akgün seramik

1 EOQ Calculation and Optimizing the Packaging Department For Dura-Tiles

EOQ Calculation and Optimizing the Packaging Department

For Dura-Tiles

STUDENT: Yunus Emre KOCA, 12348

INTERNSHIP DATE: June 20 – August 12,2011

LOCATION: AKGÜN GRUP İÇERENKÖY HEADQUARTER –BİLECİK FACTORY

SUPERVISED BY: MR. ONUR AKMEŞE

SUBMISSION DATE: September 30,2011

Sabancı Unıversity

Faculty of Engineering and Natural Sciences

Manufacturing Systems Engineering


ABSTRACT

Dura-tiles are one of the companies from AKGÜN GROUP. The company

is involved in ceramic and porcelain. They are one of the leading companies in

the ceramic industry in Turkey. My internship was about finding a better

solution for packaging the goods produced and finding the EOQ’s for certain

products. I succeeded in completing my tasks. You may find information about

my intern and the company that I did intern at in this report.


TABLE OF CONTENTS

ABSTRACT ................................................................................................................................................ 2

INTRODUCTION ....................................................................................................................................... 4

COMPANY BACKGROUND ....................................................................................................................... 4

ORGANIZATIONAL STRUCTURE ........................................................................................................... 8

PROJECT DESCRIPTION ............................................................................................................................ 9

INTERNSHIP EXPERIENCE: OBSERVATIONS AND ANALYSIS ................................................................... 18

CONCLUSION ......................................................................................................................................... 19

RECOMMENDATIONS ............................................................................................................................ 19

REFRENCES ............................................................................................................................................ 20


INTRODUCTION

Ceramics and porcelain tiles are widely used among all places around the world.

Dura-tiles is a leading company in this business. I had a chance to spend 40 days with these

ceramic producing people and I tried to report what I have done and learned in this project.

This paper contains a company background of AKGÜN GROUP, its organization schema

among dura-tiles, my project description and analyzes and my experience about my 40 days

in Dura-tiles.

COMPANY BACKGROUND

Image 1: Early times of AKGÜN GROUP small child is the founder of the company

Akgün Group is a group of companies with 85 years of standing which is still managed

by the third generation. The establishment has been making investments on industries using

raw materials which are related to soil since the beginning of its formation and reached to

the present day predominantly developing in these fields.

Akgün Group is trying so hard to become one of the leading firms by using modern

technology to produce high quality goods and services. Consequently every company in the


Akgün Group is encouraged to use the current highest standard in their field and offer a

wide range of products and services to their customers. Based on corporate experience of

liability, Akgün Group companies act environmental conscious in the use of natural

resources and in preservation of the nature.

Starting out from its core business of Brick in 1925, Akgün Group's activities now mainly

continue through 7 companies, of which 5 are in Construction related business &

production.

Akgün’s core sectors are building products, automotive, and gasoline stations. Additionally,

the Group is active in insurance and transportation.

Main companies that form the group are Aktuğla, dura-tile roof, dura-bagno, Akgün Vitrifiye,

dura-tiles, Akgün Seramik and Akgün Ford.

Image 2: Logo’s of “Ak tuğla” and “Dura-tile roof”

Aktuğla was the starting company of the group which started producing bricks in

1925. Today it has a brand called dura-tile roof and the biggest brick and rooftile

factories of Turkey in and Eskisehir which is on a land of 70.000 m2 and has 130.000

pcs/day with these qualifications Aktuğla is the 2nd biggest rooftiles producer in

turkey .


Image 3: Logo’s of “dura-bagno” and “Akgün Vitrifiye”

Dura-bagno and Akgün Vitrifiye are operating in bathroom furniture and sanitary

ware production in 2 different factories having totally 22.000m2 closed areas. In

these facilities factories produce more than 30.000 units annually. Akgün, with

capacity of production in sanitary wares answers 12 % of needs in this sector accros

Turkey.

