In production systems, functions and roles to be performed by a manager is to take decisions on matters relating to the alternatives of action that must be implemented by the production process. Several factors present in real conditions tend to increase the degree of difficulty and complexity of decisions to make, sort of:
• Factors of uncertainty about the future conditions, which it often brings difficulty in determining the form of potential and installed production capacity to be realized.
• The need to consider various criteria that must be met, such as quantity, quality, cost and so on.
• The pressures associated with the speed of decision-making time, which is often this will result in inappropriate decisions / thorough and far beyond the expectations exist.
• The conflicts that occur and that arise due to the diversity of opinion or pandangn / opinions of various parties involved in the decision-making process. This sort of thing happens because of differences in background and interests of various parties in seeing the problems to be resolved / decided.
Despite many difficulties and obstacles that must be faced, management can not not have to do studies, anaisis, followed by evaluation and decision making. Any problems encountered and must be solved, must first be analyzed and developed alternatives feasibility, both technically and economically, to then decide the most appropriate.
A draft or proposal of the projects, will be evaluated erdasarkan technical efficiency (physical) and economic efficiency. Technical efficiency is generally formulated as follows:
On the other hand, although economic efficiency is expressed as a ratio of output per input, but in this case is expressed in units of the economic units (money). General formulation as follows:
7.1 CYCLE FLOW OF MONEY (CASH FLOW) IN THE PRODUCTION PROCESS
The production process is always described as a process of metamorphosis (transformation) of the raw materials into finished products. From the flow of money, production systems must be able to convert the funds invested in the form of Long Term Assets atupuun working capital into finished products or services that can satisfy the demands (fever) there. The smooth production process, which is measured by effectiveness, efficiency and productivity of work, cycles will be able to facilitate the flow velocity of money (cash flow) that exists. Surely here is not only an efficient depends only production but also be determined by the smoothness of the process of marketing or product sales output.
Once the output sold, it happened once again the process of transformation of products / services into "cash" (cash) in the form of receipt or payment (revenue), which then flows back to a range of needs such as the following inivestasi for depreciation or the need to add capacity production (expansion) and operating costs. If there are remaining revenue, after deducting the total production costs (Fixed Costs + Variable Costs), then this would be an advantage (profit) company which in this case would be allocated for tax and divedends (profits distributed to owners of separation company).
7.2 CLASSIFICATION AND PRODUCTION COST STRUCTURE
In order to carry out the analysis and evaluation of alternatives related to the projects (products, services, processes or work facilities), it would require the ability to be able to identify the type and cost of existing types. To clarify the costs that must be spent in production activities, the following describes some types of common costs:
• Initial and Operating Costs. Start-up costs (first cost) is that expenses must be incurred prior to the beginning of the production activities carried out. These costs will usually be used to purchase machinery (production facility), installations, buildings and so on. This start-up costs tend to be large and have a strategic value that includes the long-term time dimension (long term). To get back the invested capital (investment), then it can be done through the cost of depreciation (Depreciation cost) whose magnitude will depend on the depreciation calculation method applied. Cost of origin issued only once for each of assets invested. Further costs are routinely incurred hahrus / periodic be classified in the form of operational and maintenance costs (operating and maintenance costs).
• Cost Direct and Indirect Costs. Direct costs (direct costs) are costs that can be directly identified with a particular production process or product output (production output) is produced. For example here includes the costs of direct materials, components, direct labor, and so on. Here, the cost will be calculated in detail for each unit of output produced products. The same thing as energy, supplies, utilities and other overheads cost items that can be linked directly with the department or a particular facility.
Whereas indirect costs (indirect costs) in this case can not be identified with a particular product or process. Cost for lighting, air conditioning, telephone, indirect materials / labor and so in this case could not be calculated detaol for each unit of output produced.
• Fixed Costs and Costs Not Fixed. In many cases the decision-making with respect to cost as one benchmark, often the decision will be based on production volume that must be fulfilled within a certain period. In connection with this analysis needs to known and identified the so-called fixed costs (fixed cost) and cost is not fixed (variable cost).
