1

UNIVERSITAS INDONESIA

BANANA STORAGE

Draft Assignment 4
GROUP 25
GROUP PERSONNEL:
ELSA RAMAYENI
FARAJ SUNGKAR
LINGGAR ANINDITA
MANGGALA PASCA WARDHANA
SEVA JUNEVA
SHEILA NABILA PUTRI

(1406643072)
(1306392840)
(1306392954)
(1306409375)
(1206241552)
(1306392821)

CHEMICAL ENGINEERING DEPARTMENT

ENGINEERING FACULTY
UNIVERSITAS INDONESIA
DEPOK
MEI, 2016

LIST OF CONTENT

EXECUTIVE SUMMARY ................................................................................... 2

LIST OF CONTENT ............................................................................................ 2
LIST OF FIGURES .............................................................................................. 3
LIST OF TABLES ................................................................................................ 4

LIST OF FIGURES

LIST OF TABLES

CHAPTER 1
SUPPLY CHAIN

1.1. Distributing Products (Seva)

1.2. Plant Location (Seva)
1.3. Raw Material Distribution (Seva)
1.3.1. Raw Material Location
1.3.2. Alternative Scenarios and Modeling
1.3.3. Raw Material Supply Chain
1.4. Product Distribution (Seva)
1.4.1. Product Distribution Region
1.4.2. Product Distribution Pathway

1.5. Transportation Method

In Indonesia and more specifically on the Java island there are two
transportation method through land, which are by truck and by train. However, if
we distribute our products by train, there are some problems in case of flexibilities
to reach distributor offices and the facilities of train in Indonesia which are
insufficient. Therefore, we chose Mitsubishi Colt Box Diesel FI with 4 wheels to
distribute our products to distributors in region 2, 3 and 4. This vehicle has a
dimension 2,600 m x 1,700 m x 2,160 m.
After that, we also planned to use Mitsubishi Colt T120 Pick Up to
distribute our products to customers in region 1. This vehicle has a size 3720 mm
x 1560 mm x 1825 mm. We use this kind of vehicle because the distance between
our plant and costumers in region 1 not far away, so the smaller vehicle is more
efficient.
The reason why we chose this method because this vehicle is more flexible
to reach distributors rather than train. Besides, the capacity of our plant is still
small, so our plant does not need many box car to deliver the products. Thus, the
distribution cost will become more efficient than the distribution by train. We
planned to buy three units secondhand Mitsubishi Colt Box Diesel and seven units
secondhand of Mitsubishi Colt T120 Pick Up for distribution activities in our
plant.
Table Specification of Distribution Cost for All Region

Region Driver Cost

1

Rp 200.000

Assistant
Driver Cost
-

Fuel Fees

Highways
Fees

Total Cost

Rp 150.000

Rp 100.000

Rp 450.000

Rp 350.000 Rp 250.000

Rp 300.000

Rp 200.000

Rp 1.100.000

Rp 550.000 Rp 350.000

Rp 700.000

Rp 300.000

Rp 1.900.000

Rp 650.000 Rp 450.000 Rp 1.050.000 Rp 450.000

Rp 2.600.000

(Source: Reproduced from private source)

The cost on Table 1.2.5.1 above consist of one trip to consumers and
distributors and one trip from consumers and distributors back to plant again.

Table1. Distribution Cost All Region for One Trip

Distribution
Pathway

Pathway

Route

Bekasi- Jakarta
Jabodetabek
(Region 1)

Land

Bekasi-Bogor

Bekasi-Tanggerang
West Java

Land

Bekasi-Bandung

Central Java
(Region 3)

Land

Bekasi-Semarang

Surabaya
(Region 4)

Land

Bekasi-Surabaya

(Region 2)

Time Spent
1 hours 20
minutes
1 hours 30
minutes
2 hours 10
minutes
2 hours 30
minutes
8 hours 10
minutes
16 hours 50
minutes

Cost/trip

Rp 450.000

Rp 450.000

Rp 450.000

Rp 1.100.000

Rp 1.900.000

Rp 2.600.000

(Source: Reproduced from private source)

The time needed in column in table 1.5.2 is gotten from searching the
distance of each distributors by using Google Maps. For estimate cost, we
determined it by assuming the cost of driver and assistant driver and calculating

the fuel charge and highways fees to reach our distributor. The table above shows
that the distribution cost to Surabaya is very high because of the distance. To
distribute the product to distributors, we need more than one car box for each
target because the capacity of the Mitsubishi Colt Box. To distribute product to
Bandung we need 1 car box, for region 3 in Semarang, we need 1 car box and for
Surabaya, we need 2 car box. Then for region 1, we use all of our pickup truck to
distribute the products two trips per one week.

