Assignment 4

UNIVERSITAS INDONESIA

Herbal Antibacterial Hand and Body Lotion

Revised Assignment IV

GROUP 20

GROUP PERSONNEL :

Dita Amelia Putri (1206201965)

Hari Purnama (1206202015)

Kameliya Hani Millati (1206202034)

Nurcahyo Adyota Prabhaswara (1206261200)

Ratri Kirana Prabaningtyas (1206202154)

CHEMICAL ENGINEERING DEPARTMENT

FACULTY OF ENGINEERING

UNIVERSITAS INDONESIA

DEPOK

MAY 2015

ii Universitas Indonesia

EXECUTIVE SUMMARY

In order to maximize the potential revenue that we could get from the selling

of our product, we have to determine the most profitable distribution and marketing

strategy. The distribution strategy consists of choosing the plant location with

consideration of land cost, accesibility to the nearest highway and other significant

infrastructure, closer location proximity to the raw material supplier, and the direct

pathway of all product distributor for each region. For our plant, we chose to locate

our plant in Jababeka Industrial Area, Jababeka XI Blok H no. 30 40, Cikarang

Utara, Bekasi, Jawa Barat, 17430 with land cost of IDR 3,000,000.00 per m2.

After that, we have to know the raw material supply chain by selecting the

distributor and calculating the quantity needed for each production period which

then can be illustrated by the raw material scheduling. Then, for the market strategy

we have to know the exact market segmentation of our consumer to further

determine the name for each of our product distributor in each region, the number

of offsite facilities (warehouses) needed, the route, and the approximate distance

with our plant to fully know how much time will be spent and how much it will cost

for the product to be distributed.

In order to start-up the plant, there are costs needed to buy the facilities and

equipment needed which usually called as capital costs. The capital costs

investments that are gathered by loaning 20% from each 3 investors and 20% from

each BNI and Mandiri Bank will then be allocated for fullfiling the direct plant

expenses and indirect plant expenses. The total capital investments (TCI) needed to

start-up our company is IDR 13,840,116,811.00. It also has to fulfill the monthly

operational costs of our company which costs about IDR 29,678,892,181.10

consisting of raw material cost, utility cost, direct labor, maintenance, patent,

insurance, distribution cost, administrative cost, and marketing, with the most

significant part being the raw material cost.

To make an attractive interest rate for the investor, we have to determine an

interest rate that is above the general interest rate provided from investing in a bank.

We have to specifically determine the interest rate that is above the MARR which

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values approximately the same with the value of WACC (Weighted Average Cost

of Capital). The WACC calculated for our company is 15.8%. To further improve

and stabilize the income of the company, we have to determine the IRR value which

is calculated by summing the cumulative cash inflow and outflow along the period

of production.

To evaluate the profitability of our plant, we have several parameters that

show whether our plant is economically attractive or not. Those parameters include

rate of investment, net present value, payback period, internal rate of return, and

breakeven point. With minimum attractive rate of return of 15.58%, we can assess

those parameters as following : rate of investment is 19.23%, net present value is

IDR 42,683,925,000, payback period to be 3.84 years, internal rate of return is 27%,

and breakeven point is 4,815,360 products. Having assessed all of those parameters,

we can conclude that our plant is economically attractive.

iv Universitas Indonesia

LIST OF CONTENT

COVER ............................................................................................................ i

EXECUTIVE SUMMARY ............................................................................. ii

LIST OF CONTENT ...................................................................................... iv

LIST OF FIGURES ........................................................................................ v

LIST OF TABLES .......................................................................................... vi

CHAPTER 1. INTRODUCTION .................................................................. 1

1.1. Distribution Product .............................................................................. 1 1.2. Plant Location ....................................................................................... 1 1.3. Raw Material Distribution ..................................................................... 4 1.3.1. Raw Material Location .......................................................................... 4 1.3.2. Alternative Scenarios and Modelling .................................................... 6 1.3.3. Raw Material Supply Chain .................................................................. 8 1.4. Product Distribution .............................................................................. 13 1.4.1. Product Distribution Region ................................................................. 14 1.4.2. Product Distribution Chain ................................................................... 18 1.4.3. Distribution Pathway ............................................................................. 19 1.4.4. Transportation Method .......................................................................... 20 1.4.5. Fluctuation of Products in The Warehouse ........................................... 22 1.5. Marketing .............................................................................................. 25 1.5.1. Target Determination ............................................................................ 25 1.5.2. Market Segmentation ............................................................................ 25 1.5.3. Marketing Integration ............................................................................ 26 CHAPTER 2. PRODUCT COSTING ........................................................... 28

2.1. Total Capital Investment ....................................................................... 29 2.1.1. Fixed Capital Investment ...................................................................... 30 2.1.2. Working Capital .................................................................................... 36 2.2. Operational Cost..................................................................................... 37 2.2.1. Manufacturing Cost ............................................................................... 37 2.2.2. General Expenses .................................................................................. 46 2.3. Determining Price for Product per Package .......................................... 55 2.4. Cash Flow ............................................................................................. 55 2.4.1. Before and After Tax Cash Flow .......................................................... 56 CHAPTER 3. PROFITABILITY ANALYSIS ............................................. 58

3.1. Rate of Return / Rate of Investment ...................................................... 58 3.2. Net Present Value .................................................................................. 58 3.3. Payback Period ...................................................................................... 59 3.4. Internal Rate od Return ......................................................................... 60 3.5. Breakeven Point .................................................................................... 60 3.6. Sensitivity Analysis ............................................................................... 61 3.6.1. Product Price Fluctuation ...................................................................... 61 3.6.2. Raw Material Cost Fluctuation ............................................................. 62 3.6.3. Sensitivity Graph ................................................................................... 62 CHAPTER 4. CONCLUSION ....................................................................... 66

REFERENCES ................................................................................................ 68

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APPENDIX ...................................................................................................... 69

Appendix A Depreciation and Salvage Value Calculation .......................... 69

Appendix B Loan and Interest Calculation .................................................. 83

Appendix C BTCF & ATCF Calculation ..................................................... 84

vi Universitas Indonesia

LIST OF FIGURES

Figure 1.1. Empty Land on Block H Number 30 40 ................................... 3 Figure 1.2. Plant Location to The Highway ................................................... 3 Figure 1.3. Plant Location to The Port ........................................................... 4 Figure 1.4. Fluctuation of Raw Material Supply ............................................ 13 Figure 1.5. Fluctuation of Packaging Supply ................................................. 13 Figure 1.6. Flow Chart of Product Distribution .............................................. 15 Figure 1.7. Product Distribution Parameters .................................................. 19 Figure 1.8. Distribution Pathway to Region 1 ................................................ 19 Figure 1.9. Distribution Pathway to Region 2 ................................................ 20 Figure 1.10. Fluctuation of Product Warehouse ............................................... 23 Figure 1.11. Fluctuation of Product at every regions ....................................... 24 Figure 2.1. Bare Module Factors .................................................................... 31 Figure 2.2. Eelectricity Cost for Industry ....................................................... 39 Figure 2.3. Diagram of Operational Cost Breakdown .................................... 56 Figure 2.4. BTCF & ATCF ............................................................................ 59 Figure 3.1. Graph of Net Present Value ......................................................... 63 Figure 3.2. Sensitivity Chart for IRR ............................................................. 67 Figure 3.3. Sensitivity Chart for NPV ............................................................ 67 Figure 3.4. Sensitivity Chart for Payback Period ........................................... 68

