Production unit’s overhead cost allocation with activity-based costing in food industry enterprise

The main objective of this Master’s thesis is to develop a cost allocation model for a leading food industry company in Finland. The goal is to develop an allocation method for fixed overhead expenses produced in a specific production unit and create a plausible tracking system for product costs. The second objective is to construct an allocation model and modify the created model to be suited for other units as well. Costs, activities, drivers and appropriate allocation methods are studied. This thesis is started with literature review of existing theory of ABC, inspecting cost information and then conducting interviews with officials to get a general view of the requirements for the model to be constructed. The familiarization of the company started with becoming acquainted with the existing cost accounting methods. The main proposals for a new allocation model were revealed through interviews, which were utilized in setting targets for developing the new allocation method. As a result of this thesis, an Excel-based model is created based on the theoretical and empiric data. The new system is able to handle overhead costs in more detail improving the cost awareness, transparency in cost allocations and enhancing products’ cost structure. The improved cost awareness is received by selecting the best possible cost drivers for this situation. Also the capacity changes are taken into consideration, such as usage of practical or normal capacity instead of theoretical is suggested to apply. Also some recommendations for further development are made about capacity handling and cost collection.

Cost Reduction of Permanent Magnet Synchronous Machines

Electrical machine drives are the most electrical energy-consuming systems worldwide. The largest proportion of drives is found in industrial applications. There are, however many other applications that are also based on the use of electrical machines, because they have a relatively high efficiency, a low noise level, and do not produce local pollution. Electrical machines can be classified into several categories. One of the most commonly used electrical machine types (especially in the industry) is induction motors, also known as asynchronous machines. They have a mature production process and a robust rotor construction. However, in the world pursuing higher energy efficiency with reasonable investments not every application receives the advantage of using this type of motor drives. The main drawback of induction motors is the fact that they need slipcaused and thus loss-generating current in the rotor, and additional stator current for magnetic field production along with the torque-producing current. This can reduce the electric motor drive efficiency, especially in low-speed, low-power applications. Often, when high torque density is required together with low losses, it is desirable to apply permanent magnet technology, because in this case there is no need to use current to produce the basic excitation of the machine. This promotes the effectiveness of copper use in the stator, and further, there is no rotor current in these machines. Again, if permanent magnets with a high remanent flux density are used, the air gap flux density can be higher than in conventional induction motors. These advantages have raised the popularity of PMSMs in some challenging applications, such as hybrid electric vehicles (HEV), wind turbines, and home appliances. Usually, a correctly designed PMSM has a higher efficiency and consequently lower losses than its induction machine counterparts. Therefore, the use of these electrical machines reduces the energy consumption of the whole system to some extent, which can provide good motivation to apply permanent magnet technology to electrical machines. However, the cost of high performance rare earth permanent magnets in these machines may not be affordable in many industrial applications, because the tight competition between the manufacturers dictates the rules of low-cost and highly robust solutions, where asynchronous machines seem to be more feasible at the moment. Two main electromagnetic components of an electrical machine are the stator and the rotor. In the case of a conventional radial flux PMSM, the stator contains magnetic circuit lamination and stator winding, and the rotor consists of rotor steel (laminated or solid) and permanent magnets. The lamination itself does not significantly influence the total cost of the machine, even though it can considerably increase the construction complexity, as it requires a special assembly arrangement. However, thin metal sheet processing methods are very effective and economically feasible. Therefore, the cost of the machine is mainly affected by the stator winding and the permanent magnets. The work proposed in this doctoral dissertation comprises a description and analysis of two approaches of PMSM cost reduction: one on the rotor side and the other on the stator side. The first approach on the rotor side includes the use of low-cost and abundant ferrite magnets together with a tooth-coil winding topology and an outer rotor construction. The second approach on the stator side exploits the use of a modular stator structure instead of a monolithic one. PMSMs with the proposed structures were thoroughly analysed by finite element method based tools (FEM). It was found out that by implementing the described principles, some favourable characteristics of the machine (mainly concerning the machine size) will inevitable be compromised. However, the main target of the proposed approaches is not to compete with conventional rare earth PMSMs, but to reduce the price at which they can be implemented in industrial applications, keeping their dimensions at the same level or lower than those of a typical electrical machine used in the industry at the moment. The measurement results of the prototypes show that the main performance characteristics of these machines are at an acceptable level. It is shown that with certain specific actions it is possible to achieve a desirable efficiency level of the machine with the proposed cost reduction methods.