1.6.The Location of Distributors

We decide to divide our market into four regions as we have been
explained before. We decide to distribute our products through two ways. First,
we distribute our products directly to consumers in region 1. The second ways, we
distribute our products through distributor which are located in Bandung,
Semarang and Surabaya.
There are some reason why we use that method. We chose to distribute our
products directly to consumers in region 1 because our plant is located in Bekasi.
Therefore, the distance between our plant and consumers in Jabodetabek and
Cilegon so close that caused we dont need larger transportation cost to distribute
our products.
The second is region 2, we chose Bandung as our distributor city because
there are a lot of packaging industries in this city and its not far away from
Karawang and Cirebon as the other markets target in region 2.
Next, we select Semarang as our distributor city in region 3 because in this
city there are a lot of industrial areas and we hope can grab potential market in
this city.
Lastly, we chose Surabaya as our distributor city in region 4. The reason
we chose Surabaya because this city has a lot of industrial areas and the
transportation in this city is good enough so we can distribute our product to other
cities in this region easily.
After our product has been distributed to distributors, the distributors will
recieve orders from industries toward our product. Then, distributors will deliver
our product to consumers depend on the region of our consumers.

1.7. Fluctuations of Product in the Plant Warehouse

Fluctuations of the products in the distributors are important to be made
because they will show our capability to meet the market demands. Assumptions
that were made to make the fluctuations curves are:
a) 100% production capacity.
b) The distribution of products to each regions scheduled every week, with
different time of deliverance for each region
c) Products distributed for each distribution offices will be bought by markets
This fluctuation is used to check the safe inventory of our product. The table
below shows that the amount of our product fluctuation in the warehouse and each
region
Number of
Days

Production per
day

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

0
710
1420
2130
2840
3550
4260
4970
710
1420
2130
2840
3550
4260
4970
710
1420
2130
2840
3550
4260
4970
710
1420

Region 1
0
0
0
0
0
0
0
0
1988
0
0
0
0
0
0
1988
0
0
0
0
0
0
1988
0

Distribution Value
Region 2
Region 3
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
994
0
0
745
0
0
0
0
0
0
0
0
0
0
994
0
0
745
0
0
0
0
0
0
0
0
0
0
994
0
0
745

Region 4
0
0
0
0
0
0
0
0
0
1243
0
0
0
0
0
0
1243
0
0
0
0
0
0
1243

24
25
26
27
28
29
30
31

2130
2840
3550
4260
4970
710
1420
2130

0
0
0
0
0
1988
0
0

0
0
0
0
0
994
0
0

0
0
0
0
0
0
745
0

0
0
0
0
0
0
1243
0

(Source: reproduced from private source)

After making the table, we are now making the graph that shows the
fluctuation of our plant warehouse.

Number of Production

6000
5000
4000
3000
2000
1000
0
0

10

15

20

25

30

35

Number of Days
Figure 1.2.7.1. Fluctuations of the Product Warehouse
(Source: reproduced from private source)

From the figures above, we can infer that in the beginning of the
production time, it will reach the highest point of production. After reaching its
highest point, the products will be decrease gradually to make a stable fluctuations
for a set period of time. This happens in each region as shown in the table. The
percentage of distribution set with the amount that will be enough for the
distribution products to the distributor in each regions. So this is the graph that
will show clearer about the distribution.

10

2500

Number of Production

2000
1500

Region 1
Region 2

1000

Region 3
500

Region 4

0
0

10

-500

15

20

25

30

35

Number of Days
Figure 1.2,7.2. Fluctuations of the Product at Every Regions
(Source: reproduced from private source)

The graphs show that stock or inventory of our product in every region is
very different according to the percentage of the product that we will distribute.

Table 1.2.7.2. Total stock for 6 months

Need of Month

Total Stock (End of the Month)

710

1420

2130

2840

3550

4260

(Source: reproduced from private source)

The total stock that we have from the inventory for 6 months is about 4260
units that can be stored and delivered to our wholesaler. This stock can be used
when our raw materials are difficult to get.

1.8. Marketing
Marketing is an activity that aims for the availability of products that can
satisfy consumers and provide benefits to companies that offer the products.
Marketing concept is based on three fundamental beliefs: all planning and

11

operations should be costumer oriented; all marketing activities in an organization

should be coordinated and consumer oriented. Our marketing objectives is to
introduce our product, increase promotion to our product, and sell our product to
consumer.
1.8.1.Target market
According to stanton, a target market consist of a group of consumers
(people or organizations) at whom the seller directs a marketing product target
market of our products is packaging industries that are locate in java island.
1.8.2.Market Segmentation
Market segmentation is the process of dividing the total heterogenous
market for a good or service into several segments, each of which tends to be
homogeneous in all significant aspects. We divide the market/buyer based on
costumers age segmentation, demographic, and geographic. The grouping will
affect the market demand for our product.
a. Costumers age Segmentation
For this segmentation, our target is children ranging from 6-14 years old and
productive people ranging from 15-64 years old. Nowadays, Indonesian
population is 259.27 million people. We chose based on the age due to their habits
to bring bananas their meals to school or office. Beside that with segmentation,
consumers are expected to understand more about uses and benefits of our
products. It will happen because of our product has some advantage, cheap prices,
easy to use and still has good performance.
b. Geographic segmentation
Firstly, we take Indonesia as our market state. From this country, we minimize
our segmentation by choosing only Java Island as our target. The consideration is
based on the distribution of product and the potential consumer. Our target would
be people with higher purchasing ability. Another consideration is based on the
statistic of the production of banana in Java island which is greater than other
island in Indonesia. The bigger marketing percentage of our product there are in
Jabodetabek region. The rationale of this decision is based on number of
packaging industries, plant location, raw material plant, etc.
c. Demographic Segmentation