vii Universitas Indonesia

LIST OF TABLES

Table 1.1. Name of Supplier of Raw Material .............................................. 5 Table 1.2. Raw Material Supplier ................................................................. 6 Table 1.3. Scenario and Modelling For Raw Material .................................. 6 Table 1.4. Scenario and Modelling For Packaging ....................................... 7 Table 1.5. List of Priority Supplier For Packaging ....................................... 8 Table 1.6. Total Order For Raw Material ...................................................... 10 Table 1.7. Total Order For Packaging ........................................................... 11 Table 1.8. Scheduling of Raw Materil Supply .............................................. 11 Table 1.9. Name of Wholesaler and Location Selected ................................ 15 Table 1.10. Weekly Product Distribution For Each Region ........................... 18 Table 1.11. Distribution Cost .......................................................................... 21 Table 1.12. Warehouse Planning ..................................................................... 22 Table 1.13. Total stock for 6 months .............................................................. 24 Table 2.1. Marshall and Swift Chemical Equipment Cost Index .................. 31 Table 2.2. Total Bare Modul Cost ................................................................. 32 Table 2.3. Land Cost ..................................................................................... 33 Table 2.4. Building Cost ............................................................................... 33 Table 2.5. Total Supporting Equipment Cost ................................................ 34 Table 2.6. Utilites Installation Cost ............................................................... 35 Table 2.7. Market Research Cost Calculation ............................................... 35 Table 2.8. Patent and Brand Investment Cost ............................................... 35 Table 2.9. Total Fixed Capital Cost .............................................................. 36 Table 2.10. Total Capital Investment Cost ...................................................... 37 Table 2.11. Raw Material Cost ........................................................................ 38 Table 2.12. Electricity Cost ............................................................................. 39 Table 2.13. Water Cost .................................................................................... 40 Table 2.14. Direct Labor Cost ......................................................................... 41 Table 2.15. Maintenance Cost ......................................................................... 42 Table 2.16. Patent Maintenance Cost .............................................................. 42 Table 2.17. Insurance Cost .............................................................................. 43 Table 2.18. Depreciation Value and Salvage Value Every Year .................... 45 Table 2.19. Loan and Interest Percentage ....................................................... 45 Table 2.20. Loan Payment ............................................................................... 46 Table 2.21. Indirect Labor Cost ...................................................................... 48 Table 2.22. Communication Cost .................................................................... 50 Table 2.23. Distribution Cost .......................................................................... 50 Table 2.24. Grand Launching Cost ................................................................. 53 Table 2.25. Printed Media Cost ....................................................................... 53 Table 2.26. Commercial Processing Cost ....................................................... 54 Table 2.27. TV Commercial Publication ........................................................ 54 Table 2.28. Website Cost ................................................................................ 55 Table 2.29. Online Media Cost ....................................................................... 55 Table 2.30. Total Operational Cost ................................................................. 56 Table 2.31. Product Forecasting ...................................................................... 57

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Table 2.32. WACC Variables ......................................................................... 58 Table 2.33. Cash Flow Before Tax ................................................................. 61 Table 2.34. Cash Flow After Tax .................................................................... 61 Table A.1. Equipment Depreciation .............................................................. 69 Table A.2. First Supporting Equipment Depreciation ................................... 71 Table A.3. Second Supporting Equipment Depreciation ............................... 74 Table A.4. Plant and Building Depreciation .................................................. 78 Table B.1. Loan and Interest Calculation ...................................................... 81 Table C.1. BTCF Calculation ........................................................................ 83 Table C.2. ATCF Calculation ........................................................................ 84

1 Universitas Indonesia

CHAPTER 1

SUPPLY CHAIN

1.1. Distribution Product

The products marketing system is in conjuction with the product distribution

system becausw both variables are closely related. If we are going to market our

produced goods to our target market region, we have to first consider the plan areas

of marketing and distribution. Proper marketing and distribution strategy could be

the critical point that defines the success of a business. Both marketing and

distribution strategy have complement each other in a way that will increase the

capability of earning maximum profut in order to boost the companys revenue.

To choose a distribution strategy we have to consider factors like plant

location, product distribution location, raw materials distributors location, etc.

Distribution strategy is also related to how our product would be introduced to

public so that it could be accepted by society despite there has been a lot of existing

antiscratch product. This issue of advertising is also one of the largest contributor

that takes an important role for the success of our product.

The distribution strategy of our company is the Exclusive Distribution

Strategy (EDS). Exclusive Distribution Strategy (EDS) is a distribution strategy

where only certain dealers are sactioned to sell products within a given region. EDS

allowa us to distribute our product just for one or two dealers in one distribution

area. The benefit that we will gain by utilizing EDS is that the products that will be

sold is produced with better quality for limited consumers. Examples of exclusives

distributions are supermart, minimart, hypermart, etc.

1.2. Plant Location

The plant location has to be selected carefully because it determines the cost

of production and distribution of an industrial activity. Some parameter that we use

to determine the plant location are:

a. Located in an industrial area.

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Universitas Indonesia

Industrial area is an region which is divided into several block for industrial

plant. The land in industrial area is wide and ready to be used so it will reduce the

needed of land preparation cost. In this case, we choose

b. Close to the raw material supplier and consumers market.

The plant location which is near to the raw material supplier and the consumer

market will reduce transportatation and storage charges.

c. Close to transportation access.

The ease of transportation access will facilitate the product distribution. For

example the plant which is located near the highway, port, or aiIDRort.

d. Have complete facilities and utilities.

The main facilities and utilities which needed by the plant are electricity, water,

and communication. The other facility needed at emergency are hospital,

firefighters, etc.

e. Protected from natural disaster.

The regional history of natural disaster such as flood or hurricane should be

examined and the consequences of it should be considered.

f. Waste disposal.

The plant should have adequate capacity and facilities for waste disposal. The

permissible tolerance leveles of waste disposal methods should be considered

carefully which is not interfere the public.

Based on the criteria above, we choose our plant location in Jababeka

industrial region. The exact location is in Jababeka XI Blok H No.30-40, Cikarang

Utara, Bekasi, Jawa Barat 17530.In this block there is 350 m x 200 m empty land.

The Jababeka Indsutrial Estate itself is known as the first modern eco-industrial

estate under technical cooperation program which collaborative with Indonesias

Ministry of Environment and The Republic of Germany. Its area is 1570 hectares

and consist of more than 1400 local and multinational coporations from 29

countries.

This area near to our main raw material supplier which is from Jakarta and

Bogor and near to our main consumer market i.e. in Jabodetabek area.The

transportation access is easy because it only takes 13 minutes (6.5 km) to the

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highway (Jalan Akses Tol) and 56 minutes (43.1 km) to the port which can be seen

on the google map figure below.

For facility and utilities, this industrial region has two water treatment plant

unit with the total capacity is 500 1000 L/s and 25000 lines capacity for

telecommunication network. It also safe from natural disaster. The other facilities

and utilities are quality road improvement, drainage service program, in-house fire

brigade and fire hydrants, 24 hours security, public lightning and transportation,

etc. All these facilities and utilities are under Jababekas Estate Management

Services.

Figure 1.1. Empty Land on Block H Number 30 40

(Source: Google Map, 2015)

Figure 1.2. Plant Location to The Highway


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Figure 1.3. Plant Location to The Port


1.3. Raw Material Distribution

Raw material distribution is one of the most important factor in this chapter

raw materials sent by the supplier to the plant located in Bekasi using the landline.

Supplier selection is based on the comparison of the price and distance between the

supplier and the plant. Those considerations bearing on the costs that incurred for

the purchase of each material. There is an alternative supplier (supplier 2) with the

intent if the supplier cannot deliver the raw material for one reason or another, the

plant still can order raw materials from other suppliers.

1.3.1. Raw Material Location

Raw Material Location is on of important thing in raw material supply

chain, It is one of factor to distance to plant in Bekasi. Raw materials obtained

should be taken near the location of the plant.. Some of the main raw materials have

to be obtained as easy as they get because they available in indonesia.

Raw material is important for production product. Production of plant will

be stop if raw material is failed to transport to plant. One of solution to prevent

empty-raw material storage, is to make two alternatives for raw materials suppliers.

The three tables below will consists of raw materials needed for production and

their compositions, consumption per day, and the name of the suppliers.

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Table 1.1. Name of Supplier of Raw Material

Composition Of

Product

Weight

Consumption

(%)

Consumption

Per day

(kg)

Supplier 1 Supplier 2

Piper Betle Extract 25.0 71.325 Cv. M&H FARM, Villa Bogor

Indah DD1 No.3 Pusat Herbal Ekstrak Cair dan Serbuk

Titanium Dioxide 0.3 1.425 PT Artha Jaya Sanatyaasa, Banten PT. ANUGRAH PUTRA KENCANA(Jabaeka,

Bekasi dan Cikarang)

Olive Oil 5.0 23.75 PT. Lantabura Interanational,

Jakarta Cv. Mawar Herbal, Jakarta

Alpha Tocopherol

(Vitamin E) 0.2 0.95 Cv. Harum Kimia, Jakarta PT. Cortico Mulia Sejahtera, Jakarta

Glycerin 1.0 4.75 PT. Iniko Karya Persada, Jakarta PT. Kartika Tirta Hema , Jakarta

Aqua Demineralized 63.0 299.25 Cv. Harum Kimia, Jakarta CV. Harum Kimia, Jakarta

Carbomer 940 0.1 0.475 Toko Kimia Indonesia - Jakarta PT SAMIRASCHEM Indonesia, Jakarta

TEA (Tri-

ethanolamine) 2.5 11.875

PT. Graha Jaya Pratama, Jawa

Barat Toko Spreindo Triarsa, Jakarta

Methyl Paraben 0.1 0.475 PT Tirta Buana Kemindo, Jakarta Hefei Reachever Import And Export Limited

Company , China

Fragrance 0.1 0.475 Pt. Sumber Indokemjaya,

Tanggerang Pabrik Sabun Bandung

Emersol 132 2.5 11.875 Changzhou Truly Foreign Trade

Co.,LTD,Cina Jinan Rouse Industri Co., Ltd, China

Propyl Paraben 0.2 0.95 PT Tirta Buana Kemindo, Jakarta Qingdao Fraken International Trading Co., Ltd.

