Sensitivity analysis result based on order period.... Our team decided to come up with the idea of applying 3D printing technology to design and manufacture parts for sewing machines in
Trang 1OPTIONS: A CASE STUDY OF A TEXTILE MANUFACTURING PLANT
Assoc Prof., Dr Le Ngoc Quynh Lam Instructors Dr Le Thi Diem Chau
Dr Tran Quynh Le SEMESTER 231
Tran Son Nam (team leader) 2154015
HO CHI MINH CITY - 2023
Trang 2Quynh Le, our Engineering Economy lecturers, for imprating us a wealth of beneficial knowledge
that will help in the future career as well as guiding us a lot through the final assignment report
We have learned a lot from this experience and hope that our findings will contribute to the development of 3D printing investment in Vietnam
In addition, we would like to acknowledge the use of Grammarly, an online writing assistant,
to help us correct the grammar We also utilized the Al system ChatGPT 4.0 to research for more information and consult its ideas on our topic We guarantee that we did not copy any content from
these sources, but only used them as references to improve the quality of our final report
We have strived our best to fulfill all the requirements and objectives of this project However, we cannot avoid all the mistakes in our content and presentation We hope to receive feedback from our lecturer so that we can improve our performance in the future
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TABLE OF CONTENTS
| GENERAL INTRODUCTION HH HH HH HH HH 1
Il PRO.JECT INTRODUCTION SH n ST TH TH TH TH HH KH KH KH HH TH 2
II DEVELOPMENTS OF ALTERNATIVES SH HH HH Hà Hà Hit 5
“ha an 5
“Anh 00 nh eẽ 5
3.1.2 Operational COSÌ - - nh TH TH HH KT KH tệp 8 SA s0 eo 9
3.1.4 Alternative 1 COSt SUMMATY eee 9
3.2 AILErM ative 2 oo 10
3.2.1 Capital INVESTMENT ooo ee - -c HH TH ki HH KH KH kh 10 S2 209000000 na 11
E0 g9 009000062900 e 12
E2 Na 2000006000 ôn ố ec ee 13
3.3 Alternative sô 14
E000 14
3.3.2 PUPChASING COST ee 14
3.3.3 Alternative 3 COSt SUMMALY © ec 14
IV ANALYSIS OF ALTERNATIVES - LH HH HH 16 1A 9i 16
4.2 Rate of Return analysis for each alternafiVe HH nh kh 16 4.2.1 Rate of Return analysis for alternative †1 (AT) ch khe ky 17 4.2.2 Rate of Return analysis for alternative 2 (A2) ng kh ki, 17 4.2.3 Rate of Return analysis for alternative 3 (A3) ch ky 18 4.3 Rate of Return analysis with incremental cash flow L ST SH 18 CS -I0) 1) 2-0.-0,aadđaadadaadaiiẢẢ 19 4.4.1 Sensitivity analysis based on product quantity 0 chen e 19 4.4.2 Sensitivity analysis based on order periOd cung nghe 21
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4.5 AHP approach considering economic, social and environmertal factors 23
G9 99000200 e 24
Tin nh 26
=0 1 27
5.1 Selection nsbi ng an ae e 27
152009020 209 27
b9) 20) 2000210203 e 28
VI CONCLUSION =4 “ 30
REFERENCES 6-4314 31
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LIST OF FIGURES
Figure 1 Sewing machine guide attachmei - - LH ng kh ky 2 Figure 2 Sewing machine guide attachmernt in U5@ - - che 3 Figure 3 Anycubic Kobra 2 3D printer 00.0 eee ee reer Tnhh 5 Figure 4 Versatile - Brass Filled PLA filament «0000000 ee eee reer rete k kh 7 Figure 5 PLA 3D Printing Filament «2.0.00 eee eee tear ee tear rere eee ena aee setae aae eee eeaaeeeteaaeees 8
Figure 6 Alternative 1 cash flOW an 10
Figure 7 Alternative 2 cash flOW 0 eee ee reer 14
Figure 8 Alternative 3 cash flOW 0 15
Figure 9 Sensitivity analysis graph based on product quanify nen re 21 Figure 10 Sensitivity analysis graph based on order period - chinh re 22 LIST OF TABLES Table 1 Alternative co 6i e 9
IE)9-2212/00909000ì 9 9h 12
IE)9 61242 2226000 13
IE)9 1á co 600i 15
Table 5 Summary of cash flow for alternafiV€ Í -. chen ke 17 Table 6 Summary of cash flow for alternative 2 cccccccccccceeeeneeeeeeeeeeeeeneeeeseseeeeseseeeetsnneees 17 Table 7 Summary of cash flow for alternatiVe 3 LH TH TH KT kg ke 18 Table 8 Incremental Cash Flow TabulatiOr - - ch ng ky 18 Table 9 Sensitivity analysis result based on product quantily chen 20 Table 10 Sensitivity analysis result based on order period nhe 22 Table 11 AHP pairwise matrix ÍOr Crit@fÏa LH SH HH kk kế 25 Table 12 AHP pairwise matrix for economic WeiQïI eee ee reer renter tea teeta 25 Table 13 AHP pairwise matrix for environmernit weiQhi - <1 1n khe 25 Table 14, AHP pairwise matrix for social weigQhI - <1 + SH kkh 25 I9 bo Ni nh 26 Table 16 SWOT †abl@ HH KH KH KT KH KH tệp 28
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Engineering economy has become an imperative part of people’s lives especially those working in the fields of engineering nowadays Knowledge of this subject can help people to learn and have a wide view of engineering economics, which is considered essential for the success of
any project Learners will understand how the money works in different situations and
circumstances such as companies, organizations, individuals or even governments Also, the ability to deal with important factors like the time value of money, inflation, economic facts, tax considerations, cost estimation together with calculation and project insights will be enhanced to
a new level As a result, it is necessary to apply knowledge from this field to conduct a study that