12

This segmentation is grouping the market of consumers by their social class,

lifestyle, and personality. Middle-upper class society will be our target. Their
concerns on health, convinience, practicle, and their economical abilities are
simply the reason why our banana storage will only be bought by the middle and
higher class society.

1.8.3. Marketing Integration

The purpose of marketing integration is to create an effective marketing,
achieve a successful marketing and also to give satisfaction to the consumers. We
wiil use some ways of marketing, which is the combination of four primary
elements that comprise a companys marketing program. The four elements are:
a. Product
b. Price
c. Place
d.

Promotion

13

CHAPTER 2
PRODUCT COSTING

2.1 Total Capital Investment

To make the plant works, we need to invests in the facilities, the equipment,
the market research, the buildings, the patent and so on; all to ensure the smooth
operation of our factory in 5 years consecutively and get a high payback later on.
In calculating the total capital investment cost, there are two kind of cost, fixed
capital or total permanent investment and working capital. Total permanent
investment is the capital needed to supply the necessary manufacturing and plant
facilities meanwhile working capital is the capital needed to operate the plant
until the company gets income.
Calculation method for total capital investment are stated below.
(

where,
CTCI = Cost of Total Capital Invesment or Fixed Capital
CTPI = Cost of Total Permanent Investment
CWC = Cost of Working Capital
k = Constant while calculating working capital

By using Guthrie method, the equation above will be modified into :

(
where,
CTBM = Total Bare Module Cost
Csite = Cost of Site
Cbuilding = Cost of Building
Cfacilities = Cost of Facilities in Factory

2.1.1 Fixed Capital

14

Fixed capital refers to any kind of real or physical capital (fixed asset) that
is not used up in the production of a product. It contrasts with circulating capital
such as raw materials, operating expenses and others.
There is three factors which influence the Fixed Capital Requirements.
The first is the nature of the undertaking. For example, a florist needs less fixed
capital than a vehicle-assembly factory. The second is the size of the undertaking,
which a general rule applies which is the bigger the business, the higher the need
for fixed capital. The last is the stage of development of the undertaking. The
requirement of capital for a new undertaking is usually greater than that needed
for an established business that has reached optimum size
Based on the three factors above, this manufacturing process will need
high fixed capital. The calculation of the direct cost is explained below

a. Equipment Cost
This section will discused about the purchasing cost for all the
manufacturing equipment. It includes the cost of shipping and another additional
cost for import regulation. The equipment cost is calculated with Guthrie method
by adding some cost that known as Bare Module Cost.
The sequence step to obtain Total Bare Module Cost are :
List all of our equipment needed, include the quantity
Classify it in a category that is most suitable in data to obtain bare-module
factor
Look for Marshall and Swift Chemical Equipment Cost Index to determine
cost of equipment in year that we expect to buy
Use the formula to obtain Total Bare Module Cost.
The formula is explained below
Based on the previous assignment, we already listed all of the equipment
needed also the quantity. In this part, each equipment will be divided into certain

15

category to obtain bare module factor. The bare module factors included FOB
(Free on Board) purchase, equipment instruments and installations (piping,
concrete, steel, controllers, electrical, insulation, and paint), direct labor for
installation (material erection and equipment setting), and also indirect module
expenses (insurance, taxes, construction overhead, and contractor engineering
expenses). Then, this factor will be multiplied by the cost of equipment. For the
equipment that did not match any bare module factors in the table, the average
value of all the bare module factors will be used which is 2.45.

In this bare module cost calculation, the FOB purchase cost that we got
from equipment catalogue is FOB for year 2016, so that the forecast of FOB
purchase cost for the next year is needed to determine equipment cost for year
2018. To forecast the price of equipment in 2018 we need to use Marshall and
Swift Index for Chemical Engineering Cost Index as shown in the table below.

Year

Cost Index

2003

1123.6

2004

1178.5

2005

1244.5

16

2006

1302.3

2007

1373.3

2008

1449.3

2009

1468.6

2010

1457.4

2011

1565.64

2012

1618.88

2013

1672.12

2014

1725.36

2015

1778.93

Based on the table above, we can make the extrapolation based on

linearity of the indexs trendline to determine the index for 2018. This is the
trendline of the index based on table above.