Image 4: Logo’s of “dura-tiles” and “Akgün Seramik”

Akgun Seramik which also covers the dura-tiles brand is producing its goods from

three main factories.

o One of them is on porcelain production and it is established in Bilecik on the

land of 540.000 sqm and having 75.000 sqm covered area. This factory is

producing 10.8 mio sqm porcelain tiles. By means of this capacity , Akgun

Seramik porcelain tile factory , whose aim is to be a World wide name among

the porcelain ceramic producers, has achieved to be a leading producer and

well-known brand in its territory.

Duratiles presents the tiles with large scale of production portfolio like 33x33 ,

45x45, 30x60, 60x60, 60x120 cm in both domestic and foreign markets, to

the appreciation of its esteemed customers. With its approach of high quality

which is appropriate to International Standarts , Akgun Seramik exports its

high quality tiles to 35 Countries .


o Second one is Gediz Ceramic Factory is the newest investment in ceramic tiles

from Akgün Group . The factory started up in 2010 on the land of 125.000

sqm under 14.000 sqm covered area in Gediz Industry Zone . Annual

production capacity is 4.5 mio sqm and it will be doubled by the end of the

year.

o The last one is the ceramic factory which is established in 2009 on the land of

150.000 sqm under the 35.000 sqm covered area in Eskişehir, with Sacmi

technologies and total production capacity of 9 mio sqm is the most modern

and youngest ceramic tile factory of Turkey and Europe.

Image 5: AKGUN GROUP CERAMIC & PORCELAIN FACTORIES

When I was told that about the companies by other workers, I could not get the reason for

the group having 2 companies producing the same product. But later I learned that Erhan

Akgün (chairman) wanted to see literally if the name of the brand is effective on customer.

And he placed a new brand called “dura-tiles” instead of “Akgün Seramik” by the way Akgün

Seramik continued producing the same products. But it was seen that with the “dura-tiles”


name number of saled products were much more higher than the “Akgün Seramik”

furthermore they could sell the same quality product for a higher price. So this brilliant idea

was shaped into a price discrimination policy. Now “Dura-tiles” is producing high quality and

higer priced goods and “Akgün Seramik” is producing standard price and normal quality

goods. With this way the company could take a bigger share from the ceramic and porcelain

industry locally. This can be considered as a social experiment and as a result we can see that

in our country there is an aspiration against import goods.

ORGANIZATIONAL STRUCTURE

Image 6: Organizational Structure


Nearly 1800 people are employed under this hierarchical structure and these people are

exporting the ceramic, tile and sanitary ware goods to 42 countries mostly in USA, Europe,

Russia and Middle East.

My department hosting my internship was the production management and planning

department in Bilecik factory and my supervisor in the factory was Onur Akmeşe. Although

my supervisor was in the Bilecik factory I was just being able to be in touch with him by

phone or by doing several trips to the factory in order to understand the situation. For the

rest of my intern I tried to subscribe in anyways I could by being present in the headquarter

of the company which is in Istanbul, İçerenköy. I was told to visit the factory for 3 times. And

during my visits my supervisor Onur Akmeşe gave adequate information about the factory.

PROJECT DESCRIPTION Dura-tiles assigned me two different projects before my intern started. These

projects are raw material and supply management of 3 different products that will be

produced next year besides I will be involved in the productivity enhancement studies which

will be done on quality discrimination department in this department products are packaged

according to their qualities and an optimization can be done on this department by

decreasing the number of workers regarding the fatigue limit and number of products that

the worker must deal with.

In my first project I needed to know the products with highest production rates. So I

looked at the annual production report that is prepared by my supervisor and I saw that the

ceramic with the “60*60 viva bej” name was the mostly produced product and in descending

order; “60*60 viva beyaz”, “40*40 grain bej”. These were the products with the highest

production rates. Clearly to achieve my objective I decided to find out what were the

individual EOQ’s of these products individually. First I obtained the formulas of these

products. A ceramic is formed up from 6 to 15 different ingredients these are different types

and quality of clay, feldspar - which is a mineral rock, kaolinite – which is a clay mineral,

binder, painting ingredient and sodium silicate – which is also known as water glass, this

component makes the ceramic more fire proof.