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Beside of supplier of compositon product. For packaging, our product need bottels

of cosmetic and printed label to cover that bottles. They are supplied by twosupplier

in Indonesia. Below this table, supplier to be listed.

Table 1.2. Raw Material Supplier

Raw Material For

Packaging Supllier 1 Supplier 2

Consumption

Per Day

(Piece)

PET Food Gradde

Clear Bottles

PT. Permata Plastik

(Banten)

PT. Fajar Inti Plasindo

(Kerawang ) 4800

Printed Labels Mulya Mandiri

(Ciamis) CV. Rikma Karya 4800

1.3.2. Alternative Scenarios and Modeling

From two supplier, we will cooperate with first supplier and second suppler.

To Choose fisrt and second suppler, we create alternative scenario and modelling.

The model will consist of the supplier credibility, the distance needed to arrive at

our plant location, effectiveness of the pathway, and the time needed to deliver to

our plant location. In the tables below we will see the modeling for the raw material

distribution.

Table 1.3. Scenario and Modelling For Raw Material

Composition Of

Product


Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Piper Betle

Extract

56.6 km, 56

minutes 25 34.7 km, 49 Min 100

Titanium Dioxide 53.4 km, 58 min 10 2 km, 10 Min 25

Olive Oil 25.8 km, 40

minutes 150

25.8 km, 40

minutes 100

Alpha Tocopherol

(Vitamen E)

25.8 km, 40

minutes 25

25.8 km, 40

minutes 20

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Table 1.3. Scenario and Modelling For Raw Material (Contd)

Table 1.4. Scenario and Modelling For Packaging

To anticipate an urgent situation when the supplier can not deliver the raw

materials, so the raw materials needed will all be transferred to the other supplier.

This secondary supplier serves as a backup supplier for the raw materials. This

selection is based on the credibility of the supplier, distance, and time needed for

the delivery. Tables below will show the scenario for the suppliers.

Composition

Of Product


Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Glicerin 25.8 km, 40

minutes 100

25.8 km, 40

minutes 50

Aqua

Demineralized

25.8 km, 40

minutes 1000 2 km, 10 Min 1000

Carbomer 940 25.8 km, 40

minutes 10

25.8 km, 40

minutes 25

TEA

or

Trietanolamin

25.8 km, 40

minutes 100 53.4 km, 58 min 50

Methyl

Paraben

25.8 km, 40

minutes 10 10 days 50

Fragnance 53.4 km, 58

min 10 133 km, 2 Hour 25

Emersol 132 10 days 100 10 days 25

Propyl

Paraben

25.8 km, 40

minutes 25 10 25

Raw Material

For Packaging


Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Distance,

Distribution

Duration

Minimum

Selling Unit

(kg)

Cosmetic Bottles 53.4 km, 58 min 750 42.9 km, 51 Min 1000

Printed Labels 25.8 km, 40

minutes 1000

25.8 km, 40

minutes 750

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Table 1.5. List of Priority Supplier For Packaging

1.3.3. Raw Material Supply Chain

Most The raw materials will be transported from suppliers located in cities

in Jakarta, West Java and Banten.. For the suppliers located in Java Island, the

delivery of the raw materials will be carried by land transportation such as truck

with box to keep condition of product. The cost of transport of material will be

assumed to be included of Raw Material Price.

The time needed for our raw materials to be delivered will be affected by

the distance of supplier, For the near supplier, the time needed is one day in

maximum without accident in the way. The length of time needed will be

determined by the supplier so that it is necessary for us to arrange the schedule of

the raw materials arrival. So, Order Time period is time from supllier can supply

raw material to our plant. This time based on capability of supplier to deliver raw

material.

Suppliers sell their products in a particular unit. The unit according to the

capacities of the sale that can be achieved by the suppliers. This capacity will also

be adjusted with the production capability of the plant so that we can determine the

number of units need to be ordered from the suppliers from order time period. The

amount of order will be adapt to our need of production. Ordering are using the unit

from the suppliers, so that the raw materials to be ordered are based on the sold unit

of raw materials. within a certain time. Usually the time of ordering and the depleted

raw materials is frequentive. For raw materials, ordering are usually set to use for

one month, same as ordering packaging. To prevent empty of raw material in

storage plant , we set order raw material be a safety order more than need per kg.

For the first order, the amount of raw materials for the production are

ordered 5%-10% to anticipate of disturbance of product. All of first order for our

plant based on time scheduling in January. For the order scheduling have to be

Raw Material For

Packaging First Supplier Second Supplier

Cosmetic Bottles PT. Fajar Inti Plasindo

(Kerawang )

PT. Permata Plastik,

Tanggerang

Printed Labels PT Label indonesia, jakarta Fonda Mandiri Jaya, Jakarta

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arranged so that all aw materials will arrive at the same time for the first time of

production. Delivered goods take time such one day until three weeks. Henceforth,

the ordering should be arranged at a regular intervals. Tables below will show

amount order for raw materials.

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Table1 1.7. Total Order For Raw Material

Composition of

Product

Consumpton

Per day

(kg)

Priority Supplier

Order Time

Period

(Day)

Need Order

Per Period

(kg/Period)

Selling

Unit

(Kg)

Total Order

per unit

(Piece)

Safety

Order

(Piece)

Piper Betle

Extract 71.325

Cv. M&H FARM, Villa Bogor Indah

DD1 No.3

5 356.625 150 2.378 3.0

Titanium Dioxide 1.425

PT. ANUGRAH PUTRA

KENCANA(Jabaeka, Bekasi dan

Cikarang)

30 42.750 25 1.710 2.0

Olive Oil 23.750 PT. Lantabura Interanational, Jakarta 15 356.250 150 2.375 3.0

Alpha

Tocopherol(Vitam

en E)

0.950

Cv. Harum Kimia, Jakarta 30 28.500 25 1.140 1.5

Glicerin 4.750 PT. Iniko Karya Persada, Jakarta 30 142.500 100 1.425 1.5

Aqua

Demineralized 299.250

PT. ANUGRAH PUTRA

KENCANA(Jabaeka, Bekasi dan

Cikarang)

30 8,977.500 1,000 8.978 9.0

Carbomer 940 0.475 Toko Kimia Indonesia Jakarta 30 14.250 10 1.425 1.5

TEA

(Trietanolamin) 11.875

PT. Graha Jaya Pratama, Jawa Barat 15 178.125 100 1.781 2.0

Methyl Paraben 0.475 PT Tirta Buana Kemindo, Jakarta 30 14.250 10 1.425 1.5

Fragnance 0.475 Pt. Sumber Indokemjaya, Tanggerang 30 14.250 10 1.425 1.5

Emersol 132 11.875 Changzhou Truly Foreign Trade

Co.,LTD,Cina

15 178.125 100 1.781 2.0

Propyl Paraben 0.950 PT Tirta Buana Kemindo, Jakarta 30 28.500 25 1.140 1.5

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Table 1.8. Total Order For Packaging

Raw Material For

Packaging

Consumption Per Day

(kg/Day) Supllier 1

Order Time

Period

(Day)

Need Order

(kg)

Selling Unit

(Piece)

Total Order Per

Unit

(Piece)

Safety Order

per unit

(Piece)

Bottles For Lotion 4,800

PT. Permata

Plastik,

Tanggerang

30 39,600 1,000 39.6 40

Printed Labels 4,800

PT Label

indonesia,

jakarta

30 39,600 1,000 39.6 40

Table 1.9. Scheduling of Raw Materil Supply

Composition Of Product Activity January February March April May June

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Piper Betle Extract Ordering

Consumption

Titanium Dioxide Ordering

Consumption

Olive Oil Ordering

Consumption

Alpha Tocopherol (Vitamin E) Ordering

Consumption

Glycerin Ordering

Consumption

12


Table 1.9. Scheduling of Raw Materil Supply (Contd)

Composition Of Product Activity January February March April May June

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Aqua Demineralized Ordering

Consumption

Carbomer 940 Ordering

Consumption

TEA (Tri-ethanolamine) Ordering

Consumption

Methyl Paraben Ordering

Consumption

Fragrance Ordering

Consumption

Emersol 132 Ordering

Consumption

Propyl Paraben Ordering

Consumption

Packaging

Bottles For Lotion Ordering

Consumption

Printed Labels

Ordering

Consumption

Note: yellow (ordering), orange (distribution), green (arrival), and blue (consuming).

