FOOD PLANT DESIGN CFB 30403

MDM FARIDATUL AIN

PRODUCTION OF BARBEQUE FLAVOURED POTATO CHIPS

NAME ID NUMBER
FARID IQMAL BIN SAMSUDIN 55218117087
FATIN NUR ASHIRA BT MOHD ASHRAF 55218117068
MOHAMAD AZUAN BIN MOHD SOFIAN 55218117083
NASUHA ZAHIRAH BINTI ZAHARUDDIN 55218117094
NUR DIYANAH BINTI ABD JALIN 55218117050
 CHAPTER 1

1.1 COMPANY PROFILE

1.1.1 COMPANY BACKGROUND

On 20 July 2020, TIDBIT Enterprise was established by 5 young food

technologists, with a background of food chemical engineering technology. It is a
small and medium enterprise that specializes in the production of snack foods and
confectionaries. Putting our customers as our top priority, we have launched various
snack food and confectionaries, pack with flavor and excitement, to deliver good
times all over the country. TIDBIT Enterprise is also set to embark our journey on
delivering safe, quality and premium goods, to our consumers, with the
implementation of HACCP and GMP.

1.1.2 VISION

Our vision is to become an internationally renowned supplier of high quality

snack food and confectionaries manufacturer with the aim of building deep and
strong relationships with all our customers through premium quality, safe and
delicious products, providing exceptional customer service levels and deep customer
satisfaction.

1.1.3 MISSION

Our mission is to become the number one snack food and confectionaries
manufacturer in Malaysia by delivering premium quality, safe and best value
products through the constant pursuit of innovation and excellence.

1.1.4 COMPANY LOGO

 Our logo is consists of a straightforward brand name with bright colours,
showing off with vibrant red and yellow as the main colours. These colours will
attract the attention of the consumers walking on the aisle at the malls, alluring them
to buy the products of TIDBIT Enterprise. The circle on the background represents
the main product of the company, which is potato chips.

1.1.5 FOOD SAFETY POLICY

To ensure the best practice, TIDBIT Enterprise shall regularly measure compliance
against the standards of Hazard Analysis Critical Control Point (HACCP), as well as
implement performance objectives to that our products are safe, delicious and
quality.

1.1.6 FOOD SAFETY OBJECTIVES

To ensure the best practices, TIDBIT Enterprise has established Hazard Analysis
Critical Control Point (HACCP) system. To achieve our goal, we shall:
1. Perform regular identification of hazards, determination of critical control points
and timely implementation of effective control and monitoring measures;
2. Provide our personnel with adequate food safety information, training,
instructions, tools and equipment to carry out their job in a hygienic and
professional manner;
3. Develop and strive to continually improve our processes capable of delivery of
safe food products through an efficient, effective and suitable food safety
management system.
4. Produce the best quality food products for domestic and international market,
guaranteed safe, which complies to HACCP (MS1418: 2019), Good
Manufacturing Products (MS 1514: 2009) and Malaysia Food Act 1983 & Food
Regulation 1985.
 1.1.7 ORGANIZATION CHART

MANAGER

Nasuha Zahirah bt
Zaharuddin

ASSISTANT
MANAGER

Farid Iqmal Bin

Samsuddin

HR/ADMIN PRODUCTION
DEPARTMENT QA/QC DEPARTMENT
DEPARTMENT

Mohd Azuan Bin Mohd Nur Diyanah bt Jalin

Sofian Fatin Nur Ashira bt
Mohd 'Ashraf

Figure 1.1: Organization Chart of the Company

As shown in Figure 1,1, the company is led by Nasuha Zahirah, as the

manager, which she is assisted by the assistant manager, Farid Iqmal. Responsible
as the HR or Admin Department is Mohamad Azuan, whereas, the Production
Department is led by Nur Diyanah. Lastly, QA/QC Department is under Fatin Nur
Ashira. The roles and responsibilities under each position are listed in Table 1.1.
 1.1.8 ROLES AND RESPONSIBILITIES

Table 1.1: Roles and Responsibilities

ROLES RESPONSIBILITIES
DIRECTOR - to provide direction for the company
- to create, communicate, and implement the
organization’s vision, mission, and overall over all
company’s strategy
- to signing checks and documents on behalf of the
company
- to increase management’s effectiveness by
recruiting, training, and coaching managers;
communicate values, strategies, and objectives; and
plan, monitor, and appraise job results

ASSISTANT - to plan meetings, trainings and activities

MANAGER - to arrange travel, meetings and appointments
- to record minute meeting and to ensure everything is
in track
- to provide secretarial and administrative support to
the general manager
- to coordinate work with other executive and to
ensure high performance of work

HR/ADMIN - to oversee the smooth running of HR and

DEPARTMENT administrative tasks for the organization
- to maintain office supplies by checking stocks;
placing and expediting orders; evaluating new
products.
- to ensure operation of equipment by completing
preventive maintenance requirements; calling for
repairs.
- to update job knowledge by participating in
educational opportunities; reading professional
publications; maintaining personal networks;
 participating in professional organizations
- to enhance department and organization reputation
by exploring opportunities to add value to job
accomplishments
- to define job positions for recruitment and manage
interviewing process
- to carry out staff induction for new team members
- to train, evaluate and assess employees

QA/QC DEPARTMENT - to manage and oversee project quality to ensure

compliance to codes, standards, regulations and
Quality Management System requirements
- to advance quality achievement and performance
improvement throughout the company
- to manage inspection, and testing plans for new
construction, repair work and alterations
- to ensure the consistency of quality of each raw
materials throughout the process
- to manage plant integrity through a failure analysis
reporting system and following up on
recommendations
- to inspect and ensure compliance with
regulations and standards with GMP (MS 1514:
2009) and HACCP (MS 1480: 2007).

PRODUCTION - to plan and organise production schedules

DEPARTMENT - to monitor operations and trigger corrective actions
- to ensure that everything on the production
department is done according to the policy and
safety standard of the company
- to ensure that finished goods meet quality
standards and customer satisfaction
1.2 INTRODUCTION OF PRODUCT

Figure 1.2: Barbeque flavoured potato chips

The fame of snacks food in recent time is developing fast on the daily basis,
which potato chips have always been one of the popular choices since many years
ago. TIDBIT Chips is in the snacks production industry to sell our well packaged
potato chips. The objectives of TIDBIT Chips are to become the leading potato chips
production company brand in the Malaysia and to build a potato chip production
company, whose products can be found in supermarkets and grocery stores all
across West and East Malaysia.

1.2.1 PRODUCT DESCRIPTION

Potatoes are known as the all-time most loved snacks of people around the
world. TIDBIT Chips are made from fresh potatoes grown at farm-grown potatoes
and are cooked and seasoned to perfection. TIDBIT Chips can be described as thin
slices of potatoes that have been deep fried until the potato turns out to be very
crispy. TIDBIT’s Chips comes in flavour barbeque, as our very first flavour to launch.
The ingredients used in the chips comply with Food Regulation 1985. All ingredient
will be written at the packaging as required by the regulation, including the chemical
name of the flavour enhancer used.

The chips are packaged into an aluminium pouch packaging that will preserve
critical attributes of the chips that consumers seek for. For instance, the flavour, the
aroma, and not to forget, the crispiness of the chips. The use of aluminium
packaging is also an important asset in order to keep the moisture of the surrounding
out, thus, keeping the chips nice and dry, leading them to last longer. TIDBIT Chips
also comes in form of stackable of very thin layer of potato in a cylindrical can. The
cylindrical can is chosen as it is the most ideal way to hold the stackable chips in a
place keep them fresh. The container of the potato chips can be found in two sizes,
which are the small and the big one. The small one is much more convenient as it
can be used to bring it anywhere due to its small size while the big one is worth to
share with more than two people.

1.2.2 PRODUCT VALUE PROPOSITION

TIDBIT Potato is the healthier alternative to the regular potato chips because the
chips are fried with finest vegetable oil that is high in tocopherols, palm oil and it is
stable to be used for frying. There are no any trans-fat, MSG or artificial colouring in
making TIDBIT Chips.

1.2.3 INGREDIENT OF TIDBIT’S CHIP

Potato chips are thin slices potatoes that have been cooked by frying or baking
process until it turns crunchy and crispy. The basic chips are usually seasoned with
salt. TIDBIT Chips come with flavour of barbeque.

i. Flavouring Ingredients

As for the flavour, Russet potatoes will be used to provide a distinct flavour
of potato chips. Russet potatoes is chosen as it is a great option for
Additional ingredients that comprises of spices, garlic powder, tomato
powder, onion powder and paprika extract powder will be added as the
barbeque flavouring. Yeast extract is also added as a flavour enhancer as
yeast extract will provide a savoury flavour to the chips.
 ii. Colouring Ingredients

Colouring ingredients used in TIDBIT Chip are mainly from the colour of
ingredient used in barbeque flavouring. Spices, tomato powder and
paprika extract powder will provide a red pigment to the chips.

iii. Texturing Ingredients

Anticaking agent are also included in the ingredients for making TIDBIT
Chips to prevent clumping of dusted barbeque seasoning to the chips
during storage that will lead to quality degradation of the chips.

1.3 PROBLEM STATEMENTS

There are several problem statements can be drawn regarding the production of
potato chips, which are:

i. Lack of raw food material (potato) in Malaysia. Need to import the raw
material from India and China.
ii. Increase the quantity of production of the chips annually.
iii. Extend the shelf life and quality of the chips.

Malaysia located near the equator, Malaysia's climate is categorized as

equatorial, being hot and humid throughout the year which suitable for the agriculture
industry. the weather condition suitable for any agriculture industry such as palm oil,
rubber, and tropical fruits. However, the russet potato which is the most suitable type
of potato in the potato chips production is low due to the number of potato plantation
in Malaysia is less and on a small scale. This cause the demand for potato in the
market is high. The company needs to find other suppliers to get potato stock
continuously throughout the year. India and China are one of the largest potato
producers that the company will buy the potato stock.
 Malaysia is not the major producer of potato in the world. The demand for the
potato in the market is high and may not enough for potato chips production. So, the
company will import the russet potato from India and China to fulfilled the quota of
the production annually. Also, the other raw material and dry material such as
packaging need to be managed. The research and development for creating the
recipe of the potato chips are done by the research department to increase the
quality and quantity of the product.

Potato chips have a long shelf life if the product is kept in a suitable condition. the
critical control point of the process should be controlled to prolong the shelf life of the
product. the process, packaging, and delivery process need to be controlled so the
quality of the potato chips can be maintained until it reaches the consumer. Several
factors that will reduce the quality of the product such as oxidation of oil, stale, and
crack on the chips need to eliminate. Moreover, due to the weather condition in
Malaysia which is humid and hot throughout the year, the potato chips will easily
become stale. So, the proper process needs to be controlled to preserve the quality
of the chips.

1.4 PROJECT OBJECTIVES

From the problem statements above, a few objectives have been made to achieve
by our company, which include:

i. To become a leading potato chips production company in Malaysia.

ii. To build the potato chips company of the product can be found in domestic
and international market
iii. To produce the best quality food products that are guaranteed safe for
consumption which are compliance to Good Manufacturing Products (GMP)
(MS 1514: 2009) and Malaysia Food Act 1983 & Food Regulation 1985.
1.5 MARKET SURVEY

1.5.1 GLOBAL SNACK INDUSTRIES

Snacking has grown to be a big industry. It has earned the spot of regular
meals like breakfast, lunch, and dinner, unlike in the past, where snacking was made
in between meals. These days, grabbing a quick snack, whether it is a granola bar or
overnight oatmeal, has become a habit for many to replace the most essential meal
of the day, which is breakfast. Presently, ready-to-eat food is the biggest segment in
the overall conventional and non-conventional food industry. Its market growth is
fuelled by various determinants that drive the risen demand for on the go
convenience foods. (Businesswire, 2018). These include consumers' lifestyles, rapid
urbanization, and high disposable wages. It is also expanding at a speedy pace due
to the high consumer acceptance for such food globally. (MarketWatch, 2020).

Snacks Consumption Globally

70%
Figure 62% 64%
1.3: 60%
Top 5 50%
50%
44%
40%
33%
30%

20%

10%

0%
Fresh Fruits Chocolate Chips Ice Cream Yogurt

Favourite Snacks Globally (Nielsen, 2014)

The Nielsen Global Snacking Survey polled 30,000 online consumers in 60

countries to identify which snacks are most popular around the world and which
health, taste and texture attributes are most important in the selection criteria.
Confections, which include sugary sweets, such as chocolate, hard candy and gum,
comprise the biggest sales contribution to the overall snack category in Europe
($46.5 billion) and the Middle East/Africa ($1.9 billion). Salty snacks contribute more
than one-fifth of snack sales in North America ($27.7 billion), refrigerated snacks
comprise almost one third of snacks in Asia-Pacific ($13.7 billion) and cookies and
snack cakes make up more than one-fourth of total snacks in Latin America ($8.6
billion). Sales of savory snacks, which include crackers, rice cakes and pita chips,
increased 21% in the last year in Latin America. Meat snacks, which include jerky
and dried meat, grew 25% in the Middle East/Africa and 15% in North America.
Refrigerated snacks, which include yogurt, cheese snacks and pudding, jumped
6.4% in AsiaPacific, while dips and spreads, which include salsa and hummus, rose
6.8% in Europe.

In 2019, Harris Poll has conducted an online survey, concerning the UK’s
snacking habits, that involved a total respondent of 2,042 people. A whopping 1,193
respondents, which covers 57% of the total respondents, said that they tend to skip a
meal and eat snacks instead. The most popular reason that dominated the other
reasons of why they skip meals is the fact that snacking is easier for them, while
18% said they eat snacks because of their “on the go” lifestyle. This indicates that
our busy lifestyle and the pressure to do everything instantly has led to a disinterest
in food, as well as, an inability to sit down and have a proper meal. Furthermore,
almost 60% of people buy snacks as part of their weekly grocery shop, proving that
snacking is planned and an expected behaviour.
Lays Chio Chips Calbee Chips

PRICE RM 2.80 RM 20.80 RM 6.80

NET WEIGHT 55 g 60 g 170 g
ESTIMATED RM 3.00 RM 20.80 RM 2.40
PRICE
PER 60 g
COMPANY Frito-Lay Company Intersnack Group Calbee’s
Corperation
COUNTRY Canada Germany Japan

Table 1.2: Global Price Comparisons of Potato Chips

1.5.2 GLOBAL SALTED SNACK INDUSTRIES

 The global snack food market can be divided into several types, which
include bakery, confectionery, and salted snacks. The bakery snacks involve
cakes, pastries, and bread, whereas, confectionery snacks include chocolates,
candies, and cookies. The salted snacks, such as potato chips, tortilla chips, and
pretzels, are deemed as the kings of the snacking world, due to an increase of
sales by 4.9% to $24.9 billion for the 52 weeks ending May 19, 2019, per IRI.
Potato chips are the only largest segment within the category, in which the sales of
potato chips rose for the year, up 2.2 percent to achieve $7.7 billion (Reilly
M.,2019). Said dominant snacks category is also anticipated to possess the highest
market growth through the duration of the forecast, where they are poised to rise at
a rate of 5.6% in size. By 2025, the salted snack segment alone is predicted to
strike $109 billion in global sales (Cision News, 2019).

CONSUMPTION OF POTATO CHIPS IN

VARIOUS COUNTRIES

10%

37%
23%

30%

North America Asia Pacific

Europe Rest of the world

Figure 1.4: Consumption of Potato Chips in Various Countries (Market Research

Future, 2020)

With a market share of 37.13% in 2018, the potato chips market in North
America is expected to be the leading market internationally. The main reason for
the previous statement is owing to the escalating demand for potato chips and crisps
among the working population and rising disposable income in the region. High
snack consumption in the US and Canada, supported by the growing demand for on-
the-go food, is the prime factor that encourages market growth in North America
(Market Research Future, 2020). The industry is driven by countries, such as the UK
and Spain, as the consumers are actively involved in on-the-go eating, as an
immediate energy booster, to substitute the place of whole meals. The demand for
savory snacks also towers significantly in Europe, particularly Netherlands, Norway,
and Germany, as these products are consumed on numerous occasions by the
community in this region. The established culture of eating chips as a daily snack is
also the trump card that contributes to said scene. (Market Reseach Biz, 2020).

Additionally, the Asia Pacific market is expected to record a skyrocket

growth rate in the target market, thanks to the growing population and expanding
the food & beverage sector, especially in developing prosperity, such as India and
China (Hayes J, 2020). Since the disposable income of these countries is rising,
the industries of food and beverage are getting more acceptance form the
community. (Cision News, 2019). Furthermore, giant snacks companies are taking
a step ahead by introducing new and innovative regional flavored potato chips to
win more hearts of consumers all over the world. This unique approach to tackle
the taste buds of universal consumers is foreseen to contribute significantly to the
impact of the sales of potato chips in Asia-Pacific during the forecast period (Hayes
J, 2020). For instance, PepsiCo launched Lays India’s Magic Masala that excites
the pallet of the associated communities, as it offers many well-known Indian
spices and condiments that are familiar to them. By doing so, Lays has
successfully gained more loyalty, trust and love from their consumers, which leads
to the gain of profits too.

Figure 1.5: Lay’s Thai Sweet Chilli and India’s Magic Masala Potato Chips

1.5.3 SNACK INDUSTRIES IN MALAYSIA

 In the first instance, this cottage product received unenthusiastic feedback from
the consumers. However, involved companies in the snacks industry have turned
over a new leaf by delivering a diversity of flavors, in uniform shapes and sizes, and
impressive packaging, resulting in them to stand at par with international companies.
Now, the consumers are exposed to have ample choices to suit their taste when it
comes to snacks. Since the demand for the snacks industry, especially chips, are
increasing at a rapid pace, the manufacturers are encountering a shortage of raw
ingredients like tapioca, sweet potato and even bananas. To tackle the downfall in
the ingredients to process the chips, FAMA has taken an alternative to establish a
contract farming system, where farmers planting the tubers and bananas needed by
the industry and the yield purchased by FAMA. He regarded through FAMA's
promotional efforts and supports, numerous local products have been successfully
marketed at the international level with the Malaysia Best endorsement. (PotatoPro,
2011).

Malaysia’s Savory Snacks market is projected to manifest a soaring growth in

value, as well as volume terms during 2015-2020, where the category of potato chips
is anticipated to achieve the highest market share throughout these years (Global
Data, 2016). Malaysia's traditional snack industry is developing efficiently, with the
sales figure amounting to RM200 Million (66 Million USD) last year. As stated by the
growth data for the country's snack industry published by Federal Agricultural
Marketing Authority (FAMA), the chips serve a critical role in becoming the largest
market share of the snack industry, with their sales figure hitting RM102.1 Million (34
Million USD). The Processed Snacks category has the highest volume share, while
the Pretzels category is speculated to enrol the fastest value growth during 2015-
2020. Mamee Double Decker, Universal Robina, and Oriental Food Industries Sdn
Bhd. are the leading market players in the Malaysian savory snacks sector
(PotatoPro, 2011). Mondelez (M) Sales Sdn Bhd secured its position as the lead in
the category, in 2019, but lost share to second-ranking Mamee-Double Decker (M)
Sdn Bhd, which encountered higher sales growth thanks to the strength of its
Mamee brand. Both companies have been present in the category for some time.
 Mamee Double Decker is one of the most well-known food manufacturers in
Malaysia. It focuses on producing and selling instant noodles, snacks, confectionery,
and beverages. In 1992, the company started with a single product. Putting their
customers as their top priority, they are consistently expanding their range of
products, in order to fulfill the consumers' satisfaction. Today, Mamee products are
exported to more than 80 countries which includes Asia, the Middle East, Africa, and
Europe, leading them to grow to be one of the most respected snack companies. At
present, the company makes more than 50 different products, where Mister Potato
crisps are its biggest seller since it contributes to the highest gain to the company.
However, Mamee Monster snacks remain close to the hearts of countless
Malaysians, instantly bringing back fond childhood memories after being on the
market for 45 years. After more than four decades in business, the company has
notched up many major milestones, including a partnership with Manchester United
Football Club and the opening of a free kidney dialysis center in Malacca for
underprivileged locals (F. Najwa, 2015).