is useful to improve human life Our team decided to come up with the idea of applying 3D printing technology to design and manufacture parts for sewing machines in the factory
As a matter of fact, the explosion of technology in a new digital era sheds light on the reason that led to the decision to pursue a project related to designing and making parts for the garment industry with 3D printing technology This project also provides solutions with a high application potential which can optimize the current manufacturing process and drive to more effective outcomes Furthermore, this type of technology will supply customized parts for sewing machines with higher precision and speed compared to manual work, which will evident a strong upgrade
of the factory in terms of production and revenue Ultimately, there are a wide range of alternatives
to take into account for selecting the most suitable innovation plan for the textile industry Regarding the project’s objectives, there are many goals that need to be achieved First of
all, it is a must to have a comprehensive understanding of engineering economy since it brings
huge advantages to engineers Secondly, get to know better about the new aspects of the manufacturing industry as it has been experiencing skyrocketing development throughout the years Thirdly, considering strengths and weaknesses among alternatives helps people prosper in their critical thinking Last but not least, the ability to apply to solve practical problems, particularly the problem of choosing the best investment plan for the garment factory to boost productivity
Due to the limited understanding about the garment industry, our project is conducted based
on several assumptions and unpublished information from the case of Elite Long Thanh factory Hence, there may be some statistics taken from various sources, which may lead to inconsistent result However, this limit will not significantly affect the objectives of the project
The upcoming parts of the report are arranged as follows: Section 2 will introduce the project, including the problem statement; Section 3 will present the development of alternatives;
Section 4 will analyze and economically evaluate the alternatives; Section 5 will discuss other factors and conclude the final decision; Section 6 will summarize the projects, including recommendations, discussions, and post-evaluations
1
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FINAL PROJECT - ENGINEERING ECONOMY ¢3
Il PROJECT INTRODUCTION The development of technology brings along many innovations and applications in many industries, which is an answer to the increasingly complicated demands of customers The garment industry in Vietnam also needs improvements to catch up Reverse bidding, a familiar term in this industry, is when a fashion company wants to order a product batch, and many garment manufacturers will submit their bid to take the order Therefore, the factories will try to take advantage of offering the lowest manufacturing cost while guaranteeing the quality standard of the product and the lead time of the order To achieve this, the manufacturer will have to improve their productivity and minimize the cost of production Since the making of clothes relies significantly
on the sewing line, managers are concerned about solutions to reduce the processing time of
workstations by applying line balancing On the other hand, there is another method that is using
the supporting mold for sewing machines for less processing time Moreover, this supporting part can enhance the accuracy of stitches in the products, which is to meet the requirements of complex clothing design of customers
Figure 1 Sewing machine guide attachment
On the field trip to Elite Long Thanh, our team had the chance to learn about the use of the supporting mold for their sewing machine They have successfully invested and operated 3D printing machines to self-produce this tool for their sewing lines For each production order by
their customers, the planning team will design the mold shape that is suitable and apply them into
the sewing line The reasons for this customization are:
e To access specific products with high processing complexity
e The ability to flexibly change the layout of sewing lines to adapt to different samples in each quarter or each order batch
e Increase production productivity, reduce redundant operations of workers On the other hand, avoid bottlenecks in the product rotation process
e Create a comfortable and ergonomic working space, reducing accidents when working
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Figure 2 Sewing machine guide attachment in use
Elite Long Thanh claims that, after applying this 3D production into their factory, their productivity has improved and they have more advantage in the reverse bidding phase among their competitors due to the ability to process a wide range of complex products Many other modern factories in the garment industry have adopted the supporting molding and received positive outcomes
