BAHIR DAR UNIVERSITY

BAHIR DAR INISTITUTE OF TECHNOLOGY

FACULITY OF MECHANICAL AND INDUSTRIAL

ENGNEERING

ENTERPRENEURSHIP GROUP PROJECT

TITLE: Design and Manufacturing paddy reaper harvesting Machine

l NAME ID

1. Abiy Nigussie 1200750

2. Abrham Minale 1207429

Submitted to: Mr Zelalem 3. Adissu Menber 1200803

Summation date: 08/08/2015 E.C 4. Amanuel Ayana 1203529

: 5. Amanuel Getachew 1200891

6. Abdiawk Abraham 0903469

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Contents
Chapter One .................................................................................................................................................. 4
Description of the Business........................................................................................................................... 4
1.1 Introduction ........................................................................................................................................ 4
1.2 Working principle of the machine ...................................................................................................... 5
1.3 Features of reaper machine ................................................................................................................ 5
1.4 Information about the Enterprise ....................................................................................................... 6
1.5 Mission and Vision of the Enterprise .................................................................................................. 6
1.6 Objective of the Enterprise ................................................................................................................. 7
1.7 Type and Quality of Product(s) or Service(s) ...................................................................................... 7
1.8 Economic and Social Impact on Local Communities ........................................................................... 7
1.9 Environmental Impact on the Surrounding Area ................................................................................ 8
Chapter Two .................................................................................................................................................. 9
Market Feasibility.......................................................................................................................................... 9
2.1 Enterprise Description ........................................................................................................................ 9
2.2 Enterprise Competitiveness .............................................................................................................. 10
2.3 Market Potential ............................................................................................................................... 11
2.4 Sales Projection ................................................................................................................................. 11
2.5 Access to Market Outlets .................................................................................................................. 12
Chapter Three ............................................................................................................................................. 13
Technical feasibility ..................................................................................................................................... 13
3.1Facility Needs ..................................................................................................................................... 13
3.2. Suitability of Production Technology ............................................................................................... 15
3.3 Availability and Suitability of Site ...................................................................................................... 15
3.4 Raw Materials ................................................................................................................................... 15
Chapter Four ............................................................................................................................................... 16
Financial Feasibility ..................................................................................................................................... 16
4.1 Total Capital Requirements............................................................................................................... 16

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 4.1.1 Fixed capital ............................................................................................................................... 16
4.1.2 Working Capital per Month ....................................................................................................... 17
4.1.3 Other items of expenditure ....................................................................................................... 22
Calculating the Breakeven Point ......................................................................................................... 24
4.2 Estimate Equity and Credit Needs .................................................................................................... 25
4.3 Payback Period of Our Dep’t ............................................................................................................. 26
Chapter Five ................................................................................................................................................ 27
Organizational/Managerial Feasibility ........................................................................................................ 27
5.1 Business structure ............................................................................................................................ 27
5.2 Business Founders............................................................................................................................. 28
Chapter Six .................................................................................................................................................. 30
6. Study Conclusions ................................................................................................................................... 30
Reference ................................................................................................................................................ 31

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 Chapter One

Description of the Business

1.1 Introduction

Our nation's economy is heavily reliant on agriculture, which is why that sector should drive
industrialization policies. As a result, we should develop our agricultural system using
technology to raise production and improve quality. A firm that makes use of technical goods or
tools and scientific procedures is said to be technology-aided. Our farmers require specialized
machinery that makes difficult labor tasks simpler in order to enhance quality and increase
output. One of the more recent pieces of machinery for efficient labor use and low energy use is
the paddy reaper harvesting machine. This machinery is crucial for enhancing both the quality
and output of Ethiopian farmers' rice crop. This will determine how we develop and produce
reaper harvesting machinery. We want to work on designing the machines that are suitable for
our nation and producing them in a small factory as a means of providing the farmers with
income from the equipment.