Table 1.3: Price of Snacks from Mamee-Double Decker (M) Sdn Bhd
MAMEE DOUBLE DECKER MR POTATO

PRICE RM 2.80 RM 1.40 RM 2.70

NET 25 g 40 g 75 g
WEIGHT

ESTIMATED RM 0.35 RM 0.88 RM 0.90

PRICE
PER 25 G
Mondelez Malaysia is a part of the Mondelēz International group of
companies. In Malaysia, Mondelez has two factories, where one of them is in
Selangor, for the production of Cadbury and Choclairs, while the other is in Penang,
for the production of Twisties and biscuits, including Jacob’s. Based on sales, its top
brands worldwide are Cadbury, Oreo Cookies and belVita. On the other hand,
Mandelez's most popular brands in Malaysia are Cadbury, Twisties, Chipsmore,
Jacob’s and Tiger biscuits (Ganesan V. 2019). Through the debut of new products,
Mondelez strives to turn more people into snackers and make its products appeal to
health-conscious consumers, hence, it can dominate new business segments. Last
year’s introduction of Cadbury Dairy Milk Kopi C in partnership with Datuk
Mohammad Nor Mohammad Khalid, famously recognized as Lat, declared a
success during a three-month promotional period. Mondelez's other achievement is
the Oreo Thins, which went viral in the food industry, especially among teenagers
that love to try new stuff.

Table 1.4: Price of Snacks from Mondelez (M) Sales Sdn Bhd
RITZ TWISTIES CHIPSTER

PRICE RM 8.21 RM 1.90 RM 2.90

NET 100 g 65 g 60 g
WEIGHT
ESTIMATED RM 4.90 RM 1.75 RM 2.90
PRICE
PER 60 G
 1.5.4 TARGET MARKET

TIDBIT Enterprise is high in quality and a unique brand, which is targeted to all group
of people according to the product offered. Since the company began with a single
product, and consistently grown to several products, targeted market becomes more.

i. Kids and teenagers

From the family structure perspective, a mother with children, usually will buy
more groceries and household products. Children love to have snacks like
Potato Chips, chocolates and pastries because the products are very
convenient and it comes with different taste based on their preferences.

ii. Students
Students are also being targeted because most of the time, they need snacks
and drinks while studying to get away with the stress, especially female
students. They always need something to chew and eat during study time or
after lecture.

iii. Working people

Reaching for on-the-go food is becoming a norm to busy people, as they have
not much time to prepare for a proper meal for the day. These targeted
audiences need snacks that will satisfy their hunger without interrupting with
their daily works.

iv. Health conscious people

On account of the rising awareness of the importance to consume healthy
foods among adults, said targeted segment tend to analyse the ingredients
used in products before making the purchase. Our product is the perfect
snack for those who want to have something to munch on, while still
maintaining the healthiness of their wellbeing. This is because, TIDBIT Chips
have no trans-fat, MSG or artificial, and our potatoes are also is a gluten-free,
allowing people with Celiac or allergic to enjoy their snacks.
 1.5.5 SCOPE OF SURVEY

Market Survey is one of the most widely used sales forecasting method used
to gather information from the public, making it beneficial in gaining a better
perspective and understanding of the market or target audience. TIDBIT Enterprise
has conducted an online survey, through Google Form, that consists of 10 questions
relating to the preference of potato chips among teenagers. By doing this, the
consumers’ reactions can also be obtained to a new product or service when it is still
being developed, hence, the product can be improvise until it achieves the best
suitability to its intended market.

MALE FEMALE 15-20 21-25 26-30

Figure 1.6: Pie Chart for Gender Figure 1.7: Pie Chart for Age

The total number of respondents obtained from the market survey was 170
people. Figure 1.6 shows the pie chart for gender. As shown, the female category
dominated the survey with 62%, whereas, the remaining belongs to the male
category. On the other hand, Figure 1.7 shows that majority of the respondents are
aged ranging from 21 to 25 years old, followed with teens around 15 to 20 years old,
with 27%. Hence, it can be said that females with the ages of 21 to 25 years old
brought a huge impact to the survey conducted.
Q1: Do you like potato chips? Q2: When do you prefer to eat potato
 chips?

YES NO

Figure 1.8: Pie chart of preference of Figure 1.9: Pie chart of time preference
potato chips of potato chips

From Figure 1.8, it can be seen that 96% of the total respondents answered
‘Yes’ when they were asked about their preference towards consuming potato chips.
On the other hand, the data obtained from Figure 1.9 shows that 64% of
respondents answered that they like to eat potato chips the most during the night,
while, 30% of respondents chose evening. There is a high possibility that the
reasoning behind this is, because they want to eat something light, easy, but at the
same time, delicious after a long day at work or school. The thought of cooking or
waiting in line to get food in the restaurant may not be their cup of tea, alluring them
to get snacks instead. Moreover, many of us love to spend weekend nights with our
family to relax, while enjoying movies and snacks, leading them to choose night or
evening as their preferred time to consume potato chips.
 Q3: How often do you consume potato chips?

VERY OFTEN
OFTEN
SOMETIMES
RARELY
NEVER

Figure 1.10: Pie chart for amount of consumption of potato chips

Next, Question 3 asked about how often the respondents consume potato
chips, with five answer choices. The results are observed from Figure 1.10. More
than half of them, or more precisely 64%, answered sometimes, while, only 1.8% of
them answered very often. There is not much difference between the number of
people that answered with often and rarely, with percentages of 15 and 19
respectively. The evolving technology plays a very huge effect towards the
teenagers nowadays, where they can order food easily through a few clicks on
mobile apps, mainly Food Panda or Grab Food, to get their food delivered anytime
and anywhere. This might contribute to the reason why majority of them chose
sometimes, and rarely for said question. Moreover, the awareness of keeping a good
health among teenagers and young adults are spreading like a wildfire, especially
due to the rising cases of obesity in Malaysia. The desire of maintaining a good
health might become the second reasoning of why the respondents are minimizing
the intake of snacks in their diet.
 Q4: Which brand of potato chips do you prefer?

MAMEE
PRINGLES
MR POTATO
OTHERS

Figure 1.11: Pie chart for brand preference of potato chips

Furthermore, it was observed from Figure 1.11 that 55% of the respondents
prefer Mr Potato, followed by Pringles, and Mamee, with 32% and 11% respectively.
There were also other brands that are preferred by the respondents, which include
Wise Cottage and Jacker. Mr Potato has a wider range in producing their products,
where they come in both paper tube and plastic pouch. Majority of Pringles’ products
come in the form of paper tube, while, Mamee focuses on plastic pouch. The
diversity qualities offered by Mr Potato provides options for the consumer, in order to
satisfy their preference and wants. This is because, some people tend to think that
potato chips in a paper tube are a lot for them, and keeping the chips for some time
might cause them to stale, leading to the loss of crunchiness and flavor of the chips.
Hence, they opt to buy in plastic pouch more. Vice versa happens to the consumers
that prefer chips in the paper tube.
 Q5: Which flavour of potato chips do you prefer?

ORIGINAL
BARBEQUE
CHEESE
OTHERS

Figure 1.12: Pie chart for flavour preference of potato chips

From Figure 1.12, it is can be seen that there is not much difference in
percentage regarding the various flavors, with 33.3% for BBQ, 23.8% for original and
18.5% for cheese. However, 24.4% of the votes goes for other flavours, where most
of them prefer sour cream and onion, hot and spicy and garlic. The result obtained
might be contributed due to the fact that Malaysians love spiced food with adequate
seasonings. Food testers from tasteofhome summed up the barbecue-flavoured
chips as “a summer party packed into a chip”, which the majority of the panel really
enjoyed this chip’s savoury barbecue sauce taste with a kick of smoke.   It also
comes with just a hint of sweetness to round out the taste.

Next, combining sour cream and onion actually makes for one of the very best
chips in the chips line up. The savoury onion flavor is balanced well by the creamy
tartness of the sour cream, and the amount of salt is perfect. For fans of spice and
snacks, they would go for hot and spicy chips.  The thin and crispiness of the potato
chip combined with the light coating of hot flavor delivers a great combination of
flavours to the consumers. There is also an interesting note of sweetness to these
chips that offset the intense burn of the spice, giving it a well-rounded flavor rather
than an over-spiced acidic one.
 Q6: Which quality of potato chips do you prefer the most?

THICKNESS
FLAVOUR
CRUNCHINESS
AMOUNT

Figure 1.13: Pie chart for quality preference of potato chips

As we can see from Figure 1.13, it can be extracted that the crunchiness and
flavour of chips play critical roles in capturing the consumers’ hearts, leading them to
trust one’s brand that they have put their attention on. The percentages of
respondents gained by crunchiness and flavour of chips are 41.8 and 38.2
respectively. Crispness and crunchiness are found to be highly noticeable textural
attributes, often linked with the freshness and firmness foods. In consumer
interviews, it was reported that people considered crispy and crunchy foods to be
appealing and enjoyable, due to the sound produced when one eats something,
leading it to be is an important part of a food's desirability factor. Sounds made
during eating can modulate people’s perceptions of moistness, texture, and other
aspects of food, and may influence taste perception. People associate the loudness
of a crunch with the freshness of the food.

Besides, flavours are also assets that need be considered the most in the
production of potato chips. If the flavour is failed to be delivered, they will opt for
another brands, leading to loss of trust and loyalty to the brand. In addition,
developing flavours that are suitable to the pallet of the targeted market open the
door for the success of the brand. The profit of Lays Chips in India soared when
Magic Masala was launched, because the use of spices that familiar and loved by
the community.
 Q7: Which range of price of potato chips do you prefer the most?

RM 2-5
RM 6-10
RM 11 AND ABOVE

Figure 1.14: Pie chart for price preference of potato chips

Question 7 asked about the preferred price range of potato chips from the
consumers. Three answer choices were provided, which are RM2-5, RM6-10 and
RM11 and above. Based on Figure 1.13, it is obvious that more than half of them,
precisely 68.2% of them, chose RM2-RM5 as their most preferred price range when
they buy potato chips. Meanwhile, 28.2% of them chose RM6-RM10, making the
remaining of the respondents to choose RM11 and above. Looking back at Figure
1.6, the respondents are dominated with teens and young adults that are still
studying or still at the beginning of their career, with no stable income. These
categories cannot splurge their money mindlessly, especially with the current
economy that is still trying to gain its momentum. Saving money is important for
them, hence they opt for chips with reasonable prices. There is also a possibility that
the thought of spending a lot of money for something that will be gone in minutes will
be a waste to them.

Q8: Which type of packaging do you Q9: Which type of packaging do you
prefer the most? prefer the most?
PLASTIC PAPER PLASTIC TRAY +
POUCH TUBE PLASTIC POUCH

Figure 1.16: Pie chart for type of packaging

Figure 1.15: Pie chart for packaging
preference of potato chips
preference of potato chips

Based on Figure 1.15, the data obtained shows that 60% of the respondents
prefer chips that come in paper tube, while plastic pouch and plastic tray got 26 and
14 of percentages respectively. This is because, the paper tube has a lid, allowing
the consumers to be able to keep the chips fresh and crunchy, if they could not finish
them in one seating. The think paper material is beneficial in increasing the
permeability of the products, due to less air that can enter the tube. Thus, the
moisture content of the chips can be maintained, preventing the chips to become
stale and lost the flavours. In contrast, plastic pouch has a low permeability, where
air can enter easily once the package is opened. The consumers also need to store
the left over chips in other container since it is not close-able type of packaging.

Last but not least, it can be observed from Figure 1.16 that 41% of the
respondents prefer medium sized packaging of chips, whereas, 28% of them prefer
large size. The remaining chose small. Based on the date collected from Question 3,
majority of them consume potato chips sometimes. There is a possibility that the
respondents consume chips in a moderate to large amount, even though the
frequency of said scene is low.

1.6 SWOT ANALYSIS

1.6.1 STRENGTH

i. Growing Demand of Potato Chips Among Malaysian

 Figure

Figure 1.17 represents the data gathered concerning the per capita
consumption of snacks in 2013 involving various countries. It was found that
Indonesia, the Philippines, and Thailand are the largest sales contributed by their
massive population. Malaysia manifests signs of a maturing market in courses of
both growth and per-capita consumption. Finally, Vietnam is an assuring market, on
account of its immense growth and low snack-consumption level.

With the active growth of Malaysia’s traditional snack industry, the sales value
of snack food scores $66 million. The snack industry has played a vital role in
improving the rural economy and increasing the rural people's income, where many
of the chip makers work in groups. The demand for potato chips is growing day by
day, also because of the development of media and globalization. Young people are
attracted by the western lifestyle, resulting in them tend to eat snack food more. In
addition, there are more and more women get to work in the present time, therefore,
they have less time to cook for themselves or their families. Here is the part where
they would reach for snack foods, in which potato chips with crispy, good taste and
color are one of their choice between meals.

ii. Assurance of Quality and Safe Products

 HACCP, which stands for Hazards Analysis and Critical Control Point, is a
system that enables companies to determine and manage any hazards that pose a
danger to them. It can be utilized throughout the food chain from production to
consumption. Prerequisite programs, such as Standard Operating Procedures
(SOPs), are the foundation of HACCP. The use of SOP pre-operations and clean up
checklists further ensure that the steps throughout the production process are
performed accordingly, leading to fewer mistakes. By distinguishing and managing
possible risks, such as microbiological, chemical and physical contaminants, the
company can strongly secure consumers that its products are safe. By decreasing
risks, companies are able to sustain a clean record, which in turn will strengthen the
company’s public image. As part of the HACCP, system critical control points are
recognized, so that corrective actions can be implemented to prevent a hazard. From
there, critical and measurable limits of acceptability are planned for each critical
control point, as well as monitoring methods. If the correct methods are not uniformly
executed, documented and sustained, risks are expected to occur. Leniency could
result in noncompliance, recall, or even a foodborne illness outbreak.

Figure 1.18: Example of Manufacturing Process of Potato Chips

 1.6.2 WEAKNESS

i. Lack of Raw Materials In Malaysia

As the fourth most essential food crop after the cereal wheat, rice, and corn in
global crop production, potatoes are the most crucial vegetable crop as it is deemed
as the world’s stable food consumed by numerous countries. In 2011, the potatoes
industry gave off around 61% to the total entire value of vegetable production.
Nonetheless, Malaysia does not produce potato locally, which most of the fresh
potatoes and potato products are imported from its neighboring countries, as well as
other western countries, such as China (59%), USA (8%) and Pakistan(8%).

Figure 1.19: Top 10 Biggest Potato Producer in The World (Aster, 2019)

Currently, the potato harvested area in the world has conquered more than
1.88 million hectares. China dominates the list of the world’s largest potato producing
countries, estimating for a share of nearly 26% of the world’s total production
volume. As of 2017, China’s potato exports equalled USD 281.1 million, which is
equivalent to approximately 6.8% of the global potato exports value. India ranks
second in terms of potato production volume, holding a share of almost 12.5% of the
world’s Today, about 2.18 million hectares are covered as the potato harvesting area
in India, where Uttar Pradesh and West Bengal are the major potato-producing
states in said country. With a percentage of roughly 7.62% of the world’s potato
production volume, Russia gets the third place on the list of the global major potato
product.
ii. Lack In Terms of Products, Company and Facilities

Since TIDBIT Enterprise a new company, we have only few numbers of

manufacturing facilities which could make them insufficient to meet market demand.
As we are also focusing to export to over 100 countries around the world, but it may
be insufficient for the company to serve an enough quantity of products to meet the
market demand with our limited manufacturing facilities. We can only make limited
production one day, hence, the sales of the company may also be restricted due to
the limited products in the market offered. A major weakness that may count against
us is the fact that we are a new potato chips production company, and we don’t have
the financial capacity to compete with multi-million dollars chains potato chips
production companies who are already determining the direction of the market as it
relates to the sale and supply of potato chips all across the globe.

The flavour of the potato chips that the company will be launching is also
limited to only BBQ for now, which means that the consumers are exposed to very
narrow choice to make. The reason why we chose BBQ as our first flavour is due to
the very high preference of said flavour from consumers through the survey
conducted, compared to other flavours. Moreover, the top organization is shaped by
young people. The lack of experience and knowledge to manage a company are
also one of the TIDBIT Enterprise’s weakness. The responsibilities of each roles
might have shortcomings, that hopefully can be reduced as the time goes by.
 1.6.3 OPPORTUNITIES

i. Demand of Healthy Snacks in Malaysia

In the globalization era, it is obvious that there is an increase in working

women over the years, who spend less time cooking, resulting in soaring demand for
the snack food market, particularly potato chips. Generally, potatoes can be served
in a diversity of methods by roasting, frying, baking and many more. It was found that
the healthiest ways of cooking potatoes are by boiling and baking. On the downside,
these methods of cooking lead to the high absorption of fat and added salt. In
addition, WHO estimates that the concentration of acrylamide is higher in fried potato
products, followed by cereals, crisp and bakery products. The use of oil and MSGs in
potato chips also bring forth several diseases to the consumers. Some people stated
that MSG causes in excessive glutamate in the brain and excessive stimulation of
nerve cells. It is true that a high glutamate activity in the brain can result in harm to
the body, as well as can raise blood levels of glutamate. In one study, a megadose
of MSG raised blood levels by 556%. That said, numerous human studies associate
MSG consumption to weight gain and obesity.

As of 2019, Malaysia is placed sixth in the Asia Pacific region and the first
country within Southeast Asia for both obesity and diabetes. By 2025, an alarming
seven million adults, both diagnosed and undiagnosed, are expected to be impacted
by diabetes in Malaysia. Based on a report by Food Industry Asia (FIA) and research
firm IGD, nearly 99% of Malaysians are engaged in supporting a healthy diet and are
actively working to develop their consumption habits. So, it is no wonder that this
fitness-conscious category is especially enthusiastic about the idea of healthy
snacking. It was concluded that a fifth of 18 to 24-year-olds constantly strive to go for
the healthier option when they snack, where, 38% of them prefer a healthy option
most of the time. However, a notable majority, accounting for 71% of the total
respondents, revealed that the cost of healthy food as a primary barrier to obtaining
a healthy diet. Food Industry Asia (FIA) also said that many consumers are still not
content with the number of healthy food options accessible in Malaysia.

