Developing an Inventory Management System for LB

Caluag Food Products: Reducing Overtime and Costs in

Made-to-Order Snack Production​
​
Ellida Juna J. Arellano, Julian Kenji DL. Ibong, Raily M. Reyes,
Industrial Engineering Department
Bulacan State University
City of Malolos, Bulacan, Philippines
[email protected] , [email protected],
[email protected] , [email protected]

Abstract
​
​ 1. Introduction​
​
​ LB Caluag Food Products, founded in 2021 by Lawrence B. Caluag, is a manufacturing company
that focuses on producing Happy Tofu Chips. These tasty snacks have become a signature product for the
company. Based in Guiguinto, LB Caluag Food Products operates small-scale manufacturing facilities,
ensuring efficient production and quality control of their Happy Tofu Chips. The company stands out with
a strong presence on e-commerce platforms and partnerships with resellers, making these delicious treats
widely available. Under the leadership of Lawrence B. Caluag, the company’s dedicated team embraces a
vibrant company culture.

Despite its growth and success, LB Caluag Food Products encounters challenges in efficiently
managing its production processes. The lack of an inventory management system has made it hard to
track stock levels, predict demand, and handle supply chain fluctuations. Consequently, the company
faces inefficiencies in inventory control, affecting its ability to fulfill customer orders promptly. This
situation leads to extra costs, such as overtime to manage unexpected demand spikes or shortages.
Inventory management is a vital component of a systematic supply chain, yet small businesses often
neglect inventory management (Alam et al., 2024), as is the case with LB Caluag Food Products.

Through this study, the company aims to analyze and identify the root causes of these
inefficiencies. Statistics reveal that workflow bottlenecks and other issues have a significant impact on
productivity, indicating a pressing need for intervention. Addressing these challenges is crucial for LB
Caluag Food Products to maintain its competitive edge and sustain growth in the market. This research
aims to boost productivity while ensuring top-quality products, ultimately enhancing customer
satisfaction and loyalty.

Furthermore, addressing this issue is crucial for LB Caluag Food Products to maintain its
competitive edge and sustain growth in the market. By introducing an effective inventory management
system, the company can better anticipate demand, minimize waste, and optimize its workforce. This will
ultimately lead to reduced operational costs, improved productivity, and enhanced product quality, which
are essential for maintaining customer satisfaction and loyalty.
 This study focuses on how a lack of an inventory management system contributes to
inefficiencies in the production process. The study will explore the impact of this gap in operations and
propose practical solutions to improve inventory tracking, demand forecasting, and resource allocation.
The goal is to design a system that ensures a smooth and efficient production process, enabling LB
Caluag Food Products to meet demand while maintaining the quality and consistency of their popular tofu
chips.

Figure 1: The Tofu Chips Product

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Figure 1: The Tofu Chips Product
​
​ The LB Caluag food products produce delicious tofu chips. Company’s estimated cost of preparing
one dough amounts to Php 550, with each dough weighing approximately 1.5 kilograms. The owner dedicates
10-15 minutes to prepare a single dough and spends a total of 3 hours to prepare the day's dough supply, which
totals 29 kilograms and consists of 12 doughs, inclusive of other flavorings, at an estimated cost of Php 500.
Converting the total dough into chips within a day requires 8 hours for the 12 doughs. The production yields an
estimated 260 pieces of finished products per day, priced differently for resellers/buyers based on quantity.
Quality checks of dough are conducted on the same day of production in the production area, with an
additional 15-20 minutes per flavor required for arranging on storage racks from the sealing workstation.
​
1.1 Process Flow Chart
​ Figure 2: Working Flow Process in the Workplace​
​
​
​ The company's current process flow, as outlined in the flowchart, begins with rolling of dough and
flattening raw dough to the ideal thickness, followed by precise cutting to ensure uniformity. The product is then
cooked to develop its flavor and texture. After cooking, it undergoes a drying process to remove moisture, enhancing
both shelf life and crispness. Next, flavoring is added to deliver the desired taste. The product is then carefully
packed and sealed to maintain its freshness and crunch. Finally, the finished goods are stored until they are ready for
sale. Each step is essential in ensuring the quality and consistency of the final product, meeting consumer demands
for taste and convenience.