Cost Index

Marshall and Swift Chemical Equipment Cost

Index
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2002

y = 53.402x - 105827
R = 0.9888

2004

2006

2008

2010

2012

2014

2016

Year
Figure 2.1. Marshall and Swift Index Graph
(Source: http://che.utah.edu)

To get the cost index for year 2018, we can extrapolate the index based on the
trendline on the chart. The calculation is shown on the table below

17

Year

Cost Index

2016

1831.432

2017

1884.834

2018

1938.236

The formula to determine the price of the equipments for year 2018 is as below
(

)
(

(
)

(
(

)[
(

)[

)
]
)
]

The calculation of bare module cost is shown in the table below

18

Qty

Total FOB in
2018

Modul
Equipment
Assumption

Bare
Modul
Factor

Total Bare Modul

Cost (Rp)

33,527,489

33,527,489

Average Bare
Modul Factor

2.45

82,142,348

631,303,200

668,119,039

668,119,039

Flakers

2.05

1,369,644,031

Storage Tank 500 L

6,500,000

6,879,061

6,879,061

Tank

1.41

9,699,477

Conveyor

4,620,000

4,889,425

4,889,425

Horizontal
Conveyots

1.61

7,871,975

Melting Index

39,600,000

41,909,361

41,909,361

Average Bare
Modul Factor

2.45

102,677,935

Analytical Balances

6,560,400

6,942,984

6,942,984

Average Bare
Modul Factor

2.45

17,010,311

Tensile Strength Test

Equipment

26,400,000

27,939,574

27,939,574

Average Bare
Modul Factor

2.45

68,451,956

Screwer

26,400

27,939

27,939

Average Bare
Modul Factor

2.45

68,451

Equipment

FOB in 2016
(Rp)

FOB in 2018
(Rp)

Mixer

31,680,000

Injection Molding
Machine

TOTAL

1,657,566,487.79

19

b. Land and Plant Cost

We are planning to build the Banana Storage Plant in the 800 m2 area,
which is 484 m2 for the site area and 202 m2 for the office building. This plant
will be built in Jababeka Industrial area, Cikarang, Bekasi. The estimated land
price in this area is Rp 3,000,000.00 / m2. The table below shown the cost for land
and for builidng the site and office

Component

Area

Cost / m2 (Rp)

Total Cost (Rp)

Land

800

3,059,000

2,447,200,000

Site

484

100,000

48,400,000

Office Building

220

4,000,000

880,000,000
3,375,600,000

TOTAL

After we build the plant, another cost is needed for utility installation that will
help the production starting process. The utility installation as listed below

Utility Installation

Cost (Rp)

Water

20,000,000

Telephone

15,000,000

Electricity

30,000,000

20

Internet

7,500,000

Hydrants

12,000,000

TOTAL

84,500,000

c. Supporting Equipment Cost

Supporting Equipment

Qty

Price per Piece

Price

Computers

10

3,200,000

32,000,000

Laptop

3399000

6,798,000

Meeting Desk and Chair Set

1,200,000

1,200,000

Toilet Set

3,500,000

14,000,000

Office Stationary

2,000,000

2,000,000

Facsimile Machine

1,200,000

1,200,000

Telephone

125,000

625,000

Photocopy, Scanner and

Printer

10,000,000

20,000,000

Clock

20,000

120,000

Table

400,000

2,400,000

Chair

10

250,000

2,500,000

21

Filing Cabinet

1,200,000

1,200,000

Sofa

1,000,000

2,000,000

Dispenser

150,000

300,000

Generator

60,000,000

60,000,000

CCTV

10

850,000

8,500,000

White Board

200,000

400,000

LCD Proyektor

2,500,000

5,000,000

Trash Bin

10

50,000

500,000

AC 1 PK

15

2,400,000

36,000,000

Television

1,500,000

1,500,000

Refrigerator

2,180,000

2,180,000

Absence Machine

800,000

800,000

Suzuki Carry Pick Up 1500 cc

35,000,000

175,000,000

TOTAL

376,223,000

d. Market Research Cost

Market research cost is used to make a research from the consumer. In
market research, we will gather information and data about consumer and market
strategy. We will hire consultant for this market analysis. This analysis is very
important to improve production process.

22

Market Research Cost

Cost (Rp)

Consultant Service

15,000,000

e. Patent and Brand Investment

Patent

QTY

Cost (Rp)

Total Cost (Rp)

Simple patent request

500,000

500,000

Additional Cost per Claim

50,000

450,000

Request for letter of priority

right evidence

250,000

250,000

Substantive inspection
simple patent

350,000

350,000

Cost for publishing

certificates

250,000

250,000

Admission for liceso thense

agreement registration

1,000,000

1,000,000

Request for compulsory

licensing

3,000,000

3,000,000

Request for general list

excerpts of patents

1,000,000

1,000,000

Request for copies of patent

100

10,000

1,000,000

23

documents
Cost For Patent Search That Has Been Announced
Domestic

250,000

250,000

Overseas

1,300,000

1,300,000

Cost for patent application

administration through
Patent Cooperation Treaty
(PCT)

1,000,000

1,000,000

Request for regional

execution

3,000,000

3,000,000
13,350,000

TOTAL

Patent

Cost (Rp)