Costs associated with the operation of fasililtas-production facilities within a specific period in which the costs are relatively fixed / constant for the production activity took place and no matter the amount or volume of production the resulting known as fixed costs or fixed costs. For example the cost of depreciation, taxes, insurance, mortgage interest, rent buildings / equipment, indirect costs or overhead costs.
Further direct costs such as direct material cost, direct labor cost and the cost of packing (packaging) of this magnitude will tend to "stay" perunit output. These costs generally referred to as "unit variable cost"; where the total cost is total variable cost will depend on the amount or vary with the amount / volume of production.
Total Cost = Total Fixed Cost + Total Variable Cost
(TC) (TFC) (TVC)
When the cost of production or manufacturing cost (manufacturing cost) per unit of product to be known, then this can be obtained by the following formula:
Production Cost per unit Total Cost of Production
(USD / unit) Amount / produced by Production Volume
7.3 DEPRECIATION OF AN ECONOMIC ASSET VALUE (Depreciation)
Definitively, depreciation / depreciation can be expressed as berkutangnya value (value) of a "physical assets" such as machinery, production equipment, factory buildings, and other elements with increasing use of these assets. In the case in shrinkage can be classified in the form:
• Physical Depreciation (physical Depreciation)
• Depreciation of work function (functional Depreciation)
• Depreciation of the economic value / accounting (accounting Depreciation)
Depreciation is defined as a reduction in physical shape, size or physical dimensions of asset due to usage. A simple example of this can be seen on the wear occurs on the bearing (bearing) which arise as a result of friction, thinning thick boiler tubes due to corrosion, and so on. Penyusustan work function is defined as a reduction in work function and usefulness of an asset, which in this case was not caused by a decrease in physical ability, but because of changes in demand / needs (demand) that is technically and economically feasible asset is no longer applied. For example, a decrease of new technology that caused peralatanproduksi or automatically operated equipment which will cause long been a no longer economical to operate. While accounting penyusustan will analyze the reduced value of the dollar value measure (USD).
Depreciation or depreciation size will depend on the method applied menyusutan. With the selected method, the depreciation cost of adjustable constant per year or greater are made in the first years and continued to decline (small) in the following years. Main reason of depreciation for the year was made earlier are as follows
• Providing protection against the risk of an asset usangnya rapid innovation due to the fast growing technology.
• Depreciation large ditahun early withdrawal will accelerate all the costs incurred for such investments as the asset is still in its peak performance, in addition to the tax-relief to be paid.
To determine the amount of depreciation costs, there are 4 (four) common method was applied, namely:
• straight-line depreciation method (straight line Depreciation method)
• the number of digits method of depreciation (sum of the year digits Depreciation method)
• declining balance depreciation method (declining balance method Depreciation)
• reduced funding depreciation method (Depreciation sinking fund method)
Before the calculation of depreciation costs must first be obtained data relating to:
• initial costs (cost + installation cost) of assets (P)
• Estimated value of assets sold on tahunke-N or commonly known as "salvage value" (S)
• Age indicates the length of productive assets is to be operated economically (N)
7.3.1 STRAIGHT-LINE DEPRECIATION METHOD (STRAIGHT LINE METHOD Depreciation)
This method provides the possibility to shrink the value of an asset at a constant rate of depreciation during the period took place. Depreciation costing formulation can be stated as follows:
P = initial cost (USD)
S = Salvage value (USD)
N = Period of depreciation
Example:
Initial value of an asset is Rp 40.000.000, - and setimasi its salvage value Rp 10.000.000, -. Depreciation period for 5 years, the cost of depreciation each year is:
= 1 / 5 (Rp 40.000.000, - - Rp 10.000.000, -)
= Rp 6.000.000, --
Year Cost Depreciation
Book Value per year on
end
0
1
2
3
4
5 --
6,000,000
6,000,000
6,000,000
6,000,000
6,000,000 USD 40,000,000
USD 34,000,000
USD 28,000,000
USD 22,000,000
USD 16,000,000
Rp 10.000.000
7.3.2 ASSET DEPRECIATION METHOD METHOD WITH SUM OF YEAR Digits