One of the most time-consuming steps in the manufacturing process is harvesting. The difficulty
of harvesting has grown as a result of the introduction of new, high yielding rice varieties due to
the larger volume of harvests that must be handled. The most significant grain and main meal
consumed in Ethiopia, as well as the majority of tropical nations that cultivate rice, is rice. The
transition from the manual farming era to the current power farming era is now taking place.
More food must be produced due to the rapidly rising population. The only option to boost
output given the increased amount of area under cultivation is to boost yield and produce more
than one type of crop. The harvesting of the first crop corner occurs extremely close together in
regions with double or triple cropping. The majority of farmers in Ethiopia employ conventional
techniques like hand-harvesting using sickles. Traditional harvesting involves a total of 30 to 60
man hours per acre in labor, with cutting and laying alone requiring 25 to 30 man hours per acre.
Delays in harvesting can result in grain losses of up to 6% for a week and 11% for ten days.
Farmers have significant challenges in promptly harvesting their crops during the height of
harvest and owing to an increase in agricultural labor. Crop harvesting should be done as soon as
possible. As a result, farming was efficiently managed by machines. This bottleneck might be
reduced by using a mechanized reaper to boost lab our productivity and rice yield.

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 1.2 Working principle of the machine

A processing trolley, rail and plant holding system made up the configuration. The laboratory
set-up simulates the 600 mm-wide cutting unit of a reaper. Using a torque transducer, it was
discovered that the torque needed for cutting paddy crop at knife speeds of 1.8-2.6 m/s and
forward speeds of 0.8-1.1 m/s was 0.6-5.5 N-m for a 600 mm cutting width. The maximum
power needed to cut paddy was therefore determined to be 362.67 W for a 600 mm cutting
width.

The power needed for the conveying unit is a crucial consideration when building the e-reaper
header unit. Paddy harvesting requires a maximum cutting speed of 2.6 m/s (620 rpm for the
header shaft), and since power is transferred from the header shaft to the conveyer shaft at a ratio
of 1.5:1, the conveyer speed is 1.73 m/s. With a straw grain ratio of 1.4:1, the IR-36 type of
paddy yields 2500 kg/ha. With a cutting width of 0.6 m and a forward speed of 1 km/h, the
electric reaper's conveying unit was able to move crops at a rate of 4 kg per minute, using around
70 W of electricity. The total power required for conveying was calculated as 100 W with a
frictional loss of 20%. The closest-sized DC motor on the market was an 800 W model. As a
result, a DC motor with 800 W and 48 V might provide 50 N-m of torque at 3000 rpm .The crop
lifter directs the crop to the cutter bar and the crop is cut by the cutter as the machine is pushed
by the operator in the field at the designated speed. The crop is then conveyed with the aid of a
star of wheel at one side by the lugged belt conveyer for simple collection and bundling.

1.3 Features of reaper machine

It is a walk-behind harvester with an engine that may be used to harvest and windrow grain and
oilseed crops. The crop row separators, cutter bar, pneumatic wheels, conveyor belts with lugs,
star wheels, operational controls and a robust frame make up the reaper. Through belt pulleys,
the engine's power is transferred to cutter bars and conveyor belts. harvest row dividers split the
harvest as the reaper moves ahead, whereupon the crop stems are sheared as they come into
contact with the cutter bar. The conveyor belt has lugs that help it move the cut crop to one side
of the machine where it is windrowed in the field. The produce is physically packaged and
carried to the threshing yard. Because the produce is transported vertically, there are no
shattering losses.

Specifications

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Dimensions (LxWxH) : 2450 x 1200 x 1000

Weight (kg : 145

Number of crop dividers : 4

Length of cutter bar (mm) : 1000

Cutter bar pitch (mm) : 75

Number of strokes/min : 700 (0.8 m/s average speed)

Power requirement (hp/kW) : 5/3.75, diesel engine

1.4 Information about the Enterprise

• Name of Enterprise: Ethiopia mechanization plc.

• Name of the product: Paddy Reaper Harvesting Machine.

• Partnership: General partnership

1.5 Mission and Vision of the Enterprise

Mission

- use our product to benefit society and raise standards of living.

- providing Ethiopian farmers with improved harvesting equipment at a reasonable price.

Vision

- To see a community that employs harvesting equipment improve their

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level of living, increase their revenue, and supply companies with barley of higher quality.

1.6 Objective of the Enterprise

• To create a harvesting device for barley that is both affordable and manageable for farmers to
use.

• To raise farmers' living standards by improving their harvesting practices.

• To reduce inactivity (thereby generating work opportunities).

1.7 Type and Quality of Product(s) or Service(s)

The company offers both goods and services. The equipment itself serves as both the product and
the service, which also offers superior quality, on-time, and labor-saving barley harvesting. Our
project's primary goods and services include:

-The manufactured harvesting machine

-Mini plant for manufacturing

-higher standard paddy product

-diminished labor force

1.8 Economic and Social Impact on Local Communities

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Economically, this company plays a significant role in the communities by increasing the
quantity and improving the quality of the products. Additionally, it lessens the energy and
exhaustion of Ethiopian farmers.