Patent Registration

13,350,000

Brand

5,000,000

Industrial Design

1,500,000

Copyright

450,000

TOTAL

20,300,000

24

2.1.2 Working Capital

The simple formula for calculating work capital is:

Where :
CWC

= Working Capital

= 0.05

CFC

= Fixed Capital

To calculate the working capital, we need total fixed shown in Table below

Fixed Capital

Cost (Rp)
Equipment

1,657,566,488

Land and Building Cost

3,375,600,000

Supporting Equipment

376,223,000

Utility Installation

84,500,000

Market Research

15,000,000

Patent and Brand Investment

20,300,000

Direct Cost

Indirect Cost

122,360,000

Total Permanent Investment Cost (CTPI)

5,529,189,488

Fixed Capital Cost (1,18 x CTPI)

6,668,828,396

25

So the working capital is

Capital Investment

Cost (Rp)

Fixed Cost (1,18 x CTPI)

6,668,828,396

Working Capital (5% Fixed Cost)

333,441,420

Total Capital Investment (Fixed Cost

+ Working Capital)

7,002,269,815

Total Capital Investment

2%

0%
0%

Equipment

2%

0%
6%

Land and Building Cost

30%
Supporting Equipment
Utility Installation

60%

Market Research
Patent and Brand Investment
Contractor
Working Capital

26

2.2 Operational Cost

Operational cost expenses related to the operations of devices, components,
and equipments or facility that is used in manufacturing the products. Operational
cost is usually paid annually. Operational cost can be classified into 3 major
classifications which are direct production cost, fixed cost, and plant overhead
cost. Operational costs consists of several kinds of costs including raw material
cost, operating labor salary, maintenance cost, patent cost, and fixed cost, etc.
Below are details for the operational cost that is accounted for the company.
2.2.1 Direct Cost
a. Raw Material Cost
The cost for raw materials needed for production is obtained by
arrangement with suppliers. Raw material cost is used to prepare all of the raw
material that is needed to produce the our banana container. Below are some raw
materials and its price that is needed for manufacturing.
Table 2. 1
Material

Supplier

Polypropylene

PT Chandra
Asri
Petrochemical
Tbk

Color
Masterbatch

PT. Trycera
Centro
Chemindo

Location

Order
(ton/yr)

Price
(Rp/ton)

Cilegon

25

10,021,500

Bogor

0.43

33,405,000

Total Cost
(Rp/year)

250,537,500.00

14,364,150.00

27

CaC03

PT. Trycera
Centro
Chemindo

Bogor

1.93

13,362,000

Carbon Fiber

PT. Trycera
Centro
Chemindo

Bogor

3.52

40,086,000

KMNO4
Absorber

LV Neng,
Shanxi

China

1.2

13,362,000

Plastic Snap
Button

PT YKK Zipper
Indonesia

Jakarta

0.4686

133,620

Total Cost per Year

25,788,660.00

141,102,720.00

16,034,400.00
62,614.33
447,890,044.33

Besides raw material, the material for packaging also needed to be

accounted as production cost. The price for packaging raw material can be viewed
as follows:

Table 2. 2.
Packaging
Material
Carbon
Box

Supplier
PT Inti Rama
Raya

Location

Order
(pieces/yr)

Price
(Rp/pieces)

Jakarta

710

500

As we can see above that we need Rp every year for raw material cost.

Total Cost
(Rp/year)
355,000.00

28

b. Direct Labor Salary

Direct labors are the employees that directly involved in the production
process of our product. To determine the salary of the labor we used Regional
Minimum Wage Policy that is determined from the Governor. This Regional
Minimum Wage is different based on the location where the employees work. The
Regional Minimum Wage in Jakarta at 2016 is Rp. 3,100,000.

Table 2. 3
Number of Salary per person
Workers
(Rp/year)

Direct Labor

Total (Rp)

Warehouseman

37,200,000

74,400,000

Molding Operator

39,600,000

79,200,000

Mixing Operator

39,600,000

39,600,000

Assembling &
Packaging Labor

37,200,000

297,600,000

Quality Controller

37,200,000

74,400,000

Total Cost

565,200,000

Variable Cost for Bonus (THR) 20%

113,040,000

Total Cost/year

678,240,000

29

As we can see above that we need Rp. 678,240,000 every year for direct
labor wages.

c. Utility
The cost for utility is accounted for the resources that are needed for
production process. The cost for utility that is accounted for the plant is from the
consumption of electricity and water. According to PLN official website, our
factory is classified to I-3/TM industry level (above 200 kVA) since our factory is
a middle scale industry. So, our industry should pay Rp 1,008.15/kWh. Here is the
detail of electricity cost that our factory should pay for every year.
The base price for water consumption is obtained from PT. PDAM Jaya.
The base price for water is set to be Rp. 12,550/m3. The needs of water that are
calculated here are based on the employees and labors daily needs, such as for
the restroom, pray, and etc. We assume that every employee needs 20 liter per
day. As for solar, the base price is set to be Rp. 5,150/L. The calculation for
utility cost can be seen from the tables below.
Table 2. 4. Main Equipment
Equipment

