Food-Processing-Plant-Design-layout

Food Processing Plant Design & layout
5.1.2 Market demand
Market demand for any product is the total volume that will be bought by a defined
customer group in defined geographical area in a defined time period and in a defined
environment. It is possible that the raw material is available in abundance. One can get as
much raw material as one wish. But one can not sell all that one can produce. The demand
for the product is limited. In this case, it is the market demand, which will determine the
plant size.
5.1.3 Degree and nature of the market competition
There is no restriction on raw material availability. It is available in abundance. Also, there
is enough demand for the product in the market. However, there exist a large number of
manufacturers / processors for the product who are expected to provide stiff competition.
In this case, the plant size may be restricted to a limit governed by the share of the market,
which the entrepreneur may capture. Depending on the product, a 10 - 15% market share is
considered to be adequate. The competition may involve price or quality or timely delivery
or a combination of such features. To study the competition, the entrepreneur needs to have
a list of major competitors, details of their product range, product features, output, market
share and pricing.
5.1.4 Economic Considerations
Many times plant size is determined by the financial resources available with the
entrepreneur as also by the degree of risk the entrepreneur is prepared to take. Sometimes
it is also advisable to find the popular plant size of existing enterprises engaged in
manufacturing/processing the product of choice.
In cases where the availability of raw material, market demand and the financial resources
are not a problem, the entrepreneur may look for the size which will ensure him / her a
minimum acceptable return/profit. This size is called the minimum economically viable
plant size. However, when situation permits a plant size larger than the minimum
economically viable size, a size, which will maximize profits, is selected.
The minimum acceptable return/profit viewed in two ways. In one case larger share of the
capital investment may consist of the equity (entrepreneur's own capital) while in another
case it may consist of the borrowed capital. In case of the former, the return/profit must be
greater than the amount of interest earned if the entire capital of the entrepreneur was
invested as fixed deposit in a scheduled bank. In case of the later, the return/profit must be
greater than the interest paid on the borrowed capital.
While deciding the plant size/capacity one should also remember the following:
Specify the number of days for which the proposed plant will work in a year. In
general, it is customary to presume 300 working days. However, if the enterprise is
to handle the seasonal product, it may work for less than 300 days.
One shift consists of 8 hours. One shift working is the most popular pattern among
small enterprises. Two and three shift working is largely limited to continuous
enterprises and the medium and large-scale enterprises.
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