UNIVERSITI TEKNIKAL MALAYSIA MELAKA

MANUFACTURING SYSTEM

BMFG 2113 SEMESTER III SESSION 2022/2023

Individual Group Assignment (10%)

DATE OF SUBMISSION
10 NOVEMBER 2022
PROGRAM
1 BTEC SECTION 2
STUDENTS NAME &
MATRIX NUMBER
TAN JIN YEE B062110301

NAME OF LECTURER
DR RAJA IZAMSHAH BIN RAJA ABDULLAH

LECTURER SIGN &

STAMP DATE:

TOTAL MARKS:
Manufacturing production refers to the methodology of how to most efficiently manufacture
and produce goods for sale, beyond just a bill of materials. Three common types of
manufacturing production processes are: make to stock (MTS), make to order (MTO), and
make to assemble (MTA). Such strategies have advantages and disadvantages in labor costs,
inventory control, overhead, customization, and the speed of production and filling orders.

Q: You plan to start up a business (pick your own), based on the three common types of
manufacturing production processes which one do you think is more suitable for your
business? Justify your answer.

Your answer MUST includes

i. Introduction on your business

ii. Market size
iii. Types of manufacturing production processes
iv. Advantages and disadvantages in term of labor costs, inventory control, overhead,
customization, and the speed of production and filling orders

1.0 INTRODUCTION

1.1 Business details

Business Name
Serendipity Cosmetics
Owner Tan Jin Yee
Address 3, Jalan Bahagaia, Taman Utama Sekinchan,45400,
Sekinchan, Selangor
Contact Detail 018-3107506

The idea behind my company, and specifically the product, is to create lip tints that are as
chemical-free or as natural-looking as possible. Beeswax, coconut oil, honey, natural food
colouring, and flavouring will all be used in the production of the goods to give them a glossy
appearance.Not only will I produce a product that assures clients that it has only natural
components, but I'll also make sure that it offers the balms a hint of taste or aroma and a tiny
bit of tint that teens will adore, ensuring that their lips are safe, healed, and healthy after using
them.
1.2 Vision
The business wants to have a top-notch, well-recognized brand with an organic product. It
intends to allow the income to increase over time. The company's next endeavour or
objective, as the years go by and it expands, is to make other cosmetics in addition to lip tints.
Since it is the team's duty to make cosmetics with little to no chemicals, the following goods
will also be organic.
1.3 Mission
The goal of the business is to offer high-quality products for general hygiene needs that will
reward the workforce with profits. It seeks to create cosmetics with a high degree of safety
assurance. It attempts to provide the high-quality services the customers deserve. Moreover,
it can ensure the customers’ health and skin while providing proper care to them at the same
time.
1.4 Introduction
Serendipity Cosmetics will be producing a handmade and tinted lip balm that contains natural
ingredients. In just a swipe, the teens will fall in love with the product. The product will
contain these ingredients:
In addition to developing an organic lip balm, the company wants to make other organic
goods as it develops and as soon as sales and customers rise. Lip balm's main function is to
create an occlusive coating on the surface of the lips, sealing in moisture and shielding them
from the elements. The purpose of the company is to achieve these qualities that a lip balm
should have as dry air, low temperatures, and wind all have a drying effect on skin by
sucking moisture away from the body.
With little to no chemicals, Serendipity Cosmetics will create high-quality cosmetics that will
assist teenagers moisturise their lips rather than harming them. Serendipity Cosmetics is
designed to be a less expensive alternative to other lip balms of comparable or higher quality,
providing teens with not only beauty but also the quality and attention they deserve. Our
company is distinctive in that we don't overuse chemicals that could harm customers' lips. It
promises that it won't harm the consumers' lips; rather, it will nourish them. What manner?
Natural components that are beneficial for treating the skin on the lips will be used to make
lip balms. There won't be many, if any, chemicals in the products. Depending on the
preferences of the customers, I may also offer a customised lip balm, in which case they can
select the colour and scent of the product as well as its preferred colour. Products will be
manufactured by hand, yet in a clean environment. To ensure that I can always rely on them
and that we are comfortable with their supplies, I will either purchase all of the ingredients
from a well-known source or from suppliers that are acquainted with me. The responsibilities
involved in launching this business include buying the ingredients, locating suppliers of
resources and supplies, producing the lip tints and packaging them, and finally visiting
schools or bazaars to sell the items.
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2.0 MAKRET SIZE