1.2 Fishbone Diagram and Why-why Analysis

Figure 3: Fishbone Diagram

​
​ The fishbone diagram above illustrates the root causes of overtime and costs due to lack of inventory
management system. It identifies three main categories of causes: overtime, unnecessary costs/overtime costs, and
slow production process. Overtime is caused by having too much work at hand, too many orders, and accepting
orders beyond capacity. Unnecessary costs/overtime costs result from an inability to meet demand on time,
unpredictable demand fluctuations, and a lack of forecasting methods. Slow production processes are attributed to a
lack of standardization, worker errors, and bottlenecks in workflow. By addressing these root causes, the researchers
can improve their ability to provide and manage possible solutions related to unpredictable demand and avoid
overwhelming their production capabilities.
​
Table 1: Why-Why Analysis

Define the Problem: Too much overtime and high costs

Why is it happening? Production cannot keep up with fluctuating demand.

 Why is that? There’s no system to predict demand or optimize
production schedules.

Why is that? The company only reacts to current orders without

maintaining buffer inventory.

Why is that? Historical data is not being used to predict trends or plan
inventory levels.

​ The Why-Why Analysis highlights the root causes of overtime and high costs at LB Caluag Food Products.
The primary issue is that production cannot keep up with the fluctuating demand. This happens because the
company lacks a system to predict demand or plan production schedules in advance. As a result, production is
reactive, adjusting only to current orders, which leads to inefficiencies and overtime. Furthermore, the company
doesn’t maintain buffer inventory to handle unexpected spikes in demand, causing overtime when demand exceeds
expectations. Lastly, the company isn't using historical data to forecast future demand, leaving it unprepared for
upcoming trends. By using past data to predict demand and plan ahead, the company could reduce overtime, cut
costs, and improve production efficiency.

1.3 Sales Record and Workload Capacity

Sales Record

Table 2: Company’s Three-Year Sales Record

Month Orders (2021-2022) Orders (2022-2023) Orders (2023-2024)

October 85 150 185

November 150 300 350

December 330 400 450

January 300 400 400

February 325 450 450

March 385 495 550

April 400 500 600

May 300 440 495

June 350 400 550

July 95 150 200

August 100 150 150

September 185 285 300

The table presents the company's three-year demand record from 2021 to 2024, highlighting fluctuations in
the number of orders received each month. While certain months, such as March and April, show a consistent rise in
demand year after year, other months like July and August display relatively stable demand. This pattern indicates
that demand is unpredictable, with some months experiencing significant growth while others remain constant. The
variability suggests challenges in forecasting, as there is no clear seasonal trend, and demand can spike
unexpectedly, leading to difficulties in planning production and resource allocation.​

​
Workload
Table 3: Number of Workload done per period of time

Time Workload Translating Orders into Packs

Per Month 400 orders 5200 packs

Per Day 20 orders 260 packs

Per Hour 2 orders 32 packs

1 order = 13 packs

The table above outlines the standard production output of the company, indicating a monthly capacity of
400 orders, translating to a daily output of 20 orders, and an hourly production rate of 2 orders. This data serves as a
crucial component in assessing production needs, facilitating the planning of production schedules, and identifying
potential bottlenecks in the manufacturing process. It provides a foundational benchmark for operational efficiency
and resource allocation.

1.4 Overtime Costs

To calculate the overtime (OT) cost for workers in tofu chips production, we start with their daily wage of
₱450, which breaks down to ₱56.25 per hour, assuming an 8-hour workday. The company's OT cost is based on this
regular hourly pay of ₱56.25 per hour. For instance, if a worker works 1 hour of overtime, the company incurs an
additional cost of ₱56.25 for that worker. If all 5 workers each work 1 hour of overtime, the total overtime cost
becomes ₱281.25.

Table 4: Overtime Cost of Workers​

Number of Overtime per Overtime Cost Overtime Cost Overtime Cost

Excess Orders Day (Hours) per Worker per Day (all 5 per Month (all
in Workload workers) 5 workers)
Capacity
(Month)

50 1 hour ₱56.25 ₱281.25 ₱5,625

​
 The table details the overtime costs incurred in response to monthly demand fluctuations from October
2023 through September 2024. Each entry highlights the specific overtime expenses for that month, reflecting how
demand levels impact labor costs. This data can be useful for analyzing trends, forecasting future expenses, and
making informed decisions about staffing and resource allocation.​
​
​
​
1.5 Objective of the Study

LB Caluag Food Products faces challenges with fluctuating demand, resulting in higher costs due to
reliance on overtime and temporary workers. This study aims to find ways to improve production efficiency and
better manage the workforce to meet demand while keeping costs low and maintaining product quality.
​
General Objective:​
​
​ • To develop and implement solutions that enable LB Caluag Food Products to meet demand while
minimizing costs and overtime.​
​
Specific Objectives:​
​
​ • To design a system for forecasting demand. ​
​ • To minimize unnecessary costs through developing a system.​
​ • To evaluate the effectiveness of these solutions in reducing costs and the ease of use of the system.​