No.
of
Unit

Energy
Consumption
(kW)

Working
hour per day
(hour)

Power
output per
day (kWh)

Power output
per year
(kWh)

Mixer

2.2

1.5

3.3

1,089.00

Injection
Molding

48

96

31,680.00

Total Cost

1,097,875.35
31,938,192.00

30

Conveyor

0.06

1.5

0.09

29.70

Tensile
Strength
Equipment

990.00

Analytical
Balances

0.1

0.1

33.00

Melting
Index
Equipment

0.55

0.55

181.50

Total Cost per Year

29,942.06

998,068.50

33,268.95

182,979.23

34,280,326.08

Table 2. 5. Secondary Equipment

Equipment

No. of
Unit

Energy
Consumption
(kW)

Working
hour per
day
(hour)

Power
output
per
day
(kWh)

Power
output
per year
(kWh)

Total Cost
(Rp/year)

Computers

10

80

26,400.00

26,615,160.00

Laptop

0.06

0.96

316.80

319,381.92

Facsimile
Machine

0.018

0.144

47.52

47,907.29

Photocopy,
Scanner
and Printer

0.5

2,640.00

2,661,516.00

Dispenser

0.5

24

24

7,920.00

7,984,548.00

31

CCTV

10

0.0084

24

2.016

665.28

670,702.03

LCD
Proyektor

0.3

0.6

198.00

199,613.70

AC 1 PK

15

0.8

96

31,680.00

Absent
Machine

0.018

0.144

47.52

47,907.29

Television

0.11

0.33

108.90

109,787.54

Refrigerator

0.1

24

2.4

792.00

798,454.80

Neon
Lamps

60

0.036

24

51.84

17,107.20

Total Cost per year

31,938,192.00

17,246,623.68
88,639,794.24

Table 2. 6. Cost for Water

Water Needs

Consumption
(m3/day)

Employee (35)

1.05

Total Cost (Rp/year)

4,348,575.00

Total Cost per Year

4,348,575.00

Table 2. 7. Cost for Solar

Solar Needs (L/yr)

Total Cost (Rp/year)

1800

9,270,000

32

Therefore, based on the tables above, the total cost for utilities can be summed as
follows.
(

d. Maintenance
The cost for maintenance covers the expenses for maintaining the condition
of the facilities or plant equipments and made repairs or replacement that is
necessary in order to maintain standard state of production process. Maintenance
need to done in order to obtain the production capacity as planned before to fulfill
the demand of the consumer. Maintenance activities may include inspection
activities, lubrication of the equipment, the replacement of components that is
needed to be done periodically or because it is broken, and repair the damage
equipment.
Maintenance process is performed with the three parts, i.e major equipments
maintenance, plant and office building maintenance, and supporting equipment
maintenance. For main equipments, the cost of maintenance is around 10 % of
total bare module. For office supplies (supplementary equipments) is around 3%
of total cost for the equipment. For land and building maintenance, is around 1%
of land and building cost. The cost for maintenance can be seen from the table
below.

33

Table 2. 8. Cost of Maintenance

Maintenance

Amount

Total Cost
(Rp/year)

Main equipments

10% of Total Bare Modul Cost

239,636,820.55

Secondary
Equipments

3 % of Supporting Facilities
Cost

11,286,690.00

Land and Building

1% of cost of Csite, DCs, and

Cbuilding

33,756,000.00

Total Cost per Year

284,679,510.55

e. Patent
For this patent the annual investment will be used for patent maintenance
according to Indonesia Law. Patent maintenance cost is an annual cost during our
factories running and we propose for 10 years maintenance. For first year until
fifth year, basic cost and cost per claim for the patent are 0 rupiah. This is the
table that shows the cost that we have to pay each year.

Table 2. 9. Cost for Patent

Non Tax Revenue

Unit

Cost
(Rp)

Qty Total (Rp)

6th year from the date of patent acceptance

Basic cost

Per patent

1,500,000

1,500,000

Cost per claim

Per Claim

150,000

1,350,000

34

7th year from the date of patent acceptance

Basic cost

Per patent

2,000,000

2,000,000

Cost per claim

Per Claim

200,000

1,800,000

8th year from the date of patent acceptance

Basic cost

Per patent

2,000,000

2,000,000

Cost per claim

Per Claim

200,000

1,800,000

9th year from the date of patent acceptance

Basic cost

Per patent

2,500,000

2,500,000

Cost per claim

Per Claim

250,000

2,250,000

10th year from the date of patent acceptance

Basic cost

Per patent

3,500,000

3,500,000

Cost per claim

Per Claim

250,000

2,250,000

Total

20,950,000

Based on the table above, the average patent cost each year is around

2.2.2. Fixed Cost

Fixed cost consists of insurance, depreciation, and local tax. The detailed
description for each cost as follows.