-higher quantity of barley

-superior goods delivered at the right time.

-less exhaustion.

- High profits by supplying the barely for the industry

1.9 Environmental Impact on the Surrounding Area

The Paddy Reaper Harvesting Machine's design and production have some detrimental effects on
the environment, including some noise from the cutting and welding of the machine's parts and
some environmental robustness from the trash. The reaper fundamentally altered how farmers
gathered their grain. Before its invention, harvesting needed a large number of workers to use
manual instruments like sickles and scythes. A farm could harvest about two acres of produce
every day using this technique. A farmer would either have to incur additional costs to hire help
during the harvest or risk losing their crop if they did not have enough support. Farmers could
harvest more with less work and in less time thanks to the reaper.

The reaper has a variety of effects on agricultural and daily life. Farmers started producing more
as a result of being able to harvest more, which reduced the likelihood of food shortages. Reaper
had a role in the Industrial Revolution. The reaper reduced the number of workers required for
farming, freeing up workers for jobs in factories and other industrial sectors. Was chosen for the
e-reaper's header unit. Four 12 V, 18 Ah lead-acid batteries were linked in series to power the
DC motor for the reaper for two hours. This created a 48 V, 18 Ah current.

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 Chapter 2

Market feasibility

2.1 Enterprise Description

As is well known, our nation's farmers harvest their crops using an antiquated and time-
consuming approach. Despite the fact that there are several harvesting and combining methods,
machines have been manufactured and are readily available; the primary issue has been farmers'
access to them. Simple devices and processes that even farmers themselves might use to run
them may be used to address these issues. These ought to be planned and ought to target farmers.

Our tiny barley harvesting machine is the first option from this perspective since it combines the
above-simplified qualities with a reasonable price. As a result of the business's enormous
potential and importance to agriculture in our nation.

Market segmentation

Market segmentation is the separation of the overall market into smaller, more homogeneous
groupings or the subdividing of the market into discrete subgroups of customers. The following
factors need to be considered while segmenting the market.

- Define unique buyer groups.

-who are they ?

- What products do they desire?

-When do they intend to purchase?

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-Where do they wish to purchase?

-Typical criteria for dividing consumer markets

• Geographic division Since we would be providing the harvester to the farmers, our business is
separated into the rural area business. This is something we'll take into account while promoting
the machine to the public.
• Psychographic segmentation: From a psychological standpoint, clients might not think about
the machine's lifespan but instead focus only on cost savings.
• There is no age or gender segmentation in this company.

2.2 Enterprise Competitiveness

We may state that there is now no competition for the industry because there is no facility in
Ethiopia that produces reaper harvesting equipment. Even if we could face some competition, we
can be a strong rival by developing a brand-new, very advantageous machine through continual
improvement.

• Our products compete with any designed to harvest barley, but due to technological
advancement, high cost, and the fact that many reapers and combiners are only operated by
skilled individuals, farmers are not as involved in purchasing and using harvesting machines.

• Some defining characteristics and excellent specifications that set this harvester apart from
others include:
• Easy maintenance ability;
• Ease of use;
• Low cost (affordability);
• No need for a skilled operator to operate the reaper;
• Less fuel consumption;
• Portability to operate and store after completing a task or job

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Due to these features, our paddy crop cutting machine would stand out and maybe draw
customers since it provides a solution to the challenges that each and every farmer faces. This is
one strategy we use to outperform our rivals.

2.3 market potential

As we have explained in the context of our business endeavor, the market for buying and
utilizing rice harvesting machines is not very pleasant due to the affordability of many
equipment. This may present an opportunity for our small, inexpensive barley harvesting
machine. Since our product primarily applies to the agricultural sector, it may then be accessible
to individuals who cultivate rice in general. With a little alteration to the cutter and gear design,
the equipment may also be utilized for the growth of rice, wheat, and oats. As a result, it is
obvious that our goods will be concentrated on and delivered to Ethiopia's adjacent local areas
where the farmers would have easy access to buy.

2.4 Sales Projection

Based on historical performance and present trends, a sales forecast makes predictions about
future sales. A target to work towards during such time is the sales predictions, which are
normally created at the start of a planning period. Consumers must pay the product's price in
order to purchase it. Price has historically been the primary factor influencing user decision.
Even if non-price factors have gained prominence in recent years, price is still one of the key
variables affecting market share and profitability. Here are a few price strategies that are
appropriate in terms of market pricing.

