 PM2

Spiral Mixer3 Spiral Mixer1

Exhibit 6: Workflow Diagram in Processing Area

14.4 21.6 32.0 -

Table 7: From-to-Chart for Distances

Number of Trips per Batch between Centers

Table 8: From-to-Chart for Number of Trips 34

Transportation Cost per Batch

Table 9: Total Transportation Cost per Batch

Exhibit 7: Functional Areas and its Description

Rack Compressor Cake depositor Tray container

Steamer Master Cooker Emulsifier Banana Slicer Grinder

Stove Washing Table Barrel Push track

0.68 2.31 0.32 0.68

Existing Available Operating Time

Computations: Available Operating Time

Personal Necessity Muscular Pain Lifting, pushing and pulling Standing up

Ideal Operating Time

= (Regular Time Scheduled Downtime) x Allowance

Personal Necessity Muscular Pain Stand-up Lifting, pushing and lifting

Ideal Operating Time Shaper Operating Time

Personal Necessity Muscular Pain Stand-up

Ideal Operating Time Sansan Operating Time