1.6.4 THREATS

i. Growth of Global Preference of Other Snacks

GLOBAL SNACK PREFERENCES 2019

Chocolate

Crips

Sweets

Biscuits

Fruit

0 10 20 30 40 50 60 70

Figure 1.20: Global Snack Preferences in 2019

The same poll that has been conducted by Harris Poll, in 2019, reported that
chocolates and fresh fruits are the most popular snacks among respondents from all
over the world. Women are more prone to pick fruits as their snack options. On the
other hand, the influence of chocolate has taken over the whole world as a popular
snack among younger consumers. In detail, 71% of the 25 to 34-year-old age group
affirmed they had eaten chocolate in the past week. That fell to just 55% among the
over-55s.

In the said age group, biscuits are the more preferred choice, enjoyed by
61% of respondents in the week leading up to the survey. Furthermore, there are
some regional variations, where, just 49% of respondents in the northeast answered
they had eaten fruit as a snack in the northeast. Consumers are seeking past the
traditional salty or sweet snacks to other areas such as fruit snacks, protein-based
snacks and even meal drinks. The fruit snack market is predicted to observe a strong
growth, thanks to the increase of the demand for refreshments that are rich in
nutritional content, simultaneously with the growing consumer consciousness,
principally linked to the consumption of healthy food (Business Wire, 2020)

ii. Increase of Potato Price From Suppliers

Figure 1.21: Price of Imported Fries in Malaysia (2017, 2018 & 2019) (Fresh Plaza,
2019)

At the start of 2019, sales of European and United States fries to the
Malaysian market fell because of the higher prices on average by almost 10%. Year-
to-date, US imports are dropping 7%, while the market has increased by 10.7%. The
lack of supplies in Europe has caused higher prices with increases of 12-34% for the
product from European importers. Shortages of supplies for European processors
observed the association of the Dutch, Belgian, German and Danish suppliers drop
back. Over the course of the year, they have been capable to make vital inroads in
what had traditionally been a strong market for the United States. The Dutch are now
importing at Ringgit 4,538/ton (€986) and Belgians Ringgit 4,173 (€907). The price of
US fries has also increased, but by just 5% as they continue to relish a slight
premium at Ringgit 5,534/ton (€1,203).

1.7 PROCESS SCREENING

Process selection is very important on balancing the costs, efficiency, output and
quality of each option to meet the production goals. It can increase the production
output, decrease the operational costs and enhance the quality of product (Ingram,
2019).

1.7.1 PROCESS FLOW CHART

i. Process Flow Diagram 1

Raw Materials

Mud and Washing

soil

Potato skinPeeling

Slicing

Frying

Add flavouring Excess oil Draining

Potato crisp

Pack/Seal

Figure 1.22: Process Flow Diagram of Making Potato Chips (FAO-AGS Food
and Agriculture Organization of the United Nations, 2007)
ii. Process Flow Diagram 2

Raw Material

Washing
Mud and soil

Peeling &
Potato skin
trimming

Selecting

Slicing

Potato washing
Starch

Blanching

Drying (60% wet

basis)

Frying

Excess oil removal

Flavouring

Potato crisp

Packing

Figure 1.23: Process Flow Diagram of Making Potato Chips (Ellie, 2019)
iii. Process Flow Diagram 3

Raw material

Washing, sorting
Potato skin &
peeling

Slicing

Washing
Starch

Drying

Frying

Seasoning

Packing

Figure 1.24: Process Flow Diagram of Making Potato Chips (Goyal & Goyal, 2018)
 Table 1.5: Comparisons between processes

PROCESS FLOW PROCESS FLOW PROCESS FLOW

DIAGRAM 1 DIAGRAM 2 DIAGRAM 3
Raw Materials
Washing
Peeling
Selecting
Slicing
Starch washing
Blanching
Drying
Frying
Excess oil
removal
Seasoning
Packing

1.7.2 JUSTIFICATION FOR SELECTED PROCESS

Based on Table 1.5, comparisons between each process flow diagrams are made
and Process Flow Diagram 2 have been selected to be proceed. Justifications for the
selection that was made are as shown in Table 1.6 below:

Table 1.6: Importance of Steps Involved

STEPS IMPORTANCE
STARCH - Potato starch is a sticky white coating that will occur after
WASHING peeling and slicing process.
- The potatoes need to be rinse under cold water
immediately to wash away the starch.
- Starch washing is done to remove excess starch after
peeling and slicing the potatoes to prevent the starch from
blocking the evaporation of moisture from the potato that
will cause the potato to turn brown and mushy.
BLANCHING - The blanching process is done to remove some of the
sugar in the potatoes.
- The sugar in potatoes will cause the browning of the
potatoes during frying.
- The nutritional value, flavour, colour and texture of the
potatoes will be altered during the blanching process.
- The blanching process also will improve the flavour and
colour of the final product as it minimizes the leaching of
solid that leaves more natural sugar in potatoes

DRYING - Drying of potatoes after rinsing is important as the water on

the surface of the potatoes will in lead in dropping the
temperature of the cooking oil.
- The water on the surface of the potatoes will reduce the
crispiness of the potatoes and produce a greasy potatoes
chips after frying.
 1.7.3 SELECTED PROCESS FLOW DIAGRAM

i. Process Flow Diagram In General

Raw Material

Mud Washing
and soil

PotatoPeeling
skin

Selecting

Slicing

Potato washing
Starch

Blanching

Drying (60% wet

basis)

Frying
T:180 C

Excess oil removal

Flavouring

Packing

Figure 1.25: Process flow diagram of general manufacturing for potato chips
 1.7.4 DETAILED PROCESS FLOW DIAGRAM

Receiving Raw Material

Potable Semi-perishable Dry Ingredient Liquid Packaging

Water Ingredient • Salt • Tomato Powder Ingredient Material
• Potatoes • Sugar • Paprika Extract • Cooking Palm • Primary
- Room temp. • Corn Starch Powder Oil packaging:
- Avoid light, • Garlic Powder • Yeast Powder Multilayer
prevent sprouting • Onion Powder • Anticaking agent metalized
E551 laminated
film roll
• 2ndary
packaging:
Box carton
Preparation of Raw Ingredients

Potatoes All dry

ingredient
Washing
Dry Mixing
Peeling Potato skin

Selecting

Slicing
0.066 - 0.072 in
(1.7 - 1.85 mm)

Starch washing
Cold water, 1 min

Blanching
T: 85°C
t: 3.5 mins

Drying (0.6%moisture)
Convection oven, T: 60±1°C,
air velocity: 1m/s

Frying
T: 180°C
t: 3 mins

Excess oil removal

Seasoning

Packing

Storage

Distribution

Figure 1.26: Process flow diagram of barbecue flavoured potato chips in detail
 1.7.5 PROCESS FLOW DIAGRAM DESCRIPTION

i. Receiving Raw Materials

The basic of finished food product is having raw materials. Raw materials
Raw materials are materials or substances used in the primary production or
manufacturing of goods. Raw materials used must follow the regulatory
requirement which are safe and legal. The ingredients used to make potato
chips are:

- Potatoes - Garlic Powder

- Cooking Oil - Tomato Powder
- Salts - Onion Powder
- Sugar - Yeast Extract
- Dextrose - Paprika Extract
- Corn Starch - E551 Anticaking agent

ii. Preparation of Raw Materials

Potatoes will be washed and peeled its skin prior before selection. Clean
water will be used as a medium for washing the potatoes to rinse off the muds
and soil on the skin of potatoes. After washing, skin potatoes will be peeled.

iii. Selecting

Selection of potatoes will be made based on the appearance of peeled

potatoes. Any potatoes that shows visible blackspots on the surface of
potatoes will be rejected. Medium size of potatoes will be sorted by size
sorting machine and selected manually by hand.

iv. Slicing

The potatoes will go through a slicer that is equipped with a blade that can be
set according to the desired thicknesses. In this manufacturing process,
required thickness for the sliced potatoes is around 0.066 - 0.072 in (1.7 -
1.85 mm). An average size of potatoes will provides around 28 slices of
potatoes.
v. Starch Washing
 The excess potato starch that forms when potatoes are peeled and sliced
must be rinsed off the chips with water to reduce the formation of acrylamide
that will be influenced by starch. If washing is not included, the surface starch
will block the evaporation of moisture from the potato and lead to mushy, dark
brown chips (Society of Chemical Industry, 2008). Sliced potatoes is washed
with cold fresh water for about 1 minute.

vi. Blanching

Blanching process is added as it this step may improves the colour and also
the texture. Moreover, it can also reduce the oil uptake by gelatinization on
the surface of potato (Califano & Calvelo, 1988). Blanching reduces the level
of reducing sugar in sliced potatoes thus can avoid browning before frying.
The best blanching time according to (Damto & Chala, 2019) is 5 to 7 minutes
while the temperature for blanching is 70°C to 100°C. Selected temperature
and blanching time are 85°C and 3.5 minutes respectively, with a ratio of
potato-to-water ~0.005w/w.

vii. Drying

Blanched slices potatoes will then be blotted with paper towel to eliminate
loose material adhering to the surface prior to drying or frying. Air dehydration
with warm air, is used to dry the blanched potato sliced until it reaches 60% of
moisture content, wet basis (Talburt & Smith, 1975). Air dehydration leads to
a lower moisture content that will also reduce oil absorption (Talburt & Smith,
1975). Blotted blanched slices of potatoes will be arranged in one single layer
and dried in a convection oven with temperature 60±1°C and air velocity 1
m/s. Mass loss of potatoes is measured regularly until a final moisture of 60
g/100 g (wet basis).

viii. Frying

Dried slices potatoes will be fried in a batch fryers according to each batch.
The setup consists of a frying pan of a rectangular shape with the size of 1800
mm × 900 mm × 300 mm. The pan with the perforated plate is completely
 filled with vegetable oil manually. Oil temperature ranges, initially, between
175°C and 190°C, and terminally 180°C. Frying time for about 3 minutes
(Varzakas & Tzia, 2015). The frying temperature needs to be maintained

below 190°C. If temperature increases, it causes burning of chips at its outer

boundary and also makes it reddish which changes. Owing to evaporation of
water during frying, the weight of potato slices decreases, and consequently
float into the oil.

ix. Removing Excess Oil

Excess oil are crucial to be separated to slow down the deterioration process
cause by oxidation that will creates a rancid flavour and off odour during
storage. Fried slices of potatoes will then be placed in a deoiling machine or
known as oil separator machine that will work under a centrifugal force with
high-pressure airflow that will blow away the surface oil and cooled it down.
Excess oil is piped out from the machine and be collected. This excess oil will
be send to a third party together with leftover oil used for frying for further
treatment.

x. Seasoning

The chips / crisps pass through a rotating flavour drum where they are lightly
sprinkled with salt and barbeque flavouring powder. The rotating drum makes
sure the flavouring is evenly distributed over all the chips / crisps.

xi. Packing

Flavoured potato chips need to be packaged immediately after seasoning

process. Nitrogen gas is opted to be filled in the package as the chips will not
be reacted with nitrogen (Nobile, 2001).
 1.7.5.1. Compositions of Ingredients

Table 1.7: Composition of Ingredient for Barbecue Flavored Potato Chips

COMPOSITIONS OF
PERCENTAGE OF
INGREDIENTS INGREDIENTS PER BATCH
COMPOSITIONS (%)
(250KG/BATCH) (KG)
Potatoes 220 88
Cooking Oil 1.0 0.4
Salts 5.0 2
Sugar 5.0 2
Corn Starch 1.0 0.4
Garlic Powder 2.0 0.8
Tomato Powder 7.0 2.8
Onion Powder 4.5 1.8
Paprika Extract 3.0 1.2
Anticaking agent E551 0.5 0.2
Yeast Extract 1.0 0.4
Total 100%

Initial compositions for our barbecued flavor potato chips are basically started
with a homemade recipe, which then were up scaled for a larger production (250kg).
Based on Table 1.7, the percentage of each composition of barbeque flavored chips
has been fixed by the following permitted amount or value of ingredients in Food Act
1983. Potato is the main ingredient in this composition, hence the amount is larger
than the other. Salt, sugar, corn starch, garlic powder, onion powder and paprika
extract powder are used as flavoring agents. Anticaking agent E551 are used as an
anticaking agent that will prevent lumps for the barbecue flavoring and yeast extract
used as flavor enhancer.

1.7.6 EQUIPMENT REQUIREMENT

i. Potato Washing Peeling Machine

TYPE OF
OPTION 1 OPTION 2
MACHINE
 Henan Vic Machinery (Model
Brand Sammic (Model number: PI-10)
number: PWP80)

Figure

Power
0.55kw 1.5kw
Consumption
Weight 36kg 158kg
Capacity 240 kg/hour 500-800 kg/hour
Dimension
433 x 638 x 1040mm 900×800×1300mm
(mm)
Price per unit RM 7, 700.00 RM 10, 000.00

Figure 1.27: Potato Washing Peeling Machine

The Henan Vic Machinery (Model number: PWP80) is chosen as the

equipment for washing and peeling. The use of potato washing peeling machine is to
remove the thin peels of potato. The machine is essential for semi-automatic potato
chips line or automatic potato chips line. The cleaning machine has been used
independently for the food processing industry. This machine has a high peeling rate
up to more than 98% with a capacity of 500-800 kg/hr. Even though the price of the
machine is higher compared to Option 1, the dimension of the machine is much
higher. Thus, the capacity of the Option 2 machine is higher than Option 1.
ii. Automatic Slicing Potato Chips

TYPE OF
OPTION 1 OPTION 2
MACHINE
Brand Sammic (Model number: CA-62) Henan Vic Machinery (Model
 number: QS600B)

Figure

Power
0.75kw 1.5kw
Consumption
Weight 29.5kg 120kg
Capacity 500 Kg - 1000 Kg 800 kg/hour
Dimension
480 x 480 x 740 mm 900×800×1300mm
(mm)
Price per unit RM 10, 500.00 RM 9, 900.00

Figure 1.28: Automatic Chips Cutting Machine

The SAMMIC (Model number: CA-62) is chosen as the equipment to cutting

the potato into chips. Cutting the potato is one of the crucial parts of making potato
chips that need to be focused especially in the slicing process. The automatic chips
cutting machine helps in processing potatoes in different thicknesses and shapes in
order to meet the variety of industry’s demands. Moreover, said machine can also be
used for kinds of potatoes, sweet potatoes, carrot, and cassavas. The capacity of
this machine varies from 500kg/hr to 1000kg/hr. Also, the machine is compact and
lightweight suitable for the cleaning process by the operator after the slicing process.

iii. Potato Chips Blanching Machine

TYPE OF
OPTION 1 OPTION 2
MACHINE
 Henan Vic Machinery (Model
Brand TAIZAN (Model number: JME6)
number: PT-1500)

Figure

Power
15kw 18kw
Consumption
Weight 29.5kg 80kg
Capacity 1000 Kg 800 kg/hour
Dimension
6000 x 1200 x 2700 mm 1780 x 650 x 700 mm
(mm)
Price per unit RM 6, 300.00 RM 10, 500.00

Figure 1.29: Potato Chips Blanching Machine

The TAIZAN (Model number: JME6) is chosen as the equipment to blanch the
potato. Potato chips blanching machine is used after the process of cutting or slicing
the potatoes. The potatoes will be put into boiling water for a few minutes and then
will be plunged into cold water. The reason for blanching the potatoes using this
machine after slicing it is to pre-cook sliced potato chips in potato chips line. The
flavor, texture, color, and nutritional value of the potatoes will be altered during this
process. Also, the machine is in lightweight suitable for the cleaning process by the
operator after the blanching process. the price of the machine also less compared to
Option 2.

iv. Potato Chips Dehydrating Machine

 TYPE OF
OPTION 1 OPTION 2
MACHINE
Fengxiang (Model number: Henan Vic Machinery (Model
Brand
FZHS-15) number: TS600)

Figure

Power
1.5w/380v 1.1Kw/220v
Consumption
Weight 280kg 500kg
Capacity 10-15 Kg/batch 35-40 kg/batch
Dimension
950 x 700 x 1230 mm 1050 x 660 x 930 mm
(mm)
Price per unit RM 10, 700.00 RM 4, 200.00

Figure 1.30: Potato Chips Dehydrating Machine

The Henan Vic Machinery is chosen as the equipment to dehydrate the potato chips.
Potato chips dehydrating machine is used to remove the surface water from the
slices, strips, dices of the cleaned, or soaked potatoes. It is totally made of stainless
steel. Hence, it is sanitary and easy to clean. The use of a centrifugal machine
allows the fast rotating barrel to remove the food surface water. It also comes with an
anti-shock system, to ensure a reliable working condition, as well as, digital control
panel, to make the operation of high automation and labor-saving.

v. Potato Chips Frying Machine

 TYPE OF
OPTION 1 OPTION 2
MACHINE
Henan Vic Machinery (Model Henan Vic Machinery (Model
Brand number: DYZ-2000A) number: DYZ-1000 (Manual
(Auto discharge material) discharge material)

Figure

Power
54w/380v 21kw/380v
Consumption
Weight 280kg 120kg
Capacity 35-40 Kg/batch 20-35 kg/batch
Dimension
2350 x 1050 x 1200 mm 1380 x 620 x 950 mm
(mm)
Oil groove
2000 x 700 x 400 mm 1000 x 500 x 400 mm
size (mm)
Price per unit RM 5, 000.00 RM 5, 000.00

Figure 1.31: Potato Chips Frying Machine

The Henan Vic Machinery is chosen as the equipment to fry the potatoes.
This machine has qualities of high efficiency and energy saving, It is made of
stainless steel and able to control the temperature. The machine is also able to
adopt advanced oil-water mixture technology, which can save 50% of oil and 40% of
the power. Besides, the safety of the machine can also be affirmed since it comes
with an over-temperature protection device. The capacity of the Option 1 is much
higher compared to Option 2.
vi. Potato Chips De-Oiling Machine
 TYPE OF
OPTION 1 OPTION 2
MACHINE
JOYSHINE (Model number: Henan Vic Machinery (Model
Brand
JXTYJ-800) number: TS600)

Figure

Power
3 kw 1.1Kw/220v
Consumption
Weight 480kg 500kg
Capacity 35-55 kg/batch 35-40 kg/batch
Dimension
1400 x 900 x 800 mm 1050 x 660 x 930 mm
(mm)
Price per unit RM 6, 700.00 RM 4, 200.00

Figure 1.32: Potato Chips De-oiling Machine

The Henan Vic Machinery is chosen as the equipment to de-oiling the potato
chips. This model comes with an anti-shock system which makes the machine run
stably at high roasting speed. The conveying speed, length, and turnings of oil the oil
removing machine can be adjusted to meet the expected results. Several turnings
design with airflow reversing device contributes to a good drying effect on food
products. Also, the high-pressure flow used in this machine able to fasten the de-
oiling and cooling process. This machine is also good to cut down investment, as it
consumes less oil. The power consumption and the price of the Option1 is less than
Option 2.
vii. Potato Chips Seasoning Machine
 TYPE OF
OPTION 1 OPTION 2
MACHINE
ULTRON (Model number: Henan Vic Machinery (Model
Brand
BL3000) number: BL3000)

Figure

Type roller roller

Power
1.5 kw/220v 1.47Kw/380v
Consumption
Weight 250kg 380kg
Dimension
1100 x 1000 x 1300 mm 3000 x 850 x 2100 mm
(mm)
Price per unit RM 8, 400.00 RM 4, 200.00

Figure 1.33: Potato Chips Seasoning Machine

The potato chips seasoning machine is used to season the potato chips
evenly and discharged them automatically. This machine is made of stainless steel,
sanitary, and easier to clean. The diameter and length of the roller seasoning can be
customized as it comes from three types of models which are disc-type seasoning
machine, octagonal type seasoning machine, and roller type seasoning machine.
The price of Option 2 is lower than Option 1. There are several types of seasoning
machine, however, the type of machine we used is the roller type which uses fully
automatic equipment.
Table 1.8: Types of Seasoning Machine
 TYPES OF SEASONING DESCRIPTION
MACHINE
Disc - Comes with low speed motor to prevent
damage to the fried food

Octagonal - Able to process the food material with the

required spices and mix them evenly in a
short time

Roller - Fully automatic equipment

- Able to customize the seasoning barrel length
and diameter, depending on customer needs
1.8 FEASIBILITY AND SITE SURVEY

The location of the factory needs to be considered in many aspects before

deciding to build the factory. Provisions must be made for the ancillary buildings and
services needed for factory operation. A suitable site must be found for a new
project, and the site and equipment layout planned. There are three suggestions for
the factories to be built. The locations are at Klang, Sungai Udang, and Alor Gajah.
All the locations of the suggested factory have a flat and not hilly area. The locations
are also near to the main road and port, which helps to transport the product to the
market. The site location is a vacant land filled with bushes and shrubs. It is also
having a reasonable price for its location and the area. Besides that, it is near to the
raw material supply. The production of the potato chips product uses imported
potatoes as the main raw material. In Klang and Sungai Udang, the imported
potatoes can be transported using shipment through Klang port and Sungai Udang
Port. The distance from the site location to the supplier is just only several
kilometers. Other facilities such as mobility, health service, communication, and
security are also easy to access in those areas.

