Presented To:

Mr. Rana Shahzad

Presented By:

Hamid Javed (082405)

Umair Ali khan(091415)
Umair Rana (081157)
Usman Pervaiz (081155)
Qasim Ali (073166)
Observation
During observing markets in Lahore, We found that
Prices of yarn increasing day by day as increase in
Cost of Production.
PROBLEM STATEMENT
What Factors are responsible for
variation in cost of production?
Preliminary Data Gathering: (PDG)
Industries are producing many products and exporting them
to all over the world.
But due to recent Inflation in Pakistan the Cost of
Production is at its Boom level.
Our research is focus on Textile Product Yarn.
Preliminary Data Gathering: (PDG)
(Literature Review)
We observed data from Literature survey from many sources
(1) www.fbr.gov.pk
It tells us about increasing Tax Rates. Sales Tax is 16% in 2010-11
that was 15%. Many Exempted Things are now Taxable. High
Import Duty.
(2)www.brecorder.com
We found Raw Material Prices, Power & Fuel, Taxations etc.
(Cotton Price is Rs. 9500/Mund on 6-10-2010 that was Rs. 2500 in
2009-10. Polyester Prices Rs. 157/Kg today. It was 125/KG in
2009(Petrol, Electricity And Gas Prices High)
(3) Budget 2010-11
Increase Wages from Rs 5000 to Rs 7000 in 2010-11)
Preliminary Data Gathering: (PDG)
Through Interviews
Ghazi Fabrics International Limited Head Office is
located
8-C, Block E-III,
Gulberg III, Lahore - 54660. Pakistan
Ph: (92-42) 576 4026-8 (3 lines)
Fax: (92-42) 576 4032
-
 Some References
Sr # Name Designation Cell Number
1 Mr. Muzamil Tahir Finance Manager (Chiniot Textile) 03224386478
Muhammad Abid
2 Chief Accountant (Ghazi Fabrics Int) 03217515207
Hanif
3 Mr. Ali Sattar Accountant (Chiniot Textile Mills Ltd) 03228075723
Mill Manager
4 Mr. Ayaz Sb Production & Operations (Chiniot ------
Textile)
  5 Mr. Sidique Sb Marketing Manager (Chiniot Tex) -------
       
       
       
       
Dependent Variable

Cost of Production
Independent Variables
1. - Raw Material Prices
2. - Inflation
3. - Depreciation Rate
4. - Utility Bill Prices (Electricity, Fuel, SuiGas,
Petroleum)
5. - No of Labor Workers
6. - Govt. Policies
7. - Tax Rates
8. - Quality of Raw Material
9. - Facility Arrangement
10. - Technology
11. - IMF Policies
12. Load shedding
Independent Variables
(Prioritized)

1. - Utility Bills
2. - Labor Workers
3. - Raw Material Prices
4. - Technology
MODERATING VARIABLES

1. Inflation
2. IMF Policies
Theoretical Framework
Raw Material
Prices
Inflation

Cost of IMF Policy Utility Bills

Production

Labor
Workers

Technology
Nature And Direction

Raw Material Prices (Direct) +

Utility Bills (Direct) +

Cost of
Production Labor Workers (Direct) +
(Direct)

Technology (Indirect) -
Logical Statements
-If Raw Material prices increase then the
Cost of Production will increase.

-If Utility Bills increase then the Cost of

Production will also increase.

-If Number of labor workers increases then

the Cost of Production will increase.

-If Industry use Low technology then cost of

Production will increase.
Research Design
-PURPOSE OF STUDY
EXPLORATORY (Pure)

-TYPE OF INVESTIGATION
NON –CAUSAL (Correlational)