This method will calculate the cost of depreciation (depreciation) in a given year bebrdasarkan digit ratio that year with the number of digit years (sum of year digits) where applicable depreciation period. SOYD method will provide the possibility of the value of an asset will continue to decrease in the rate of certain reductions. The amount of depreciation can be calculated based on the formulation as follows:
Year Cost Depreciation
Book Value per year on
end
0
1
2
3
4
5 --
10,000,000
8,000,000
6,000,000
4,000,000
2.000.000 Rp 40,000,000
IDR 30,000,000
USD 22,000,000
USD 16,000,000
USD 12,000,000
Rp 10.000.000
7.3.3 BALANCE DEPRECIATION METHOD DECREASING (Declining Depreciation BALANCE METHOD)
This method will result in depreciation costs in large numbers in the early years and then rapidly in the period according to the following year. The amount of depreciation in this case is calculated based on the percentage teretentu / face-to book value of assets in the year prior to the desired depreciation. The formula calculating the annual depreciation charge in this case stated sepereti follows:
where:% R = the desired percentage of depreciation per year
BVn-1 = book value in year n-1 (n = 1, 2, ..., N)
Year Cost Depreciation
Book Value per year on
end
0
1
2
3
4
5 --
0.25 x 40,000,000 = 10,000,000
0.25 x 30,000,000 = 7,500,000
0.25 x 22,500,000 = 5,625,000
0.25 x 16,875,000 = 4,218,000
(12,656,250 -10,000,000) = 2,656,000 IDR 40,000,000
IDR 30,000,000
USD 22,500,000
USD 16,875,000
USD 12,656,000
Rp 10.000.000
Note:
In the case above% R = 25% per year. Depreciation costs for the period to 5 in this case does not follow the formula / method defined, because in this case bound to estimate the value of salvage value of Rp 10.000.000, -.
In this method, the determination of shrinkage percentage (% R) is based on setimasi will cause incompatibility with the depreciation of the asset salvage value at the end of the period of depreciation. To be precise, the determination of% R in this case can be determined according to the following formulation:
it is thus in the case above, R-dilai% would be:
= 24.22%
7.3.4 DEPRECIATION FUND DECREASED METHOD (METHOD Depreciation Sinking Fund)
In this method the value of an asset will be reduced by the continued depreciation rate increase. This Dalammetode of interest (interest) the bank will take into account the consequences of the changes ebagai money value in accordance with the function of time (Time Value of Money). Based on this method, the annual depreciation is the sum total of the amount invested in asset values in the "sinking fund" at the end of the year from the amount of interest earned during the year. The formula for this method are as follows:
As an example of the above questions, then:
= USD 4,031,400
With regard to the interest rate (i = 20%), the annual depreciation is:
AD1 = Rp 4,031,400, --
AD2 = Rp 4,031,400, - + 20% x Rp 4,031,400, --
= Rp 4,837,600, --
Year Cost Depreciation
Book Value per year on
end
0
1
2
3
4
5 --
4,031,400
4,834,600
5,805,200
6,966,300
8,359,000 USD 40,000,000
USD 35,968,600
USD 31,131,000
USD 25,325,800
USD 18,359,500
Rp 10.000.000
7.4 ANALYSIS OF POINT HOME (BREAK EVEN ANALISYS)
Titk home Anilisa principal is a general economic analysis applied in the decision-making process. In analyzing the point home crow, have to overlook things like the following:
• Condition of the future related to changes in the level of certainty needs (assumed to be constant fever)
• Value for money will not change over the period of time running (Time value of Money)
To perform the calculation analysis, then it can be seen from the following relationships are:
Fortunately (profit) or loss (loss) (Z) = Total Revenue (TC) - Total Cost (TC)
When the Z value is positive, the favorable conditions that will be found. Conversely if Z value is negative, then the losses incurred. Thus begins this relationship can be further analysis as follows:
[Total Revenue] = [Total Cost]
(TR) (TC)
Selling price per Number of output Variable Cost Total Cost Total Output
Home production product unit remains (TFC) per unit of production output return
(P) principal (NBEP) (V) principal (NBEP)
With slight modifications the above formula can be made as follows:
NBEP =
Number of output Total Fixed Costs
production of the selling price per home - Variable Cost
main (NBEP) product units per unit of product
The difference between the P - V is called by the term "contribution per unit of output". From this analysis found the assumptions and limitations are as follows:
• The selling price per unit of product (unit price) or P will always be constant, regardless of the number of units of output that can be sold. In real conditions, the unit price will depend on the law of supply existing demand.