Every ingredient is obtained from many different dealers. In order to find the EOQ’s,

I needed the fixed cost for making an order for each ingredient, and also I needed to know

the inventory cost but the company does not worry about the inventory cost because the

staff told me that the factory had plenty of storage place and ceramic did not have to stay

under any certain weather conditions. Later I justified that expression during my first factory

visit in bilecik. I saw that even though the factory is big, it sells everything they produce so

they produce the maximum amount that they can. This is because of the energy

expenditures of the ovens that bake the ceramic. These ovens consume a lot of energy so it

is not profitable to shut down the oven, instead the oven does not stop any time and bakes

ceramic and the start up energy consumption issue is under taken which is the most energy

consumption rate of an oven.

Image 7: ” viva bej” “viva beyaz” “grain bej”

So if I come to the point I had to find a constant inventory cost. I made an

assumption from the land price that the inventory cost should be 1.8 TL. From the material

that I learned from ens 208 course the formula for EOQ is as fallows;

Q*= 2Kλ

h

For example for product “60*60 viva bej” the K202 clay ingredient coefficients to

calculate EOQ are the K (transportation cost) = 32.344 TL, λ (production rate) = 851.167 kg,

h=I*c and “I (inventory cost) = 1,8* 43,75 m3=78,75” here 43,75 m3 amount of place that the

minimum order (one truck of 35 tons = 43,74 m3 clay) occupies and last c= 0,02 tl/kg so the h

= 1,578.


Simply;

Q*= 2Kλ

h= 2∗32344∗851167

1,578 = 148 983.678 kg

This means that optimal order quantity for this ingredient

is 148 984.

The time between the placement of orders is found by Q*/λ here it is

T=Q*/λ = 148.9840/851.167 = 0.175034981 years (=2.1

months)

This means that a new order must be placed 63 days after

the previous one.

Image 8: The ingredients to be mixed

Following excel spreadsheets shows the calculations among all other three product

and their ingredients optimal order quantities and the placement time between the orders.


“60*60 Viva Bej”

RAW MATERIAL

NAME

Raw Material Cost ( TL )

Place Occupied

by the Min.

Amount of Order (m3)

I (monthly inventory

cost of min.

Order) (TL)

c (cost for 1 kg) (tl/kg)

h = I*c K

(transportation cost) (TL)

λ (amount neded

anually) (kg)

K202 CLAY 17.023,35 TL 43,75 78,75 TL

0,02 TL

1,575 32.344,36 TL 851167,3

K222 CLAY 17.023,35 TL 43,75 78,75 TL

0,02 TL

1,575 32.344,36 TL 851167,3

F330 FELDSPAR

164.785,99 TL 43,75 78,75 TL

0,02 TL

1,7325 322.081,71 TL 7490272,4

F315 FELDSPAR

54.474,71 TL 43,75 78,75 TL

0,03 TL

2,52 81.712,06 TL 1702334,6

A112 CLAY 21.279,18 TL 43,75 78,75 TL

0,03 TL

1,96875 22.130,35 TL 851167,3

C150 CLAY 42.898,83 TL 43,75 78,75 TL

0,04 TL

3,3075 36.770,43 TL 1021400,8

C102 CLAY 55.325,75 TL 750 937,50 TL

0,01 TL

12,18747343 110.651,75 TL 4255836,6

BINDER 2.028,16 TL 1 18,00 TL

0,01 TL

0,107225691 340,47 TL 340466,9

SODIUM SILICATE

34.046,69 TL 5 9,00 TL

0,25 TL

2,25 136,19 TL 136186,8

Solutions;

RAW MATERIAL

NAME Q* (kg)

T (time between

the orders) (day)

K202 CLAY 186.974,10 79,08

K222 CLAY 186.974,10 79,08

F330 FELDSPAR

1.668.822,76 80,21

F315 FELDSPAR

332.261,70 70,26

A112 CLAY 138.331,58 58,51

C150 CLAY 150.699,74 53,12

C102 CLAY 277.990,38 23,52

BINDER 46.498,67 49,2

SODIUM SILICATE

4.060,31 10,73

Table 1:

EOQ of “viva bej”


“60*60 Viva Beyaz”

RAW MATERIAL

NAME


Place Occupied

by the Min.