54
 1.8.1 SITE SELECTION

i. Site Option 1

The first option for the factory to be built is at Klang, specifically at Kapar,
Klang. The site location is near to Port Klang which is the place for importing and
exporting food products to the international market. The place has a reasonable
price for its location and the area with a total build-up of 46113 sqft amounting to
RM360 psf. Besides that, it is near to the port which makes it easy to access raw
materials and other supplies. Other than that, the transportation of the product to the
consumer is also another important factor. In Kapar, Klang there are three highways
that can be accessed easily such as KESAS, FEDERAL and NKVE. This location
also ensures that employees can get there easily. The government also provide the
incentive such as capital grants and tax concessions for the new company. The
government also support the establishment of the factory which can open up new job
opportunities.

Table 1.9: Location of the Option 1

Address No. 3,Jalan Wawasan 3/Ku7, Kawasan Perindustrian Sg.

Kapar Indah, 42200 Klang, Selangor
Coordinate 3.0990181, 101.3899397
Land Price RM 11, 900, 000.00
Land Area 46113 sqft

55
 ii. Site Option 2

The location of the factory that are suggested to be built is at Sungai Udang,
Melaka. The site location is near to Port Sungai Udang which is the place for
importing and exporting food products to the national market such as Indonesia,
Thailand and Brunei. The place also has a reasonable price for its location and the
area with a total build-up of 51110 sqft amounting to RM310 psqft. Besides, it is near
to the port which makes it easy to access the raw materials and other supplies.
Other than that, the transportation of the product to the consumer is also another
important factor. In Sungai Udang, Melaka, three highways can be accessed easily
such as SPA, AMJ and NSE. This location is located at sub-urban area which
ensures that employees can get to the factory easily. The residential area is also
nearby and the accommodation rent is cheaper in this location.

Table 1.10: Location of Option 2

Persiaran Penapisan, Taman Peruna, 76300 Sungai

Address
Udang, Melaka
Coordinate 2.2752591, 102.1359310
Land Price RM 15, 850, 000.00
Land Area 51110 sqft

iii. Site Option 3

56
 The last option is at Kelemak, Alor Gajah, Melaka. The site location is quiet
far from any port which causes difficulties to export the product to international
market. The last option has a rather reasonable price for its location with a total
build-up of 47630 sqft, amounting to RM315 psqft. The site location is near to NSE
highway which connects the main road of North-South Expressway for transporting
the food products in peninsular Malaysia. This location is located at sub-urban area
which ensures that employees can get to the factory easily and fairly a cheaper
accommodation rent for the employees. The government also provides the incentive
such as capital grants and tax concessions for the new company. The government
also support the establishment of the factory which can open up new job
opportunities.

Table 1.11: Location of Option 3

Address Kawasan Perindustrian Alor Gajah, 4, Jalan Industri 6,

78000 Alor Gajah, Malacca
Coordinate 2.3638972, 102.2061022
Land Price RM 15, 000, 000.00
Land Area 47630 sqft
1.8.2 GENERAL CONSIDERATION FOR PLANT LOCATION

57
 The development of a complete factory design requires consideration of many
different factors such as factory location, site and layout, utilities, and availability of
raw material. Sufficient suitable land must be available for the proposed factory and
future expansion. The area of the factory should ideally be flat, well-drained, and
have suitable load-bearing characteristics for the installation of equipment. Also, the
full site evaluation could be made to determine the need for the factory to piling or
other special foundations. The land price also needs to be considered before the site
location was chosen. All aspects will need to be considered and a thorough decision
will be made. This is to avoid any loss to finance in the future. Also, the facilities and
other necessary utilities need to be examined, so, the factory can operate smoothly.

The geographical structure of the location for the factory will influence the
success of an industrial venture. Primarily, the factory should be located where the
minimum cost of production and distribution can be obtained, but other factors, such
as room for expansion and safe living conditions for factory operation as well as the
surrounding community, are also important. The healthcare and safety service such
as hospital, police station, the fire department is important for the safety of the
workers and factory. These utilities provide service to workers and factories during
emergencies and other incidents.

Manpower will be needed for the operation of the equipment at the site,
transportation of the product, repair and maintenance, and marketing of the product
to the market. Local trade union customs, the existence of technical training
institutes, and restrictive practices will have to be considered when assessing the
availability and suitability of the local labor for recruitment and training. Also, it is
better if the location of the factory is not far from the housing area of the workers.
Whether the manpower residential should be rural or urban it also assumed as
significant in selecting the location for one’s industry. The wage rates prevalent
within the area even have a very important regarding the choice of location
decisions. If the transportation cost is cheap, it makes the workers easier to travel to
work.

58
 Transportation is another factor that influences the site selection. To transport
the product to the distributor or customer, the factory also needs good loading and
transportation facilities to make sure it is easier to transport. Besides using the port
to transport the product, it also recommended using the train and lorry. For the
domestic consumer, it can be transported by using lorry and train while for
international consumers, shipping is the best option. There are several
transportations located in east Malaysia for import and export. These facilities help
the company to distribute its product to the customer.

Political stability is essential for industrial growth. Malaysia has stable politics
and government support by providing several incentives such as capital grants and
tax concessions for the new company mostly the small and medium enterprises.
Capital grants, tax concessions, and other inducements are often given by
governments to direct new investment to preferred locations, like areas of high
unemployment. the supply of such grants is the overriding consideration in site
selection. The government also has come with a few acts to help the local company
to start-up their company. These acts cover the investment within the manufacturing,
agriculture, tourism, and approved services sectors similarly as R&D, training, and
environmental protection activities. The act that the govt. provides is that the
Promotion of Investment Act 1986, revenue enhancement Act 1967, Customs Act
1967, excise Act 1972, Excise Act 1976, and therefore the Free Zones Act 1990.
These kinds of acts help the new company to start-up their company or plant.

All chemical waste from the factory must be disposed of in an acceptable

manner. All the waste material can be either sent to the waste treatment factory or it
can be sold to the factory that uses the waste material as their raw material. This
also can generate side income for the factory. As stated in the process selection, the
waste products are water, starch, potato skins, and excess oil. The waste needs to
be treated before it can be recycled or release to the environment. A waste
management plan needs to be conducted according to the procedure.

59
 1.8.3 AVAILABILITY TO OBTAIN NECESSARY SOURCE

Table 1.12: Utilities service

UTILITIES SERVICE
Tenaga Nasional Berhad
Syarikat Air Selangor
Syarikat Air Melaka Berhad
Telekom Malaysia
DESCRIPTION
 Investor Relations Department Level 4, TNB
Headquarters, 129 Jalan Bangsar, 59200 Kuala
Lumpur
 Email: tenaga_ird@tnb.com.my
 Website: https://www.tnb.com.my/
 Address: Jalan Pantai Baharu, Bangsar, 59200
Kuala Lumpur, Wilayah Persekutuan Kuala
Lumpur
 Phone: 15300
 Email: puspel@airselangor.com
 Website: https://www.airselangor.com
 Address: Jalan Pengkalan, 78000 Alor Gajah,
Melaka.
 Phone: 013-7515800
 Email : aduan@samb.com.my
 Website: https://samb.com.my
 Address: No 23 A, Tingkat Bawah,Jalan Bandar
Pusat Perdagangan,81700 Pasir Gudang,Johor,
81700 Malaysia
 Phone: 1-300-88-8123 ext. 100
 Website: http://www.tm.com.my/

The availability and price of the raw material also can be used to determine
the site location. It is good to have the raw materials supplier near to the site
location. The price to transport the raw material to the factory can be cut due to the
short distance and it can also reduce the budget. The main raw material for the
production of potato chips is the potato. Since the number of potato plantations in
Malaysia is low, the demand for potato in the market is high. So, it necessary to
import potatoes from other countries such as India and China. Thus, it is very critical
for the factory to be built near the port. It also shortens the duration to transfer the
raw material and finished product to and from the factory.

60
 As mention in the availability of utilities, all the utilities are not a problem to
start up the factory in the suggestion site. Each of these suppliers has its standard
tariff for industrial use. Every type of building has its specific tariff. So, every industry
will have the same standard tariff for water and electricity. In order to reduce the cost
of water supply, the wastewater from the cleaning process will be treated before it
can be reused again. Besides that, the factory also uses Telekom Malaysia for
communication service. Telekom Malaysia provides communication services such as
phone lines and Wi-Fi. Communication is important for the factory to make contact
with the supplier or customer. These service providers help the company to make
sure the daily operation works smoothly. Table 1.12 shows the utility service.

Other than that, the ways to transport the product to the consumer is also one
of the important factors. In the suggested area, there are several ports nearby which
are the Klang Port, Lumut Port, Port Dickson, Tanjung Pelepas Port, Johor Port and
Sungai Udang Port. So, the factory has several choices to transport the product to
international market. Road transport is increasingly used and is suitable for local
distribution from a central warehouse. Also, all the suggested factory is nearby to the
main road which is North–South Expressway and East–West Highway that connect
to the north-south and East-west area of Malaysia. Hence, the factory has several
choices to transport the product to local market.

Table 1.13: Transportation facilities for the particular state (East Malaysia)
STATE TRANSPORTATION FACILITIES
Port Dickson, Negeri Sembilan  Port Dickson
Kelang, Selangor  Klang Port
Pasir Gudang, Johor  Tanjung Pelepas Port
 Johor Port
Lumut, Perak  Lumut Port
Sungai Udang, Melaka  Sungai Udang Port

1.8.4 THE SITE PROXIMITY TO MARKET

61
 Market research is the analyst's research, analyze, and report on the patron
data that has been compiled so as to assist and inform the proximity marketing
strategies. This market research is done by the market research department to help
the company keep the business on the right track. Effective research analysts have
in-depth knowledge of which kinds of data provide the foremost insight into
consumer trends, and that they require excellent communications and presentation
skills so as to show data analysis into effective marketing plans.

Transportation and logistics are some of the factors that influence the market
of this product. In order to transport the product to the distributor or customer, the
factory also needs good loading and transportation facilities to make sure it is easier
to transport. The transport of materials and products to and from the factory is
something to think about in site selection. If practicable, a site that selected should
close to at least two major forms of transport such as road, rail, and waterway. Road
transport is commonly used and suitable for local distribution from a central
warehouse. Rail transport is usually cheaper for the long-distance transport of bulk
raw material. Also, air transport is more convenient and efficient for the
transportation of personnel and essential equipment and supplies. However, the cost
for transportation using air transport is higher compare to road transportation and
waterway.

In transporting the potato chips to the local market, road transportation is the
most efficient way in terms of cost and time. The factory located at Alor Gajah,
Melaka, which located in the middle of Malaysia. Malaysia's road network is quite
extensive, which covering around 250,023 kilometers, including 1,956 km of
expressways (stated in 2019). The main highway of the country length over 800 km,
reaching the Thailand border from Singapore. The company can distribute the
product to each state by using the lorry and truck. The railways also can be used to
transport the product to further regions such as Thailand and Singapore. This road
transport should be fully utilized in transporting the product due to the good condition
of the road and railway network.

1.8.5 SITE-SURVEY AND COMPARISON ANALYSIS OF SITE

62
 Figure 1.34: Maps for Site Option 1, located in Klang

Figure 1.35: Maps for Site Option 2, located in Sungai Udang, Melaka

Figure 1.36: Maps for Site Option 3, located in Alor Gajah, Melaka

Table 1.14: Comparisons of Site Options

63
UTILITIES DESCRIPTION
OPTION 1 OPTION 2 OPTION 3
Address - No. 3, Jalan - Persiaran - Kawasan
And Wawasan 3/Ku7, Penapisan, Perindustrian
Coordinate Kawasan Taman Peruna, Alor Gajah, 4,
Perindustrian Sg. 76300 Sungai Jalan Industri 6,
Kapar Indah, Udang, Melaka 78000 Alor
42200 Klang, - 2.2752591, Gajah, Malacca
Selangor 102.1359310 - 2.3638972,
- 3.0990181, 102.2061022
101.3899397
Land And 46113 sqft 511100 sqft 47630 sqft
Building (4284.03 square (47482.74 square (4424.9718 square
Area meter) meter) meter)
Price RM 11, 863, 320.00 RM 15, 844, 100.00 RM 15, 003, 450.00
Comply With No Yes Yes
HACCP
Requiremen
t
Utilities - Tenaga Nasional - Tenaga Nasional - Tenaga Nasional
Berhad (TNB) Berhad (TNB) Berhad (TNB)
- Syarikat Air - Syarikat Air - Syarikat Air
Selangor Melaka Berhad Melaka Berhad
(SYABAS) (SAMB). (SAMB).
Accessibility - 9.5 KM to the - 40 KM to the - 9.5 KM to the
North–South North–South North–South
Expressway Expressway Expressway
- 28 KM from Klang - 1 KM form - 21 KM form
Port Sungai Udang Sungai Udang
- 112 KM from Port Port Port
Dickson - 80 KM form Port
Dickson

Facilities - Urban area - Sub-urban area - Sub-urban area

(located near (located near (located near
residential area) residential area) residential area)

64
 - 54 KM to Beringin - 5.8 KM to Sungai - 21 KM to Alor
Landfill Udang landfill Gajah landfill
- 21 KM to Shah - 6.6 KM to Sungai - 3.3 KM to Alor
Alam Hospital Udang hospital Gajah hospital
- 25 KM to Shah - 6 KM to sungai - 1.6 KM to Alor
Klang Hospital udang fire Gajah fire
- 17.7 KM to Jalan department department
Kampar Syah - 1.2 KM to Sungai - 1.2 KM to Alor
Alam Fire Udang Police Gajah Police
Department Station Station
- 32 KM to Seksyen
15, Shah Alam
Fire Department
- 2.2 KM to Kapar
Police Station

After a thorough analysis of the three options as in Table 1.14, the location
that is chosen is Option 2 which is at Persiaran Penapisan, Taman Peruna, 76300
Sungai Udang, Melaka. The area of the factory is mainly for industrial development.
The land is located in a flat and not hilly area which is suitable to build the food
process factory. The suitability of the land must be taken seriously. The site location
cannot be built in an environmentally sensitive area such as residential area,
cemetery, site gazette area, and land with heritage value. So, the selected site
location is not built at the environmentally sensitive area and it follows the criteria as
stated in The Industrial Coordination Act, 1975 (ACT 156). Besides that, the location
of the factory is sub-urban which not too far from the town center. The area has
many utilities such as hospital, police station, fire department school, bank, and
many facilities are not far from the site location. The area is also easy to reach due
to the modern road network, so, employees can get to the factory easily. Also, the
factory area is located near the residential area where the hired worker will be given
a place for them to stay. The rent price for the accommodation for the employees is
also fairly cheaper compared to the other locations. The location of the factory was

65
selected by using The Industrial Coordination Act, 1975 (ACT 156) page 8-9
according to Appendix 1 and 2 as a preference (Department of Environment, 2012).

Transportation for the factory is also the factor that influences site selection.
The second option factory is located at the Sungai Udang Port, which is the place for
the transportation of the product to the local and international markets. The factory
is located approximately a 5-kilometer from Sungai Udang Port, 40 KM to the main
road PLUS (North-South Expressway and East-West Highway) and accessible to
another transportation medium such as train and air carrier. These facilities and
mobilities really help the company to distribute the product to the customer. The
factory is located in a suburban area where the water and electrical supply is
provided by the company such as Tenaga Nasional Berhad (TNB) and Syarikat Air
Melaka Berhad (SAMB). Furthermore, the factory is near to other facilities such as
landfills and accessibility to raw material and water supply. The factory located 5.8
KM to Sungai Udang Sanitary Landfill. This location is strategic to transport the
waste from the factory and it is located far enough from affected by smell pollution
from the landfill. For the raw material, the potato is imported from India and China.
The potato arrives at Sungai Udang Port and delivered to the factory. The Sungai
Udang Port is located only 1 km from the factory. The cost of transportation for the
product, waste, and the raw material is reduced greatly due to the strategic location
of the factory.