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After making scheduling of Material Supply, we can make a graph to know

fluctuaction supply for plant. Graph below will show fluctuaction of raw materials

supply. Fluctuaction show time of cunsumption of material in our palant. Most of

raw materials have consumed in 15 days.

Figure 1.4. Fluctuation of Raw Material Supply

Figure 1.5. Fluctuation of Packaging Supply

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

0 50 100 150 200 250 300

Co

mp

osi

tio

n P

er K

g

Days

Piper Betle Extract

Titanium Dioxide

Alpha Tocopherol

Glicerin

Aqua Demeneralized

Carbomer 940

TEA( Trietanolamin)

Methyl Pareban

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

0 50 100 150 200 250 300

Per

Bel

on

gin

g

Day

Cosmetic Bottle

Printed Labels

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1.4. Product Distribution

Product distribution will be explained these following things, which are our

products time of delivery, the way to deliver our products from the plant to storage

and then delivered to the wholesaler and eventually, get to our consumers. The

things that need to be considered in this stage are distance of plant to distribution

center, distance of distribution center to retailer and scheduling of the product

distribution, as well as transportation method.

1.4.1. Product Distribution Region

Our product distribution regions are the big province within Java Island due

to the high population growth and development rate (Badan Pusat Statistik, 2010).

Other consideration is based on the economical growth factor. If it is viewed from

the economical growth factor, these islands have been having a steady economical

growth and also increasing every year especially the island of Java, because we all

know that Java is an island where economic activity is the highest in Indonesia.

Besides that, these islands have been experiencing high levels of income per year

per household and relatively stable, increasing every year.

Last considerations are based on the number of retailer and total distance

towards the location of our plant that is also located in Java Island. Regions that

became our main target of distributing are Jabodetabek (Jakarta, Bogor, Depok,

Tangerang, Bekasi), Banten, West Java, Central Java and East Java. These regions

can be reached by land route.

Our product will be marketed and distributed to several regions in Indonesia

with the following distribution:

a. Region I covers Jakarta, Bogor, Depok, Tangerang, Bekasi and Banten.

b. Region II covers West Java Province, Central Java Province, Yogyakarta and

East Java Province.

Our product will be distributes in one ways, through a wholesaler.

Wholesaler is a coIDRoration that sells a great amount of products with varieties

form and quality of products.

15


Figure 1.6. Flow Chart of Product Distribution

The figure above describes the distribution of our product. After we have our

product produced by the factory or plant, we will ship or distribute our product

directly to a wholesaler and the wholesaler will sell it to the small seller or sales

who the customer can directly buy the product to the sales. Wholesaler that we

selected is based on their strategic location and also their level of availability for

consumers.

Table 1.10. Name of Wholesaler and Location Selected

Region Wholesaler Location

Region 1

(Jabodetabek & Banten) Century

Grand Indonesia Mall, South Jakarta

Mangga Dua Square Mall, Centre Jakarta

Taman Anggrek Mall, West Jakarta

Cibubur Junction Mall, East Jakarta

Summarecon Gading SeIDRong Mall, Tangerang

Bekasi Square Mall, Bekasi

Plant

Wholesaler

Region 1

Wholesaler

Region 2

Retailer Retailer

End

Consumer

End

Consumer

16


Table 1.10. Name of Wholesaler and Location Selected (Contd)


Region 1

(Jabodetabek & Banten)

Guardian

Plaza Bintaro Jaya, Bintaro

Margonda City Mall, Depok

Plaza Indonesia Mall , Centre Jakarta

Lippo Karawaci Mall, Tangerang

Central Park Mall, West Jakarta

Gandaria City Mall, South Jakarta

Giant Supermart

Citra Garden, West Jakarta

Gunung Sahari, Centre Jakarta

Plaza Semanggi Mall, South Jakarta

BSD City, Tangerang

Margo City Mall , Depok

Jatibening, Bekasi

Serang, Banten

Cibubur

Carrefour Hypermart

Blok M Square, Jakarta

Pasar Minggu, Jakarta

TangCity Mall, Tangerang

ITC BSD, Tangerang

Bekasi Square Mall, Bekasi

ITC Depok, Depok

CBD Ciledug, Banten

Region 2

(West Java, Central Java,

Jogjakarta and East Java)

Century

Ciampelas Walk, Bandung

Paris Van Java, Bandung

Hayam Wuruk, Yogyakarta,

Pemuda-Paragon Mall, Semarang

DP Mall Semarang, Semarang

Kalimas, Surabaya

Pasar Atom, Surabaya

Rungkut, Surabaya

Golden City Mall, Surabaya

17


Table 1.10. Name of Wholesaler and Location Selected (Contd)

In the table above, we choose our Century, Guardian, Giant, and Carrefour

as a whole saler because they are the top big wholesaler in Indonesia and they are

quite wide nationally. You can find them everywhere and they will make a great

relation and opportunity for us to distribute the products.


Region 2

(West Java, Central Java, Jogjakarta

and East Java)

Guardian

Istana Plaza, Bandung

Jatinangor Town Square, Bandung

Karangasem Laweyan, Solo

Candi, Gajah Mungkur, Semarang

Sultan Agung, Semarang

Mall Galaxy, Surabaya

Jl. Pemuda, Surabaya

Giant Supermart

Istana Plaza, Bandung

Flamboyan, Bandung

Premier Plaza, Bandung

Suci, Bandung

Setrasari Mall, Bandung

Palur Plaza, Solo

Godean, Yogyakarta

Uripsumoharjo, Yogyakarta

Ring Road Utara, Yogyakarta

Arief Rachman Hakim, Surabaya

HR Muhammad, Surabaya

Kedungsari, Surabaya

Klampis, Surabaya

Carrefour

Hypermart

Sukajadi, Bandung

Kiara Condong, Bandung

Braga, Bandung

Mollis, Bandung

Ambarukmo Plaza, Yogyakarta

Dp Mall Semarang, Semarang

Rungkut, Surabaya

Kalimas, Surabaya

Golden City, Surabaya

18


For one day of production, we produce approximately 4800 units of HALO

(Herbal Antibacterial Hand and Body Lotion). One units consists of 100 ml HALO

and be packaged in one labelled plastic tubes. Based on our considerations, our

products distribution is conducted once a week to the targeted areas. Table below

shows the percentage of distribution for each region.

Table 1.11. Weekly Product Distribution For Each Region

Targeted Regions Location Percent of

Distribution

Product Distribution

(Tube/week)

Region 1

(Jabodetabek & Banten)

DKI Jakarta 35% 11760

Bogor 5% 1680

Depok 5% 1680

Tangerang 2% 672

Bekasi 3% 1008

Banten 5% 1680

Region 2

(West Java, Central Java,

Yogyakarta and East Java)

West Java 15% 5040

Central Java 15% 5040

Yogyakarta 5% 1680

East Java 10% 3360

Total 100% 33600

From the table above, we can infer that the biggest amount of distribution is focused

in the Region 1 because in that region we have more than one city for distributing

the HALO. Another reason, why we choose region 1 as the main consumer target

because all of the activity of the number of people that live in Jabodetabek and

Banten are so high and consumptive, so the chances for them to buy our product is

also high.

1.4.2. Product Distribution Chain

HALO, our product, after being produced will be kept inside a storage for a

week and next will be distributed to the wholesaler and sold to the consumers. The

parameters that have to be considered first, before making a distribution pathway

will be shown below.

19


Product Distribution Parameters

Plant LocationCikarang,

Bekasi

Raw Material Supplier

Local

Distribution Pathway

Directly Distribute to the wholesaler

Transportation Method

Land Truck

Figure 1.7. Product Distribution Parameters

In our supply chain we dont need to have DC (Distribution Centre), because our

production is only distributed to Java Island for the first starting of our plant. So,

we directly distribute the product the wholesaler by ourselves.

1.4.3. Distribution Pathway

This picture below shows that the distribution pathways of our plant that

directly distributed to the wholesaler without Distribution Centre.

Figure 1.8. Distribution Pathway to Region 1

(Source: Google map, 2015)

20


Figure 1.9. Distribution Pathway to Region 2

(Source: Google map, 2015)

From the picture above, it shows that we use one type of transportation method

which is land. This path ways is so possible to travel it because the road or the

transportation path already created and still at good condition only have some

problem in traffic and some of broken road.

1.4.4. Transportation Method

Transportation method that we use is by land. For this method of

transportation, there are two alternatives, by truck or by train. Because all of the

city or region have Train Station and very possible to distribute by train and for the

distribution by truck, the reason for using this type of vehicle is because it is the

most flexible vehicle to reach our targeted locations. We choose to distribute it with

trucks. By using trucks, our products will be transported directly to the wholesaler.