Cost-effective analysis of different algorithms for the diagnosis of hepatitis C virus infection

We compared the cost-benefit of two algorithms, recently proposed by the Centers for Disease Control and Prevention, USA, with the conventional one, the most appropriate for the diagnosis of hepatitis C virus (HCV) infection in the Brazilian population. Serum samples were obtained from 517 ELISA-positive or -inconclusive blood donors who had returned to Fundação Pró-Sangue/Hemocentro de São Paulo to confirm previous results. Algorithm A was based on signal-to-cut-off (s/co) ratio of ELISA anti-HCV samples that show s/co ratio ³95% concordance with immunoblot (IB) positivity. For algorithm B, reflex nucleic acid amplification testing by PCR was required for ELISA-positive or -inconclusive samples and IB for PCR-negative samples. For algorithm C, all positive or inconclusive ELISA samples were submitted to IB. We observed a similar rate of positive results with the three algorithms: 287, 287, and 285 for A, B, and C, respectively, and 283 were concordant with one another. Indeterminate results from algorithms A and C were elucidated by PCR (expanded algorithm) which detected two more positive samples. The estimated cost of algorithms A and B was US$21,299.39 and US$32,397.40, respectively, which were 43.5 and 14.0% more economic than C (US$37,673.79). The cost can vary according to the technique used. We conclude that both algorithms A and B are suitable for diagnosing HCV infection in the Brazilian population. Furthermore, algorithm A is the more practical and economical one since it requires supplemental tests for only 54% of the samples. Algorithm B provides early information about the presence of viremia.

Anthropometric midarm measurements can detect systemic fat-free mass depletion in patients with chronic obstructive pulmonary disease

Our objective was to determine whether anthropometric measurements of the midarm (MA) could identify subjects with whole body fat-free mass (FFM) depletion. Fifty-five patients (31% females; age: 64.6 ± 9.3 years) with mild/very severe chronic obstructive pulmonary disease (COPD), 18 smokers without COPD (39% females; age: 49.0 ± 7.3 years) and 23 never smoked controls (57% females; age: 48.2 ± 9.6 years) were evaluated. Spirometry, muscle strength and MA circumference were measured. MA muscle area was estimated by anthropometry and MA cross-sectional area by computerized tomography (CT) scan. Bioelectrical impedance was used as the reference method for FFM. MA circumference and MA muscle area correlated with FFM and biceps and triceps strength. Receiver operating characteristic curve analysis showed that MA circumference and MA muscle area cut-off points presented sensitivity and specificity >82% to discriminate FFM-depleted subjects. CT scan measurements did not provide improved sensitivity or specificity. For all groups, there was no significant statistical difference between MA muscle area [35.2 (29.3-45.0) cm²] and MA cross-sectional area values [36.4 (28.5-43.3) cm²] and the linear correlation coefficient between tests was r = 0.77 (P < 0.001). However, Bland-Altman plots revealed wide 95% limits of agreement (-14.7 to 15.0 cm²) between anthropometric and CT scan measurements. Anthropometric MA measurements may provide useful information for identifying subjects with whole body FFM depletion. This is a low-cost technique and can be used in a wider patient population to identify those likely to benefit from a complete body composition evaluation.

SEPARATION OF SATURED AND UNSATURATED FATTY ACIDS FROM PALM FATTY ACIDS DISTILLATES IN CONTINUOUS MULTISTAGE COUNTERCURRENT COLUMNS WITH SUPERCRITICAL CARBON DIOXIDE AS SOLVENT: A PROCESS DESIGN METHODOLOGY

In this work the separation of multicomponent mixtures in counter-current columns with supercritical carbon dioxide has been investigated using a process design methodology. First the separation task must be defined, then phase equilibria experiments are carried out, and the data obtained are correlated with thermodynamic models or empirical functions. Mutual solubilities, Ki-values, and separation factors aij are determined. Based on this data possible operating conditions for further extraction experiments can be determined. Separation analysis using graphical methods are performed to optimize the process parameters. Hydrodynamic experiments are carried out to determine the flow capacity diagram. Extraction experiments in laboratory scale are planned and carried out in order to determine HETP values, to validate the simulation results, and to provide new materials for additional phase equilibria experiments, needed to determine the dependence of separation factors on concetration. Numerical simulation of the separation process and auxiliary systems is carried out to optimize the number of stages, solvent-to-feed ratio, product purity, yield, and energy consumption. Scale-up and cost analysis close the process design. The separation of palmitic acid and (oleic+linoleic) acids from PFAD-Palm Fatty Acids Distillates was used as a case study.