Cost plus pricing-often known as markup pricing, is the most basic pricing approach. It entails
adding a standard markup to the cost of the product in order to set the price for that commodity
in the market.

Skimming the price- Setting a high price for a new product allows the corporation to sell fewer
units at a higher profit margin by layering maximum revenues from market groups willing to pay
the high price. Putting a new, low-quality product on the market with a high price and then
lowering it.

Below market price-Setting a low starting price allows you to enter the market rapidly and
deeply, attracting a big number of customers immediately and gaining a sizable market share.

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Premium cost: Setting a high price for things is referred to as premium pricing. The premium
pricing technique establishes a high price for high-quality items by creating an approving
perception. Consider the market you are targeting as well as the sort of product you are
introducing.

Because consumers think that the more expensive a thing is, the greater its perceived quality will
be. This method is used by businesses to set their pricing higher than those of their rivals' goods.
Since we added our 20% profit to the variable cost of our machines, we have used a cost-plus
pricing strategy for our business.

2.5 Access to Market Outlets

Since Bahir Dar is not too far from the rural areas where the farmers reside, we had intended to
build a selling store here for our goods. However, in the future, we aim to open a selling shop in
each capital of the regional states.

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 Chapter Three

Technical feasibility
3.1 Facility Needs
The first step in the construction of a paddy reaper harvester is to identify the components that go into
making the machine in the tiny production facility. These harvester machine parts are obtained from raw
material suppliers and manufactured in accordance with design specifications. These consist of:

❖ Cutter bar, The cutter bar can be lifted by pushing on the handle. For harvesting wheat and
paddy crops, the most popular reaper is a front-mounted vertical conveyor. It can also be
used to harvest soybeans and other crops that are comparable.
❖ Crop row divider called reel
❖ Conveyor belt, is to regulate the product's movement. The belts are made in various sizes,
and the apparatus that drives them operates at various speeds.
❖ Star wheel.
❖ Dc motor: The fundamental component of the harvester that once operated using mechanical
force and generated electrical energy to power the cutter
❖ Nuts and Bolts For attaching machine pieces together.
❖ Electric Wires: for electrical connection.

Generally all components are purchased from local suppliers except dc motor

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Paddy reaper harvesting machine

Paddy reaper harvesting machine drawing

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3.2. Suitability of Production Technology
There isn't a paddy harvester supplier in Ethiopia, thus we have the chance to operate our
company. Since there hasn't been any competition for this firm yet, its dependability is growing.
Although we may face competition in the future, we will continue to introduce new values to
maintain our position in the market. Lack of a sophisticated manufacturing facility to produce
harvesters with an accurate design is one of the technology limitations or restrictions we will
encounter.3.3 Availability and Suitability of Site

There are lots of factors to consider when choosing a business location. Some of the factors
Considered are;

a. Availability of raw materials- Except for the engine, all of the necessary raw materials for
our plant are available in Ethiopia, and Bahir Dar city has many stores that stock some of the
parts we need to build our machine.

b. Nearness to market- Farmers are our target market, and they have a strong desire to save
time and energy, thus we have a fantastic potential to gain access to marketplaces. Since
Ethiopian farmers are located close to our country's towns, they have easy access to
transportation, and the machinery is also quite small and portable.

c. Availability of basic infrastructure- Here in Bahir Dar, there are plenty of businesses that
carry the infrastructures we need, as well as the infrastructures that are needed by our company.

d. Distributive channel- We're going to sell our products directly to the public in a zero-level
channel for distribution. The requirement for qualified employees is not a problem for our firm at
first, so we can manage the business ourselves. We have a skilled labor force. Natural gas, which
is readily available in rural areas and has no adverse effects on the environment or the local
community, can be used to power the harvester.

3.4 Raw Materials

Our harvester machine's raw materials are accessible from suppliers and may be divided into two
categories.

The first contains the components needed to assemble the plant itself. These consist of

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1. Cutting machine. is used to cut metal pieces in a variety of sizes and shapes. It is driven by
electricity and can cut metal up to 60 mm wide and 30 cm thick.

2. Bending machine: A tool used in shaping is a bending machine. It is used to put together a
bend on a work piece. During a linear or rotating motion, a bending tool is used to create a bend.