However, for train alternatives, there is minimum weight to distribute the product.

The minimum amount of distribution is 30 Ton and we are not possible for that

capacity, so we decide to choose small truck. The type of the truck is Double Box

Truck with dimension (420 cm x 200 cm x 190 cm) and capacity 4 Ton.

We use two trucks which one for deliver product to region 1 and other truck

for deliver product to region 2. Travel time from the plant or from each wholesaler

to other wholesaler can be seen from the following table.

21


Table 1.12. Distribution Cost

Distribution

Pathway Pathway Route Time Spent

Distance

(km)

Interval

Time

Deliver Cost (IDR)

Total Cost per

year

(IDR/Year)

Region 1

(Jabodetabek &

Banten)

Land

Cikarang-Bekasi 40 minutes 28.7

1 week

800,000

240,000,000

Bekasi-Jakarta 49 minutes 17.1

Jakarta-Depok 1 Hours 3 minutes 38.5

Depok-Bogor 47 minutes 39.8

Bogor-Tangerang 1 Hours 51 minutes 80.0

Tangerang-Banten 2 Hours 6 minutes 103.0

Total 8 Hours 307.1

Region 2

(West Java,

Central Java,

Yogyakarta, East

Java)

Land

Cikarang-Bandung 1 Hours 59 minutes 117.0

3,000,000

Bandung-Semarang 8 Hours 53 minutes 474.0

Semarang-Yogyakarta 3 Hours 8 minutes 130.0

Yogyakarta-Solo 1 Hours 45 minutes 60.4

Solo-Surabaya 6 Hours 2 minutes 269.0

Total 22 Hours 1050.4

22


1.4.5. Fluctuation of Products in The Warehouse

Fluctuations of the products in the distribution centre 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:

1. 100% production capacity.

2. The distribution of products to the each regions are scheduled each week, with

different time of deliverance for each region

3. Products distributed for each distribution centre will be bought by markets

This fluctuation is used for checking the safe inventory of our product. This table

below shows that the amount of our product fluctuation in the warehouse and each

regions.

Table 1.13. Warehouse Planning

Day

Products in Plant

Warehouse

(Package)

Jabodetabek Banten West Java Central Java Yogyakarta East Java

0 0 0 0 0 0 0 0

1 4800 0 0 0 0 0 0

2 9600 0 0 0 0 0 0

3 14400 0 0 0 0 0 0

4 19200 0 0 0 0 0 0

5 24000 0 0 0 0 0 0

6 28800 0 0 0 0 0 0

7 33600 0 0 0 0 0 0

8 4800 16800 1680 5040 0 0 0

9 9600 0 0 0 5040 1680 3360

10 14400 0 0 0 0 0 0

11 19200 0 0 0 0 0 0

12 24000 0 0 0 0 0 0

13 28800 0 0 0 0 0 0

14 33600 0 0 0 0 0 0

15 4800 16800 1680 5040 0 0 0

16 9600 0 0 0 5040 1680 3360

17 14400 0 0 0 0 0 0

23


Table 1.13. Warehouse Planning (Contd)

After the table that we made above, we can make the graph which shows the

fluctuation of our plant warehouse.

Figure 1.10. Fluctuation of Product Warehouse

From the figures above, we can infer that in the beginning of the production

time, it will rise to the highest point of production. After reaching its highest point,

products will gradually decrease to make a stable fluctuation for a set period of

time. This is because the distribution to each region as shown in the table. It is set

0

5000

10000

15000

20000

25000

30000

35000

40000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

To

tal

Pa

cka

ges

Number of Days

Day

Products in Plant

Warehouse

(Package)

Jabodetabek Banten West

Java

Central

Java Yogyakarta

East

Java

18 19200 0 0 0 0 0 0

19 24000 0 0 0 0 0 0

20 28800 0 0 0 0 0 0

21 33600 0 0 0 0 0 0

22 4800 16,800 1,680 5,040 0 0 0

23 9600 0 0 0 5,40 1,680 3,360

24 14400 0 0 0 0 0 0

25 19200 0 0 0 0 0 0

26 24000 0 0 0 0 0 0

27 28800 0 0 0 0 0 0

28 33600 0 0 0 0 0 0

29 4800 16,800 1,680 5,040 0 0 0

30 9600 0 0 0 5040 1,680 3,360

31 14400 0 0 0 0 0 0

24


that their amount will be enough for the distribution of products to the wholesaler

in each region. So this is the graph that will show clearer about the distribution.

Figure 1.11. Fluctuation of Product at every regions

The graphs shows that stock or the inventory of our product in every region

is very different according to the percentage of the product that we will distribute.

After our product being produced for a month, we need to stock our product. The

number of our stock product will be 5% of total production for a month which is

about 7440 tubes. Some of our raw material is available in every month. This is

because our raw material is chemical. The reason we choose the number of our

stock is because the wholesaler needs a stable distribution. Thats why we cant

have a low product production, to fulfil the needs, we need stocks for the

anticipation. This inventory is usually called seasonal inventory.

Table 1.14. Total stock for 6 months

Number of Month Total Stock

(End of the month)

1 7440

2 14880

3 22320

4 29760

5 37200

6 44640

Total 156240

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Tota

l Pac

kage

s

Number of Days

Jabodetabek

Banten

West Java

Central Java

Yogyakarta

East Java

25


This total stock that we have from the inventory for 6 months is about 156240

packages that can be stored and delivered to our wholesaler. This happens when our

raw materials are hard to get.

1.5. Marketing

Marketing is defined as an activity which makes the availability of the product

and can satisfy costumers, and also provide benefits to companies that sells the

product. To be able to distribute our products, it is necessary for having an adequate

network of marketing. The marketing of our products is aimed to introduce our new

concept product to the public about function and benefit of our product in order to

market will be accepted the new concept of our product.

1.5.1. Target Determination

For developing our marketing strategy, to determinate our consuments

target is a must in order to be more focused in the market in accordance to our

function and benefit our products. Our marketing target is woman who work as

employee and student aged 15 35 years old, with a middle up to upper economic

level.

1.5.2. Market Segmentation

Market segmentation is a grouping of the market into segments of potential

costumers with characteristics that similar to each other that also show the

similarities of consumers behaviour.

1.5.2.1. Geographic Segmentation

Geographic segmentation divides the market into defferent geographical

unit such as regional. Our products will be sold in Java Island which has 5 province

DKI Jakarta, Banten, West Java, Central Jav and East Java. Each of province has

biggest capital city in Java Island and The considerations of the Java Island are

based on easy acces location, population of the city and low-cost of transportation,

etc. we can use truck to transport to our product to costumer target because using

truck is efficient transport method.

26


1.5.2.2. Demographic Segmentation

Segmentation of market is grouped by ages, type of gender, level of

income, and consumerss occupation. From the several parameter from

demographic segmenatation, we choose type of gender, level of income and age.

Form concept testing, we get conclude the consumer who will be our target is

woman who have 15- 35 years old and occupation as student and employee and

from middle to upper economic level.

1.5.2.3. Psychographic Segmentation

This segmentation is grouping the market of consumers by their life style.

It can identifies the personal activities and targeted lifestyle. Based on the on the

our produt , will be suitable for student woman who spend their activities in class

with air conditioner and woman who work a half of day in the room with air

conditioner.

1.5.2.4. Behaviour Segmentation

This behaviour segmentation groups the consumers based on benefits

sought product. With segmentation based on benefit sought , our product will

compete with other product who has function as lotion with additional function to

treat itchiness to gain consumers who had skin problem in itchiness.

1.5.3. Marketing Integration

The puIDRose of marketing integration is to create an effective marketing,

achieve a succesful marketing and also to give satisfaction to the consumers.

Product

The name of our product is Hallo , which is a hand and body lotion. The benefit

of our product is that our product uses natural ingredients for its active ingredients

and we also avoid usage of hypoallergenic substances, our product is in the form of

lotion so it is easy to carry and it can be used safely anytime and anywhere by

simply rubbing it onto the ski. The texture of product is , so that it will solution for

consumer problem about stickiness of other lotion. With many kinds of speciality

27


and benefits for consuming our products, we are confident enough that our product

can compete with other hand.

Price

The price of our Hallo is 30.000 IDR, we estimate this price is affordable to

compete with other antibacterial lotion in the market. This price had already tested

to consumer through kuesioner and benchmarking price from other product.

Place

Our product will be distributed to supermart, minimart, and pharmacy store.

This place have advantages like a intregrated market to collect consumer and more

consumer than traditional market.