66
1.7 RAW MATERIALS DESCRIPTIONS

Chemical State Of
/ Matter
N Common Name And Address Of
Scientific Source
o Name Manufacturer
/ Trade
Name
1 Potato Potato Solid Plant Malala Food Privet Limited
Opp Eidgah Masjid, Dhaura
Tanda, Bareilly, Uttar
Pradesh - 343202, India
2 Cooking Palm Oil Liquid Plant Rahim Palm Oil Industry
Oil (Palm (M) Sdn Bhd
Oil) No. Lot 1, Jalan IKS Sungai
Petani 3, Melaka, 78000
Alor Gajah
3 Salt Salt Solid Other Hoe Hing Chan Sdn Bhd
No.2, Jalan Lombong
Emas 3, Seremban Light
Industrial Park, Jalan Tun
Dr. Ismail, 70200
Seremban, Negeri
Sembilan, Malaysia
4 Sugar Sugar Solid Plant Central Sugars Refinery
Sdn Bhd
Batu Tiga, 40000 Shah
Alam, Malaysia
5 Corn Corn Solid Plant Hoe Hing Chan Sdn Bhd
Starch Starch No.2, Jalan Lombong
Emas 3, Seremban
6 Garlic Garlic Solid Plant  Meida Foodstuffs Supplies
Powder Powder Plt, No.7, Jalan Semtec 3,
Semtec Park, 43500
Semenyih, Selangor
7 Tomato Tomato Solid Plant LLKOW Food Industries

67
 Powder Powder No.13 Persiaran Desa
Ampang, Taman Sri
Ampang, 68000 Ampang
Selangor
8 Onion Onion Solid Plant GBA Corporation Sdn Bhd,
Powder Powder Lot 8, Wisma GBA, Jalan
PPU 3, Taman
Perindustrian Puchong
Utama, 47100 Puchong,
Selangor
9 Yeast Yeast Solid Other GBA Corporation Sdn Bhd,
Powder Powder Lot 8, Wisma GBA, Jalan
PPU 3, Taman
Perindustrian Puchong
Utama, 47100 Puchong,
Selangor
10 Paprika Paprika Solid Plant GBA Corporation Sdn Bhd,
Powder Powder Lot 8, Wisma GBA, Jalan
PPU 3, Taman
Perindustrian Puchong
Utama, 47100 Puchong,
Selangor

68
2.1 REVERSE CALCULATION

The production of potato chips is estimated to be 100 metric tonne per year.
In order to determine the overall monthly, weekly, daily and hourly production of the
product, reverse calculation needs to be done, to ensure the goal value can be
reached. By implementing the method of reverse calculation, the production per day,
as well as the total amount of raw material needed by the production can be
identified. Hence, the production of potato chips can be run smoothly. The reverse
calculation for the production of 100 metric tonne of potato chips is shown below:

Production per month

metric tonne 1 year metric tonne

100 × =8.33
year 12months month

Production per week

metric tonne 1 month metric tonne

8.3 × =2.08
month 4 weeks week

Production per day

metric tonne 1 week metric tonne

2.08 × =0.42
week 5 days day

Production per hour

metric tonne 1 day metric tonne

0.42 × =0.05
year 8 hours hour

69
2.2 TOTAL PRODUCTION TIME

Table 2.1: Total Production Time for BBQ Potato Chips

PROCESS CAPACITY UNIT PROCESSING

TIME
Washing 800 kg/hr 1 30 minutes
Peeling 800 kg/hr 1 1 hour
Selecting - 1 1 hour
Slicing 250 kg/hr 1 45 minutes
Starch Washing 800 kg/hr 1 1 minute
Blanching 900 kg/hr 1 3.5 minutes
Drying 35 kg/batch 1 5 minutes
Frying 35 kg/batch 1 3 minutes
Excess oil removal 35 kg/batch 1 15 minutes
Seasoning 35 kg/batch 1 15 minutes
Packing 800 kg/hr 1 30 minutes
Total 4 hours

As shown in Table 2.1, the total production time, for BBQ-flavoured potato
chips, takes about 4 hours to complete one batch. Since the working hours per day
is 8 hours, hence, two batches of potato chips can be done in one day. The process
of washing, and packing will take 30 minutes each. On the other hand, peeling,
selecting, and starch washing requires 1 hour to be conducted, whereas, de-oiling
and seasoning will both take 15 minutes. Blanching, drying and frying need less than
5 minutes to complete. There is no capacity for selecting because it will be done
manually, by workers, monitored by the Head of Department of QA/QC, in order to
ensure that the best quality of potato will be chosen. Based on a manual calculation,
each packet will consist of 80g of potato chips, meaning, one batch will generate 125
bags. Then, the potato chips packets will be packed in cartons, where 5 carton of
potato chips will be produced per hour, since the end production value will be 50 kg,
or 0.05 tonne per hour as shown in the previous calculation. Hence, the total
production will be 10 cartons with 250 packets of potato chips each per day
2.3 MASS BALANCE

2.3.1 Mass Balance for Washing

ṁwater, in = 400 kg/hr

WATERIN xp = 0
70 xw = 1

POTATOIN POTATOOUT
 WASHING
ṁpotato, in = 204.4 kg/hr ṁpotato, out = 204.4 kg/hr
xp = 1 xp = 1
xw = 0 xw = 0

ṁwater, out = 400 kg/hr

WATEROUT xp = 0
xw = 1

Assume:

 The total mass of input and output of the equipment are the same
 The mass flowrate of input for water = 400 kg/hr

MASS BALANCE FOR POTATO

P¿ ( X P 1 ) +W ¿ ( X P 2) =POUT ( X P 3 ) +W OUT ( X P 4 )

kg kg
x ( 1 ) + 400 ( 0 )=204.4 ( 1) + y ( 0)
hour hour

kg
P¿ =204.4
hour

MASS BALANCE FOR WATER

P¿ ( X W 1 ) +W ¿ ( X W 2 )=POUT ( X W 3 ) +W OUT ( X W 4 )

kg kg kg
204.4 ( 0 )+ 400 ( 1 )=204.4 ( 0) + y ( 1)
hour hour hour

kg
W OUT =400
hour

OVERALL MASS BALANCE

P¿ +W ¿=P OUT +W OUT

71
 kg kg kg kg
204.4 + 400 =204.4 +400
hour hour hour hour

kg kg
604.4 =604.4
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
604.4 × =2,417.6
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
2,417.6 × =4,835.2
batch day day

SUMMARY

Table 2.3: Input and Output for Washing

MATERIAL INPUT OUTPUT

Percentage Mass Flowrate Percentage Mass Flowrate
(%) (kg/hr) (%) (kg/hr)
Potato 33.79 204.4 33.79 204.4
Water 66.21 400.0 66.21 400.0
Total 100 604.4 100 604.4

Based on Table 2.3, the input of potato and water are 204.4 kg/hr and 400 kg/hr
respectively. This means that, 33.95% of the total input belongs to the Potato Stream, while
the remaining belongs to the Water Stream. It gives the total input of 604.4 kg/hr. Since
there is no absorption involved during the process, the amount of input and output for both
components are the same.

2.3.2 Mass Balance for Peeling

POTATOOUT
a
ṁPOTATO, out = 196 kg/hr
xp2 = 0.73
xs2 = 0
72

POTATOIN PEELING
 SKIN OUT

ṁWASTE, OUT = 8.4kg/hr

xp3 = 0.
xs3 = 0.27

ṁPOTATO, IN = 204.4 kg/hr

xp1 = 0.7
xs1 = 0.3

Assume:
 The mass percentage of potato in the outlet stream is 73%

MASS BALANCE FOR POTATO

P¿ ( X P 1 )=P OUT ( X P 2 ) + S OUT ( X P 3 )

kg
x ( 0.7 )=196 ( 0.73 ) + y ( 0 )
hour

kg
x=204.40
hour

MASS BALANCE FOR POTATO SKIN

P¿ ( X S 1 )=POUT ( X S 2 ) + SOUT ( X S 3 )

kg kg
204.4 ( 0.3 )=196 ( 0 ) +8.4 ( z )
hour hour

z=7.3

OVERALL MASS BALANCE

P¿ =POUT + SOUT

kg kg kg
204.40 =196 +y
hour hour hour

kg
SOUT =8.4
hour

PRODUCTION PER BATCH

73
 kg 4 hours kg
423.11 × =1,692.44
hour 1 batch batch

PRODUCTION PER DAY

kg 2batches kg
1,692.44 × =3,384.88
batch day day

74
2.3.3 Mass Balance for Slicing

POTATOIN SLICING POTATOOUTa

ṁPOTATO, IN = 196 kg/hr ṁPOTATO, OUT = 196 kg/hr

xp = 1 xp = 1

Assume:

 The total mass of input and output of the equipment are the same

MASS BALANCE FOR POTATO

P¿ ( X P 1 )=P OUT ( X P 2 )

kg
x ( 1 ) =196 (1 )
hour

kg
P¿ =196
hour

OVERALL MASS BALANCE

P¿ =POUT

kg
x=196
hour

PRODUCTION PER BATCH

kg 4 hours kg
196 × =784
hour 1 batch batch

75
PRODUCTION PER DAY

kg 2batches kg
784 × =1,568
batch day day

SUMMARY

Table 2.4: Input and Output for Slicing

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 100 196 100 196
Total 100 196 100 196

In this process, the only component involved is potato, as shown in Table 2.4, where
the percentage for Potato Stream in input and output is 100%. In addition, the number of
streams for input and output is 1, indicating that there is no loss or gain in the mass flowrate.
The mass flowrate calculated gives the value of 196 kg/hr.

76
2.3.4 Mass Balance for Starch Washing

WATERIN
ṁWATER, IN = 220 kg/hr
xp2 = 0
xw2 = 1

POTATO OUT
POTATOIN STARCH WASHING
ṁPOTATO, IN = 196 kg/hr ṁPOTATO, OUT = 196 kg/hr
xp1 = 1 xp3 = 1
xw1 = 0 xw3 = 0

WATER OUT
ṁWATER, OUT = 220 kg/hr
xp4 = 0
xw4 = 1

Assume:

 Mass of starch is neglected

kg
 Mass flowrate of water: 220
hour

MASS BALANCE FOR POTATO

P¿ ( X P 1 ) +W ¿ ( X P 2) =POUT ( X P 3 ) +W OUT ( X P 4 )

kg kg kg
x ( 1 ) +220 ( 0 ) =196 ( 1 )+ 220 (0 )
hour hour hour

kg
P¿ =196
hour

MASS BALANCE FOR WATER

P¿ ( X W 1 ) +W ¿ ( X W 2 )=POUT ( X W 3 ) +W OUT ( X W 4 )

196 ( 0 ) +220 ( 1 )=196 ( 0 )+ y ( 1 )

77
 kg
W OUT =220
hour
OVERALL MASS BALANCE

P¿ +W ¿=P OUT +W OUT

kg kg kg kg
196 +220 =196 +220
hour hour hour hour

kg kg
416 =416
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
416 × =1 ,664
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
1 , 664 × =3 , 328
batch day day

SUMMARY

Table 2.5: Input and Output for Starch Washing

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 47.11 196 47.11 196
Water 52.89 220 52.89 220
Total 100 416 100 416

There are two components involved in starch washing process, which are Potato and
Water, as illustrated in Table 2.5. The mass of starch used in this process will be neglected.
For input, the mass flowrate for Potato is 196 kg/hr, whereas, for Water is 220 kg/hr. With
the assumption of no absorption occurring during the process, hence, the input value equals
to the output value.

78
2.3.5 Mass Balance for Blanching

WATERIN
ṁWATER, IN = 250 kg/hr
xp2 = 0
xw2 = 1

POTATO OUT
POTATOIN
ṁPOTATO, IN = 196 kg/hr
BLANCHING ṁPOTATO, OUT = 196 kg/hr
xp1 = 1 xp3 = 1
xw1 = 0 xw3 = 0

WATEROUT

ṁWATER, OUT = 250 kg/hr

Assume: xp4 = 0
xw4 = 1

kg
 Mass flowrate of water: 250
hour

MASS BALANCE FOR POTATO

P¿ ( X P 1 ) +W ¿ ( X P 2) =POUT ( X P 3 ) +W OUT ( X P 4 )

kg kg kg
x ( 1 ) +250 ( 0 ) =196 ( 1 )+ 250 (0 )
hour hour hour

kg
P¿ =196
hour

MASS BALANCE FOR WATER

P¿ ( X W 1 ) +W ¿ ( X W 2 )=POUT ( X W 3 ) +W OUT ( X W 4 )

kg kg kg
196 ( 0 ) +250 ( 1 )=196 ( 0 )+ y ( 1 )
hour hour hour

79
 kg
W OUT =250
hour

OVERALL MASS BALANCE

P¿ +W ¿=P OUT +W OUT

kg kg kg kg
196 +250 =196 +250
hour hour hour hour

kg kg
446 =446
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
446 × =1 ,784
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
1 ,784 × =3 , 568
batch day day

SUMMARY

Table 2.6: Input and Output for Blanching

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 43.94 196 43.94 196
Water 56.06 250 56.06 250
Total 100 446 100 446

As observed in Table 2.6, the input of Potato and Water are 196 kg/hr and 724 kg/hr
respectively. This means that, 21.31% of the total input belongs to the Potato Stream, while
the remaining belongs to the Water Stream. It gives the total input of 78.69 kg/hr. Since

80
there is no absorption involved during the process, the amount of input and output for both
components are the same, with the total input of 920 kg/hr.
2.3.6 Mass Balance for Drying
POTATOOUT
ṁPOTATO, OUT = 49 kg/hr
xp2 = 0.8
xw2 = 0.2

POTATOIN
DRYING
ṁPOTATO, IN = 196 kg/hr
xp1 = 0.2
xw1 = 0.8

WATEROUT
ṁPOTATO, OUT = 147 kg/hr
xp3 = 0
xw3 = 1

Assume:

 The total mass of input and output of the equipment are the same
 No water was absorbed by the potatoes

MASS BALANCE FOR SOLID

P¿ ( X P 1 )=P OUT ( X P 2 ) +W OUT ( X P 3 )

kg
x ( 0.2 )=49 (0.8)+ y(0)
hour

kg
P¿ =196
hour

MASS BALANCE FOR WATER

P¿ ( X O 1 )=POUT ( X O 2 )+ W OUT ( X O 3 )

kg kg
196 ( 0.8 ) =49 ( 0.2 ) + y (1)
hour hour

81
 kg
W OUT =147
hour

OVERALL MASS BALANCE

P¿ =POUT +W OUT

kg kg kg
196 =49 +147
hour hour hour

kg kg
196 =196
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
196 × =784
hour 1 batch batch

PRODUCTION PER DAY

kg 2batches kg
784 × =1 , 568
batch day day

SUMMARY

Table 2.7: Input and Output for Drying

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 100 196 25 49
Water - - 75 147
Total 100 196 100 196

From Table 2.7, in this process, the input stream consists of Potato, with the mass
flowrate of 196 kg/hr. The components exist under the Potato Stream are Potato, with the
percentage of 0.2, and Water, with the percentage of 0.8. when the drying process is
happening, the water in the Potato will be released, leading to an addition of a stream for the

82
output in the system. The mass flowrate for output of Potato and Water are 49 kg/hr and 147
kg/hr respectively.
2.3.7 Mass Balance for Frying

OILIN
ṁWATER, IN = 75 kg/hr
xp2 = 0
xo2 = 1

POTATO OUT
POTATOIN
ṁPOTATO, IN = 49 kg/hr
FRYING ṁPOTATO, OUT = 51.58 kg/hr
xp1 = 1 xp4 = 0.95
xo1 = 0 xo4 = 0.05

OILOUT

ṁWATER, OUT = 72.4 21kg/hr

xp3 = 0
xo3 = 1
Assume:
 It is an open system
 Maximum capacity for frying equipment is 700kg/hour.
 Energy loss is eligible

MASS BALANCE FOR POTATO

P¿ ( X P 1 ) +O¿ ( X P 2 ) =P OUT ( X P 3 ) + OOUT ( X P 4 )

kg kg
x ( 1 ) +700 ( 0 ) =51.58 ( 0.95 )+ y (0)
hour hour

kg
P¿ =49
hour

MASS BALANCE FOR OIL

P¿ ( X O 1 ) +O ¿ ( X O 2 ) =POUT ( X O 3 ) +O OUT ( X O 4 )

kg kg kg kg
49 ( 0 )+700 (1)=51.58 ( 0.05 )+ y (1)
hour hour hour hour

kg kg
700 =2.579 +y
hour hour

83
 kg
O OUT =697.421
hour

OVERALL MASS BALANCE

P¿ +O¿ =POUT +OOUT

kg kg kg kg
49 + 700 =51.580 +697.421
hour hour hour hour

kg kg
749 =749
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
749 × =2 , 996
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
2 , 996 × =5 , 992
batch day day

SUMMARY

Table 2.8: Input and Output for Frying

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 40 49 42 51.58
Oil 60 75 58 72.42
Total 100 124 100 124

There are two components involved in frying process, which are potato and oil, as
illustrated in Table 2.8. For input, the mass flowrate for potato is 49 kg/hr, whereas, for oil is

84
 75 kg/hr. The total of input equals to 124 kg/hr. Since it is assumed that there is 5% of
absorption of oil by the Potato, the values of the output change. The mass flowrate of output
for potato and oil are 51.58 kg/hr and 72.42 kg/hr respectively.

2.3.8 Mass Balance for De-oiling

POTATOOUT
ṁPOTATO, OUT = 49 kg/hr
xp2 = 1
xo2 = 0

POTATOIN
DE-OILING
ṁPOTATO, IN = 51.58 kg/hr
xp1 = 0.95
xo1 = 0.05

WATEROUT
ṁPOTATO, OUT = 2.58 kg/hr
xp3 = 0
xo3 = 1

Assume:

 The total mass of input and output of the equipment are the same
 The ratio of oil to potato after the cooking process is 1:9

MASS BALANCE FOR POTATO

P¿ ( X P 1 )=P OUT ( X P 2 ) +OOUT ( X P 3 )

kg
x ( 0.95 )=49 ( 1 ) + y (0)
hour

kg
P¿ =51.58
hour

MASS BALANCE FOR OIL

P¿ ( X O 1 )=POUT ( X O 2 )+ O OUT ( X O 3 )

85
 kg kg
51.58 ( 0.05 )=49 ( 0 ) + y (1)
hour hour

kg
O OUT =2.58
hour
OVERALL MASS BALANCE

P¿ =POUT +O OUT

kg kg kg
51.58 =49 +2.58
hour hour hour

kg kg
51.58 =51.58
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
51.58 × =206.32
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
206.32 × =412.64
batch day day

SUMMARY

Table 2.9: Input and Output for De-oiling

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 100 51.58 95 49
Oil - - 5 2.58
Total 100 51.58 100 51.58

86
 In this process, the components involved are Potato and Oil, as shown in Table 2.9,
where oil will be removed from the Potatoes by 5% in the output stream. The mass flowrate
for Potato before the de-oiling process is 51.58 kg/hr, where the value decreases to 49 kg/hr
after the process is completed. Thus, it shows that 2.58 kg/hr of Oil is removed.

2.3.9 Mass Balance for Seasoning

POTATOIN

ṁPOTATO, IN = 49 kg/hr
xp1 = 1
xs1 = 0

SEASONED
POTATO OUT
SEASONING
ṁ S.POTATO, OUT = 50 kg/hr
xp3 = 0.98
xs3 = 0.02

SEASONIN
ṁSEASONING, IN = 1 kg/hr
xp2 = 1
xs2 = 0

Assume:
 The ratio of potatoes to seasoning is 1:0.02
 Neglect oil in the process
 m ¿ =mout

MASS BALANCE FOR POTATO

P¿ ¿

kg
x ( 1 ) + y ( 0 ) =50 (0.98)
hour

kg
x=49
hour

MASS BALANCE FOR SEASONING

87
P¿ ¿

kg
x ( 0 )+ y ( 1 ) =50 (0.02)
hour

kg
y=1
hour

OVERALL MASS BALANCE

m P ,∈ ¿+ m S,∈¿=mF ,OUT ¿ ¿

kg kg kg
x +y =50
hour hour hour

kg kg kg
49 +1 =50
hour hour hour

kg kg
50 =50
hour hour

PRODUCTION PER BATCH

kg 4 hours kg
50 × =200
hour 1 batch batch

PRODUCTION PER DAY

kg 2 batches kg
m S =200 × =400
batch day day

SUMMARY

Table 2.10: Input and Output for Seasoning

MATERIAL INPUT OUTPUT

Percentage Percentage Weight
Weight (kg)
(%) (%) (kg)
Potato 98 49 100 50
Seasonings 2 1 - -
Total 100 50 100 50

88
 As observed in Table 2.10, the input stream involves two components, which are
Potato and Seasonings. It is assumed that the seasonings used in the process takes up 2%
of the total input value. The mass flowrate of the input stream for Potato and Seasonings are
49 kg/hr and 1 kg/hr respectively. The seasoning process allows the Potato and Seasonings
to be mixed together, leading to the streams to combine into one for the output. Thus, the
output value gives a total of 50 kg/hr.
2.3.10 Mass Balance for Packaging

Assumption

 The total mass of input and output of the equipment are the same
 The mass percentage of potato and nitrogen is 81% and 19%.