This company will be placing or marketing our products on where there are more teenagers
who loves to purchase cosmetics just like malls (may be high-end). The company will be
selling the tints in universities of any schools that conducts student bazaars. I may also sell
them whenever there will be a make-up conventions or bazaars. As the income rows, I may
rent places or stands somewhere where there are many students. The products are also open
for commission, just in case people decided to sell my products.
 Market size = Potential figure (%) x Number of populations
Total market size = 20% x 50
= 10

Market Segment Population Target Market (%) Target Market

Teenagers 30 37.5 20
Adults 50 62.5 30

Market Segment Target Market Potential Purchase Total Potential

Purchase (monthly)
Teenagers 20 10/day (RM 10 x 30 days) x
20 = 6,000
Adults 30 200/week (RM 200 x 4 weeks)
x 30 = 24,000
TOTAL 30,000

Market size per year = RM 30,000

Target Customers
Demographics
Since the quantity of customers has a significant impact on a business, Serendipity Cosmetics
will locate or situate the company in areas with a high concentration of female students.
Psychographics
There are a lot of students who are willing to pay a particular amount of money for a beauty
item as long as the cost is still within their budget. As a Malaysian businessperson, I must be
able to persuade customers to buy and receive the quality they desire by appealing to their
behaviour and perceptions of low prices. Customers of the business would primarily be
teenagers looking for inexpensive cosmetics that would fit inside their allowance or budget
and still leave them with extra cash. The company's lip products will be suitable for adults
looking for economical cosmetics that would fit with their budget or allowance and yet have
extra money available, as well as for teenagers and students. The lip care products are
excellent for adults as well as teenagers and students who want to add a little colour and
sparkle to their lips or who just want to take good care of them.
Value of Product to Customers
In today's time, cosmetics like lip balms, lip tints, lip sticks, or any other type of skin care are
popular because they not only add colour to teenagers' skin but also boost their confidence if
they have low self-esteem. There aren't many ingredients in the goods that could harm
consumers' lips. It promises that it won't harm the consumers' lips; rather, it will nourish
them. What manner? Natural components that are beneficial for treating the skin on the lips
will be used to make lip balms. There won't be many, if any, chemicals in the products. The
business may also provide customised lip balms, allowing clients to select the colour and
scent they want for their lip balms or opt out entirely, depending on their preferences.
Stand of Business in The Market
The goal of Serendipity Cosmetics' business is to establish itself as a household name while
maintaining its independence. Its stance is to provide hygienic, natural, and risk-free
cosmetics with minimal to no chemical ingredients.