Promotion

The promotion of our product is needed to spread information to people about

use and benefit product to their skins. The promotion will be done through the

deployment of advertises in television, radioa, product website, and seminar in

seniour high school, university and mall about Skin Problem and How to treat

it.

.

28 Universitas Indonesia

CHAPTER 2

PRODUCT COSTING

Herbal Antibacterial Hand and Body Lotion product is manufactured in

Jababeka Industrial Area, Jababeka XI Blok H no. 30 40, Cikarang Utara, Bekasi,

Jawa Barat, 17430 which consists of the plant and the office. The plant that will we

build has 1500 m2 area with 1345,5 m2 for the plant and office building. This plant

will produce 4800 Herbal Antibacterial Hand and Body Lotion tubes per day. To

achieve this production, the working hours of our plant is 24 hours per day, 7 days

per week (from Monday to Friday), and 330 days per year. This product will be

distributed to DKI Jakarta, Banten, West Java, Central of Java, and East Java by

land transportation using truck. The distribution will be done once a month.

To determine wether the product will provide benefirs or not, we have to do

economic analysis. The economic analysis is done with total capital investment

calcultaion which consists of fixed capital investment and working capital

investment. Fixed capital investment includes equipment, supporting equipment,

land and building, and patent registration, while working capital investment is the

cost that spent before the production gives revenue. Some assumptions used to

calculate economical aspect are:

1. The construction of the plant building will be begun in the middle of 2015 and

finish in the middle of 2016.

2. The plant will start production in the beginning of 2017 for 10 years.

3. The production capacity of the plant is 4800 Herbal Antibacterial Hand and

Body Lotion per days.

4. The working hours of the plant is 10 hours per day, 7 days per week, and 330

days per year. The 30 days remaining is used for maintenance.

5. Investment will be loan 20% from each 3 investors and 20% loan from BNI and

Mandiri Bank

6. Loan interest rate from investor is 14% and from bank is 13% for BNI and

13,5% from Mandiri Bank.

7. The method used to calculate depreciation is declining-balance method with

depreciation rate (f) is 15% for equipment and 5% for plant building.

29


8. The tax rate used in the cash flow calculation is 30%.

9. The Weighted Average Cost of Capiral calculated is 12,1%

10. Exchange rate 1US$ = IDR 12.983,5 (as of 27th April 2015)

2.1. Total Capital Investment

Before we begin the production process, we first have to realize the layout

planning in the desired location and also construct the plant by providing the

required facilities and equipment to fully operate the plant. In order to construct the

plant and start-up the production we have to pay the expenses of plant construction

and also the construction of supporting facilities and equipments including the

office area. Other than that, we also have to pay for the construction worker,

contractor, employees, utilities expenses such as electricity bills, and many other

related expenses related to the start-up of our plant. Thus, we before we begin the

production process we got to acquire total capital investment (TCI).

Total Capital Investment (TCI) of a plant is a one-time expense for the design,

construction and start-up of a new plant or a revamp of an existing plant. The total

capital investment consists of two types; Fixed Capital (FC) and Working Capital

(WC). To determine the feasibility of a plant and identify whether it will give a

sufficient positive marginal value we have to calculate the value of Total Capital

Investment (TCI).

We calculate the TCI inside the battery limit, an area inside the boundary of

the plant. The value battery limit investment required is the sum of purchase of the

individual plant items and their installation to form a working process. Usually, TCI

is calculated with Guthrie method by multiplying the Guthrie method factor to the

Total Bare Module Cost Total Bare Module Cost is the total cost of equipment with

the additional delivery fee, customs fee, and other required fee. The Total Bare

Module Cost will be the cost reference in calculating Total Capital Investment. But,

according to the information we gather from lecturing, we know that for our firm

that can produces consumption goods, we dont have to calculate the TCI with

Guthrie method. Rather, we can just calculate the TCI value by calculationg the

sum of all variables related to the TCI, which is, as stated above, consists of Fixed

30


Capital (FC) and Working Capital (WC). The equation to calculate Total Capital

Investment is provided below

= + = (1 + )

where,

Fc = Fixed Capital

Fw = Working Capital (First Month Production)

Based on the sum of related factors to that contained in each Fixed Capital and

Working Capital variables, the equation above can be modified into

= + = ( + + + ) +

where,

CTCI = Cost of Total Capital Investment

CTPI = Cost of Plant Investment including Total Bare Module Cost, Cost of Land,

Cost of Buildings, and Cost of Site Facilities

CWC = Cost of Working Capital

2.1.1. Fixed Capital Investment

Fixed capital investment is the expenses of design, construction, and many

other inquiries required for plant start-up. Fixed Capital investment consists of

direct cost, the cost of equipment and equipment shipping and indirect cost, the cost

that not directly connected to the equipment, such as equipment construction

expenses. Direct cost contains all the expenses regarding the buying of equipment

including the shipping payment including the equipment cost (EC), Plant Cost (PC),

and others supporting cost.

2.1.1.1. Direct Cost

Equipment Costs

As we know, each plant will have the equipment system of their own that

varies regarding the product of each plant. The plant will also need some plant

utilites and office to to fully support the working performance of plant production.

In this equipment calculation, we will calculate the sum of each equipments cost

that has meet the requirements such as equipment capacity and material. Equipment

cost here is the cost of equipment until it is installed in our plant. That means that

31


it include cost of buying equipment, shipping, assurance, and installation. The

sequence step to obtain Equipment Cost (Total Bare Module Cost) are:

List all of our equipment needed, include the quantity.

Define the Free On Board prices off each equipment. If there are no equipment

with the required quantity, calculate the approximate cost of equipment by this

equation.

. = . (. .

. . )

Look for Marshall and Swift Chemical Equipment Cost Index to determine cost

of equipment in year we expect to buy. In this case, because all of the data that

we gather is from the year 2015, we then forecast the price to the production

year which is 2016. The Marshall and Swift Chemical Equipment Cost Index

that we use in this calculation is provided below.

Table 2.1 Marshall and Swift Chemical Equipment Cost Index

Year Cost Index

2015 1,778.60

2016 1,831.84

(Source : Muharam, Chemical Product Design Presentation, 2014)

Forecast the cost of equipment in the year expected by equation below

. = . (&

& )

Look for the shipping and installation cost for each equipment

Sum the total price of buying for each equipment by equation below

. = + +

List all the related bare modul factor for each equipment based on classifying

each equipment to related groups

Figure 2.1 Bare Module Factors

(Source : Seider, Product and Process Design Principles, 2004)

32


Calculate the total bare module cost with this formula

= ( )=

= (

)=

33


Table 2.2 Total Bare Modul Cost

Equipment Qty Bare Mod. BM

Factor

FOB 2015

(IDR)

Forecast

FOB 2016

(IDR)

Country Shipping

(IDR)

Installation

(IDR)

Total Price

(IDR)

TBMC

(IDR)

Storage tank

& Vessel

10 Tank 3.12 129,835,000 133,721,000 China 4,564,000 12,984,000 151,269,000 471,958,000

Vacuum

Emulsfying

System

1 Centrifuges 2.03 103,868,000 106,977,000 China 28,622,000 10,387,000 145,986,000 296,352,000

Tube filling

& sealing

machine

1 Average

Bare Modul

Factor

2.45 97,376,000 100,291,000 China 28,622,000 9,738,000 138,651,000 339,695,000

Centrifugal

pump

7 Pumps and

drivers

3.30 29,400,000 30,280,000 Indonesia 870,000 2,940,000 34,090,000 112,497,000

Rotary pump 2 Pumps and

drivers

3.30 8,000,000 8,239,000 Indonesia 345,000 800,000 9,384,000 30,969,000

Dosing pump 1 Pumps and

drivers

3.30 2,000,000 2,060,000 Indonesia 177,000 200,000 2,437,000 8,042,000

Conveyor

machine

1 Horizontal

conveyors

1.61 194,752,000 200,582,000 China 15,087,000 19,475,000 235,144,000 378,582,000

Total Cost 1,638,064,000

Note:

Qty. = Quantity, BM = Bare Modul, TBMC = Total Bare Modul Cost.

34


Land, Building, and Offsite Facilitites Cost

After we get the value of total bare modul cost (TBM) we still have to

calculate the value of Total Site Cost (Tsite), Total Building Cost (Tbuiliding), and

Total Offsite Facilities Cost (Toffsite facilities) which next will be summed as Direct

Permanent Investment (DPI) (Seider, 2003). The value of site (Tland) is the cost of

the plant itself. Because we build our plant on an industrial area, the land does not

require any further treatment thus we do not have to add any land construction cost

to the Total Land Cost (Tland). The land cost in our location based on the research

we did online, is estimated to be about IDR 3.000.000,00. Thus, the Total Land

Cost is as provided below.