• variable cost per unit of output (V) is also considered constant. No matter how much the amount of output sold, here is not known a discounted price (discount price).
• Assumption P and V values are constantly providing new assumption that all costs associated with the (cost) or revenue (cost) would be linear).
• Analysts can only be applied to analyze the production facility that produces products for a single service (single output).
Next we will discuss the production activities that have been implemented in a manufacturing industry with the knowledge of the following data:
• Total fixed costs TFC = Rp 90.000.000 -/tahun
• The total variable cost TVC = USD 192,000,000, -/tahun
• The number of products manufactured / sold was for 12,000 units / year
• Total revenue from the sale of 12,000 units of these products is the TR = Rp 240,000,000, --
So the profit or loss will be obtained is:
Z = TR - (TFC + TVC)
Z = USD 240.000.000/th - (USD 9.000.000/th + USD 192.000.000/th)
= - Rp 42,000,000, -/th
Since Z is negative (-), then clearly state that there is a loss.
a) Pressing / lower Total Fixed Costs (TFC)
Step down the amount TFC prices can be done with the road:
• Reduce costs penyusustan (depreciation) is by using a specific depreciation method or enlarge the period of depreciation.
• Pressing the costs of promotion, advertising or other expanses sales.
• Implement cost savings, other overhead costs such as indirect costs, etc..
To find out how much the maximum total fixed costs in order to provide conditions of possibility of profit analysis can be done with BE. As we all know the terms achieved break even condition is biia Z = 0, so that TR = TC or TFC + TVC. In other words, the relationship can be obtained:
TFC = TR - TVC
TFC = USD 240,000,000, -/th - USD 192,000,000, -/th
TFC = USD 48,000,000, -/th
From the calculation results can be concluded that if the production process and the benefits desired in other words is assumed to remain the same, then the total fixed cost (TFC) should be suppressed less than USD 48,000,000.
b) Pressing / Lower Variable Cost per unit of output or unit cost variable (V)
Step down unit cost variable (V) can be implemented by:
• Implement improvements to the working procedures of standards or other working systems so that production processes can be implemented more effectively and more efficiently.
• Selecting materials that are cheaper, and easier / faster to produce, raise the technological level of production process by selecting a machine or production facilities are more productive options that can reduce the cost of direct labor (direct labor cost), energy saving and so on .
To find out how many units the maximum cost variables that can be tolerated so that the production process can be profitable, then the same way can be evaluated through the analysis of the calculation as follows:
Of the existing problems and obtained information that:
Unit Variable Cost = Total Variable Cost (TVC)
Volume products produced
V = USD 192.000.000/th = USD 16.000/unit
12,000,000 units / year
Clearly, in order to obtain an advantage in this case the unit variable cost (V) must be emphasized less than Rp 16.000, -. From the analysis, where the terms Z = 0 must be fulfilled, obtained the following relationship:
TR = TC
TR = TFC + TVC = TFC + ON
V = Rp 12.500, -/unit Yr
c) Raise the Price perunit or Unit Cost Items Price (P)
Although measures to raise the selling price is not an easy alternative to implement, but nevertheless it remains a pikihan can be taken by management in order to prevent themselves from losses. Based on the information data, obtained that:
Total Revenue (TR) = USD $ 240,000,000, -/tahun
where TR = P x N
Price = Total Revenue (TR)
Volume Sold Items (N)
P = Rp 240,000,000, -/tahun = Rp 20.000, -/unit Yr
12.000/unit/tahun
Obviously with P = Rp 20,000, will cause losses -/unit Yr because here TR
Z = 0; TR = TC or
P.N = TFC + NV
P = TFC + V
N
P = Rp 90.000.000 -/th + Rp 16.000, -/unit Yr
12,000 units / year
P = Rp 23.500, -/unit Yr
d) Increasing Number or Volume Unit Output (N) who made / sold
This step enables management to increase the amount of production output as much as possible (in accordance with the capacity terpasangnya) without worrying about these things can affect the total fixed cost (TFC). The greater the volume of production is produced, then the contribution of fixed cost per unit of output will be smaller. This course will be able to push the total to calculate the end. Back again to the concept of BE analysis stated in the previous pages, the basic formulation obtained as follows:
Number of output Total Fixed Costs
production of the selling price per home - Variable Cost
main (NBEP) product units per unit of product
NBEP =
From the results of calculations can be concluded that if you want to make profit, the amount / volume of product to be made should be increased more for 22,500 units / year. When N = 22,500 units / year this will lead only to reach break-even condition.