MASS BALANCE FOR POTATO

PRODUCTION PER BATCH

kg 4 hours kg
m S =50 × =200
hour 1batch batch

89
PRODUCTION PER DAY

kg 2 batches kg
200 × =400
batch day day

90
2.4 SUMMARY FOR MASS BALANCE

Table 2.11: Mass Balance for Every Process

PROCESS PER HOUR PER BATCH PER DAY PER MONTH

(kg/hr) (kg/batch) (kg/day) (kg/month)
Washing 604.4 2, 417.6 4, 835.2 96, 704
Peeling 204.4 817.6 1, 635.2 32, 704
Slicing 196.0 784.0 1, 568.0 31, 360
Starch Washing 416.0 1, 664.0 3, 328.0 66, 560
Blanching 446.0 1, 784.0 7, 360.0 35, 680
Drying 196.0 784.0 1, 568.0 31, 360
Frying 124.0 496.0 992.0 19, 840
De-oiling 51.58 206.32 412.64 8, 252.8
Seasoning 50.0 200.0 400.0 8, 000
Packing 50.0 200.0 400.0 8, 000

From Table 2.11, it can be seen that it lists the mass balance for every process
involved in the process flow during the production of potato chips. The mass balances for
several processes that utilize the use of water result in higher values. These include
washing, starch washing and blanching, with the values of 96 704, 66 560 and 35 680
kg/month respectively. This is because, the amount of water required to complete the
process is huge, leading to the increase of mass flowrate of water involved in said
processes. On the other hand, peeling, slicing and drying gave off moderate values of mass
flowrate, compared to other values. The process of peeling and slicing involve merely potato,
with no additional components, whereas, the process of drying is consists of potato and hot
air. Moreover, the mass flowrate resulted from the frying process is 18, 940 kg/month. The
use of oil in the process gave off a slightly high value. Last but not least, seasoning and
packaging contribute to the least mass flowrate value, which is 8,00 kg/month, since these
processes involve little to no additional component.

91
2.6 ENERGY BALANCE

2.6.1 Energy balance for Washing

ṁ= m
ṁ = 0.0568
s
WASHING
m
v1 =0.5
s

Assume:

 It is a closed system
kg
 The mass flowrate for input = 0.25
s
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 PE=0 kJ: The system is not rising or falling, so, it is neglected
 KE0 kJ: Involve velocities
m m
 v1 =0 , v 2=0.5
s s

Q – W = △U + △KE + △PE
- W = △KE
1
△KE = m ( v 2−v 1) 2
2
2
1 kg m m
W=
2
( 0.0568 ) 0.5 −0
s s (s )
kJ
W = 0.0071
S
kJ
¿ 25.56
hr

92
2.6.2 Energy balance for Peeling

ṁPOTATO, IN = 0.568 kg/s PEELING

ṁPOTATO, OUT = 0.568 kg/s

Assume:

 It is a closed system
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 PE0 kJ: Assume that the system has constant speed
 KE=0 kJ: Does not involve velocity
 ṁ = 301.4 kg/hr = 5.023 kg/s, g = 9.8 m/s2, h =1.3m

Q – W = ∆U + ∆KE + ∆PE

-W = △PE
-W = mgh

kg m
W= (0.568 × 9.8 2 ×1.3 m¿
s s
kg m 2
-W = 7.236 3
s
kJ
W = 0.00724
S
kJ
¿ 26.051
hr

93
94
 2.6.3 Energy balance for Slicing

ṁPOTATO,IN = 0.0544kg/s SLICING ṁPOTATO,OUT = 0.0544kg/s

Assume:

 It is a closed system
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 PE0 kJ: There is rising and falling in the system
 KE=0 kJ: Does not involve velocity
 ṁ = 196 kg/hr = 3.667 kg/s, g = 9.8 m/s2, h =0.74m

Q – W = ∆U + ∆KE + ∆PE

- W = △PE
-W = mgh

kg m
W= (0.0544 ×9.8 2 ×0.74 m¿
s s
kg m 2
-W = 0.395 3
s
kJ
W = 0.000395
S
kJ
¿ 1.422
hr

95
2.6.4 Energy balance for Starch Washing

ṁWATER, IN = 0.173 kg/s

STARCH WASHING
ṁPOTATO, OUT = 0.0544 kg/s
ṁPOTATO, IN = 0.0544 kg/s

Assume: ṁWATER, OUT = 0.173kg/s

 It is a closed system
 ΔU=0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 PE=0 kJ: The system is not rising or falling, so, it is neglected
 KE0 kJ: Involve velocities, velocity = 0.4m/s

Q – W = △U + △KE + △PE

- W = △KE
1
△KE = m ( v 2−v 1) 2
2

2
1 Kg m m
=
2
( 0.061
s (
) 0.4 −0
s s )
J
= 0.00488
s
= 0.00488 W
kJ
¿ 230.375
hr

96
2.6.5 Energy balance for Blanching

ṁWATER, IN = 0.0544 kg/s

T2 = 295K

ṁPOTATO, IN = 0.201 kg/s

BLANCHING ṁPOTATO, OUT = 0.201 kg/s
T1 = 295K T3= 358K

ṁWATER, OUT = 0.0544 kg/s

T4 = 348K
Assume:

 Temperature: 85°C, time: 3.5mins

 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 PE0 kJ: There is rising and falling in the system
 KE=0 kJ: Does not involve velocity
 Cp Potato = 3.43 kJ/kg.°K, Cp Water = 0.083kJ/kg.°K

Q – W = △U + △KE + △PE
Q P=ṁ C P △ T Q O =ṁC P △ T
Q P=(0.0544)(3.43)(348 K −295 K ) QO =(0.201)(4.18)(358 K−295 K )
J J
Q P=9.889 Q O =52.9313
s s
kJ kJ
Q P=0.00988 Q O =0.05293
s s
kJ kJ
Q P=35.6017 Q O =190.5528
hr hr

∆PE = mgh
∆PE = ( 0.0544 )( 9.81 ) (0.74)
J
∆PE = 0.3949
s
kJ
∆KE = 0.000395
s

97
 kJ
∆KE = 1.4217
hr

2.6.6 Energy balance for Drying

ṁHOT AIR, IN = 0.0083kg/s
T2 = 418K
V1 = 0.8m/s

DRYING
ṁPOTATO, IN = 0.0544kg/s ṁPOTATO, OUT = 0.0136 kg/s
T1 = 333K T3 = 423K

ṁHOT AIR, out = 0.0083kg/s

T4 = 403K
V2 = 1.0m/s

Assume:
 It is a closed system
 Q  0 kJ: The system and its surroundings are not at the same temperature
 ΔU = 0 kJ: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 PE=0 kJ: There is rising and falling in the system
 KE0 kJ: Does not involve velocity
 Cp Potato = 3.43 kJ/kg.°K, Cp Hot Air = 0.083kJ/kg.°K

Q – W = ∆U + ∆KE + ∆PE
Q - W = △KE
Q P=ṁ C P △ T Q A =ṁC P △ T
Q P=(0.0544)(3.43)(423 K−333 K ) Q P=(0.718)(0.083)( 403 K−418 K )
J J
Q P=16.793 Q A =−0.8939
s s
kJ kJ
Q P=0.01678 Q A =−0.000894
s s
kJ kJ
Q P=60.408 Q A =−3.218
hr hr

98
 1
△KE = m [ ( v 2 )2−( v 1 )2 ]
2
1 Kg
△KE = ( 0.00833 ) [ (1.0 )2−( 0.8 )2 ]
2 s
J
△KE = 0.0149
s
kJ
△KE = 0.0000149
s
kJ
△ KE=0.05364
hr

99
2.6.7 Energy balance for Frying
ṁOIL, IN = 0.0194kg/s
T2 = 427K

FRYING
ṁPOTATO, OUT = 0.0136 kg/s
ṁPOTATO, IN = 0.0136kg/s
T1 = 333K T3 = 423K

ṁOIL, out = 0.0194kg/s

T4 = 423K

Assume:
 Q  0 kJ: The system and its surroundings are not at the same temperature
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 PE0 kJ: There is rising and falling in the system
 KE=0 kJ: No vertical movement in the system
 ṁ = 0.0136 kg/s, g = 9.8 m/s2, h =0.74m
 Cp Potato = 3.43 kJ/kg.°K, Cp Oil = 2.34 kJ/kg.°K

Q – W = ∆U + ∆KE + ∆PE
Q - W = △PE
Q P=ṁ C P △ T QO =ṁC P △ T
Q P=(0.0136)(3.43)( 423 K−333 K ) Q O =(0.194)(2.34)(423 K−427.9 K)
J J
Q P=4.198 Q A =−2.2244
s s
kJ kJ
Q P=0.004198 Q A =−0.002225
s s
kJ kJ
Q P=15.1128 Q A =−8.0079
hr hr

10
0
 ∆PE = mgh
∆PE = ( 0.0136 ) ( 9.81 ) (0.74 )
J
∆PE = 0.873
s
kJ
∆PE = 0.000873
s
kJ
∆PE = 3.1428
hr

10
1
2.6.8 Energy balance for De-oiling

DE-OILING
ṁPOTATO, IN = 0.01434kg/s ṁPOTATO, IN = 0.01361kg/s
V1 = 0m/s V2 = 0.8m/s

Assume:

 It is a closed system
 Q0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 PE=0 kJ : The system is not rising or falling, so, it is neglected
 KE0 kJ : Involve velocities (centrifugal rotator)
m m
 v1 =0 , v 2=0.8
s s
 Cp Potato = 3.43 kJ/kg.°K

Q – W = △U + △KE + △PE
– W = △KE

1
△KE = m [ ( v 2 )2−( v 1 )2 ]
2

1 Kg
△KE = ( 0.01434 ) [ ( 0.8 )2− ( 0 )2 ]
2 s

J
△KE = 0.004589
s

kJ
△KE = 0.000004589
s

10
2
 kJ
△ KE=0.01652
hr

2.6.9 Energy balance for Seasoning

SEASONING
ṁ IN = 0.01361kg/s ṁ OUT = 0.01389kg/s

Assume:

 It is a closed system
 U =0 kJ: There is a temperature change in the system
 Q=0 kJ: There is no heat release to the surrounding
 PE = 0 kJ : The system is not rising or falling, so, it is neglected
 KE  0 kJ : Involve velocities (centrifugal rotator)
 Q=0 kJ: There is no heat release to the surrounding
 Cp Potato = 3.43 kJ/kg.°K
m m
 v1 =0 , v =2
s 2 s

Q – W = △U + △KE + △PE
– W = △KE

1 2 2
m ( v ) −( v 1 ) ]
2 [ 2
△KE =

1 Kg
△KE = ( 0.01361 ) [ ( 2.0 )2−( 0 )2 ]
2 s

J
△KE = 0.02722
s

kJ
△KE = 0.00002722
s

10
3
 kJ
△ KE =0.09799
hr

2.6.10 Energy balance for Packaging

PACKAGING
ṁin= 0.01389kg/s ṁout = 0.01389kg/s

Assumption
 ΔU = 0: There is no temperature changes, phase changes, or chemical reactions
occur; pressure changes are less than a few atmospheres
 Q≈0 kJ: The system and its surroundings are at the same temperature, so, it is
neglected
 ∆KE=0 kJ: Does not involve velocity
 ∆PE≠0 kJ: There is rising and falling in the system
 Mass of packaging is neglected
 g = 9.81 m/s2, h = 1.3m

Q – W = ∆U + ∆KE + ∆PE

W = △PE
W = mgh

kg m
W= (0.0138 × 9.8 × 1.3 m¿
s s
kg m 2
-W = 0.1769
s3
J
W = 1.769 ×10−4
s
kJ
W = 0.63684
hr

10
4
2.7 SUMMARY FOR ENERGY BALANCE

Table 2.12: Energy Balance for Every Process

PROCESS PER HOUR PER BATCH PER DAY PER MONTH

(kJ/hr) (kJ/batch) (kJ/day) (kJ/month)
Washing 25.56 102.244 204.488 4, 089.76
Peeling 26.05 104.204 208.408 4, 168.16
Slicing 1.422 5.688 11.376 227.52
Starch Washing 230.375 921.5 1843 36, 860
Blanching 224.73 898.92 1797.84 35, 956.8
Drying 56.728 226.912 453.824 9, 076.48
Frying 3.962 15.848 31.696 633.92
De-oiling 0.01652 0.066 0.132 2.64
Seasoning 0.09799 0.3916 0.7832 15.664
Packing 0.636 2.544 5.088 101.76

2.8 ESTIMATION COST PER MONTH FOR EVERY PROCESS

By using equation:

RM 0.51 1kWh x kJ
× ×
kWh 3600 kJ month

Table 2.13: Estimated Electrical Cost for Every Process

PROCESS PER MONTH COST (RM/month)

(kJ/month)
Washing 4089.76 0.57
Peeling 4168.16 0.59
Slicing 227.52 0.03
Starch Washing 36860 5.22
Blanching 35956.8 5.09
Drying 9076.48 1.28
Frying 633.92 0.089
De-oiling 2.64 0.03
Seasoning 15.664 0.02
Packing 101.76 0.02

10
5
2.9 PROCESS INSTRUMENT DIAGRAM (PID) FROM SUPERPRO

Figure 2.1: Process Instrument Diagram (PID) from Superpro

Figure 2.2: Input stream of water enter the washing inlet

Figure 2.3: Input stream of potato enter the washing inlet

 Figure 2.4: Outlet stream of water flow out from washer

Figure 2.5: Outlet stream of potato remove from washer and enter peeler
Figure 2.6: Outlet stream of potato’s flesh after potato has been peeled enter slicer

Figure 2.7: Outlet stream of potato’s skin after potato has been peeled remove from
peeler
Figure 2.8: Outlet stream of potato’s flesh remove from slicer and enter the starch
Washer

Figure 2.9: Inlet stream of water enter the starch washer

 Figure 2.10: Outlet stream of water flow out from starch washer

Figure 2.11: Outlet of washed potato removed from starch washer and enter
blancher
 Figure 2.12: Inlet stream of water enter blancher for blanching process

Figure 2.13: Outlet stream of water and blanched potato removed from blancher and
enter dryer
 Figure 2.14: Inlet stream of air enter dryer

Figure 2.15: Outlet stream of dried potato remove from dryer to enter fryer
Comparison Between Manual Calculation and Superpro Calculation

Table 3.1: Comparison between manual calculation and Superpro calculation

MANUAL CALCULATION SUPERPRO CALCULATION
PROCESS
INPUT OUTPUT INPUT OUTPUT
Potato = 204.4 Potato = 204.4 Potato = Potato = 204.4
kg/hr kg/hr 204.4 kg/hr kg/hr
Washing
Water = 400 Water = 400 Water = 400 Water = 400
kg/hr kg/hr kg/hr kg/hr
Potato = 196 Potato =
Potato = 204.4 kg/hr Potato = 195.99 0 kg/hr
Peeling
kg/hr Potato’s skin = 204.4 kg/hr Potato’s skin =
8.4 kg/hr 8.4 kg/hr
Potato = 196.0 Potato = 196.0 Potato = Potato =
Slicing
kg/hr kg/hr 195.99 kg/hr 195.99 kg/hr
Potato = 196.0 Potato = 196.0 Potato = Potato =
Starch kg/hr kg/hr 195.99 kg/hr 195.99 kg/hr
Washing Water = 220.0 Water = 220.0 Water = 220.0 Water = 220.0
kg/hr kg/hr kg/hr kg/hr
Potato = 196.0 Potato = 196.0 Potato =
Potato =
kg/hr kg/hr 195.99 kg/hr
Blanching 195.99 kg/hr
Water = 250.0 Water = 250.0 Water = 250.0
kg/hr kg/hr kg/hr
Potato =
Potato = 49.0 195.99 kg/hr Potato = 48.99
Potato = 196.0 kg/hr Water = kg/hr
Drying
kg/hr Water = 147.0 250.0 kg/hr Water =
kg/hr Air = 734.99 146.99 kg/hr
kg/hr
 Table 3.1 shows the comparison between two ways of material balance for
potato chips production were calculated. There are two ways of calculating the
material balance which by using manual calculation and the other one is by using a
software named Superpro. The total production of potato chips needed in both
calculations is 200kg per batch or 400kg per day.
The first step in calculating the material balance is washing. The mass in and
out of potato in washing is remain the same which is 204.4 kg per hour for both
manual and Superpro calculation. Second process involved in this calculation is
peeling. There is different between mass in and mass out of potato since the skin of
the potato was peeled off during this process. The mass in for potato for both
calculations is 204.4kg while the mass out for the potato after peeling is 196kg for
both calculations too. 8.4kg of potato skin was removed from this process which
making it left with the 196kg of potato flesh only.
The third step is slicing which the input and output mass for both calculations
is the same. 196kg of flesh potato were sliced in this process and the weight of
potato is constant. The starch of sliced potatoes was washed using a starch washer
also has the same mass input and output in manual and Superpro calculation.
Next process after starch washing is blanching. The flesh potatoes after being
washed using starch washer was used for blanching. The flesh potatoes will be
rinsed in a hot water about 70°C to 100°C. The mass in and out potato after being
blanched also remain the same which is 196kg for manual and Superpro calculation.
Drying process also showed difference in mass of potatoes after being dried. It was
calculated that the input mass of potatoes before drying is 196kg. The mass of
potatoes after drying decreased and was calculated about 47kg. The mass of output
for both manual and Superpro calculation is 47kg.
The comparison between manual calculation and Superpro calculation can
only be done until drying process as there is bug involved in frying equipment for
Superpro version 9.5. Figure below is the email send from the developer about the
bugs involved in this version of Superpro. There is no further calculation for the next
process as the next process can be proceeded since there is no frying process.
 Figure 2.16: The email from the developer about the bugs involved in
Superpro version 9.5
As the conclusion, there is no different between manual calculation and
Superpro calculation gained from this comparison. Both calculations are
corresponding with each other with each other as the total of potatoes produced until
drying is 47kg.
3.1 HACCP TEAM

It is important that HACCP is not carried out by one person alone but it is the
result of a multi-disciplinary team effort- the HACCP team. The second preparatory
activity is to identify and train the HACCP team. It is recommended that as a
minimum, the core HACCP team consists of experts with knowledge and experience
from the following areas:

1. Quality assurance/Technical

To provide expertise in microbiological, chemical and physical hazards, an

understanding of the risks, and knowledge of measures that can be taken to
control the hazards

2. Operation or production

The person who has responsibility for and deitaled knowledge of the day-to-day
operational activities required in order to product the product.