Amount of Order

(m3)


cost of min. Order) (TL)


h = I*c K


λ (amount neded

anually) (kg)

K201 KAOLINITE

474.777,45 43,75 54,00 0,10 5,40 123.442,14 4.747.774,48

F330 FELDSPAR

127.299,70 43,75 63,00 0,02 1,39 248.813,06 5.786.350,15

C107 CLAY 436.201,78 43,75 63,00 0,98 61,74 11.572,70 445.103,86

C150 CLAY 105.934,72 43,75 63,00 0,04 2,65 90.801,19 2.522.255,19

C102 CLAY 173590,5045 750 937,5 0,13 121,875 34718,10089 1335311,573

BINDER 26.706,23 120,00 0,18 0,60 0,11 44,51 44.510,39

SODIUM SILICATE

29.673,59 5,00 9,00 0,25 2,25 118,69 118.694,36

Solutions;

RAW MATERIAL

NAME Q* (kg)

T (time between

the orders) (day)

K201 KAOLINITE

465.902,32 35,33

F330 FELDSPAR

1.441.359,52 89,67

C107 CLAY 12.917,54 10,45

C150 CLAY 416.064,20 59,38

C102 CLAY 27582,07724 7,436128

BINDER 6.057,10 48,99

SODIUM SILICATE

3.538,78 10,73

Table 2: EOQ of “viva beyaz”


“40*40 Grain Bej”

RAW MATERIAL NAME


Place Occupied

by the Min.

Amount of Order

(m3)


cost of min.

Order) (TL)


h = I*c K


λ (amount neded

anually) (kg)

K202 CLAY 17023,3463 43,75 78,75 0,03403 2,67990029 19009,05193 500238,209

K222 CLAY 17023,3463 43,75 78,75 0,03403 2,67990029 19009,05193 500238,209

F330 FELDSPAR 164785,9922 43,75 78,75 0,037434 2,94789032 189290,1382 4402096,24

F315 FELDSPAR 54474,70817 43,75 78,75 0,054449 4,28784047 48022,86803 1000476,42

A112 CLAY 21279,18288 43,75 78,75 0,042538 3,34987536 13006,19343 500238,209

C150 CLAY 42898,83268 43,75 78,75 0,071464 5,62779061 21610,29061 600285,85

C102 CLAY 55325,75486 750 937,5 0,02212 20,7372785 65030,96713 2501191,04

BINDER 2028,155642 1 18 0,010136 0,18244709 200,0952835 200095,283

SODIUM SILICATE 34046,69261 5 9 0,425381 3,82842899 80,03811339 80038,1134

CK 31500 BROWN PAINT 9374 500 600 15,12 1512

CK 32840 PINK PAINT 3376 500 600 6,62 662

Solutions;

RAW MATERIAL NAME

Q* (kg)

T (time between

the orders) (day)

K202 CLAY 84.241,16 60,62

K222 CLAY 84.241,16 60,62

F330 FELDSPAR 751.887,90 61,49

F315 FELDSPAR 149.700,47 53,87

A112 CLAY 62.325,28 44,85

C150 CLAY 67.897,75 40,72

C102 CLAY 125.248,54 18,03

BINDER 20.949,97 37,7

SODIUM SILICATE 1.829,37 8,23

Table 3:

EOQ of “grain bej”


My second project was to prepare a plan for making the decision to buy an automatic

packaging machine to the factory or not. So I researched the packaging machines in the

terms of usage, price, capacity, maintenance costs, and electricity costs. I found a convenient

machine to the Bilecik factory machine brand is B&T and I calculated the breakeven point of

the investment that is to say when the money for purchasing the machine will turn back and

according to my calculations the machine will depreciate in 47,2 months.

Here is the table that shows the cost of manual packaging;

Figure 1: Cost of manual packaging

At the moment the packaging department has a total of 4.092,4 tl expenditure.