3. Drilling machine: can be characterized as a device that uses a drill bit as a cutting tool to
remove volume of metal from a work in order to create a circular hole in it. The drill bit, or
cutting tool, is turned into the task when drilling is done by the drilling machine along its own
axis. We need a drilling tool with a 6mm–20mm drill bit.

Chapter four

Financial Feasibility
4.1 Total Capital Requirements
4.1.1 Fixed capital
A. Land

We evaluated and calculated the amount of land needed in the fabrication area.

And among the 200 square meters we have allocated for the entire compound, we only need 120
square meters for the production space. We calculated the monthly rental cost to be not all that
far from 5000 ETB. And we have to pay for a one-year contract.

B. Machinery and Equipment Cost

Table 2- Machinery and Equipment cost.

No. Description & Quality Price Sale tax. Total

specification (ETB) 15% (ETB)

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1 Cutting 1 7000 1050 ETB 8050
machine

2 Bending 1 5000 750ETB 5750

machine

3 Drilling 1 2300 345 ETB 2645

machine

4 Packaging 1 5,500 825 ETB 6325

machine

5 Working 7 10500 5250 ETB 15750

tables
benches

C. Electrification and Installation

The cost of installation and electrification is limited to 10% of the cost of the machinery and
equipment.

Since we approximated and computed the cost of the machinery in the preceding table, it is 3852
ETB.

D. Cost of Office Equipment

We have calculated the cost of office equipment to be 50,000 ETB, which includes the cost of
desktop computers, working tables, guest receiving seats, stationary facilities, documents, and
other accessories.
The cost of the office equipment, the cost of the installation and electrical work, and the cost of
the machinery together make up the total fixed capital cost. Thus, the total fixed capital cost is
equal to 60,000 ETB plus 38,520 ETB plus 38,52 ETB plus 50,000 ETB, or 152,372 ETB.

4.1.2 Working Capital per Month

Cost Estimation Procedure

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We must estimate the production cost before moving on to other relevant costings.
Manufacturing expenses are broadly categorized into three fundamental costing factors.

• Direct material costs

• Direct labor costs

• Indirect labor costs

A. Direct Material Costs are expenses we have to pay for just the machines that turn raw
materials into finished goods. The following steps are involved in estimating the cost of the
materials used to produce a component or product:
It is estimated how much of every material will be used in the production of the product. Each
component's or part's allowance for material waste, spoilage, and scarp is also included.

By dividing the expected quantity of each item by its predicted future price, the cost of each mate
rial is calculated.
According on current pricing as well as broad patterns and changes, an estimate of a material's fu
ture price is created.

The total estimated material cost is obtained by adding the projected costs of all the materials.

Cost of Raw Material (per month)

The following list includes the components that will not be processed but can still be purchased
and put together without processing in order to create the micro barely harvesting machine.
• Diesel engine

• Nuts and bolts

• Sheet metal

• Belts

• Electric wires

• DC motor and

• Other expenses

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assuming that our facility can provide 5 fully assembled, functionally tested miniature harvesting
devices. This would make it simple to calculate the cost of raw material inventories for a
production rate of 5 units per day. When the facility is fully functioning, there will only be 26
days in a month, leaving no Sundays for rest.
1) Engine (generator): 26 days times 5 pieces equals 130 pieces. Considering that the price of
the generator is 1800 ETB per unit and there is a 15% sales tax, that makes the monthly cost of
the engine 130*2100 ETB, or 273,000 ETB.
2) Bolts and Nuts: We need a bolt of 3 different kinds of bolts and quantity of 12 bolts which
have a price of 5 birr per piece. Therefore, the price of bolts for our rice crop cutter is12*5*26 =
1560 ETB.

3) Electric Wires: we need 2.5 mm wire diameter for our power transmission from engine to
Motor. For one product we need about 4-meter wire and for 5 products per day we need5*4=
20m wire per day, also we need 20*26= 520-meter wire per month with cost of 3 birr per meter,
therefore the wire requirement for a month is going to be 520m *3=1560 ETB.

4) Cutter bar: the cost of the cutter is 150 birr per piece, therefore for 5pieces and for 26 days of
production the price of cutter bar will be 150*5*26=

19500ETB.

5) DC motor: DC motors are small in size and could attain high speed of rotation, as per our
Requirement 3000 RPM is needed for crop harvesting machines. Its price per piece is 2000ETB.
Therefore for 5 product per day and for 26 days of working days the price of DC motor will be
2000*5*26= 260,000ETB.