Improving Cost-Efficiency and Reducing Environmental Impacts of Intermodal Transportation with Dry Port Concept – Major Rail Transport Corridor in Baltic Sea Region

Transportation plays a major role in the gross domestic product of various nations. There are, however, many obstacles hindering the transportation sector. Cost-efficiency along with proper delivery times, high frequency and reliability are not a straightforward task. Furthermore, environmental friendliness has increased the importance of the whole transportation sector. This development will change roles inside the transportation sector. Even now, but especially in the future, decisions regarding the transportation sector will be partly based on emission levels and other externalities originating from transportation in addition to pure transportation costs. There are different factors, which could have an impact on the transportation sector. IMO’s sulphur regulation is estimated to increase the costs of short sea shipping in the Baltic Sea. Price development of energy could change the roles of different transport modes. Higher awareness of the environmental impacts originating from transportation could also have an impact on the price level of more polluting transport modes. According to earlier research, increased inland transportation, modal shift and slowsteaming can be possible results of these changes in the transportation sector. Possible changes in the transportation sector and ways to settle potential obstacles are studied in this dissertation. Furthermore, means to improve cost-efficiency and to decrease environmental impacts originating from transportation are researched. Hypothetical Finnish dry port network and Rail Baltica transport corridor are studied in this dissertation. Benefits and disadvantages are studied with different methodologies. These include gravitational models, which were optimized with linear integer programming, discrete-event and system dynamics simulation, an interview study and a case study. Geographical focus is on the Baltic Sea Region, but the results can be adapted to other geographical locations with discretion. Results indicate that the dry port concept has benefits, but optimization regarding the location and the amount of dry ports plays an important role. In addition, the utilization of dry ports for freight transportation should be carefully operated, since only a certain amount of total freight volume can be cost-efficiently transported through dry ports. If dry ports are created and located without proper planning, they could actually increase transportation costs and delivery times of the whole transportation system. With an optimized dry port network, transportation costs can be lowered in Finland with three to five dry ports. Environmental impacts can be lowered with up to nine dry ports. If more dry ports are added to the system, the benefits become very minor, i.e. payback time of investments becomes extremely long. Furthermore, dry port network could support major transport corridors such as Rail Baltica. Based on an analysis of statistics and interview study, there could be enough freight volume available for Rail Baltica, especially, if North-West Russia is part of the Northern end of the corridor. Transit traffic to and from Russia (especially through the Baltic States) plays a large role. It could be possible to increase transit traffic through Finland by connecting the potential Finnish dry port network and the studied transport corridor. Additionally, sulphur emission regulation is assumed to increase the attractiveness of Rail Baltica in the year 2015. Part of the transit traffic could be rerouted along Rail Baltica instead of the Baltic Sea, since the price level of sea transport could increase due to the sulphur regulation. Both, the hypothetical Finnish dry port network and Rail Baltica transport corridor could benefit each other. The dry port network could gain more market share from Russia, but also from Central Europe, which is the other end of Rail Baltica. In addition, further Eastern countries could also be connected to achieve higher potential freight volume by rail.

The transforming network of a foreign company operating in Mongolia. Case: A Finnish firm in Mongolia

