Davao Asia

Plastic
Corporation

A Case Company for Operations and Supply Chain Management

Study
 STRATEGY

While most of the plastic industries'

strategy focuses on environmental
awareness and production, Davao Asia
Plastic Corporation has chosen to focus on
the factors that affect their daily target
capacity.
Product Design
 Product Development Process

Planning  The company produces plastic bags which is considered as their core
product because of this, they are able to help customers find the perfect
bag packaging solution for their products or for their own needs.

Concept  The produced plastic bags are used as a container for goods such as
foods, produce, powders, ice, magazines, chemicals, and waste.
Development

System Level  Sando bag is a type of container made of thin, flexible, plastic film, non-
woven fabric, or plastic textile. The process of making this product
Design
involves blowing, extrusion, bagging, checking, and packing.

Detail Design  In the checking process, employees will check conformity to each
product. The employees will also ensure the quality of the sando bag by
checking each plastic bags manually using their bare eyes to check if
there are defects or irregularities in the process.

Testing and  Workers will test if the process of sealing and cutting of plastic sando bags
are correct by getting random samples of the produced product. Here,
Refinement
the worker assures that no possible leakage would occur.

Production  The company uses make-to-order production system. They are making
Ramp-up their goods according to what their customers need. They are trained to
work as fast as possible in case they are demanded to make a batch of
plastic bags in a short period of time. It is also the identifier on how
competent and efficient the employees are.
Strategic Capacity
Design
 Capacity Utilization

Davao Asia Plastic Corporation is currently capable of

producing one batch daily. Every batch produces 160,000
pieces of plastic sando bags. The capacity utilization rate is
equal to 80 %
Process Design and
Analysis
• Daily batch of 160,000 pieces of plastic bags or
8 rolls.
• Utilization rate: 80%
• Make-to-stock process.
 Process Time per 1 roll or 20,000
plastic bags

Blowing Drying of pellets 2 hours

Extrusion Melting and forming 3 hours

Bagging Creating incisions; 2 hours and 30 minutes

sealing

Checking Measuring, examining, 15 minutes

testing or gauging one
or more characteristics

Packing and Punching Fabrication of the plastic 48 minutes

Manufacturing
Processes
MANUFACTURING PROCESS
DAPCOR practices a make-to-order
environment which means they make
the customer’s product from raw
materials, parts, and components.
1. Source

• This is where raw materials in making

the plastic/sando bags are being
purchased.
• Information regarding their supplier/s
are confidential and kept and intended
only for business purposes.
2. Make

• Blowing Process
• Extrusion
• Bagging
• Checking
• Packing/Punching
3. Deliver

• Finished products are delivered directly

to the customers or the customers picks
it up to the company.
• Orders are being transported within
Mindanao area.
CURRENT FACILITY
LAYOUT
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FROM TO DISTANCE TIME

(Meters) (Seconds)

Storage Area Blower 1 3 24

Blower 2 5 40

Blower 1 Extruder 1 12 96

Blower 2 Extruder 2 9 72

Extruder 1 Bagging Machines 13 104

Extruder 2 6 48

Bagging Machines Checking Area 5 40

Checking Area Packaging Area 2 16

Packaging Area Storage Area 10 80

65 520
Total Quality
Management
 Defects
The company has no product quality standards that
leads to defects and wastes in production which results
to
 defects per day of 8000 or 5% of daily output which has an
impact to their income
Also, the defects were caused by the current bagging
machine, specifically in the cutting and sealing process
 The spatial property of the sheets may not be properly aligned
causing uneven proportions of cutting and in effect disrupts
the sealing process as well.
 Improper Materials Addition, Surging, Poor mixing
LEAN PRODUCTION
PROCESS
 LEAN PRODUCTION PROCESS
“Lean can and does deliver exceptional improvements in
throughput, efficiency, and cost reduction for many
companies the world over.”
DAPCOR has applied the Lean Production Process in
their operations, from the purchase of raw materials to the
delivery of the product to the customers.
Logistics, Distribution
and Transportation
 LOGISTICS
• Factor in achieving a well-designed supply chain for
manufacturing services
• Plays an essential role in DAPCOR because it makes their
company more efficient
• Will determine how are the products transported from the
factory to their clients
• This department will ensure the process goes efficiently
 3rd STEP (Manufacturing
process): DELIVER
• A critical factor because it affects the cost of the product
• Make to order basis
• Different parts of Mindanao
• Mode of transportation: highway (by a truck)
 Location of facilities
• Located at Bago Aplaya (approaching Toril), Davao City
• Far from the downtown (approx. 10 kms)
• Near to some malls in the southern part of the city like:
• Gaisano Mall of Toril (5 kms), NCCC Mall- Maa (7.5 kms),
NCCC Centerpoint- Matina Crossing (4.5 kms)
 Inventory
Management
 Inventory Management