6) Conveyer belts Controlling the product's movement is necessary in order to. The belts are
made in various sizes, and the apparatus that drives them operates at various speeds. Strong and
long-lasting conveyer belts must be obtained from the market for the tiny paddy crop reaper
machine. If we estimate the cost to be 250 ETB per piece, then the cost of belts will be
250*5*26, or 71500 ETB, for a workweek of 26 days and 5 products per day.

7) Other expenses- tools and accessories such as different types of Pliers, Screw drivers, Open
and close wrenches of different size, Metal hammer and plastic hammer.

Direct material cost per month

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Name and specification Qty./month Rate

Star wheel 130 123000

Dc motor 130 260000

Nuts and bolts 312 1560

Sheet metal 130 5200

Electric wire 520 1560

Cutter bar 130 19500

Conveyer belts 130 71500

Other expense tool kit 1 2000

Total 484,320.00

B. Direct labor costs (per month)

Calculating the labor hours required to create a product and multiplying that number by the labor
cost per hour yields an estimate of the labor costs involved.

One needs to have in-depth knowledge of the numerous operations to be carried out, the
machines to be utilized, the sequence of Operations, the tools to be used, and labor rates in order
to estimate the labor time anticipated to be spent on a work.

As we've already mentioned, the cost of workers or employees who are simply involved in
turning raw materials into completed goods or products is included in the direct labor cost. Three
fundamental tasks are carried out in the workspace.

• Cutting the aluminum pipe as per the given dimensions

• Bending of aluminum also as per the given angels

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• After each component is assembled, which takes far longer than any other procedure, the
product is packaged at additional labor costs. We can therefore determine the number of
operators who are directly involved in the production and assembly of the micro barley crop
harvesting equipment based on these types of tasks.

• In cutting operation ----------- 1 person

• In bending operation ----------1 person

• In assembling operation and packaging operation------------3 persons will be employed in

which they are going to be wage employed having their salary monthly. After this we are going
to estimate costs of direct labor. Cutting and bending operation are the Operations which do not
require that much skill, hence the cost of these works per month is assumed to be 2500 ETB for
each operator. And for assembling operation since it’s a little bit complex and need skills of
assembling process, therefore the amount of cost for those three operators would be 3500 ETB.

• From this we can conclude that the total direct labor costs for operators per month is estimated
as; Total cost: 15,500 ETB

C. Indirect Labor Costs

Are there expenses associated with human resources that are not directly tied to the transformatio
n of raw materials?such as managers, inspectors, maintenance workers, store officers, and gate k
eepers in relation to the product.
These are a few of the indirect labors for which we will pay each a monthly salary.
We can independently calculate this cost based on the amount of hours they work each day and e
ach month or the number of items they contact with each day and each month.We are calculating
the indirect labor costs in this manner. We're just going to use indirect labor in our workplace;

a. Inspection: one person and with estimated salary of 2000 ETB per month.

b. Store officer and receptionist: two persons and with estimated salary of 1800 ETB for

Store officer and 1500 ETB for receptionist per month.

c. Salesman: one salesman with salary of 2000 ETB.

d. Gate keepers: two gate keepers who are going to work in shifts and having estimated

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Salary of 800 ETB for each keeper per month.

✓ Total indirect labor cost = 2000+1800+ 1500+2000+1600 = 8,900 ETB.

Total Manufacturing Cost Per Month = Direct Material Cost + Direct Labor Cost + Indirect
Labor

Costs = 484,320 + 15,500 + 8900 = 508,720 ETB.

4.1.3 Other items of expenditure

A.Utility

Electricity is mostly needed in our workshop to run the three primary machines for cutting,
bending, and drilling activities. This consumption is not overly high, and the monthly cost will be
500 ETB.

4.1.3.1 Promotion and Advertising

Because our product is primarily targeted at farmers, it is best to begin by introducing it to the ag
ricultural mechanization bureau of the Amhara area, which will help us enter the market by provi

4.1.3.2 Commission to distributers and agents ding the item.

For the expenses of commissions of distributers and agents we can estimate costs = 3000 ETB.

4.1.3.3 Insurance
Since our enterprise is not that much vulnerable to huge destruction and damage on the machines

And on the operators, we can incur 500 ETB per month for insurance.

4.1.3.4 Postage and telephone

For only business tasks for telephoning and postage we can estimate the cost as 500 ETB Per
month.