1.6 Rationale of the Study

The purpose of this study is to address LB Caluag Food Products' need to efficiently manage increased
demand during periods of unpredictable demand. During these times, the company faces challenges due to
fluctuating order volumes and production schedules. Additionally, they struggle to secure sufficient raw materials
when faced with a surge in orders. Without a comprehensive strategy, LBCaluag may encounter issues such as stock
shortages, delays, and reduced customer satisfaction.
​
​ By addressing this issue, the study will provide solutions to optimize production, ensure timely supply, and
maintain product quality. It will also help identify potential bottlenecks in the production process and develop
strategies to manage labor, raw materials, and distribution more effectively. This research will support LB Caluag
Food Products in maximizing profitability, sustaining customer loyalty, and improving overall business operations
during periods of unpredictable demand.
​
Significance of the Study:

• LBCaluag Food Products (Business Stakeholders): Improves production efficiency and resource allocation.
• Customers: Guarantees product availability during high-demand seasons.
• Employees: Reduces stress by providing a more organized production process, less overtime.
• Industry/Market: Provides insights for other businesses on scaling operations in high-demand seasons.

The study is crucial for LB Caluag Food Products as it helps the company develop a clear plan for
managing changes in demand.By focusing on optimizing production scheduling for tofu chips, the study ensures that
the company can capitalize on high-demand periods while maintaining product quality and customer satisfaction.
1.7 Scope and Limitation of the Study
This study delves into the operational aspects of LB Caluag Food Products, specifically focusing on the
production of tofu chips during periods of unpredictable demand. The research will involve key personnel within the
company, including production staff and management, to gather valuable insights and data. The study will be
conducted at the company's manufacturing facility in Guiguinto, and it will cover a defined period during
unpredictable seasons to ensure relevant findings. The scope of this research encompasses analyzing the existing
production process to identify bottlenecks and inefficiencies, developing a system to effectively predict and manage
customer orders during peak seasons, and determining the optimal number and skill sets of temporary workforce
needed during these periods. The study will provide comprehensive recommendations for process improvements,
demand management strategies, and capacity planning.
​
​ However, it is crucial to acknowledge potential limitations that may impact the implementation of proposed
solutions. Fluctuations in raw material prices, changes in consumer preferences, and competitive market dynamics
can influence the effectiveness of the proposed solutions. The company's financial resources, available equipment,
and existing infrastructure may pose constraints on implementing certain recommendations. The study's findings
will be based on available data and information, and limited data availability or inconsistencies in data collection
methods could impact the accuracy and completeness of the analysis. Implementing proposed solutions may require
significant changes in existing processes, systems, and organizational structures, which can be challenging and
time-consuming. Despite these limitations, this study aims to provide valuable insights and practical
recommendations to help LB Caluag Food Products effectively manage peak demand and optimize tofu chip
production.

​
2. Review of Related Literature

Lean Manufacturing Principles

Another pertinent area of literature focuses on lean manufacturing principles and their application in food
production contexts. The study by Khadem et al. (2008) explores how lean metrics can be utilized to assess and
improve manufacturing performance. Implementing lean practices can help LB Caluag Food Products identify waste
and streamline operations, particularly during unpredictable seasons when demand surges. By adopting these
principles, the company can optimize its workflow, reduce lead times, and enhance overall productivity, ensuring
that they meet customer expectations effectively. These reviews provide a solid theoretical framework for the study,
addressing critical aspects of production efficiency and capacity management that are essential for navigating peak
demand challenges in the food industry.

Improving Capacity Planning and Utilization in Food and Beverage Manufacturing with Integrated Planning
Systems

