Model Developed for Competing Accessory, Spare Parts and Miscellaneous Costs for Limited Available Budget under Machine Availability
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In a developing company or industry where there is availability of machines to keep the industry
running effectively, a need always arise to consider the accessories and the spare parts which will
enhance the production planning and also affects the economic growth of the company positively.
An optimum model is developed to control the limited available budget that will be optimally allotted
to accessories, spare parts and miscellaneous costs. This study considered the strategic decisions
for budgeting, developed mathematical models for accessories, spare parts and miscellaneous,
with considering the machines cost since it is available for the year under consideration. The
models were tested and their performance evaluations carried out. A decision maker/project
manager optimally allotted the limited resources to the considered strategic decisions to know
exactly the amount that will be required to keep the machines functioning efficiently and effectively
so that revenue can be generated. In allotting the limited resources for procurement, this study
considered three major strategic decisions: accessories, spare parts and miscellaneous costs. Model for each strategic decision was developed. This study made it known that the highest value
in any of these strategic decisions will definitely have the highest inventory in company’s stock for
production. Information from the past procurement made by OLAM Cocoa Processing Industry
(OCPI), Akure, Ondo State, Nigeria was used as case study to test the developed models for
decisions making. Fifteen (15) years past record of equipment cost data was collected from this
institute. A software was also developed for easy processing of this data using visual basic
language because of its versatility and friendliness. Five million, five hundred thousand Naira
(₦5,500,000) which is equivalent to more than Twenty – two thousand US dollar (US $22,448.98)
was made available for the procurement of accessories, spare parts and miscellaneous costs and
the amount allotted are ₦2,190,826.18; ₦2,861,556.10; and ₦447,617.71 respectively. This model
is a strong decision tool for allocating available budget especially during the period of financial
scarcity where equipment procurement for production needs must be carried out. This model is
highly recommended to any manufacturing company, where equipment procurement affects their
production in developed and developing countries.