a. Insurance

35

The cost for insurance covers the insurance for labor (both operating and
executive workers), land-building, and raw material. The cost for insurance is
obtained by multiplying the total cost by certain percentage that is already
determined literature studies (Product and Process Design Principles, by Wiley &
Seider). The total cost for insurance can be seen from the table below.
Insurance

Specification

Total Cost (Rp/year)

Worker Insurance

0.54% from salary

jumlah dr salary labors

Land and Building Insurance 2% TPI

Raw Material

dr capital investment

2% of total cost of material total raw materials

Total Cost per year

b. Depreciation
Depreciation

is

the decreasing value

for

equipment

(main

and

supplementary) and buildings due to its usage. The purpose of this calculation is
to know the amount of the equipment value depreciation that occur and to know
the amount of the salvage value that will be used in cash flow calculation. The
detailed calculation for depreciation can be seen in Appendix (Table A1). Below is
the depreciation value that is accumulated annually from year 0-10.

36

Table 2. 10

c. Local Tax

Year

Depreciation Cost (Rp)

384,856,892.76

341,319,660.71

302,809,022.31

268,739,926.61

238,595,755.44

211,920,287.78

188,310,610.85

167,410,865.98

148,906,730.73

10

132,520,550.31

37

The local tax that is used for operational cost is from PBB (Pajak Bumi
dan Bangunan). The method for determining the local tax is obtained from the
law set

by Direktorat

Jenderal

Pajak,

which can be viewed from

(http://www.pajak.go.id). The cost for local tax can be viewed from the table
below.
Categories

Cost/year

NJOTKP

Rp

12,000,000.00

NJOP BUMI

Rp

2,447,200,000

NJOP BANGUNAN

Rp

48,400,000

NJOP TOTAL

Rp

2,495,600,000

NJOKP

Rp

993,440,000.00

NJKP

Rp

4,967,200.00

where
NJOTKP

= Cost of Object not Accounted for Tax

NJOP

= Cost of Object

NJOKP

= Cost of Object Accounted for Tax

2.2.3. General Expenses

38

2.2.4. Plant Overhead

Plant overhead cost covers the cost that is needed for safety measures
during production process. The total plant overhead cost is around 50-70% from
operating labor salary. If we assume the total plant overhead about 50%,
Therefore, the cost for plant overhead can be calculated as follows.

2.3 Determining Price for Product per Package

The price is very important to determine the company's profit and hence,
survival. Adjusting the price has a profound impact on the marketing strategy, and
depending on the price elasticity of the product, often it will affect the demand
and sales as well. To determine the price per package we can use the equation
below and some assumption cost of plant or COGM (Cost of Goods Manufacture)
can be found by the equation:
COGM

= raw material at the first period + Purchasing cost of raw material

raw material at the end of period + production cost (direct raw material,
direct labor, FOH) + operation cost (marketing cost, general expenses,
and administration) + beginning work in process final work in process

From the cost of this plant, we can determine Cost of Goods Sold (COGS) by the
equation:

39

COGS = COGM + beginning final goods - ending final goods

The complete the calculation, and then take a few assumptions, namely:

The number of initial raw material = number of end raw material

Beginning work in process = end work in process

Beginning final goods = ending final goods

Total sales = total production

So the final equations COGS / cost of goods sold is:

COGS = production cost + operating expenses + material purchase
COGS is obtained based on the results of forecasting products that can be seen
below
2.4 Cash Flow
To determine the cash flow we need to evaluate cash flow income before
and after tax, operation, investment, and salvage value. Meanwhile outcome such
as investment, operation cost, loan payment, and interest payment.

2.2.1 Direct Cost

2.2.2 Undirect Cost
2.2.3 General Expenses
2.2.4 Plant Overhead

40

2.3 Determining Price of Product

2.4 Cash Flow

2.4.1 Loan and Interest
2.4.2 Depreciation and Salvage Value
2.4.3 Before and After Tax Value

41

CHAPTER 3
PROFITABILITY ANALYSIS

3.1 IRR
3.2 Payback Period
3.3 Breakeven Point
3.4 Return of Investment (ROI)
Return of investment (ROI) means the annual profit (per year) generated
by one unit of capital invested. We can use this formula for calculating return of
investment:
%ROI =

x 100%

From the microsoft excel program, our annual net profit after tax is
varying but we assume to take its average which is Rp...................... Our total
capital investment is Rp .................... So our ROI is:
%ROI =

x 100% =

The rule of tumb for the tolerable ROI after tax is 15-20% (Seider, 2004).
So our ROI is higher than the tolerable ROI from rule of thumb, it means our
project is feasible and acceptable.