3. Engineering

The person that is able to provide a working knowledge of process equipment

and environment with respect to hygienic design and process capability

4. Additional expertise

May be provided from within the company and from external consultancies. The
following areas should be considered

i. Supplier quality assurance – essential in providing details of supplier

activities and in assessment of hazard and risk associated with raw
materials. The person responsible for auditing suppliers will have a broad
knowledge of best practices gained through observing a wide range of
manufacturing operations

ii. Research and development – if the company is one where new products
and process development is a continuous activity, then input from this area
 will be essential. Early involvement at the product or process concept
stage could prove invaluable.

iii. Distribution – for expert knowledge of storage and handling throughout the
distribution chain. This is particularly important if distribution conditions are
essential to product safety.

iv. Purchasing – could be useful in a company involved in purchasing

factored goods for onward sale or in a good service operation, or where
technical and purchasing roles are combined. The participation of
purchasing personnel will mean that they are made fully aware of the risks
associated with particular products or raw materials and can assist with
early communication of a proposed change in supplier.

3.2 GENERIC HACCP PROJECT PLAN

 Figure 3.1: Gant Chart -Generic HACCP Project Plan

3.3DECISION TREE ANALYSIS FOR RAW MATERIALS

3.3.1 Potatoes

Figure 3.2: Decision Tree Analysis For Potatoes

3.3.2 Water

Figure 3.3: Decision Tree Analysis For Water

3.3.3 Oil

Figure 3.4: Decision Tree Analysis For Oil

3.3.4 Seasonings

Figure 3.5: Decision Tree Analysis For Seasonings

3.5 DECISION TREE ANALYSIS FOR PROCESSES

3.5.1 RECEIVING AND STORAGE OF RAW MATERIALS

 Figure 3.6: Decision Tree Analysis for Receiving and Storage of Raw Materials

3.5.2 CONVEYING RAW MATERIALS

y y

y
 Figure 3.7: Decision Tree Analysis for Conveying of Raw Materials

3.5.3 WASHING

Figure 3.8: Decision Tree Analysis for Washing

3.5.4 PEELING

Figure 3.9: Decision Tree Analysis for Peeling

3.5.5 SLICING

Figure 3.10: Decision Tree Analysis for Slicing

3.5.6 STARCH WASHING

Figure 3.11: Decision Tree Analysis for Starch Washing

3.5.7 BLANCHING

Figure 3.12: Decision Tree Analysis for Blanching

3.5.8 DRYING

Figure 3.13: Decision Tree Analysis for Drying

3.5.9 FRYING

Figure 3.14: Decision Tree Analysis for Frying

3.5.10 DE-OILING

Figure 3.15: Decision Tree Analysis for De-oiling

3.5.11 SEASONING

Figure 3.16: Decision Tree Analysis for Seasoning

3.5.12 PACKAGING
 Figure 3.17: Decision Tree Analysis for Drying

3.5.13 STORAGE OF FINISHED PRODUCT

 Figure 3.18: Decision Tree Analysis for Storage Of Finished Product

3.8 EQUIPMENT LIST AND SIZING

3.8.1 Potato Washing Peeling Machine

Table 3.4: Details for Washing Peeling Machine

Type of equipment Henan Vic Machinery (Model number: PWP80)
Dimension (mm) 450×400×650mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 1.5kw
Weight of machine 158kg
1. Can be used in many type of food such as
potatoes, carrot, cassava, ginger, kiwi and
others
2. Roller are made from nylon, a light
Features
material which is very durable
3. Spate dirt and sedimentation can be
remove completely with the circulation of
water
Capacity 250-400 kg/hour
Price per unit RM 3, 600.00

Figure

3.8.2 Automatic Slicing Machine

 Table 3.5: Details for Slicing Machine
Type of equipment Sammic (Model number: CA-62)
Dimension (mm) 240 x 240 x 370 mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 0.75kw
Weight of machine 29.5kg
1. Cut potatoes into slice, strip and chips
2. Thickness of potato strip & slice is from
0.5-1.0mm
Features 3. Vertical feeding and side feeding are
available
4. A unique device in potato chips and
French fries potato
Capacity 250-400 kg/hour
Price per unit RM 3, 800.00

Figure

3.8.3 Potato Chips Blanching Machine

Table 3.6: Details for Blanching Machine

Type of equipment Henan Vic Machinery (Model number: PT-1500)
Dimension (mm) 3000 x 600 x 1350mm
Material of construction Food-grade Stainless Steel
 Grade: 430
Opening pressure -
Maximum operating
70℃-100℃
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 15kw
Weight of machine 29.5kg
Capacity 1000 Kg
1. Blanching time can be adjusted when
convey belt running speed changes
2. The belt fluent-conveying system has an
easy operation and easy cleaning
Features
functions
3. Can be used in many vegetable and meat
4. The food product have superior flavor,
texture and color
Price per unit RM 2, 300.00

Figure
3.8.4 Potato Chips Dehydrating Machine

Table 3.7: Details for Dehydrating Machine

Type of equipment Henan Vic Machinery (Model number: TS600)
Dimension (mm) 525 x 660 x 930 mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 1.1Kw/220v
Weight of machine 500kg
Capacity 35-40 kg/batch
1. Dewatering machine is made from
stainless steel, so it is sanitary and easy to
clean
2. Using centrifugal principle to remove the
water from the food product
Features 3. Equipped with digital control which make
the operation of high automatic and labor-
saving
4. Equipped with electromagnetic brake, the
vegetable dewatering machine features a
safe and quick on-off
Price per unit RM 3, 000.00

Figure
3.8.5 Potato Chips Frying Machine

Table 3.8: Details for Frying Machine

Henan Vic Machinery (Model number: DYZ-1000
Type of equipment
(Manual discharge material)
Dimension (mm) 690 x 310 x 475 mm
Oil groove size (mm) 1000 x 500 x 400 mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 1 years
Power Consumption 21kw/380v
Weight of machine 120kg
Capacity 20-35 kg/batch
1. Automatic frying machine is used for frying
snacks, chips, peanut, meat, and fish etc.
2. Saving 50% oil and 40% electric and coal,
with stainless steel, safe and health.
3. This Frying machine is used for frying
Features
different food stuff, such as pellets, nuts,
and chips etc.
4. The temperature, fry time and de-oiling
time are all controlled by PC

Price per unit RM 1, 900.00

Figure
3.8.6 Potato Chips De-Oiling Machine

Table 3.9: Details for De-Oiling Machine

Type of equipment Henan Vic Machinery (Model number: TS600)
Dimension (mm) 525 x 330 x 465 mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 1.1Kw/220v
Weight of machine 500kg
Capacity 35-40 kg/batch
1. Dewatering machine is made from
stainless steel, so it is sanitary and easy to
clean
2. Using centrifugal principle to remove the
water from the food product
Features 3. Equipped with digital control which make
the operation of high automatic and labor-
saving
4. Equipped with electromagnetic brake, the
vegetable dewatering machine features a
safe and quick on-off
Price per unit RM 1, 500.00

Figure
3.8.7 Potato Chips Seasoning Machine

Table 3.10: Details for Seasoning Machine

Type of equipment Henan Vic Machinery (Model number: BL3000)
Dimension (mm) 1500 x 425 x 1050 mm
Type of machine Roller
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 2 years
Power Consumption 1.47Kw/380v
Weight of machine 380kg
Capacity
1. The seasoning machine is made from
stainless steel, up to health standard and
easy to clean
2. The structure of machine is compact
Features which are convenient to operate and safe
to use
3. The fried seasoning machine can mixed
and season the food evenly and discharge
the season food manually or automatically
Price per unit RM 1, 500.00

Figure

3.8.8 Potato Chips Packaging

 Table 3.11: Details for Packaging Machine
Multi-Function Packaging Machine
Type of equipment
(Model Number: ZH-V420)
Dimension (mm) 565 x 400 x 700 mm
Food-grade Stainless Steel
Material of construction
Grade: 430
Opening pressure -
Maximum operating
-
temperature
Corrosion allowance NA
Warranty 1 year
Power Consumption 2.2Kw/220v
Weight of machine 380kg
1. The equipment is controlled by intelligent
system and regulates the operation of the
machine parts.
2. The SMC cylindrical control gives accurate
Features
cutting, firm sealing, stable and air tight.
3. Thermal transfer coding machine makes
the equipment to print production date, 1D
code, 2D code, bar code and so on.
Capacity 4200 bags/hour
Price per unit RM 10, 200.00

Figure

3.9 WASTE HANDLING AND MANAGEMENT

3.9.1 TYPES OF WASTE

TYPE OF WASTE SOURCES OF WASTE RECOMMENDED CONTROL

AND DISPOSAL CONTENT
Solid 1. Packaging of raw materials: 1. Waste collection service:
 - Cartons
- Polymer films
2. Damaged and rejected raw
materials.
Liquid 1. Wastewater from washing
and starch washing process.
2. Oil that is discarded after
frying process by batch.
3. Excessive oil that was
removed in de-oiling process.
According to Act 672 (Solid Waste and Public Cleansing Management Act, 2007),
solid waste defined as;
a) Any scrap materials or other excess items that are not required or rejected
product arising rather than the use of any process
b) Any item that is required to be disposed of as already broken, torn, polluted or
otherwise damaged; or
- Unused cartons and
polymer films will be
collected including
damaged raw
materials will be
collected by SWM
Environment Sdn
Bhd (SWM).
2. Recycle and reuse
- Any cartons or boxes
that can be reused
will be kept in store
for further use.
1. BOD, pH, suspended
solids and temperature
will be checked prior
before treatment
according to
Environmental Quality
Act 1974 (Industrial
Effluent) Regulation
2009 [Act 127].
2. Waste cooking oil will be
collected and treated by
Evergreen Oil and Feed
Sdn Bhd.
 c) Any other substance in accordance with this Act or any other written law
required by the authority to be disposed of,

And according to Act 127 Environmental Quality Act 1974 (Industrial Effluent)
Regulation 2009, it is defined that industrial effluent is any waste in the form of liquid
or wastewater generated by manufacturing process including treatment of water for
water supply or any activity occurring at industrial premises.
Liquid Waste Handling

This type of waste is generated from the activities of washing, frying and cleaning of
machine. There are few criteria need to be followed in order to store the liquid waste
before passing it to the third party. Environmental Quality (Scheduled Wastes)
Regulations, 2005 requires hazardous wastes to be properly packaged, labelled and
stored. According to Guidelines for Packaging, Labelling and Storage of Scheduled
Wastes in Malaysia, section 6.2 Selection container must be as followed:
6.2.1 An appropriate container should be selected according to the characteristics of
the scheduled wastes. The characteristic of scheduled wastes shall be compatible
with the type of material used for the container to prevent any reaction which will
deteriorate the container.
6.2.2 In normal practice, scheduled wastes are stored in the following containers:

 Bunghole drum (steel/plastic)

6.2.3 The quantity of the wastes should be taken into consideration to estimate the
appropriate size and strength of container to avoid over spilling or container
breakage.
6.2.4 The container used should be in good condition (free from any damage such
as tear or hole).
6.2.5 Assigning specific containers for specific wastes will allow the containers to be
reused without further washing/cleaning.
6.2.6 Containers containing residues of chemicals or scheduled wastes which are
not compatible to the waste to be stored should be properly rinsed prior to usage.
The solution generated from the rinsing activity should be contained and
characterized prior to treatment or disposal at sites approved by the Department of
Environment
3.9.2 Waste Collection Schedule

All waste that will be collected by third parties is scheduled weekly based on the
amount of production produced. SWM Environment Sdn Bhd (SWM) will be
collecting for solid waste 5 days per week while wastewater and also waste cooking
oil will be collected by Evergreen Oil and Feed Sdn Bhd 3 days per week.

Solid Waste Liquid Waste

SWM Environment Sdn Bhd (SWM) Evergreen Oil and Feed Sdn Bhd
Days Activities Days Activities
Monday No collection, waste is Monday Time of collection: 9
stored am
Tuesday Time of collection: 9 am Tuesday No collection, waste is
stored
Wednesday Time of collection: 9 am Wednesday No collection, waste is
stored
Thursday Time of collection: 9 am Thursday Time of collection: 9
am
Friday Time of collection: 9 am Friday No collection, waste is
stored
Saturday No collection, waste is Saturday Time of collection: 9
stored am
Sunday Time of collection: 9 am Sunday No collection, waste is
stored

Waste that is stored before collection will be stored in the waste area. Solid and
liquid waste will be separated into two different area to avoid any pollution or
contamination to both type of waste. It is important to handle the waste properly by:

- Keep waste in a close container in a space with an air ventilation.

- Handle the waste in a correct manner to avoid any leakage.
- Regularly maintain and wash waste storage area.

5.1 ECONOMIC ANALYSIS

 The economic analysis is the study of a production process or an industry.
This analysis aims to determine how effectively the economy or something within it is
operating in the certain period. Economic analysis is important in order to understand
exact condition of an economy. It can cover a number of important economic issues
that keep cropping up within a particular economy, which is being analysed. This
topic will discuss the economic analysis for TIDBID SDN BHD for Total Annual Cost,
Manufacturing Cost, Cash Flow Analysis, Return of Investment, and Pay Back
Period.

Table 5.1: Summary Of Direct Cost Per Year

DIRECT COST AMOUNT PER YEAR
Raw Material RM 1, 306, 916.00
Packaging material RM 29, 244.80
Utilities RM 57, 223.40
Labour Cost RM 551, 886.00
Maintenance And Repair RM 30, 400.00
Operating Supplies RM 4, 559.85
Laboratory Charges RM 82, 782.90
Total RM 2, 063, 012.95
`
The cost of fixed cost that expend per year was RM 131,144.55. The fixed
cost was including the deprecation, local taxes and insurance, plant overhead costs.
Based on Table 5.2 show the fixed cost and cost of each compartment used by
TIDBID SDN BHD per year.
Table 5.2: Summary Of Fixed Cost Per Year
FIXED COST AMOUNT PER YEAR
Deprecation RM 20, 853.40
Local Taxes And Insurance RM 375.30
Plant Overhead Costs. RM 18, 765.00
Building Rent RM 102, 000.00
Indirect labour RM 57, 664.00
Total RM 199, 657.70

The cost of general expenses that expend per year was RM 60,077.30. The
general expenses was including the administration cost, distribution and selling
costs, research and development. Based on Table 5.3, show the general expenses
and cost of each compartment used by TIDBID SDN BHD per year.
 Table 5.3: Summary Of General Expenses Per Year
GENERAL EXPENSES AMOUNT PER YEAR
Administration Cost RM 58,100.75
Distribution And Selling Costs RM1,751.55
Research And Development RM 225
Total RM 60,077.30

SOURCE OF FINANCE
Table 5.4: Source of Finance
SOURCE AMOUNT PER YEAR
Term loan RM 2,500,000.00

TIDBID SDN BHD make a loan amount of RM 2,500,000.00 form government

to start up the business. The loan program is under Skim Usahawan Permulaan
Bumiputera (SUPERB) under TERAJU which is under prime minister’s department.
As a small and medium-sized enterprise category business, it is a huge advantage
for TIDBID SDN BHD to start up factory.

The term of loan is a monetary loan which is repaid in regular payment over a
set of time. Term loan usually last between one to ten years, but might last as long
as 30 years in some cases. A term loan usually involves an unfixed interest rate that
will add additional balance to be repaid (govche, 2019). A term loan is often
appropriate for an establish small business with sound financial statement and the
ability to make a substantial down payment to minimize payment amount and the
total cost of the loan (Investopedia, 2019).

5.1.1 ESTIMATION OF CAPITAL COST

As the final process-design stage is complete, it becomes possible to make

accurate cost estimation because detailed equipment specification and definite plant
facility information are available. Direct price quotation based on detailed
specification can then be obtained from various manufacturers. However o design
project should proceed to the final stages before costs are considered and cost
estimate should be made through out all the early stages of the design when
complete specifications are not available. Evaluation of costs in the preliminary
design is said predesign cost estimation. Such estimation should be capable of
providing a basis for company management to decide if further capital should be
invested in the project.

Table 5.5: Cost of Equipment

EQUIPMENT COST (RM)

Washing Peeling Machine 3, 600.00

Slicing Machine 3, 800.00

Blanching Machine 2, 300.00

Dehydrating Machine 3, 000.00

Frying Machine 1, 900.00

De-Oiling Machine 1, 500.00

Seasoning Machine 1, 500.00

Packaging 10, 200.00

Total 27, 800

Based on Lang factors;

 Cf = fL x Ceq

Cf = fixed capital cost

Ceq = the total delivered cost of all the major equipment items
fL = the “Lang factor”, which depends on the type of process

Ceq = RM 27, 800.00

fL = 1.35

Therefore,

Cf = 1.35 x RM 27, 800.00

= RM 37, 530

TCR = 1.05
T col = fWS = 0.1
TCR x CF = S TCR X fWS = fWF
1.05 X RM 37,530.00 = RM 39406.5 1.05 X 0.1 = 0.105

fWF X CF = CW CF + CW = CT
0.105 X RM 37,530.00 = RM 3940.65 RM 37,530.00 + RM 3,940.65 = RM
41,470.65

In industrial engineering, the Lang factor is a ratio of the total cost of installing
a process in a plant to the cost of its major technical components. The factors were
introduced by H. J. Lang in Chemical Engineering magazine in 1947 as a method for
estimating the total installation cost for plants and equipment. These factors are
widely used in the refining and petrochemical industries to help estimate the cost of
new facilities. A rough estimate of the total installed cost of the plant, including
equipment, materials, construction, and engineering will be achieved. The accuracy
of this estimate method usually is +/- 50%. The factors change over time because
construction labor, bulk materials, such as concrete, pipe, etc., engineering design,
indirect costs, and major process equipment prices do not change at the same rate.

TOTAL ANNUAL COST (TAC)

The biggest challenge of starting new business is making the financial aspect
have enough to set the company through the challenge in the first month. Without
adequate financial resources, the business will have hard time finding its footing.
Entrepreneurs also need to be realistic about how long it will take for revenues to
catch up the costs. In order to have adequate funds, it’s important to estimate the
financial needs for the company before starting the new business. Cost and
expenses need to be clarified so that general estimation can be projected for the
purpose of setting up everything.

Costing was involving direct and indirect cost. The direct cost is a price that
can be completely attribute to the production of specific goods and service. It can be
considered a variable cost if it is inconsistent and often fluctuates in amount. For
indirect cost, it is for the more difficult to assigns to a specific product, for example
depreciation or administrative expenses. This indirect cost defines as cost used by
multiple activities, and which cannot therefore be assigned to specific cost object.
The example of cost is product, services, distribution process and customer. Instead,
Indirect cost are needed to operate the business as whole.it is important to calculate
the indirect cost, so it can be excluded from short-term pricing decision where
management CAN set price just above the variable cost of the product.