However, unlike Elite Long Thanh, the sourcing of this supporting part is still a barrier for other factories in the same industry While Elite has their own additive production, many other manufacturers have to buy this product from China This is because the supporting mold for sewing machines is new and not yet popular in Vietnam Hence, the procurement process causes a lot of effort, time and money, in the cases of smaller companies who want to apply this tool In this project, our group will assess the two possible alternatives for this problem, which are investing in self-production and outsourcing production of the supporting mold The economic factor is our main focus to compare between the two options However, other sustainability criteria such as environmental and social factors are also considered in order to choose the best solution for the situation
There are several assumptions in order to conduct the project, regarding the production and life cycle of the product Our assumption is made based on the information given by Elite Long Thanh’s Head of Production, hence, our average approximation is close to reality However, we will not account for sudden changes in production demand Here are our assumptions:
e The new supporting parts 3-5 times a year, which is approximately once a quarter
e There are 150 sewing machines in use, which require 150 supporting parts each quarter
« The size of the mold depends on the design, but it is approximately smaller than an A4 paper, so we assume the size of the mold is 15x20x2 cm
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Because the actual structure of the business is very large, in addition to the fact that the business does not allow the use of too precise data, team members have reduced the scale of the project as well as the revenue of the business and mistakenly calculated it accounting as well as keeping the confidentiality of corporate information The company's annual revenue will be at
$193,000 According to a company employee, the 3D printing project has improved the company's revenue by 3-5% From there we determine that every year, the project brings $5,790, approximately 141,000,000 VND in revenue to the company The MARR is believed to be around 20% based on the risk and Inflation and Time Value of Money
=> These data will be used as statistics for calculations of the cost and develop the cash flow for the alternatives in the following section Except for those assumptions, all data is based on trustworthy sources on the internet, research and financial reports
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Ill DEVELOPMENTS OF ALTERNATIVES
In order to successfully bring this plan into operation, there are 3 alternatives that need to be taken
into consideration For alternative 1, we will invest in infrastructure, specifically investment in 3D printing with the number of workers and printers for self-production Alternative 2 is a plan about outsourcing, we will hire third-party services to call for orders and get the desired supporting parts
3.1 Alternative 1
Alternative 1 takes economic feasibility into analysis and calculation for the manufacturer
in the garment industry with the aim of boosting productivity via investing in 3D printing machines, employees, materials, utilities, etc to be proactive in producing supporting molds This analysis consists of many types of costs, varying from the initial investment, operational costs, and potential salvage value over a five-year operating period
3.1.1 Initial investment
3.1.1.1 Machine cost and software price
The initial investment comprises the cost for purchasing an Anycubic Kobra 2 3D printer,
which was chosen after conducting some analysis
ANTCURIC
Figure 3 Anycubic Kobra 2 3D printer
The 3D printing machine cost is 7,000,000 VND So as to determine the number of machines
we should order, we will first calculate the time for printing 1 support part Based on the specification of the part and the machine:
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- Layer height (1)
- Machine’s nozzle width (N) = 0.4 mm
The time required to print one support part using the following formula:
T = time to build a row x number of layers x number of rows
125
Treal =D x 20% ~ 2.08 hours
Assume that the daily working time at the company is 8 hours, to print 150 support parts
we will need a total of working days:
6 days a week, we have 72 working days per quarter Therefore, ordering one 3D printing machine
is sufficient to meet our demand
Additionally, it unnecessarily accounts for the price of the accompanying software and CAD Design since the software is available for free usage on their website and the CAD Design can be utilized by using a 15-day trial to design parts
3.1.1.2 Material costs
Besides the technological costs, material costs are the next criteria that need to be considered for the initial investment There are 2 different types of materials that are suitable for manufacturers They come with 2 different solutions to choose the right one
Solution 1: The material used is Versatile - Brass Filled PLA filament, which is designed
to print like plastic but finish like real metal and has a density of about 0.0023 kg/cm’
We will calculate the theoretical volume for 150 support parts:
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Viota =| xwxhxn=15 x 20x 2 x 150 = 90,000 cm?
