Cost-Prediction Models for Managing Transmission Units of locally-Fabricated Palm Nut Digesters
Abstract
The cost components of the transmission unit of locally-fabricated oil palm fruit digester were studied for the economic management of our local small-scale oil mills. 5 major oil mills in Orumba South Local Government Area of Anambra State Nigeria were studied and a representative company whose operational activities and available records were most amenable to the analytical models selected. Descriptive survey was adopted for this research. The records were painstakingly collated and processed, and the costs modeled using regression methods. The purchase price, maintenance cost and scrap value were each predicted with time as exponential models with R² values of 0.9833, 0.9572 and 0.9641 respectively. The scrap value and maintenance cost were each predicted as a 2nd order polynomial function of the new unit’spurchase price; with R² values of 0.9719 and 0.9351 respectively. The accumulated annual maintenance cost was predicted as a 2nd order polynomial function of the annual digested nut output with R² values of 0.8963. The annual depreciation increased with successive units change, reflecting the dependence of depreciation on purchase price. It also decreased for each successive year of use for any particular unit. The results of the study did not corroborate the general approach of estimating machinery salvage value as 10% of the purchase price, or the practice in some quarters of budgeting 10% of the machine price for its maintenance cost. Understanding these costs dynamics will facilitate our locally-fabricated oil palm fruit digester’scompetitiveness via economic management of the transmission units.
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Introduction
Nigeria today has enormous economic problems that require the diversification of her economy (Okafor et al., 2010). Resuscitating her agricultural sector; the oil palm production sub-sector inclusive, is a welcome idea. Nigeria was the world’slargest producer of palm oil in the 1950s and 1960s (Okafor, 2007). The production lines deployed during the era of palm oil production boom in Nigeria were mostly of the traditional technique, which incurred minimal breakdown and equipment cost. Advanced technologies are needed for palm oil production today due to its increased demand; occasioned by the growing world population and recent emphasis on renewable energy.
Modern oil milling today employs, among others, palm nut digesting and mashed nut oil-expressing machines which have high wear and breakdown in their material-processing screws and power transmission units. While the digesting and oil-pressing units of these machines are fabricated locally, their power transmission units which have gear transmission systems are imported. As a result, foreign exchange is incurred in the procurement of these gear transmission units. Sound management of production machines are needed to realize the intended benefits of machinery deployment. All investments, agricultural machinery investments inclusive are engaged for profit and other attractive economic benefits (Amaefule et al., 2018a and Takeshima et al., 2020). Adequate information is required by a machinery manager to make cost-effective machinery management decisions.
Few studies on agricultural processing equipment costs and economics have been carried out in the country. Repair and maintenance costs of rice mills under different ownership systems in Southeast Nigeria were studied by Oluka and Nwani (2013). Nwajinka (2010) developed computer-assisted methods for predicting the optimal-cost size and replacement time for farm tractor in Nigeria. Amaefule et al. (2018a) developed a minimum-cost model for selecting heavy tillage machinery for combined use of farmers, and tested it with data from tillage operations in Anambra State Nigeria. A presentation of the maintenance and replacement scenario and costing encountered in the Nigerian manufacturing industry milieu was given by Bagshaw (2017).Deploying relevant cost and economic data for the management of oil palm fruit digester gear transmission units is needed for profitable oil palm milling. This study is therefore aimed at predicting the purchase, operation and maintenance costs, and the scrap values of the gear transmission units of the locally-fabricated small-scale oil palm nut digester.
Conclusion
The digester’stransmission unit was found to be in upward purchase price, energy and maintenance costs, scrap value and annual depreciation increases for successive units changes. This was considered to result from inflation and market forces. The new units price could be predicted as a function of the replacement period (x). The scrap value and maintenance cost were also predictable as functions of the new units price. Equally, the annual maintenance cost was predictable as functions of change period and price of new unit. The findings of the study could not support the evaluation of the scrap value as 10% of the machine price; suggested commonly for unknown salvage values by some researchers (Field and Solie, 2007 and Hunt and Wilson, 2015). Since the overall goal of machinery management should be profit optimization rather than mere cost minimization (Schueller, undated), the mills competitiveness will be enhanced with the proper application of these costs’ knowledge. A good understanding of these transmission unit’scosts dynamics can therefore assist in sound management of our local oil palm digesters and oil milling NOTATIONS D = depreciation charged for the the year in question, monetary value L = machine life, yr n = age of the machine, yr YD = sum – of – the years digits, yr P = price of the machine, monetary valueS = salvage value of the machine, monetary value Y = New transmission unit purchase price, monetary value RM = transmission unit repair and maintenance cost, monetary valueu = annual output, drums (equivalent to 540 kg) x = transmission unit change period, years