MANUEL

PACKAGING

LABOR

COST ( TL / MONTH )

1 PERSON 1.023,1

1 PERSON 1.023,1

2 PERSON 2.046,2

4.092,4 TL / MONTHTOTAL

QUALITY CONTROL

PACKAGING

POLİSAJ

LOADING TO THE PALETTE + TAGGING

QUALITY CONTROL

AUTOMATED PACKAGING

POLİSAJ


And with the new machine that I suggested the machine will depreciate in 47,2

months, following table shows that.

Figure 2: Cost of automated packaging

Machine will cost 181.810 tl’s to the factory so;

𝑡ℎ𝑒 𝑚𝑎𝑐ℎ𝑖𝑛𝑒 𝑤𝑖𝑙𝑙 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑒 𝑖𝑛 =181.810

7.941,9− 4.902,4= 47,2 𝑚𝑜𝑛𝑡ℎ𝑠

AUTOMATED AUTOMATED AUTOMATED AUTOMATED

PACKAGING PACKAGING PACKAGING PACKAGING

LABOR MACHINE ELECTRICITY MAINTENENCE

COST ( TL / MONTH ) DEPRECIATION ( TL / MONTH ) COST ( TL / MONTH ) COST ( TL / MONTH )

1 PERSON 1.023,1 1.010,1 2.250,4 2.635,2

1 PERSON 1.023,1

( OPERATOR )

7.941,9 TL / MONTHTOTAL


During my spare time I prepared a production flow by excel. It is as fallows;

Schema 1: Production flow of ceramic factory


INTERNSHIP EXPERIENCE: OBSERVATIONS AND ANALYSIS

This was the first time i was doing some job for real life. Although it seems a short period 2

months was a long time to do intern in such a big company. My adaptation period was painfully, for

almost 2 weeks i was like a stranger. People around me were always in a rush and no one told me

what to do i just got to work and sat down. But in time i decided to get involved in the business and I

started asking questions about ceramic; how it is made what is ingredients and slowly I saw that I

was getting involved. After some time I started doing the projects that the company assigned to me

and I saw that people are helping me to manage my task but also I saw that they are not giving the

enough information to make me do some research I think that worked for me and at the end of my

intern I saw myself as a more social person. I do not doubt if I am curious about something I just get

my answer by searching or asking.

The project made me learn ENS 208 again I saw that things you learn from courses are not so

enduring. I needed to study some ENS 208 and that made me a more convenient person to manage

my project. Also I taught some to the people around me about EOQ’s. Furthermore working for a

company has a weight you cannot just neglect the commands that are given by a senior. It actually

feels good to contribute in something.

I was not expecting to learn anything new my aim was to see if I can be a part of a company,

because it always seemed so hard to have a desk job in which I had to go to work at 8.30pm and get

released at 5.30am. Again at first it was hard to get up at 7.30 every morning but then after having a

warning for being late I tried to be more punctual. Moreover It was a great opportunity to have a real

life job experience.

Although it was a good experience, I am not planning to work in such a production making

company instead I am willing to get involved in jobs in my family company which does works in

construction industry.


CONCLUSION

During my intern I learned that intern is for making a student see how things work in

real life. I learned how things learned at school can be implemented on real life. As a

Manufacturing Systems Engineering student, I saw that nearly everything can be optimized.

In my intern shortly I managed to produce an idea for making the packaging

department more accurate and less costly. And also I did a work on EOQ’s that as it is told

me the company did never did one on anything I don’t think but maybe in the future they

might inspire from what I did and continue doing EOQ for all other products and ingredients.

To sum up it was a great opportunity to work for dura-tiles. I hope my team there

was also satisfied by me.

RECOMMENDATIONS

I recommend to other students to start looking for a company to do intern. It is also a

big chance for students to do intern that most of the companies do not want to pay

insurance to the government for a naïve person who does not know much about business

life. Instead university pays the insurance and a great opportunity arises for both companies

and students it was a great experience.


REFRENCES Pictures and Some information about company, retrieved September 2, 2011 from

http://www.duratiles.com/

http://www.duratiles.com/

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