7.5. ENGINEERING ECONOMIC ANALYSIS (ENGINEERING ECONOMY ANALISYS)
Many projects engineering (engineering) that in reality there are often faced with alternative choices such as design, procedures, methods, and so on. Economic aspect has to do with the investment (fixed cost) is required, operational costs should be dikelarkan, overhead cost and others. Economic analysis techniques (engineering economy analisys) in this case will compare the differences of alternatives in this engineering project economic value of dinyatakandalam amount of money (cost). The best alternative would provide the smallest cost (economical).
7.5.1 PROCEDURE FOR EVALUATION & DETERMINATION PROJECT ALTERNATIVE TECHNIQUE AND problem
In evaluating the technical projects (engineering project) in order to determine the best alternative to be proposed, then the following procedure can be taken:
a) These alternatives should be clearly formulated before compared to one another. Here, each alternative must be equal or equivalent; in the sense that no significant in terms of functionality / usability, technical specifications and so on. Evaluation and determination of alternatives can only be done at least there are 2 (two) possibilities that might be proposed.
b) Any decision taken must also membari consideration to the consequences or impact that will happen later.
c) Further evaluation and / or decisions taken should be reviewed to satisfy the interests of whom? Is the interest of the project owners or the public / consumers generally? Analysis of BCR (Benefit Cost Ratio) is one way to assess this.
d) For each analysis and economic decisions are taken, then the money - as an economic unit the unit will be applied as the main benchmark. Here the differences are expressed in units appropriate physical units, and units of physical force is converted in units of the applicable unit of currency (USD or $).
e) There should be criteria in making decisions clearly. The main criteria for selection of the best alternative in this case lies in the alternative capable of using all available resources effectively and efficiently.
Problem evaluation and alternative selection of engineering projects, many of us have encountered in the form:
• Alternatives for the plant site selection
• Alternatives for the election of power generation (diesel power, hydropower, power plant, nuclear plants, etc.) and its procurement policies.
• And others.
7.5.2 THE CONCEPT OF INTEREST LOANS (INTEREST)
Term rates may be interpreted as rental value of borrowing some money for a certain time. Also of interest is defined as the rate of return (rate of return) of the amount of money invested. Some money comes from their own or borrowed (individual stocks, banks or other financial institutions), then the owner of the money would usually expect a "compensation" to the conditions in which the owner will not be able to use the money within a certain time period. In the cost analysis, this compensation will be calculated as one element of cost (cost), where the size of interest (interest) will be influenced by factors such as:
• Risks not return the money invested / borrowed for a variety of things such as losses, inflation and so on.
• The influence of the law of demand and supply (supply-demand) is associated with the funds for loans.
• overhead costs that must be paid for keeping clection book fees, and other administrative costs as well besides the length of the loan period.
• The rules are created / set by the government related to a specified amount of interest. For example in Indonesia, much interest will langnsung controlled by Bank Indonesia.
7.5.3 TYPE-TYPES OF INTEREST AND METHOD application
Interest rates are always expressed per year, unless there is another provision, when it states:
i = 18% / year
i = 1.8% / month
i = 4.5% / tri wulan
i = 9% / ½ years
So the statement above would have the same understanding. In a simple interest when considered as a sum of money received as a result of capital investment, then this will be interpreted as a gain (profit). Conversely, when interest is expressed as a sum of money received as rental payments (rental fee) from the loan money, then it could be interpreted as cost (cost).