TIDBID SDN BHD production plant was designed at Alor Gajah, Melaka. The
list of cost and expenses for direct cost, fixed cost and general expenses are
calculated based on the price of TIDBID SDN BHD’s suppliers. The cost of direct
cost that expend per year was RM 5,640,597.47. This direct cost was including the
cost of raw material, packaging material utilities, operating labour, direct supervisor,
clerical labour, maintenance and repair, operating supplies and laboratory charges.
5.2 ESTIMATION OF MANUFACTURING COSTS

5.2.1 DIRECT COST

5.2.1.1 RAW MATERIALS

i. INGREDIENTS

The cost material CMat required by the process is calculated from the material balances:

where FRj(t/h) is the flow rate of the jthraw material, and cRj(RM) is the unit cost of the

jthrw material. Calculation:

Potatoes = 220 kg/batch x RM 4.80/kg = RM1056/batch

Cmat = [RM1056 + RM 375.00 + RM 3.50 + RM 4.00 + RM 2.80 + RM 2.80 + RM 38.00 + RM

81.00 + RM 805.00 + RM 90.00 + RM 85.00 + RM 45.50]

= RM 2409.30/batch

Total per batch = RM 2409.30

Total per day = 2 batch/day = RM 4818.60

Total per year = RM 4275.20 x 6 days x 52 weeks = RM 1, 306, 916.00

 Table 5.6: Raw Material Cost

ITEMS QUANTITY UNIT PRICE (RM)

(KG/BATCH) PRICE (RM)

220 RM RM1056.00
Potatoes
4.80/kg

Cooking Oil 150 RM RM 375

2.50/kg

Salts 5.0 RM RM 3.50

0.70/kg

Sugar 5.0 RM RM 4.00

0.88 /kg

Corn Starch 1.0 RM RM 2.80

2.80/kg
Garlic Powder 2.0 RM RM 38.00
19.00/kg
Tomato Powder 7.0 RM RM 805.00
115.00/kg
4.5 RM RM81.00
Onion Powder 18.00/kg
Paprika Extract 3.0 RM RM90.00
30.0/kg
Anticaking Agent E55 0.5 RM RM8.50
17.00/kg
Yeast Extract 1.0 RM RM45.50
45.50 /kg
Total per batch RM 2513.30
Total per year Cmat = RM 1, 306, 916.00
 ii. PACKAGING

Similarly, the cost of the packaging materials CPack required by the process is calculated from
the material balances:

where FGj (t/h) is the flow rate of the jthraw material, CGj (RM) is the unit cost of the

jthpackaging material.

The Potato chips will be packed in 1 carton which contained 24pcs of a bag of potato chips.
The potato chips produced are 888 bags for one batch.

Poly plastic bag = 888 pcs/batch x RM 0.05/pcs = RM 44.40/batch

Carton box = 37 pcs/batch x RM 0.32/pcs = RM 11.84/batch

Cpack = [RM 44.40 +RM 11.84] = RM 56.24/batch

Total per batch = RM 56.24

Total per day = 2 batch/day = RM 112.48

Total per year = RM 29, 244.80

Table 5.7: Packaging Material Cost

ITEMS QUANTITY UNIT PRICE (RM)

PRICE
(PCS/BATCH)
 (RM)

Poly Plastic bag 888 RM 0.05 RM 44.40

Carton box 37 RM 0.32 RM 11.84
Total per batch RM 56.24

Total per year Cpack = RM 29, 244.80

5.2.1.2 UTILITIES COST, CLab

The cost of utilities CUtil required by the process is calculated from the energy balance:

where FUj(t/h) is the flow rate of the jthutility, and cUj(RM/t) is the unit cost of the jthutility.

Electricity Rates: 33.70 cent/kWh

Table 5.8: Equipment electricity cost

EQUIPMENT POWER POWER ELECTRICITY COST

(KWH) (RM)
(KW)
Washing and Peeling 1.50 12.00 RM 4.04
Machine
Slicing Machine 0.75 6.00 RM 2.02
Blanching Machine 29.50 236.00 RM 79.32
Dehydrating Machine 1.10 8.80 RM 2.97
Frying Machine 21.00 168.00 RM56.62
De-oiling Machine 1.10 8.80 RM 2.97
Seasoning Machine 1.47 1.18 RM 0.40
Packaging Machine 2.20 17.60 RM 5.93
Total per day RM 154.27
Total per year RM 40,102.40
 Table 5.9: Electrical Appliance Cost

APPLIANCES UNIT POWER (KW) POWER ELECTRICITY

(KWH) COST (RM)

Exhaust
3 0.98 23.52 RM 7.92
fan
Fan 7 0.165 9.24 RM 3.11
Air
5 3.5 140.00 RM 47.18
conditioner
Lamps 20 0.055 8.80 RM 2.97
Fly traps 5 0.03 0.15 RM 0.05
Total per
RM 61.68
day
Total per
RM 16,036.80
year

Water Rates (SAMB– Syarikat Air Melaka) for industrial: 0-51m 3

>0-20m3 = 0.60

>20 -35m3 = RM

>35m3 = RM 1.45 / m3

Table 5.10: Water Usage Cost

 PROCESSING QUANTITY QUANTITY
COST
WATER (KG/BATCH) (M3/BATCH)
Washing 400 0.4 RM 0.40
Starch washing 220 0.22 RM 0.132
Blanching 250 0.25 RM 0.15
Total per batch RM 1.36
Total per year 707.20
Other purpose (eg: cleaning) = 1000L/day x 6 days x 52 weeks = 312 m 3/year

= 312 m3/year x RM1.45

= RM452.40

Total usage of water = during process + other purpose (eg: cleaning)

= RM 848.64 + RM 452.40

= RM 1301.04

Cutil = Equipment electric cost + Electrical Appliances cost + Water usage cost

= RM 40,102.40 + RM 16,036.80 + RM 1084.20

= RM 57,223.40
5.2.1.3 OPERATING LABOR COST

The annual cost of labor CLab is calculated by the following equation:

Mj is is required manpower at the jth specialization level, cLj(RM/h) is the related

labor rate.

The cost of operating labor is the number of manpower required in the operation field
which is the factory worker. The corresponding labor rate for the factory worker also
included for the cost calculation.

Factory workers = 15 workers

1 hour = RM 5.73
1 day (8 hours) = RM 45.84

1 week (5 days) = RM 229.20

1 year (52 weeks) = RM 229.20 x 15 manpower x 52 weeks = RM 178, 776.00

 Table 5.11: Number of Workers In Each Department

TYPE OF WORKS NUMBER OF WORKERS

Production line 8
Cleaning and sanitation line 4
Distributor line 3

5.2.1.4 DIRECT SUPERVISORY AND CLERICAL LABOR

This cost is involving the summation of labor rate for clerical labor and supervisory
which are:

Table 5.12: Salaries for Each Role

ROLE SALARY
DIRECTOR 1 hour = RM 40.00

1 day (8 hours) = RM 320.00

1 week (5 days) = RM 1, 600.00

1 year (52 weeks) = RM 83, 200.00

PRODUCTION MANAGER 1 hour = RM 35.00

1 day (8 hours) = RM 280.00

1 week (6 days) = RM 1, 400.00

1 year (52 weeks) = RM 72, 800.00

ASSISTANT MANAGER 1 hour = RM 25.30

1 day (8 hours) = RM 202.40

1 week (5 days) = RM 1, 012.00

1 year (52 weeks) = RM 52, 624.00

ADMINISTRATION/ 1 hour = RM 12.08

HUMAN RESOURCE
1 day (8 hours) = RM 96.64

1 week (5 days) = RM 483.20

1 year (52 weeks) = RM 25, 126.40

QA/QC MANAGER 1 hour = RM 30.00

1 day (8 hours) = RM 240.00

1 week (5 days) = RM 1, 200.00

1 year (52 weeks) = RM 62, 400

 FINANCIAL MANAGER 1 hour = RM 37.00

1 day (8 hours) = RM 296.00

1 week (5 days) = RM 1, 480.00

1 year (52 weeks) = RM 76, 960.00

Table 5.13: Salaries and Wages

POSITION SALARIES PER YEAR

Director RM 83, 200.00

Production Manager RM 72, 800.00

Assistant Manager RM 52, 624.00

Administration/Human Resource RM 25, 126.40

QA/QC Manager RM 62,400.00

Financial Manager RM 76,960.00

Factory Workers RM 178, 776.00

Total Per year CLab = RM 551, 886.00

5.2.1.5 MAINTENANCE AND REPAIRS

For the maintenance and repairs, these are the costs associated with labor and
materials necessary to maintain plant production. Usually for maintenance and
repairs it is around 2-6% of the fixed capital investment. An estimate of these are 6%
of the fixed capital investment.

The maintenance and repairs are calculated by the following equation:

Maintenance and repairs value = Fixed capital investment x 6% x lang factor

RM 37, 530.00x 6% x 1.35 = RM 30, 399.30

5.2.1.6 OPERATING SUPPLIES

Operating supplies is 10-20% of the maintenance and repair cost. An estimate for
operating supplies is 15% of the maintenance and repair cost.

RM 55, 1886.00 x 15% = RM 82,782.90

5.2.1.7 LABORATORY CHARGE

Laboratory Charge is 10-20% of the operating labor cost. An estimate for laboratory
charge is 15% of the operating labor cost.

RM 662, 263.68 x 15/100 = RM 100,329.552

The variable manufacturing cost CMV is the sum of the raw materials cost (Cmat),
packaging material cost (Cpack), the labor cost (Clab) and the utilities cost (Cutil).

CMV= Cmat+C pack+Clab+Cutil

CMV = RM 1, 306, 916.00 + RM 29, 244.80 + RM 57, 223.40 + RM 551, 886.00

CMV = RM 1, 945, 270.2

5.3 FIXED COST

5.3.1 DEPRECIATION

The cost and payment of the machine and equipment was cost of Rm
37,530.00. 3 year of the duration payment were decided with the supplier. The list of
machine and equipment that purchase by the company was the washing peeling
machine, slicing machine, blanching machine, dehydrating machine, frying machine,
de-oiling machine, seasoning machine, packaging machine.

Table 5.14: Payment Information of Machinery and Equipment

TYPE OF ASSETS MACHINERY AND EQUIPMENT
Total cost of asset Rm 37,530.00
Economic life 3 years
Method payment Straight line

Table 5.15: The Machinery and Equipment Depreciation

YEAR ANNUAL ACCUMULATIVE BOOK VALUE (RM)
DEPRECATION (RM) DEPRECATION (RM)
0 0 0 27,800.00
1 9,266.70 9,266.70 18,533.40
2 9,266.70 18,533.40 9,266.70
3 9,266.70 27,800.00 0

The cost of the machinery and equipment used for this TIDBID SDN BHD was
RM 27,800.00. the economic life for the furniture and fixtures was three years and
the method used for the payment was the straight line thus the book value for one till
three years was RM 27,800.00, RM 18,533.40 and RM 9,266.70 respectively.

The cost and payment of the transportation lorry was cost of Rm 40,000.00. 5
year of the duration payment were decided with the supplier. The model of
transportation lorry that purchase by the company was the Hicom mtb150 box 17ft.

Table 5.16: Payment Information of Transportation Lorry

TYPE OF ASSETS TRANSPORTATION LORRY
Total cost of asset Rm 40,000.00
 Economic life 5 years
Method payment Straight line

Table 5.17: The Transportation Lorry Depreciation

YEAR ANNUAL ACCUMULATIVE BOOK VALUE (RM)
DEPRECATION (RM) DEPRECATION (RM)
0 0 0 40,000
1 8,000 8,000 32,000
2 8,000 16,000 24,000
3 8,000 24,000 16,000
4 8,000 32,000 8,000
5 8,000 40,000 0

The cost of the machinery and equipment used for this TIDBID SDN BHD was
RM 27,800.00. the economic life for the furniture and fixtures was three years and
the method used for the payment was the straight line thus the book value for one till
three years was RM 27,800.00, RM 18,533.40 and RM 9,266.70 respectively.

The cost and payment of the furniture and fixtures from was RM 9,000.00. 3
year of the duration payment were decided with the supplier. The list of furniture and
fixtures that purchase by the company was the exhaust fan, fan, air conditioner,
lamps, fly traps and other related item.

Table 5.18: Payment Information of Furniture and Fixtures

TYPE OF ASSETS FURNITURE AND FIXTURES
Cost of asset Rm 10,760.00
Economic life 3 years
Method payment Straight line

Table 5.19: The Furniture and Fixtures Depreciation

YEAR ANNUAL DEPRECATION ACCUMULATIVE BOOK VALUE (RM)
(RM) DEPRECATION
(RM)
0 0 0 10,760.00
1 3,586.70 3,586.70 7,173.30
2 3,586.70 7,173.30 3,586.70
3 3,586.70 10,760.00 0
 The cost of the furniture and fixtures used for this TIDBID SDN BHD was RM
10,760.00 the economic life for the furniture and fixtures was three years and the
method used for the payment was the straight line thus the book value for one till
three years was RM 10,760.00 RM 7,173.30 and RM 3,586.70 respectively.

Total depreciation per year

= (RM 9,266.70) + (RM 8,000) + (RM 3,586.70)
= RM 20853.40
Total depreciation per total year
= (RM 9,266.70 × 3 years) + (RM 8,000 × 5 years) + (RM 3,586.70 × 3 years)
=RM 88,290.00

5.3.2 LOCAL TAXES AND INSURANCE

The Local Taxes is the taxes assessment by a state, county, or municipality to fund
public services. The building, machine and equipment is installed with insurance
program which providing insurance protection from vandalism, robbery, natural
disaster, fire and others.
 Local taxes
Negligible due to Promotion of Investment Act 1986, revenue enhancement
Act 1967, Customs Act 1967, excise Act 1972, Excise Act 1976, and the Free
Zones Act 1990 which help the new company to start-up their company or
plant.
 Insurance
1% of fixed capital cost
1
× RM 37,530.00=RM 375.30
100

5.3.3 FACTORY EXPENSES/PLANT OVERHEAD COSTS

5.3.3.1 PLANT OVERHEAD

Overhead expenses include accounting fees, advertising, insurance, interest, legal

fees, labour burden, rent, repairs, supplies, taxes, telephone bills, travel
expenditures, and utilities.
50% of fixed operating labour

50
× RM 37,530.00=RM 18,765.00
100

5.3.3.2 FACTORY FURNITURE AND FIXTURES

TIDBID SDN BHD have purchase several equipment for the use of processing area,
packaging area, administration office, laboratory and other parts of the factory.

Table 5.20: Furniture and Fixtures Cost

APPLIANCES UNIT PRICE PER UNIT TOTAL PRICE
(RM)
Exhaust fan 3 50.00 150.00
Fan 7 195.00 1,365.00
Air conditioner 5 969.00 4,845.00
Lamps 20 20.00 400.00
Fly traps 5 500.00 2,500.00
Table and chair 1 700.00 700.00
Printer 1 200.00 200.00
Storage rack 2 300.00 600.00
Grand Total 10,760.00

5.3.3.3 FACTORY RENTING

The factory that will be rent by the company is an established building which includes
parking lots, administration office, washroom, storage for raw materials and product,
and waste area. The rental of this factory with the land size of 20 000 sq.ft is RM
8,500 monthly, which is RM0.45 per square feet.

Factory rent = RM 8,500/month x 12

= RM 102, 000/year
5.3.4 GENERAL EXPENSES

i. Administration costs is 15% of expenses from executive salaries, office

supply, communication fees and factory rent.

Table 5.21: Administration Cost Per Year

Administrative Cost Total (RM)
Executive Salaries 373,110.40
Office supply 10,760.00
Communication fees 3,468.00
Total 387,338.40

Administrative cost: 0.15 x RM 387,338.40 = RM 58,100.75

ii. Distributions and selling cost is 2-20% of expenses from shipping,

salesman and advertising.
Table 5.21: Distribution and Selling Cost
Distribution and Selling Cost Total (RM)
Shipping 6,000.00
Salesman 3,000.00
Advertising 2,677.00
Total Cost 11,677.00

Distribution and selling cost: 0.15 x RM11,677.00 = RM1,751.55

iii. Research and Development costs is 2-5% of expenses from packaging and
raw materials.
Table 5.22: Research and Development Cost
Research and Development Total (RM)
Packaging 2,000.00
Raw Materials 2,500.00
Total Cost 4,500.00

*Assumption for Research and development cost: 0.05 x RM4,500.00 = RM225

The total sum of these costs, Administration costs + Distribution and selling costs +
Research and development will be the General Expenses.

RM 58,100.75 + RM1,751.55 + RM225 = RM 60,077.30

5.3.5 ROI

The return of investment is 0.062. The ROI is necessary as it can be the key
performance indicator (KPI) which is usually used by businesses in determining their
profitability of an expenditure. The ability to calculate return on investment is
extremely valuable for any business, regardless of size and industry. When ROI
calculations yield a positive figure, it means that net return are in the black (because
total returns exceed total costs). Alternatively, when ROI calculations yield a
negative figure, it means the net returns are in the red because the total costs
exceed total returns. (In other words, this investment produces a loss). Finally, to
calculate ROI with the highest degree of accuracy, total returns and total costs
should be considered.
5.3.6 PAYBACK PERIOD

The payback period was assumed to be within 5 years, it is the period to

recover the money in expected time. The payback period refers to the amount of
time it takes to recover the cost of an investment. Simply put, the payback period is
the length of time an investment reaches a break-even point. The desirability of an
investment is directly related to its payback period. Shorter paybacks mean more
attractive investments.

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 APPENDICES

QUESTIONNAIRE FOR MARKET SURVEY OF POTATO CHIPS

1. Do you like potato chips?

 Yes
 No

2. When do you prefer potato chips in a day?

 Morning
 Afternoon
 Evening
 Night

3. How often do you consume potato chips?

 Very often
 Often
 Sometimes
 Rarely
 Never

4. Which brand of potato chips do you prefer?

 Mr Potato
 Twisties
 Pringles
 Others
 If you choose others, please state your choice below:

5. Based on Question 5, what attracts you to choose the brand generally?

 Flavours
 Quality
 Price
 Packaging

6. Based on Question 6, if you choose flavours, which flavour of potato chips do

you prefer the most?
 Original
 Cheese
 BBQ
 Others
 If you choose others, please state your choice below:

7. Based on Question 6, if you choose quality, which quality of potato chips do

you prefer the most?
 Thickness of chips
 Crunchiness of chips
 Amount of chips
 Flavour of chips

8. Based on Question 6, if you choose price, which range of price of potato chips
do you prefer the most?
 RM 2-5
 RM 6-10
 RM 11 and above

9. Based on Question 6, if you choose packaging, which type of packaging of

potato chips do you prefer the most?
 Paper tube
 Plastic pouch type
 Plastic try + plastic pouch

10. Which size of packaging do you prefer the most?

 Small
 Medium
 Large
Appendix 1: The Industrial Coordination Act, 1975 (ACT 156) Page 8
Appendix 2: The Industrial Coordination Act, 1975 (ACT 156) Page 9
 Appendix 3: Yeast extract are permitted to use as flavor enhancer, adapted by
Malaysia Food Regulations 1985 Ninth Schedule Regulation 23

Appendix 4: Permitted anticaking agent including E551, silicon dioxide, adapted from
Malaysia Food Regulations 1985 Schedule 11 Regulation 25