4.1.3.5 Repair and maintenance

Since we are connected with machinery to operate things, the necessity of repair and
maintenance is a vital aspect of our shop. In this sense, if our machines start to malfunction, they

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must also be maintained and fixed. Due to this, we project the monthly cost of maintenance and
repairs to be 1500 ETB..

4.1.3.6 Sales expenses

Since these costs are directly tied to sales expenses, it is necessary to account for greater transpor
tation and advertising costs when calculating this expense during the sale of our items.
It is projected that monthly estimated sales expenses will total 1 000 ETB.

Total overheads

All of the above expenses added together equal the total overheads, which we have listed below.
Other Expense Costs

No. Type of expenditure Expenditure (per month) ETB

1 Utility 500

2 Advertisement and publicity 300

3 Transport 3000

4 Commission to distributers 3000

5 Insurance 500

6 Postage and telephone 500

7 Repair and maintenance 1500

8 Sales expenses 1000

Total 10,300

The total expected cost for starting the business includes the total fixed capital cost, the
manufacturing cost and the other expenditure costs. Total Expected Cost= total fixed capital +
total

Manufacturing cost + other expenditure cost = 152,372 ETB + 508,720 ETB +10,300 =
671,392.00 ETB.

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 Calculating the Breakeven Point
The production volume at which the whole cost of manufacturing the goods equals the total selli
ng price is known as the breakeven point.
There will be no profit or loss for the manufacturer at break-even point.
The following criteria, including those listed below, can be used to determine the breakeven poin
t.

Fixed costs

Our company's fixed costs, as we sought to estimate at the outset, came to 152,372 ETB.
The direct and indirect labor costs are also referred to as fixed costs because we will pay the wor
kers a set wage each month.
Given that the direct labor pay cost is 24,400 ETB, our annual demand must be 24,400 * 12 mont
hs, or 292,800 ETB.
The entire fixed cost is 152,372 ETB + 292,800 ETB, which comes to 445,172 ETB.

Variable costs

Assuming this we are going to price our cost in the older method of assuming the 20% plus some
allowances for taxation of profit on our variable cost which is going to be 4658 + (4658*0.20)
=5589.6 ETB.

We add some allowance to this and set the price of the harvester per piece to 5700 ETB.

Therefore, at the breakeven point the quantity should be

Q = TFC/ (P/unit – VC/unit)

Q= 445,172/ (5700-4658) = 427. 728 ~428 products

Therefore, we could determine the time taking when we are going to be profitable. 5 products per
day, in 26 production days in a month and 12 months in a year, that we can produce our paddy
reaper harvesting machine. From this, we can produce 5*26*12 =1560 products in a year. Now
our breakeven quantity = 428 pieces, from the above quantity how much time is required to

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reach the breakeven quantity? 1 year = 1560 products? Year = 428 product, 0.274 years. And
converting these number in to month.

1 year = 12 month

0.247 year =? Month…........................ 3.2923 months, actually to be profitable we need to wait

3+ (0.2923* 4 weeks in a month) = 3+1.16723 weeks = 3 month and 1 weeks.

Break-even Chart

4.2 Estimate Equity and Credit Needs

Even though the mini barley harvesting machine's parts are few in number and small in size, it is
believed that an average workshop can manufacture and assemble each part, so first the finances
must be examined to determine the fixed and variable costs necessary for the new business that
we are starting. By investing all the funds we had on hand as a team, as well as by approaching
sponsors that are interested in and supportive of this company concept or credit-granting
organizations,

The business owners intend to pay for 38.34 percent (300,000 ETB) of the whole cost out of
pocket, and the remaining 62 percent (416,263.04 ETB) will be financed by financial institutions

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or, if possible, through business incubators. We need to build ourselves up over time because this
is a new business structure. It is necessary to support and build the firm by letting those who are
interested in investing know about it..

4.3 Payback Period of Our Dep’t

According to our strategy, we require almost 482,392 ETB in credit from Amhara Credit and
Saving Institutions, with a 5-year term and an annual compound interest rate of 18%. As a result,
the total debt five years later will be:

Amount = 416263(1+0.18)5= 952,308.9 ETB

The total number of manufactured harvesting machines are:

Number of machines = 1560/year * 5 years = 7800 units.

