i YIELD IMPROVEMENT IN THE DRYING PROCESS OF THE

i YIELD IMPROVEMENT IN THE DRYING PROCESS OF THE

POST-HARVEST OPERATION OF MAHARLIKA FARMS MULTI-PURPOSE COOPERATIVE

AT M’LANG, COTABATO

ESTHER GRACE PACLIBAR TECSON 2005-65338

A PRACTICUM STUDY PRESENTED TO THE FACULTY OF THE DEPARTMENT OF INDUSTRIAL ENGINEERING COLLEGE OF ENGINEERING AND

AGRO-INDUSTRIAL TECHNOLOGY UNIVERSITY OF THE PHILIPPINES LOS BAÑOS IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE DEGREE OF

BACHELOR OF SCIENCE IN INDUSTRIAL ENGINEERING

APRIL 2010

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EXECUTIVE SUMMARY

Maharlika Farms Multi-Purpose Cooperative is a cooperative engaged in the production and sales of rice. It is composed of farmers and agricultural workers who collaborate to improve farming and rice processing methods. The Cooperative is involved in the financing of agricultural inputs used by the farmers during land preparation and the planting season.

Maharlika Farms provides the post-harvest facility for the processing and sales of white rice.

The main problem of Maharlika Farms is the low palay yield in its post-harvest operation.

The target yield after drying of palay is 97% but the actual yield for 2008 is only 95.13%. The rest of the 4.87% of the palay are considered as grain losses. These grains can no longer be milled and sold as white rice. The total grain losses for 2008 amounted to 112,174 kg of palay. This is equivalent to 67,300 kg of white rice or PhP 1,884,000 lost income. The primary contributors of grain losses are spoiled and infested palay. Spoiled palay accounted for 51.2% of the losses while infested palay accounted for 37.2% of the losses.

Using the Streamline Diagnostic Diagram, the root causes of the problem were identified and grouped into Man, Machine, Method, Material and Environment. The root causes were further classified as Controllable, Noise and Experimental factor. Corrective and preventive actions were recommended to address the Controllable causes of the problem. For the Experimental factor, alternative solutions were generated. Noise factors were not examined in this study.

The Experimental factor and the main root cause of the problem is the Low drying capacity during the harvest season. The three alternative solutions generated to eliminate the root cause are the following: (A) Outsource drying during periods with high volume of palay purchases; (B) Purchase a new mechanical dryer and; (C) Construct a new solar drying facility. These alternative solutions were evaluated against different criteria. These are Reduction in grain losses, Annual cost of implementing the solution, Duration of the pre- implementation period, and the Cost of maintenance. Using the factor-rating method, it was determined that the best solution is Alternative B, Purchase a new mechanical dryer.

For the implementation of Alternative B, Maharlika Farms will incur an initial investment cost of PhP 1,540,000 and annual operating costs of PhP 98,257. This solution will result to 3.05% increase in the palay yield (from 95.13% to 98.18%) and total annual benefits equivalent to PhP 1,279,416.

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ONTENTS

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Title Page i

Acceptance Sheet ii

About the Author iii

Acknowledgment iv

Executive Summary vi

Table of Contents vii

List of Figures ix

List of Tables xi

List of Appendices xiii

1

I

NTRODUCTION

1.1 GENERAL OVERVIEW OF THE COMPANY 2

1.2 BACKGROUND OF THE STUDY 7

1.3 STATEMENT OF THE PROBLEM 10

1.4 OBJECTIVES 10

1.5 SCOPE AND LIMITATIONS OF THE STUDY 10

1.6 DATE AND PLACE OF STUDY 11

1.7 ROADMAP/MILESTONE 11

2

M

ETHODOLOGY

2.1 PROCEDURES 13

2.2 DEFINITION OF TERMS AND SYMBOLS 14

3

S

YSTEMS

D

OCUMENTATION

3.1 GENERAL PROCESS 18

3.2 MARKET CHANNEL 20

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3.3 PRODUCT UNDER STUDY 21

3.4 PRODUCTION SYSTEM 22

3.5 PRODUCTION FACILITY 26

3.6 MACHINES AND EQUIPMENT 28

3.7 PLANT LAYOUT 31

3.8 PRODUCTION CAPACITY 33

3.9 MANPOWER COMPLEMENT 34

4

R

ESULTS AND

D

ISCUSSION

4.1 PROBLEM IDENTIFICATION 37

4.2 ANALYSIS 39

4.3 SOLUTION 53

4.4 COST-BENEFIT ANALYSIS 63

5

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UMMARY AND

C

ONCLUSION 68

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ECOMMENDATIONS 70

7

A

REAS FOR

F

URTHER

S

TUDY 72

R

EFERENCES

A

PPENDICES

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IST OF

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IGURES

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IGURE

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ITLE

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AGE 1-1 Organizational chart of Maharlika Farms MPC 5