where:
e lis the length of the material
e wis the width of the material
e his the height of the material
e« nis the number of parts of the material
We then multiply by the infill density of 20% to get the actual total volume:
Vieal = 90,000 x 0.2 = 18,000 cm?
We then calculate the total weight for the amount of material used:
Weight = Vreal x d = 18,000 x 0.0023 = 41.4 kg where: d is the density of the material
Having the cost of 500g material account for 49.99$ (about 1,218,756.20 VND), we will obtain the final cost for the material of 150 parts each 3 months:
3-month cost = Weight x ""'8 41.4 xˆ# 5#” _ 100,913,018 VND
Finally, the total money for ordering material in 5 years:
Total cost = 100,913,013 x 4 x 5 = 2,018,260,260 VND
Figure 4 Versatile - Brass Filled PLA filament
Solution 2: The material used is Ender 1.75mm PLA 3D Printing Filament, which has a density of about 0.00125 kg/cms3
Similar to the above part, the actual total volume Viea = 18,000 cmŠ
We then calculate the total weight for the amount of material used:
Weight = Vreal x d = 18,000 x 0.00125 = 22.5 kg
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Finally, we will obtain the final cost for the material of 150 parts:
3-month cost = Weight x 230,000 ~ 5,175,000 VND The total money for ordering material in 5 years:
Maintenance cost = 1,000,000 x 4 = 4,000,000 VND/year
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machines The estimated salary to pay for this employee will be around 7,000,000 VND/month, which means:
Salary = 7,000,000 x 12 = 84,000,000 VND/year 3.1.3 Salvage value
After a five-year period, the 3D printing machines will still be worth something even though they have been used for a long period of time, this is called the salvage value The minimum depreciation period for a 3d printer is 7 years, we can calculate the salvage value for the 3d printer after 5 years:
100%
Z.000,000[1-C— x 5)] = 2,000,000 VND at year 5 3.1.4 Alternative 1 cost summary
In summary, types of costs are listed as follows:
Table 1 Alternative 1 cost summary
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To kick off an outsourcing plan, businesses must consider choosing a contractor as well as the costs involved in creating a new purchasing department Based on the down-scaled project
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model, the initial cost for this alternative proposed by employees in the referenced business is determined to be:
Design cost = 300,000 x 17 x 4 = 20,400,000 VND/year
150/500 = 0.3 seconds
Then, calculate the number of layers: divide the object's height (H) by the layer height (L) Assuming a layer height of 0.2mm, the number of layers is:
20 + 0.2 = 100 layers Next up, calculate the number of rows: divide the length of the object (L) by the width of the
nozzle (N) The nozzle width is 0.4mm, so the number of rows is:
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150 x 4.16 x 28000 = 17,472,000 VND per quarter
The manufacturing cost for one year is:
16875000 x 4 = 69,888,000 VND per year Table 2 Printing pricing table
In this way, the production process will reduce downtime and the support part can effectively promote its features
The bonus salary paid for this employee is 9,000,000 VND per month However, the garment
industry only orders 4 times a year, thus, this employee only gets the bonus 4 times per year The quality control cost:
9,000,000 x 4 = 36,000,000 VND/year 3.2.3.2 Transportation
After the quality check, if the product batch matches the design and requirements of the garment factory, a tricycle will transport them to the site Therefore, the transportation cost occurs
From the 3D printing manufacturer (located in HCM city) to the garment factory (Long Thanh,
Dong Nai), the trip is around 60 km Hence, the cost of transportation for an order is:
300,000 x 6 = 1,800,000 VND Then, the total transportation cost for a year is:
1,800,000 x 4 = 7,200,000 VND/year
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3.2.4 Alternative 2 cost summary
Table 3 Alternative 2 cost summary