The price of a single harvester is 5700 ETB as shown above. Therefore, the total amount revenue

Will be: Total Revenue = 5700 ETB/unit * 7800 units

= 44, 460,000 ETB

The profit we will gain is 20% of the total revenue. Hence, the calculated profit within 5 years

Period is: Profit = Total Revenue * 20%= 8,892,000 ETB

From the above calculations the profit is greater than the credit. Therefore, we can pay the credit

With the specified time and we decide to start the business.

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 Chapter Five

Organizational/Managerial Feasibility
5.1 Business structure
In a commercial entity, ownerships come in a wide variety. Here are the basic categories of legal
ownership that we will choose for our business venture or foundation.

1) Sole proprietorship: is a business organization owned by a single individual. A Sole

Trader has;

1 owner

0 to any number of employees

The vast majority of new businesses start as sole proprietors.

2) Partnership: is a business owned jointly by two or more people. Even if forming a

partnership is more difficult than forming a sole proprietorship, it's still simple and affordable.
Although it's typically a good idea to get professional counsel, it is possible to create a
straightforward partnership without the aid of a lawyer or accountant.

Kinds of Partnership

• Silent Partner - someone who invests money but takes no part in the day to day running of the
business.

• Secret partner: who actively participate in managing a partnership but whose identities are kept
private In other words, the general public is unaware of this person's status as partner

• General partner:is typically involved in corporate management and accepts limitless liability.

• Limited or special partner: limits their liabilities and only puts their initial investment in the
company at danger. the majority of partners are general partners.

3) Corporation.It stands out from sole proprietorships and partnerships because it is a separate
legal entity from the people who own it. It is capable of making legally binding agreements,

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buying and selling property, suing and being sued, being held accountable for its deeds, and
paying taxes. It is advantageous to set up a corporation whenever a business reaches any sizeable
size so that its owners can reduce their liabilities. Therefore, corporations often have far bigger
average revenues than companies with alternative types of ownership.

4) Franchising: is an arrangement between the buyer who is called a franchisee and the seller
who is called the franchiser. The franchisee's trademarked goods or services may be sold by the
buyer. It receives the advantages of visibility and recognition while being spared of the majority
of the tasks associated with starting an enterprise. Typically, the franchisor also handles the
franchisee's advertising, training, design and layout, etc. Since we were partners during our
educational years and are familiar with the operating principles and agreements that will be held
in the formation of a business, we can deduce that the forms of legal ownership for the business
established apply to our enterprise. This is known as the "partnership type of ownership."

Authority of Principals

This is the simplest part which is determined by the legal ownership agreements. According to

This we are agreed and decided to withdraw our ownership power on the management and
selling portions of our enterprise. We the shareholders have a major responsibility in;

• Financing the firm

• Designing and manufacturing support of any new problem-solving ideas.

• Solving the problems of any problem.

• Quality inspection and over all control of enterprise etc.

All the workers in the factory would have a big responsibility of working hard for the economic
growth, profitability and long sustainability of this enterprise.

5.2 Business Founders

Name and address of this business founders are;

1. Abiy Nigussie

Phone number:
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Email:

2. Abrham Minale

Phone number:

Email;

3. Adissu Menber

Phone number;

Email

4. Amanuel Ayana

Phone number:

Email

5. Amanuel Getachew

Phone number:

Email:

6. Abdiwak Abraham

Phone number:

Email:

The company's founders are of the highest moral character and are tireless workers. Therefore,
the project's founders are able to finish it so that our farmers can benefit from the newly created
paddy reaper harvesting machine. The major individuals who have a significant impact on the
project are all of the business's founders who are listed above. The founders are fresh to the
business world; before to this endeavor, they were not operating any other businesses.

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 Chapter Six

6. Study Conclusions
As of yet, we have completed the feasibility analysis report and attempted to follow the
instructions in the provided templates. In order to attain its viability and feasibleness, our new
business enterprise's financial feasibility, technological feasibility, and economic feasibility all
through several tests and requirements. The preliminary assessment of a company proposal,
carried out to see whether the idea is worthwhile pursuing, is known as a feasibility study. This
procedure determines whether a business idea is viable. We calculated the fixed costs associated
with the initial construction of our company as well as the variable costs associated with the
direct material and overall overhead expenses in the feasibility study. These expenses allow us to
determine the reasonable price for our product, and by examining the break-even analysis, this
also reveals our profit margin. We choose to establish this firm because it has a huge profit
potential and no financial risk.

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Reference

[1] Teaching materials.

[2] Feasibility report writing templates /Google/(Data retrieving date: from April – May

2023)

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