Inventory Management is a challenge for

DAPCOR. The company cannot fulfill its optimum
level of operation due to reduced inventory
management. They do not have a purchasing
system as to when and how much to order which
causes the company to have an unexpected
pause in their operations.
Application of Operations and
Supply Chain Management
Concepts as to

Recommended Areas for

Improvement
 Designin
g Quality
Control

Capacity
Figure iii. Improve Utilization Rate Establish
Framework for of 90 to 95 % and Fixed-Order
Facility Improve Quantity
Recommended Layout Model
Operational
Improvement Efficiency

Reduce Defects
Lead Reduce and Waste
Time Eliminatio
Cycle
n
Time
A. Proposed Facility Layout
 Table 1. lll. B Summary of Distance and Time
Between Machines and Areas
FROM TO DISTANCE TIME
(Meters) (Seconds)

Storage Area Blower 1 7 56

Blower 2 8 64

Blower 1 Extruder 1 2 16
Blower 2 Extruder 2 4 32
Extruder 1 Bagging Machines 6 48
Extruder 2 8 64

Bagging Machines Checking Area 5 40

Checking Area Packaging Area 2 16

Packaging Area Storage Area 8 64

Total   50 m 400 seconds

 B. Reduce Cycle Time and Lead
Time
•   average travel time is reduced by 480 seconds, further reducing
The
the processing time per roll by 2 minutes.
 
1 batch = 126, 241 seconds (36.33 hrs x 60mins x 60sec) + 1, 600
seconds
average travel time
= 127,841 seconds
 
8 rolls= produced in a day
 
 C. Economic Order Quantity
The economic order quantity (EOQ) is a model that is used
to
calculate the optimal quantity that can be purchased or
produced to
minimize the cost of both the carrying inventory and the
processing of
purchase orders or production set-ups
Continued….

Where:
Annual demand (D) = 10,950 units
Average daily demand (d) = 30 =√((2(10,950)(1,350))/500
(10,950/365) = 243.17
Ordering Cost (S) = P1,350
EOQ ≈ 243 units
Holding Cost (H) = P 500
Lead Time (L) = 2-3 days
Cost per unit (C) = 90 per Kg
 
 Reoder point
•  
Reorder point is an order that is placed when inventory drops to a
certain level.
Solution:

Therefore, if the
3 days) number of raw
materials drops at 90
units, the company
must order 243 units
or more

s
 D. Design of Quality Standard and Defect Elimination : Using DMAIC Methodology
Define  
The company must conduct a survey or a feedbacking system to know the

preferences of their customer. To what specification of sando bags they

would like.
Measure
The company must analyze well the process to apply certain quality

management. Example would be, how thick or thin the sando bags are and

would be according to what has been defined.

Analyze
The company must also have a study of the causes of defects not just on

mere looking at the process. Researchers suggest to looking also on the

capability of the machines not just the human operation.

Improve
After keen observation, the company must have any action on improving the

operation to eliminate defects.

Control
The company must maintain the improvement on reducing defects and the

standard being implemented to have an operational efficiency.

 Conclusion
The researchers have concluded the following

 Inefficient facility layout causes longer travel time which affects the
cycle time and lead time

 Lack of product quality standards that leads to defects and wastes in

production

 Inefficient Inventory Management tool

 Unable to attain its best operating level

 Overall Recommendation
We highly recommend the following course of action

• the facility must be improved to reduce longer travel time, cycle time and lead
time to improve their operational efficiency

• The application of Fixed-Order Quantity Model or Economic Order Quantity as

their inventory management tool to avoid delays and production pauses is
highly recommended to enhance production efficiency and effectivity

• The formulation of standards of quality of products using the DMAIC

Methodology or the Define, Measure, Analyze, Improve and Control
Methodology to eliminate defects and wastes