Table 2.3. Land Cost

Description Price/m2

(IDR)

Area

(m2)

Cost

(IDR)

Land Cost 3,000,000 1500 4,500,000,000

Total Building Cost (Tbuiliding) is calculated by the contractor of our

choosing. The building in this plant consists of Plant Building Area, a place to put

all the equipments and the place where the production process takes place, Office

Building Area, the area where administration and publishing employee activities

take place, 2 Security Offices, Canteen, Mosque, and Parking Lot. The Total

Building Cost (Tbuiliding) is provided in table below.

Table 2.4. Building Cost

Description Price/m2

(IDR)

Area

(m2)

Cost

(IDR)

Plant Builiding Area 3,500,000.00 800 2,800,000,000

Office Building Area 4,000,000.00 545.5 2,182,000,000

Parking Lot 100,000.00 100 10,000,000

2 Security Offices 500,000.00 20 10,000,000

Mosque 1,000,000.00 10 10,000,000

Canteen 1,000,000.00 24.5 24,500,000

Total Cost 5,036,500,000

Offsite Facilites Cost (Toffsite facilities) is the cost of buildings that located

outside of the plant area that built either to store our products in certain places in

order to reduce the distribution cost or because other consideration. These buildings

usually called as warehouses. Because our firm produces a product that does not

expire rapidlu with shelf life of 1-2 years and the distribution region location is not

too far from our plant, we choose to not build any warehouses. Thus, the Total

Offsite Facilities Cost (Toffsite facilities) variable can be eliminated from the equation.

35


Supporting Equipment Cost

Supporting equipment is equipment that is outside the production

equipment, but they support the company and plant activities. Supporting

equipments in our plant area consists of the stationary and facilities regarding the

office room, meeting room, laboratoty, toilet. This plant area building consists of

production room, laboratory facilities, office, guest room (receptionist), and toilet.

In this part we list every part of the non-production room and then list every needed

number units of facilities and stationaries needed in each room and then we multiply

it by the buying price. In this calculation, we assume that the price per unit has

included the shipping and installation price.

Table 2.5 Total Supporting Equipment Cost

Supporting Facilities Quantity Price per Unit

(IDR)

Price

(IDR)

CCTV 15 450,000 6,750,000

Television 3 2,850,000 8,550,000

Dispenser 5 2,000,000 10,000,000

Neon Lamp 60 150,000 9,000,000

Office Chairs 30 250,000 7,500,000

Office Desks 20 580,000 11,600,000

Faximiles 5 2,500,000 12,500,000

Phone 5 325,000 1,625,000

Receptionist Desk 1 4,500,000 4,500,000

Air Conditioner 15 2,755,000 41,326,000

Sofa Set 1 7,500,000 7,500,000

Coffee Table 1 1,322,000 1,322,000

Computer 20 606,000 12,122,000

Stationary 20 1,212,000 24,244,000

Printer, Scanner, Photocopy

Machine 4 5,050,000 20,200,000

Cupboard 5 250,000 1,250,000

Locker 5 3,325,000 16,625,000

Meeting Table 1 570,000 570,000

White Board 1 350,000 350,000

Monitor LCD 1 675,000 675,000

Projector 1 6,161,000 6,161,000

Genset 2 500,000,000 1,000,000,000

Safety Helmet 30 62,000 1,853,000

Safety Shoes 30 190,000 5,700,000

Safety Googles 30 47,000 1,418,000

Ear Plug 30 13,000 390,000

Safety Clothes 30 242,000 7,260,000

Fire Extinguisher 10 750,000 7,500,000

Total Cost (IDR) 1,228,491,000

36


Utilities Installation Cost

Utilities such as water system, telephone, internet, and electricity the

infrastructure that needs to be installed to ensure the stability and to maximize the

production process and working activities that is done within the plant. Considering

that our plant is a small to middle-sized industrial plant, the utilities usage capacities

is different than what is used in for personal home puIDRoses. The calculation for

utilities installation cost is provided below. Each of the cost is gathered from the

official website of each utility company.

Table 2.6. Utilites Installation Cost

Installation Cost

(IDR)

Water Installation 15,000,000

Telephone Installation 10,000,000

Electricity Installation 40,000,000

Internet Installation 12,000,000

Total Cost (IDR) 77,000,000

Market Research Cost

Market research is used to know the trend of our product among the

consumer compared to other competitors. It is a really important aspect in the

industry because the market research results can determine how much product

capacity that we have to suIDRass to fulfill the needs of consumer and it also

important to gain ideas for research and development of our product. The market

research method that we used is by survey and by consulting to market research

consultant service in Tebet.

Table 2.7. Market Research Cost Calculation

Market Research Activities

Price

(IDR)

Survey 5,000,000

Market Research Consultant Service 25,000,000

Total Cost 30,000,000

Patent and Brand Investment

Based on the patent planning section thet we did in assignment 3, we have

certain patent that we can assign. Most importantly, we must patent our brand so

that the other competitor that try to replicate our product will have to pay some

penalty of the invention. The cost of patent and brand investment is regulated in PP

number 45 of 2014. These patent will stay valid for 10 years and should be

37


prolonged when the patent period ended. The calculation dor patent and brand

investment is provided in table below.

Table 2.8. Patent and Brand Investment Cost

No Licensing Description Cost

(IDR)

1

Patent

Patent Registration 750,000

2 License Registration 1,000,000

3 Primary License Request 3,000,000

4 Patent General List of Quotes Request 300,000

5 Patent Copy of Certificate Request 150,000

6 Patent Copy of Document Request 10,000

7 Patent Maintenance Cost per 5 year 700,000

8 Administration Cost 1,000,000

9 Regional Patent Implementation Request 3,000,000

10

Copyright

Copyright Registration 300,000

11 Copyright Certificate Publishing Cost 100,000

12 Copyright Quotes Registration 100,000

13 Copyright License Administration 100,000

14

Industrial Design

Industrial Design Registration 800,000

15 Industrial Design General List of Quotes Request 150,000

16 Industrial Design Certificate Publishing Cost 200,000

17 Industrial Design Priority Document Request 150,000

18 Industrial Design Copy of Document Request 150,000

19 Industrial Design License Administration 350,000

20

Brand

Brand Publishing Cost 600,000

21 Lengthening Time of Brand Protection 2,000,000

22 Brand Certificate Publishing Cost 100,000

23 License Administration 500,000

24 Official Brand Quotes Request 150,000

25 Written Notes of General List of Brand Request 200,000

Total Cost 15,860,000

2.1.1.2. Indirect Cost

Indirect costs are the expenses that are paid not directly for the equipment,

materials, and building of the plant, but rather for the service of the contractor.

Based on lecturer poweIDRoint, we know that the estimation of contractors fee

that has included the expenses of design and engineering fees, administration,

personnel fees, and contingency is about 10% from the building cost, so it will be

about IDR 503.650.000,00. The total fixed capital cost calculation is shown by the

table below.

38


Table 2.9. Total Fixed Capital Cost

Direct Cost Total Bare Modul Cost 1,795,414,000

Land Cost 4,500,000,000

Total Building Cost 5,036,500,000

Total Supporting Facilities Cost 1,228,491,000

Total Patent Fee 15,860,000

Total Utilities Installation Cost 77,000,000

Total Market Research Cost 30,000,000

Indirect Cost Contractor's Fee 503,650,000

Total Fixed Capital Cost (IDR) 13,186,914,000

2.1.2. Working Capital

Working capital is needed so the plant can operate at first year or before the

company earns some revenue. This cost include raw material cost in first year,

utilities in first year, employee salaries in first year, and monthly operating

expenses. We can use estimation factor to calculate this cost with equation as

follows

=

where,

WC = Working Capital

k = 0,05 (for single product)

FC = Fixed Capital

The estimation of working capital above based on those equation is

calculated below.

= 0,05 13.186.914.105,89

= 659.342.705,3

After we know the value of each variables, we can finaly calculate the total capital

investment cost by equation below.

= +

The calculation for the above equation is provided in the table below.

Table 2.10 Total Capital Investment Cost

Investment Description Cost

(IDR)

Total Cost

(IDR)

Fixed Capital Cost Total Bare Modul Cost 1,795,414,000

13,186,914,000

Land Cost 4,500,000,000

Total Building Cost 5,036,500,000

Total Supporting Facilities Cost 1,228,491,000

Total Patent Fee 15,860,000

39


Table 2.10 Total Capital Investment Cost

Investment Description Cost

(IDR)

Total Cost

(IDR)

Total Utilities Installation Cost 77,000,000

Total Market Research Cost 30,000,000

Contractor's Fee 503,650,000

Working Capital Cost (IDR) 659,346,000

Total Capital Investment Cost (IDR) 13,846,260,000

2.2. Operational Cost

Operational cost is all expenses for manufacturing process which usually paid

every year of production. Operational cost divided into two types i.e. manufacturing

cost and general expenses.