In the globalising business environment ever fewer market areas remain unknown. Mongolia is yet only considered as an isolated strip between two power states. The purpose of this study is to put Mongolia on the map of academic business research. This is done by describing the transforming network of a foreign company operating in Mongolia. The objective of the study is approached through a case study, which presents the transformation of a Finnish company operating in Mongolia. This study aims at providing understanding on how the foreign case company observes the transformations of its network. The transformation within the case company is reflected to the transformations that occur in the Mongolian business environment. This study was conducted through a qualitative, intrinsic case study approach. The empirical data was gathered by using the method of network pictures. The network pictures were completed with the assistance of themed interviews. In order to be able to analyse the transformation within a network, three different time periods were observed: the past period around 2000, the present around 2014, and the estimated future around 2020. The data was collected from four executives positioned either in Finland, Russia or Mongolia. The respondents have a long experience within the case company, they hold managerial position, and therefore were able to offer valuable data for this study. The analytical framework used to analyse the collected data was built on the industrial network model, the ARA (actors-resources-activities)-model. The study shows that the changing business environment of Mongolia was utilised by the case company. In order to better meet the transforming customer wishes, the case company transformed from being a retailer to being a manufacturer. The case company was able to become a pioneer in the market. Thus, the case company has undergone similar kind of rapid transformation as the economy of Mongolia in entirety. This study shows that the general nature of the ARA-model makes it usable for new research contexts. The initial ARA-model offers a way to identify the dimensions of a network and a mean to understand these dimensions. The ARA-model can be applied to different contexts and to all time dimensions, past, present and future. The managerial recommendations offered in this study are directed towards the managers that plan to start operations in Mongolia. While this study is the first of its kind, it offers a good starting point for the future research on the change of Mongolian business networks. Valuable information could, for example, be obtained from a comparative study between the case company of this study and a multinational mining company operating in Mongolia.

Influence of spray drying operating conditions on microencapsulated rosemary essential oil properties

Spray drying is an important method used by the food industry in the production of microencapsulated flavors to improve handling and dispersion properties. The objective of this study was to evaluate the influence of the process conditions on the properties of rosemary essential oil microencapsulated by spray drying using gum Arabic as encapsulant. The effects of the wall material concentration (10-30%), inlet air temperature (135-195 ºC), and feed flow rate (0.5-1.0 L.h-1) on the moisture content, hygroscopicity, wettability, solubility, bulk and tapped densities, particle density, flowability, and cohesiveness were evaluated using a 2³ central composite rotational experimental design. Moisture content, hygroscopicity and wettability were significantly affected by the three factors analyzed. Bulk density was positively influenced by the wall material concentration and negatively by the inlet air temperature. Particle density was influenced by the wall material concentration and the inlet air temperature variables, both in a negative manner. As for the solubility, tapped density, flowability, and cohesiveness, the models did not fit the data well. The results indicated that moderate wall material concentration (24%), low inlet air temperature (135 ºC), and moderate feed flow rate (0.7 L.h-1) are the best spray drying conditions.

Logistics Cost Optimization of Road Freight Shipments in a Consumer Goods Company

In the industry of the case company, transportation and warehousing costs account for more than 10% of the total cost which is more than on average. A Finnish company has an understanding that by sending larger shipments in parcels, they could save tens of thousands of euros annually in freight costs in Finland’s domestic shipments. To achieve these savings and optimize total logistics cost, company’s interest is to find out which is the cost efficient way of shipping road shipments of certain volumes; in parcel boxes or on pallets, and what should be the split volume determining the shipment type. Distribution center (DC) costs affect this decision and therefore they need to be also evaluated to determine the total logistics cost savings. Main results were achieved by executing activity-based costing-calculations including DC and road freight costs to determine the ideal split volume with which the total logistics cost is optimal. Calculations were done for Finland’s DC, separately for two main road freight destinations, Finland and Sweden, which cover 50% of road shipment spend. Data for calculations was collected both manually and automatically from various internal and external sources, such as the company ERP system and logistics service providers’ (LSP) reporting. DC processes were studied in practice and compared to model processes. Currently used freight rates were compared to existing pricing models and freight service tendering process was evaluated by participating in the process and comparing it to the models based on literature. The results show that the potential savings are not as significant as the company hoped for, mainly because of packing work increasing DC labor cost. Annual savings by setting ideal split volume per country would account for 0,4 % of the warehousing and transportation costs of shipments in scope of this thesis. Split volume should be set separately for each route, mainly because the pricing model for road freight is different in each country. For some routes bigger parcels should be sent but for some routes pallets should be used more. Next step is to do these calculations for remaining routes to determine total savings potential. Other findings show that the processes in the DC are designed well and the company could achieve savings by executing tenders more efficiently. Company should also pay more attention to parcel pricing and packing the shipments accordingly.