-STUDY SETTING
NON-CONTRIEVED (Natural) (Field Studies)
Research Design
-TIME HORIZON
Longitudinal(Time Varies)
-UNIT OF ANALYSIS
Individual
-EXTENT OF INTERFERENCE
Minimal
 OUR STAKE HOLDERS
Ghazi Fabrics International Limited
LESCO
WAPDA
Raw Material Parties
 Sampling
Non probability sampling is used due to time and
capital constraint.
In Non prob. Sampling, QUOTA SAMPLING is used.
The area in which research is conducted is Lahore.
Completing 45 samples, we have made Three quotas,
1 Textile Industry (Ghazi Fabrics)
2 Raw Material Parties (Cotton/Polyester Parties)
3 Fuel Provide Companies(WAPDA,SUI GAS, LESCO)
15 samples from Fuel Provider Co., 15 from Raw
Material Parties and 15 from industry Employees.
Analysis of
questionnaire
 Introduction
I am a student of Pak-Aims INSTITUTE OF MANAGEMENT
SCIENCES (IMS), completing my MBA. I am conducting this
research to complete my academic exercise. I am conducting a
research on Cost of Production to investigate that what factors are
responsible for variation of Cost of Production? I am trying to find
out the key contributing factors of this problem by this particular
research.
• Your contribution by providing precious information regarding that
specific research will be highly appreciated. This research will also
be very useful for you to boost up moral values of people and its
responsibility of every person to respond effectively. After finding
specific results of this research, your industries can manage long
term decision making towards overall profit of the organizations
and minimize of cost. This information given by you will only be
used for this research and will remain as highly confidential.
The results of this specific research will be provided to you through
e-mail if you willing to know about the findings & results.
 Utility Bills Prices
The Prices of Utility bills (Sui Gas, Electricity) are.
 Utility Bills Prices
IMF Policy about increasing Utility bills is fair.
 Raw Material Prices
Inflation affecting prices of Raw material.
 Raw Material Prices
The prices of raw Materials not remain constant with Passage of
time.
 Labor Workers
You think that Labor Cost is affordable.
 Labor Workers
In your opinion, that Labor wages are high due to
 Technology
You are using latest Technology in the production department.
 Technology
The Technology you are using is enough for manufacturing.
 Analysis & Interpretation
80 % Employees of LESCO & Wapda said that
the prices of utility bills are very high
60% Empolyees of LESCO & Wapda said that
IMF policy regarding Utility prices is not fair.
87% Raw Material Parties said that inflation
is affecting prices of Raw material.
67% Raw Material Parties said that prices are
not constant with time to time.
53% Employees of Textile Industry said that
Labor cost is not affordable.
 Analysis & Interpretation
40% employees of the Textile Industry said that
Labor cost is increasing due to Govt Policy
regarding labor.
53% Employees of The Textile Industry said
that they are not using Latest Technology for its
production process.
53% Employees of The Textile Industry said
that they have not enough technology for the
Production Process.
Results & Findings
Most employees of LESCO and WAPDA think that
the prices of utility bills are increasing day by day that
is directly effecting Textile Industries.
IMF Policies are also leaving bad effects on many
industries specially Textile Industry. So This leads
indirectly to Cost of production High.
The Parties of Raw Material are in favor of this
research and said that inflation is increasing day by
day that is directly effecting prices of many products.
The prices are not same. If one product is having
price 8000 per mund then next day it many up by
10000 per mund.
Results & Findings
Industry Employees think that Labor cost is very high
and is not affordable.
Govt. policies is directly effecting High Labor cost
that is leading to high Cost of Production.
Some Employees think that they Have not Latest
technology in the country that’s why they could not
operate production process efficiently.
Many Employees are in favor of Technology they
think that they should have enough technology to run
the operations correctly. So they have not enough
Technology. So their Cost of Production is very High.
After findings all the Independent Variables are
directly affecting Cost of Production.
 Recommendation
Industries should purchase more raw material when prices
are very low and keep maximum stock of low priced Raw
Material.
In order to minimize Cost of Production industry should
minimize the utilization of Labor workforce. The
workforce should be given proper training to become
eligible for production operations.
Industry should buy latest technology for the production
process. It should open education institution that will
educate people who will make technology themselves in
future rather than they import it.
They should minimize Electricity and Gas. They should
OFF Air conditions etc when there is not need. They
should shout down extra machines in the Factory.
Research Limitation & Constraints
TIME LIMITATION:---Time was the major factor in
conducting result.
LOW CORDINATION:-- Some stack holder’s
employees don’t coordinate that’s why we could not
got enough information.
LIMITED ACCESIBILITY:--Individuals were not
ready to give us the full access to the information.
INDIVIDUAL BEHAVIOR:--Individual behavior of
some of the employees was not satisfactory and it
was difficult to gather information from these.
RESOURCE CONSTRAINT:---Not enough
Resources to conduct research.
Method Used to Analyze Data
Microsoft Excel
SPSS Software
PURPOSIVENESS
Hallmarks
Our Purpose is to complete the Academic Project that is on the
Variation in Cost of Production factors.
OBJECTIVITY
From literature Survey we found that 150% (approx..) increase
in Cost of Production from previous year.
In simple words Cost of Production has increased from past
year from our findings.
CONFIDENCE
We have confidence as a researcher what we have done in
order to conduct this research is accurate.
 Some Interesting Findings
Cost of Production is also hidden nature. Some factors
always remain hidden in the production like waste from
cotton etc..that is actually increasing cost of Production.

Capacity of Machines that are not working well can

decrease the production process.

Inefficiency of labor can increase the cost of production.