3.0 TYPES OF MANUFACTURING PRODUCTION PROCESSES

First of all, a factory that manufactures products for retailers and showrooms to keep on hand
is known as a "make-to-stock" (MTS) system. This implies that a market for the products
must be anticipated in order to make them in advance and have them available for purchase.
To decide how much stock to manufacture, this strategy needs a precise forecast of this
demand. A conventional manufacturing technique called "make-to-stock" aims to match
inventory with anticipated consumer demand. This means that if an estimate was off, a
company would end up with too much or not enough inventory, which would be bad for
business.
Secondly, in contrast to the make-to-stock method, make-to-assemble (MTA) has a factory
generate component parts in advance of orders for assembly. This indicates that the
manufacturer is prepared to fill client orders as they come in, but if there is no demand, the
company may decide to keep a stock of extra parts. By only spending time assembling things
when a paying order is in hand, this technique lowers labour costs while enabling
manufacturers to swiftly and readily personalise products.
Lastly, the make-to-order (MTO) approach. Using this technique, the manufacturer is able to
delay starting manufacturing until after receiving orders. Managing inventory and responding
to market demand are made more simpler as a result. Customers can use this technique to buy
products that are tailored to their needs. The typical make-to-stock strategy's issues with
excess inventory are alleviated by the make-to-order approach. The producer will need a
regular flow of orders to keep the facility in operation and profitable, but customers will have
to wait for their products to be manufactured.
Serendipity Cosmetics is applying Make-To-Stock (MTS) system.
Make to stock (MTS) is a conventional production method that companies employ to match
inventory to expected consumer demand. Serendipity’s cosmetics employing MTS would
determine how many lip tints orders could be manufactured, supply enough stock to match
those orders, as opposed to setting a production level and then trying to sell products.
The MTS system runs on prospective and possible forecasting of the demand for the lip tint
product. An accurate demand forecast results in effective production and the reduction of
unnecessary expenses. This approach aids a business in anticipating and embracing any rise
or fall in demand. Forecasts of market demands for the future are made by analysis of
historical data. The determination of a safety stock level is a crucial component of an MTS
strategy. Planning usually tries to keep inventory above the safety stock level in order to
protect against volatility. The safety stock is a certain amount of stock.
Using MTS system, Serendipity Cosmetics will be producing a handmade and tinted lip balm
that contains natural ingredients. In just a swipe, the teens will fall in love with the product.
The product will contain these ingredients:
The key component in a lip balm is:
-Beeswax, which not only hardens and maintains the product's structure but also promotes
the healing of teens' chapped lips.
-Coconut oil. Due to its antibacterial properties, the coconut oil keeps bacteria and other
germs from growing on cracked lips. It relieves chapped lips and calms your skin by lowering
inflammation.
-Honey, since the majority of teenagers use cosmetics, particularly lipsticks with a lot of
chemicals on them, which darkens their lips which honey will help to lighten dark skin,
particularly on the lips. Honey also contains a lot of bleaching chemicals, which usually
lighten the colour of the skin on the lips.
-Food colouring is necessary to create a tinted lip balm. When going out, many ladies desire
pink or crimson lips, however many lip stains or lipsticks can be drying. As they swipe or
slide the lip balm across their lips, food colouring will give them a shade.
-Scent. Since the balms will be in contact with the clients' lips, it is better and more enjoyable
if they may taste it first. In addition, this improves the scent of the product rather than just
being pure coconut oil and beeswax.
Ingredients Price Needed each Cost Per Lip Tint
Beeswax RM 15 per 120 ml 4.4 ml RM 0.55
Coconut oil RM 50 per 1000 ml 4.0 ml RM 0.20
Honey RM 10 per 200 ml 1.0 ml RM 0.05
Coloring RM 5 per 20 ml 0.3 ml RM 0.075
Flavoring RM 3 per 10 ml 0.3 ml RM 0.09
Container RM 2 per piece 1 piece RM 2
Label RM 3 per 20 piece 1 piece RM 0.15
TOTAL RM 3.115

Above is the price chart of each ingredients needed for manufacturing a lip tint.
Serendipity’s Cosmetics demand projection will set the production objective. This means that
for MTS to function successfully, the company must have a precise demand estimate. For
each product, Make to Stock will predict the number of orders that will be placed, and it will
then provide a enough amount of stock to fulfil those orders.
The detailed steps of MTS of manufacturing lip tint including:
1. Create Forecast - Before using Make to Stock, Serendipity’s Cosmetics must first
determine how much demand there will be for the lip tints that need to manufacture. To
provide an accurate demand forecast, a variety of methodologies can be applied.
2. Produce Items - After the forecast has been created, the company is given a target number
of items to make. The production of lip tibts involves numerous planning and scheduling
procedures. Ample supplies and resource capacity must be there to meet the increased
demand, according to planners and schedulers.
3. Hold in Inventory – The following stage entails keeping the finished lip tints in stock while
awaiting customer orders. The company would desire to reduce the amount of time that
products are held because this is one of the most expensive procedures.
4. Receive Customers Orders - When employing a "Make to Stock" technique, the company
will have products available when the customers place orders. The company should only have
the right amount of things in stock, not more or less, if the forecast was accurate.
5. Ship To Customer - Delivering the lip tints to the customer is the final stage. Due to the
Make to Stock production approach used by the company’s manufacturing plant, the
company will be able to provide the clients with the finished lip tints quickly.

4.0 ADVANTAGES AND DISADVANTAGES in term of labor costs, inventory control,

overhead, customization, and the speed of production and filling orders

4.1 LABOR COSTS

4.1.1 ADVANTAGES

In term of labor costs, the costs will be greatly reduced by using MTS system as the lip tints
are manufactured in a large amount if future demand can be accurately predicted. Only the
essential units will be created, and unnecessary production can be eliminated. For example, if
an accurate forecast is made, hence the company can manufacture the correct amount of lip
tints in the stock.

4.1.2 DISADVANTAGES

However, for the disadvantages, any errors in the prediction process or unforeseen economic
shocks and difficulties will be disastrous. An incorrect forecast might result in stockpiles or
stockouts and ultimately cause a significant loss of revenue. Empty inventory or even the
overflow are the biggest drawbacks. Any necessary correction is typically expensive, and the
consumer or the business must pay for it. As a result, businesses with cyclical or seasonal
sales patterns may experience a loss if there is an unexpected drop in demand during a given
year.