7.5.4 CHANGES IN THE VALUE OF MONEY BECAUSE OF TIME AND DO THE INTEREST RATE
As already explained earlier that the money will have a specific interest rate when implanted in a specific time period. The relationship between interest and this time will bring us to the concept of change in the value of money within a specific time (Time Value of Money). Here the value of money will change according to the function of the time, because when the amount of money borrowed for a certain period, then the amount of money must be paid back next akanlebih than the number who had borrowed it. Difference value of the money paid back and the value of the borrowed money is what we call the interest or interests. In conditions where the interest rate (i)> 0, this will mean the value of money at different times will not be the same.
7.5.5 TYPE-TYPES OF INTEREST AND METHOD application
The amount of interest that must be paid in principle, will depend on 3 things:
• The length of time / rental period (n)
• The amount of fixed interest rate (i%)
• The method is applied to the determination of interest include the simple interest method (single interest) and methods are combined interest (compound interest).
In the single method of interest, the amount of interest here would be proportionately paid to the method of the loan period (n) multiplied by the amount of money borrowed. Simply put it can also be formulated as follows:
I = P.n.i
where P = amount of money saved / invested
i = interest rate (%)
n = period of time the loan during the applicable interest
7.5.6 INFLUENCE OF THE TIME VALUE OF MONEY, INTEREST (INTEREST) and their application ECONOMIC ANALYSIS IN ENGINEERING
Related to the change of the time value of money or interest factors, it is in some way a relationship can be found at the dollar value of past, present or the future by looking at the prevailing interest rates. Symbols / The following notation is then used in solve problems of economic analysis techniques:
i = rate / interest rate per period interest rate applicable (interest rete).
n = period interest rate determined in a certain period if not specifically stated the interest period is generally considered per year.
P = principal amount of money whose value is calculated / dielivalensikan in the future (Present Worth)
F = The amount of money whose value is calculated principal / dielivalensikan in the future (Future Worth) at the end of the period of interest (n). The amount of the value of F is the principal (P) plus the accumulated interest during the rental period.
A = Number of n single payment equal pay row (Uniform Series) done at each end of the period of interest tahnan (Annual Payment or annuity)
Furthermore, to analyze the relationship between P, F and A are expressed in the variables n and i% can be searched by specific formulations which will be explained the application.
a. SINGLE PAYMENT (SINGLE PAYMENT)
Analysis of the calculation here to find out the relationship between P and F value or otherwise set forth in accordance with the variables n and i%. Here the relationship is known formulation as follows:
1) a single payment of multiple factors (Single Payment Compound Amount Factor)
Used to find the price of M where the value of P, n and i% unknown. The formula used is:
F = P (F / P, i%, n) or
F = P (1 + i) n
2) Present Value Factor from Single Payment (Single Payment Present Worth Factor)
Present value factor (Present Worth Factor) is used to find the value of principal (P) where F, n, and i% unknown. Formulation can be written:
P = F (P / F, i%, n) or
P = F
b. PAYMENT IN THE SAME AMOUNT AS Series (respectively) AT EACH END OF YEAR PAYMENT OR ACCEPTANCE (UNIFORM SERIES ANNUAL END OF YEAR PAYMENTS RECEIPT OR)
Calculation analysis was applied here to find out the relationship between an A, C and F are expressed in accordance with the variables n and i%. There are four types of relationships formulations respectively can be explained as follows:
1) factor funds saved / paid in equal numbers in series (The Uniform Series Sinking Fund Factor)
Uniform series used to search for a price when the value of F, n and i% is known, where the formulation can be written as follows:
or A = F (A / F, i%, n)
2) Factors funds / capital absorbed back in the same amount respectively (Uniform Series Capital Recovery Factor)
This method is used to understand the how the money should be withdrawn in the same amount respectively (A) with interest i% during the period is n to fund a number of P that has been invested. Formulation is shown as follows:
Or
, Or A = P [A / P, i%, n]
3) Factor of funds collected from the same payments in a row (Uniform Series Compound Factor)
Used to find out how much money is collected (F) at the end of n-year period for interest payments seriap in the same amount respectively with i% interest rate. Formulation can be explained as follows:
F = A (F / A, i%, n)
4) The value of money now from the same payments in a row (Uniform Series Present Worth Factor)
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