3.5 Net Positive Value

42

Net Present Value (NPV) shows the net benefits received by a project over
the life of the project at a certain interest rate. NPV can also be interpreted as the
present value of the cash flows generated by the investment. In calculating the
NPV is necessary to determine the relevant interest rate. The interest rate we used
in this calculation is WACC or MARR which is ........%. Cash flow in yearn
drawn into present value with a reasonable interest rate by using the following
formula:
CFn , 0

CFn
1 i n

A project as feasible if the NPV>0, which means the project is profitable or

provide benefits if implemented. If NPV<0, the project is not eligible to run
because it does not generate profit. From the calculation using Microsoft Excel as
below which it already has the function to calculate the NPV of a projects
economic analysis, so we got the Rp ..................... as projects NPV value. It
shows that this project ( banana container) is feasible because its value greater
than 0.
Tabel x .NPV Calculation

year
0
1
2
3

Cash flow after

tax

Present value

43

4
5
6
7
8
9
10
NPV

Rp.......................

So based on analysis advantage with IRR, payback period and NPV, banana
container products is very profitable. This product offers a good economic
advantage to run. For investors and banks that want to embed its funds, these
products

are

very

interesting

and

promising.

3.6 Sensitivity Analysis

The sensitivity analysis is an activity to analyze the economic sensitivity
of existing cash flow. The purpose of this analysis is to know the effect of cost
fluctuation. From this influence, we can determine the cost of the products that we
will sell to suit the markets demand and regain profit from these sales. Prices
have fluctuated and affected the selling price of products, is a variable cost or the
price that may change depending on the needs of the material and the amount of
production, such as cost of materials, labors salary, and others. Therefore, we
analyze the sensitivity of IRR, NPV, ROI and PP because of deviation in raw
materials cost, labors salary, and the selling price.

44

3.6.1 Fluctuation of Raw Material Cost

Every year, raw material cost generally are increase. Changes in raw
material cost can be described by a margin of deviation of 5% which will affect
the IRR, as the internal rate of return of the proceeds of this sale. In addition, these
changes also affect NPV, as present value that describe of profit, PP as payback
period to investors, and ROI, which is return of investment each year which is
directly proportional to IRR and NPV. From table below, it can be seen that raw
material cost changes affecting large IRR, NPV, and also PP. the higher raw
materials cost, then the smaller IRR generated. IRR is a variable that is directly
proportional to the NPV, so the smaller IRR equal the smaller benefit to be gained
(NPV).
Table xx. Fluctuation of Raw Materials Cost
Deviation

Raw Material

NPV

IRR

PP

(Source: Authors Personal Data)

If the raw material price is increasing, the NPV will be smaller and so does
IRR. With this condition it will make the PP becomes longer. It is understandable
since raw materials cost takes much of the outcomes percentage in the whole
operating cost per year, which is 46%. So, it takes much longer time in order to
have the profit that can fill the total operating cost.
From this table, we can see that only increase 5% deviation make
significant differences in IRR, NPV, and PP. we can conclude that raw material
cost changes causing the the significant changes like average differences of IRR is

45

10%, high differences of NPV, and differences of PP. But, the most sensitive
parameter from material changes is IRR.

3.6.2 Fluctuation of Labour Wage

This analysis sensitivity is to analyze the fluctuation of the operating
labors wage based in table below. It is important to have the fluctuation of
operating labors wage analyzed. Since the UMR for mill-hand is increasing each
year, the factory owner has to increase its mill-hand wage.
Table xxx . Fluctuation of Operating Labors Wage
Deviation Operating Wages NPV IRR

PP

(Source: Authors Personal Data)

As table above,NPV and IRR decreased and PBP increased as the increase of
labor wage but its not affected Internal Rate of Return, Net Present Value and
Payback Period significantly. It because labor wage only takes 10 % of total
expenses per year. The maximum deviation of increasing of labor wage in this
dish cleaning device factory is limited to 100%.
3.6.3 Selling Price Fluctuation

46

One of the way to encounter the increasing of raw material cost and labors
salary without reducing profits is by increasing the selling price of products. Not
only to increase selling price but also we are able to lower the selling price of the
products if we want to get more customers.

From table above,rising.....% deviation of the selling price of products,

will a ffect the great advantage of these products is about ......%. The greater level
of return (IRR) it will minimize payback period or accelerate the return
investment time. These values conclude that compared other variables, product
selling prices give very high sensitivity for parameters-parameters. We can
determine the selling price of products from the range Rp .................. because at
that value, IRR is greater than the WACC (.....%). The meaning is that at that
price, we have been able to return capital to investors and a profit. However, when
the payback period to the investor (PP) at the price RP ........... and Rp ............, the
deviation is negative and it takes a long time to restore the capital that is above
......years. On the selling price of products at the positive deviation has greater
IRR, profits and PP faster. However, we need to consider the ability of the market
economy and competitiveness with other products that had long been on the
market. The excellence of our products compared to other products is its cheap
price, then we prefer selling price ............., with an IRR that is not too small or
large and payback period can still be tolerated is ..... years.
3.6.4. Sensitivity Graph
With sensitivity graph we can see the relationship between the deviation of
the price of raw materials, labors salary, and the selling price of products with
IRR, NPV and Payback Period.

3.6.5 Conclusion and Strategy

47