4.2 INVENTORY CONTROL

4.2.1 ADVANTAGES

In term of inventory control, the capacity of Serendipity’s Cosmetics to manufacture

inventory in response to expected consumer demand. MTS enables Serendipity Cosmetics to
avoid having excessive or insufficient inventory. In this matter of fact, the company can
control the inventories well by using this technique.
4.2.2 DISADVANTAGES
However, for the disadvantages , When Serendipity’s Cosmetics using make-to-stock
(MTS) , the company produce products for stock. As a result, the inventory levels will be
larger than those of manufacturing plants that use a make-to-order (MTO) approach. Many
people think that keeping a lot of inventory is a financial waste that isn't helpful for any
organisation. Additionally, the company can be left with extra merchandise that, if kept in
inventory for a long period, will probably get damaged or become outdated.

4.3 OVERHEAD
4.3.1 ADVANTAGES
In term of overhead, Serendipity’s Cosmetics can successfully manage the resources and
production when the company rely on sales and demand estimates as the company is using
Make to stock (MTS) system, ensuring that goods are produced in the most effective way
possible. Serendipity’s Cosmetics may use resources more effectively and save money if the
company know in advance how many of each item will be needed for manufacturing lip tints.
4.3.2 DISADVANTAGES
However, for the disadvantages, the company will probably end up with too much inventory,
run the risk of running out of goods, or lose money if the company’s estimates are inaccurate.
When the company simply use previous sales data, it is difficult to make reliable predictions
about the future. However, many forecasting techniques include extra surveying and analysis
components, which can boost the forecasts' accuracy.

4.4 CUSTOMIZATION
4.4.1 ADVANTAGES
We will be able to offer customised products thanks to the make-to-order(MTO) technique
because production only begins once an order is placed. When customers want a more
specialised shopping experience, they will come to you. Due to the customising request, they
will often frequently be prepared to pay more or wait a little bit longer than usual.
Customized lip tints, for instance, function similarly to a lip tint that is often used on paper
but were created with engraving of their names. With the help of certain decorating tools, we
may alter the lip tint's pattern, making it the ideal present for close friends or family
members.
4.4.2 DISADVANTAGES
In terms of customization, Make to stock (MTS) is not that convenient compared to Make To
Order (MTO) system as the Make to stock (MTS) system is applying a manufacturing
process that produce commodities on a large scale in accordance with anticipated consumer
demand. Moreover, for the MTS method, Inventory is likely to remain unsold due to shifting
consumer preferences and ongoing technological improvement. Resources are wasted as a
result. Additionally, due to the expense involved, Make to stock (MTS) does not permit
businesses to retain a wide range of commodities. Companies in some specialised industries,
including construction, switched to the Make To Order (MTO) method to eliminate these
problems. However, Serendipity’s Cosmetics is using the same system which is Make to
stock (MTS) because this is way more convenient than Make To Order (MTO) system.

4.5 SPEED OF PRODUCTION AND FILLING ORDERS

4.5.1 ADVANTANGES
Make to stock (MTS) gets the advantage in the terms of speed of production and filling
orders as it can reduce customer wait times. This is because, one way that make-to-stock
differs from other production strategies, such make-to-order, is that it makes it easier for
manufacturers to meet customer demand and requests. The product is immediately accessible
for shipping after a consumer puts a purchase, drastically reducing the amount of time the
customer must wait. The consumer will have to wait longer for the goods to be created before
it is shipped out, which is a considerable benefit over the make-to-order(MTO) technique.
4.5.1 DISADVANTAGES
Production only begins in a make-to-order scenario following a client order.
This implies that the consumer must always wait for the finished product. Customers
generally don't like to wait for things. They would like to wait as little as possible if
they must. However, a make-to-order approach is not always feasible. It might be
argued that reality is perception. People will feel dissatisfied and have a negative
shopping experience if they believe they have to wait in line for an excessive amount
of time. One of the most crucial factors to take into account while producing a product
is customer wait times. It is crucial to make sure that our products can be
manufactured in the most effective and quick method possible because long lead
times, or the period of time from the beginning of a process until its finished product,
might cause buyers to turn away from our items when considering a purchase. In
order to maintain client satisfaction, quality and speed must be balanced. In
conclusion, the production procedure for making products to order takes longer.
People can choose to shop at other stores with full inventories if there is a long wait.
As a result, a delay could result in the company losing out on prospective sales and
having a slower cash flow. For instance, there are a lot of people rather order ready
stock lip tint rather than customized lip tint.