According to PlanetTogether (2023), the literature underscores the pivotal role of efficient capacity
planning and utilization within the food and beverage manufacturing industry, crucial for operational streamlining
and meeting customer expectations. It delineates the process of capacity planning, which involves strategically
distributing resources considering factors like equipment availability and production volumes, while utilization
focuses on maximizing productivity and minimizing wastage. The integration of planning systems such as
PlanetTogether with leading ERP, SCM, and MES platforms like SAP, Oracle, Microsoft, Kinaxis, and Aveva is
gaining traction as a means to enhance capacity planning and utilization. These integrations offer an array of
advantages, including real-time data exchange, predictive analytics insights, and dynamic scheduling capabilities.
Each integration, whether with SAP, Oracle, Microsoft, Kinaxis, or Aveva, presents distinct benefits, such as
heightened visibility, proactive schedule adjustments, and real-time monitoring of shop floor operations.
Consequently, these integrations empower production schedulers with superior control over capacity planning and
utilization, ultimately leading to optimized production processes, cost reduction, and heightened customer
satisfaction. Looking ahead, advancements in AI, machine learning, and Industry 4.0 technologies are poised to
further refine capacity planning and utilization, rendering production scheduling more efficient and adaptable to
dynamic market conditions.​
​
Production Planning and Scheduling​
​
​ According to Stadtler, H. (2015), production planning and scheduling focus on creating detailed production
schedules for the shop floor within a short time frame. These schedules specify the start and completion times for
each order, along with the sequence of operations on the necessary resources. In certain production environments,
such as job shops, the process involves sequencing and scheduling orders on potential bottlenecks.​
​
​ As applied to LB Caluag Food Products, this approach could help optimize production efficiency,
particularly in managing orders for tofu chips. The implementation of such detailed production schedules could
streamline the process, ensuring that resources are allocated efficiently, and orders are completed on time without
resorting to overtime or adding of temporary workers.​
​
Cost Optimization in Small Manufacturing Enterprises ​
​
​ Small-scale manufacturing businesses face constant pressure to reduce costs while maintaining product
quality and meeting customer demand. According to study, cost optimization in manufacturing focuses on
streamlining supply chain management, transportation logistics, and production scheduling to minimize wastage and
improve efficiency. Effective strategies include managing inventory more accurately, reducing costs through
efficient planning, and balancing production output to avoid excess labor costs. Moreover, aligning production
schedules with actual demand helps avoid the financial burden resorting to costly overtime labor during peak
seasons, Elaswad H. & Dagroum A. (2019).​
​
​ These cost-saving strategies are critical for small manufacturing companies like LB Caluag Food Products,
especially as they deal with fluctuating demand and the need for temporary workforce adjustments. By
implementing these methods, the company can lower its production costs and improve its overall operational
efficiency, leading to greater profitability and long-term sustainability.​
​
Demand Forecasting in the Food Industry​
​
​ Demand forecasting is crucial for LB Caluag Food Products due to increasing competition and market
volatility. As Silva et al. (2019) emphasize, accurate forecasting significantly impacts profitability and competitive
positioning, noting that "the viability of a company is often dependent on the efficiency and accuracy of forecasts."
Effective demand forecasting supports various business functions: it helps the sales department estimate product
sales volumes, aids purchasing in planning acquisitions, and enables marketing to assess the impact of strategies on
sales. Additionally, it allows logistics to define specific needs and assists operations in managing procurement and
labor planning more efficiently.

Forecasting with combined seasonal indices

It is evident that previous studies have extensively explored seasonal demand forecasting, with a focus on
various methodologies and their effectiveness. Notably, researchers have emphasized the importance of accurate
seasonal indices in predicting consumer behavior (Smith et al., 2020; Johnson, 2018). However, these studies often
overlook the potential benefits of combining seasonal indices across similar product lines, which can enhance
forecasting accuracy. According to Lee (2021), such combined approaches have shown promise but lack
comprehensive empirical validation. In contrast, the current study aims to fill this gap by systematically analyzing
the impact of combined seasonal indices on forecasting errors across multiple product lines, thereby offering a novel
methodological perspective that builds on and diverges from existing literature. This approach not only addresses
identified gaps but also contributes new insights into effective forecasting strategies in a dynamic market
environment.​
​
Chase Strategy Approach​
​
According to Dwitami (2022), many companies are striving to enhance profitability, particularly in the
manufacturing sector, where production costs are a significant concern. Minimizing these costs can be achieved
through the aggregate chase strategy method. This approach allows companies to optimize production planning,
maximize the efficiency of their existing workforce, and avoid overtime expenses, resulting in reduced production
costs and greater savings.

​
​
Synthesis

This chapter emphasizes the importance of understanding operational efficiencies and the methodologies
that can enhance production processes, especially during times of unpredictable demand. The literature review
begins by exploring lean manufacturing principles and their relevance in food production, highlighting how these
principles can help streamline operations and minimize waste. It cites studies that have investigated the use of lean
metrics to assess manufacturing performance, indicating that implementing such metrics could assist LB Caluag
Food Products in pinpointing inefficiencies within their production processes.