2.2.1. Manufacturing Cost

Manufacturing costis the cost required to support production process of

Herbal Antibacterial Hand and Body Lotion. Manufacturing cost includes direct

production cost, fixed cost, and plant overhead cost. Direct production cost includes

raw materialcost, operating labor salary, utility, maintenance, and patent cost. Fixed

cost includes depreciation, local tax, and insurance.

2.2.1.1. Raw Material Cost

Raw material cost is the cost needed to buy raw material to make Herbal

Antibacterial Hand and Body Lotion. The interval of raw material order period base

on the distance of the supplier to the plant. Based on the previous chapter, the detail

of raw material cost is listed below.

Table 2.11. Raw Material Cost

No. Raw Material Order per Year

(kg)

Price per kg

(IDR/kg)

Total Order Cost

(IDR)

Ingredient

1 Carbomer 940 17,118 900,000 15,406,200,000

2 Glycerin 513 19,500 10,004,000

3 Aqua Demineralized 8,550 145,000 1,239,750,000

4 Piper Betle Extract 342 1,800,000 615,600,000

5 Titanium Oxide 1,710 8,800 15,048,000

6 Alpha Tocopherol (Vitamin

E) 107,730 8,200 883,386,000

7 Olive oil 171 100 17,000

8 Emersol 132 4,275 130,000 555,750,000

40


Table 2.11. Raw Material Cost (Contd)

No. Raw Material Order per Year

(kg)

Price per kg

(IDR/kg)

Total Order Cost

(IDR)

9 Fragrance 171 91,000 15,561,000

10 Triethanolamine 171 20,000 3,420,000

11 Methyl Paraben 4,275 2,500 10,688,000

12 Propyl Paraben 342 260,000 88,920,000

Packaging

13 PET Food Grade Clear Bottle 475,200 2200 1,045,440,000

14 Printed Labels 475,200 2200 950,400,000

Total Raw Material Cost (IDR) 20,840,183,000

2.2.1.2. Utilities

Utility is a system that generates, transmits, or distributes electricity, water

or steam from facilities operated in the plant. The utility used to manufacture Herbal

Antibacterial Hand and Body Lotion are:

a. Electricity

The electricity used to manufacture Herbal Antibacterial Hand and Body Lotion

depends on the activity and total production in the plant. The electricity cost for an

industry from PLN are listed below.

Figure 2.2. Electricity Cost for Industry

(Source : www.pln.co.id, 2015)

41


Our plant is classified into I-3/TM industry level (middle scale industry),

so the price of the electricity that we have to pay is IDR 1,055/kWh. Based on

assignment 3, the detail of electricity cost is listed below.

Table 2.12. Electricity Cost

No. Equipment Qty. Time Power Total Energy per Day

(hours) (kW) (kWh/Day)

1. Storage tank 9 24.00 0.00 0.00

2. Vessel 1 24.00 0.00 0.00

3. Mixer 2 24.00 2.20 105.60

4. Mixer in Homogenizer Mixer 1 24.00 1.10 26.40

5. Homogenizer mixer 1 24.00 7.50 180.00

6. Heater 3 24.00 18.00 1296.00

7. Cooler 1 24.00 18.00 432.00

8. Tube filling machine 1 24.00 1.10 26.40

9. Tube Capping machine 1 24.00 0.60 14.40

10. Centrifugal pump 7 24.00 2.20 369.60

11. Rotary pump 2 24.00 0.55 26.40

12. Vacuum pump 1 24.00 3.85 92.40

13. Conveyor machine 1 24.00 0.90 21.60

14. Computer 20 12.00 1.00 240.00

15. Facsimiles machine 1 24.00 0.02 0.43

16. Printer, scanner, photocopy machine 3 24.00 0.50 36.00

17. Projector 2 12.00 0.03 0.67

18. CCTV 15 24.00 0.01 2.88

19. Air conditioner 1 PK 15 24.00 0.80 288.00

20. Neon Lamp 60 24.00 0.04 51.84

21. Dispenser 5 24.00 0.50 60.00

22. Television 3 12.00 0.11 3.96

Total Energy Used per Day (kWh/Day) 3,094.58

Total Energy Used per Year (kWh/Year) 1,129,523.16

Total Electricty Cost per Year (IDR) 1,259,418,000.00

(Source: alibaba.com, 2015)

b. Water

Water used for production process and daily need. In the production process,

water used to heating and cooling mixer and homogenizer mixer by heating or

cooling jacket. In the daily need, water used for drink and restroom needs. The

amount of water that every employee needs to drink and toilet is 40 Liter per day

based on WHO, 2015. The price of water in Jababeka Industrial Estate is IDR

14,557/m3. The detail of water cost is listed below.

42


Table 2.13. Water Cost

No. Location Needs

(L/Day)

Needs

(m3/Day)

Cost per Day

(IDR/Day)

1 Plant 2000 1.6 23,000

2 Office 40 0.04 6,000

Total Water Cost per Day (IDR) 29,000

Total Water Cost per Year (IDR) 46,606,000

2.2.1.3. Direct Labor Cost

Direct labor cost is the salary of employee involved in the production

process directly. The operating labor salary determined based on Regional

Minimum Wage Policy by governor, Surat Keputusan Gubernur Jawa Barat

Number 561/Kep. 1581-Bangos/2014 about Upah Minimum Kabupaten/Kota di

Jawa Barat Tahun 2015. The regional Minimum Wage in Bekasi in 2015 is IDR

2,840,000. It means that every employee who works in industry should be paid IDR.

2,840,000 per months (minimum). The number of labors determinedby shift

scheduling. The detail of operating labor salary is listed below:

Table 2.14. Direct Labor Cost

(Source: myjobstreet-id.jobstreet.co.id, 2015 and SK Number 561/Kep. 1581-Bangos/2014)

No. Type Position Person

Salary per Month per

person

(IDR/Month/Person)

Total Gross

Salary

(IDR)

1. Laborer Raw Material

Operator 6 2,840,000 17,040,000

2. Laborer Mixing Operator 6 2,840,000 17,040,000

3. Laborer Quality

Controller 2 2,840,000 5,680,000

4. Laborer Packaging Labor 10 2,840,000 28,400,000

5. Laborer Warehousman 2 2,840,000 5,680,000

6. Supervisor Facility and

Safety 1 2,840,000 3,266,000

7. Supervisor Product

Distribution 1 3,266,000 3,266,000

8. Supervisor Process 1 3,266,000 3,266,000

Operating Labor Salary per Year (IDR/year) 1,003,656,000

Variable Cost For Bonus (THR), 20% (IDR/year) 200,731,000

Total Operating Labor Salary per Year (IDR) 1,204,387,000

43


Based on the table above, the total cost of operating labor salary is IDR

1,204,387,000.

2.2.1.4. Maintenance Cost

Maintenance done to preserve the plant and its facilities included the

production process equipment by reparing, adjusting, or replacing component.

Maintenance activity usually done when there is change in production capacity,

equipment efficiency, and buliding efficiency. Maintenance divided into three

types, i.e. plant and building maintenance, equipment maintenance, and supporting

equipment maintenance. In the cosmetic industry, the maintenance cost for

cosmetic industry approximately 10% based on Rule of Thumb for Maintenance

and Reliability Engineers by Ricky Smith and R. Keith Mobley, 2007.For support

equipment, we assume it will take half from main equipment maintenance cost or

approximately 5%. While for plant and building, we assume it will take 1% from

building cost. The detail of maintenance cost is listed below.

Table 2.15. Maintenance Cost

No. Type of Cost Percentage Assumption Cost per Year

(IDR)

1 Equipment 10% of Total Bare Modul Cost 179,541,000

2 Support equipment 5% of Supporting Facilities Cost 12,575,000

3 Plant and building 1% of Csite, DCs, and Cbuilding 50,365,000

Total Maintenance Cost per Year (IDR) 242,481,000

2.2.1.5. Patent Maintenance Cost

Patent needed to market Herbal Antibacterial Hand and Body Lotion

legally in public. Patent registration includes patent, copyright, industrial design,

and brand which explained below. Patent is a set of exclusive rights granted to the

inventor from thesovereign state for limited period of time so there will be

maintenance cost that should be paid every year. The detail of patent cost is listed

below.

Table 2.16. Patent Maintenance Cost

Patent Cost

(IDR)

1st Year 750,000

2nd Year 750,000

44


Table 2.16. Patent Maintenance Cost (Contd)

Patent Cost

(IDR)

3rd Year 750

Documents

Assignment 4