1-2 Location of Maharlika Farms MPC 6

1-3 Summary of palay yields for the year 2008 7

1-4 Summary of post-harvest losses for the year 2008 8 1-5 Monthly losses from spoiled and infested palay for 2008 9 1-6 Gantt Chart of the tasks performed during the study 11

3-1 General process of Maharlika Farms 19

3-2 Maharlika Farms supply chain 20

3-3 Transformation of paddy rice to white rice 21

3-4 General post-harvest process at Maharlika Farms 22 3-5 Process chart at the post-harvest facility of Maharlika Farms 23 3-6 Process flow chart of the drying operation using the

solar drying facility 24

3-7 Main parts of the mechanical dryer 25

3-8 Rice production seasonality 26

3-9 Solar drying facility 27

3-10 Maharlika Farms warehouse 28

3-11 Mechanical dryer 29

3-12 Trucks of Maharlika Farms 30

3-13 Multi-pass rice mill 31

3-14 Post-harvest facility layout 32

4-1 Monthly palay yield for 2008 37

4-2 Breakdown of grain losses 38

4-3 Spoiled palay grains and Spotted and discolored rice grains 39

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4-4 Monthly grain losses for 2008 40

4-5 Monthly volume of grain spoilage and infestation 40

4-6 Monthly palay purchases for the year 2008 41

4-7 Capacity of the dryer of Maharlika Farms for the year 2008 41 4-8 Comparison of effective capacity to palay purchases 43

4-9 Breakdown of sellable grains 45

4-10 Streamline Diagnostic Diagram 47

4-11 Negligence of worker as controllable cause 49

4-12 No inspection before storage as controllable cause 49

4-13 Flowchart of disposal of damaged sacks 51

4-14 Low drying capacity as experimental factor

causing Low production yield 52

4-15 Modified layout for implementation of Alternative B 57 4-16 Modified layout for implementation of Alternative C 59 4-17 Comparison of increased capacity to palay purchases 66 4-18 Increase in the improved palay yield 67

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ABLES

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AGE

2-1 Terms used in the study 14

2-2 Symbols used in the study 16

3-1 Manpower requirements of the mechanical dryer 25

3-2 Transport equipment 30

3-3 Monthly capacity of the solar drying facility for 2008 33 3-4 Monthly capacity of the mechanical dryer for 2008 34 3-5 Total Effective Capacity of the Solar and

Mechanical Dryer for 2008 35

3-6 Manpower headcount 35

4-1 Breakdown of palay production for the year 2008 38 4-2 Results of Analysis of Variance from Minitab 42 4-3 Comparison of Unfulfilled Demand and Grain Losses for 2008 44

4-4 Profit Loss from Low-Quality Grains 46

4-5 Summary of CNX analysis 48

4-6 Actions to be implemented for controllable

causes of the problem 50

4-7 Reminders for proper storage practices 50

4-8 Checklist for proper post-drying practices 51

4-9 Level of under-capacity of the drying facility for the year 2008 53 4-10 Summary of alternative solutions for Factor X 54

4-11 Variable costs for Alternative A 54

4-12 Computation of total annual cost for Alternative A 55

4-13 Fixed costs for Alternative B 55

4-14 Variable costs for Alternative B 56

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4-15 Computation of total annual cost for Alternative B 56

4-16 Fixed costs for Alternative C 58

4-17 Computation of total annual cost for Alternative C 58 4-18 Weight rating of the criteria for evaluation 60

4-19 Ratings for Reduction in Grain Losses 61

4-20 Ratings for Annual Cost 61

4-21 Ratings for Duration of Pre-Implementation Period 62

4-22 Ratings for Cost of Maintenance 62

4-23 Summary of the values of the criteria for each alternative 63 4-24 Summary of the overall rating for the alternatives 63 4-25 Additional sales from grain loss reduction 64 4-26 Increase in profit from improving quality of rice 64 4-27 Cash Flow Projection for implementing Alternative B 65

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PPENDICES

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AGE A Computations for the Total Expected Dry Palay xx B Computations for the Lost Profit from Sale of Low Quality Rice xxi C Cost Breakdown for a Training Session for the

Use of Mechanical Dryer xxii

D Computations for Reduction in Grain Losses xxiii

E Computations for the Total Annual Costs of each Alternative xxiv

F Computations for Assignable Grain Losses xxv

G Computations for Assignable Low Quality Grain xxvi H Comparison of Capacity and Palay Purchases for the year 2009 xxxvii

I Certificate of Completion xxviii