A study on an optimal capacity of production for setting up a single-lever mixer factory in Thailand

Abstract

The study is conducted to determine the optimal capacity for setting up a single lever factory in Thailand. The objectives of the study are to forecast demand of single lever mixer for the year 1999-2003, select a suitable production process and raw material, and finally to evaluate financial returns from the project. The result from marketing study shows that the expected sale of the project in the next 5 years will be 90,000-130,000 sets per year. After studying on engineering, a suitable production process is using Polypropylene with injection molding process. However, because capacity of the project depends on capacity of injection machine and demand of the market is not exceed the minimum capacity of the machine, therefore the optimal capacity cannot be determined. Nevertheless, according to the minimum capacity of injection machine, we found out that the capacity should be 130,000 sets per year. Regarding financial estimation for the production of the factory during the year 1999-2003, the project requires 34,071,567 baht for the capital investment and provides IRR at 42.18% and payback period at 2 years.