Additionally, the chapter discusses seasonal demand forecasting, pointing out that while there is extensive
research on various forecasting methods, there is a lack of exploration regarding the use of combined seasonal
indices for similar product lines. This presents an opportunity for the current study to offer new insights into
improving forecasting accuracy, which is essential for managing production during peak demand periods.

Overall, this chapter underscores the necessity of integrating lean manufacturing practices with advanced
forecasting techniques to tackle the challenges faced by LB Caluag Food Products. By building on existing literature
and identifying gaps, the study aims to create a comprehensive framework for enhancing operational efficiency,
boosting productivity, and ensuring customer satisfaction through timely and high-quality product delivery. This
approach not only aligns with the company's objectives but also equips it to respond effectively to market changes.

In conclusion, this chapter lays the groundwork for the research by connecting the literature on capacity
planning and demand forecasting to the practical challenges faced by LB Caluag Food Products, thereby preparing
for the subsequent methodology and analysis.

3. Methodology​
In this chapter, the researchers outline the research methodology using the Input-Process-Output (IPO)
model as a guiding framework. The researchers begin by identifying the key inputs, such as data sources and
participant demographics, and then describe the processes involved in data collection and analysis, emphasizing the
steps taken to ensure rigor and validity. The researchers discuss the anticipated outputs and their implications for the
broader field of study. By employing the IPO model, the researchers aim to provide a clear and structured overview
of our methodological approach, ensuring transparency and coherence throughout the research process.

Table 5: Methodological Framework of the Study

INPUT PROCESS OUTPUT

●​ A plan for continuous
●​ Resource Allocation Data improvement and adaptation to
●​ Existing Data Metrics market dynamics.
●​ Process Mapping ​ ●​ Clear problem statement for
●​ Production Data Problem Definition​ addressing production
●​ Production Analysis challenges.
​
●​ Workforce Input ​
 ●​ Valuable insights for enhancing
capacity planning and demand
●​ Literature review related to forecasting in the tofu chips
the study. manufacturing facility.
●​ Qualitative and ●​ Different applications of
Research Design
quantitative research capacity planning and
studies demand forecasting that can
be applied to improve the
overall efficiency of the tofu
chips manufacturing facility.
●​ Historical Data Sales Selection of IE Tools ●​ Demand Forecasting
●​ Identified Problems Techniques
●​ Safety Stock Calculation
●​ Chase Strategy Plan
●​ Interviews with the owner and Data Collection​
●​ Understanding of the
employees. ​
current system.
●​ On-site observations ​
●​ Integration of quantitative and
●​ Collecting historical sales ​
qualitative data in identified
.
key areas for improvement and
formulating targeted strategies,
optimizing production
processes.
●​ Data collected through ●​ Demand Forecasting
qualitative assessments, Data Analysis​ ●​ Historical Data Analysis
specifically narrative analysis. ​ ●​ Safety Stock Calculation
●​ Quantitative data ●​ Chase Strategy
from observations. ●​ ANOVA
●​ Improved Inventory and
●​ Consolidated Results from Results and Findings​ Planning System.
Data Analysis ​ ●​ Enhanced decision-making
process.
●​ Improved Forecast Accuracy
●​ Reducing Stockoutss
​ ●​ Provide solutions to
●​ Outcomes from Literature
Recommendation​ increase production capacity
Review and Data Analysis.
​ to meet demand as it rises.
●​ Demand Forecasting
​ System.
●​ Inventory Planning System.
●​ Implemented Safety Stock.
●​ Chase Strategy Plan.​
​
​

●​ Recommended strategies for ●​ Successful implementation of

Implementation
identified problems. strategies.
●​ Training programs for staff. ●​ Enhanced technological
capabilities in production
●​ Financial resources for
processes.
technology upgrades.
●​ Enhanced technological
capabilities in production
processes.
 ●​ Key performance indicators ●​ Assessment of the impact of
(KPIs) to measure implemented strategies.
effectiveness of production
Evaluation ●​ Identification of areas for
output, order fulfillment rates,
further improvement based on
customer satisfaction.
performance data.
Feedback from production
staff and management. ●​ Continuous improvement plan
to adapt to market dynamics
and sustain operational
efficiency.

The methodological framework outlined for the study on enhancing capacity planning and production
optimization in a tofu chips manufacturing facility is structured around a systematic approach. It begins with
problem definition, emphasizing continuous improvement and strategic planning to leverage strengths, address
weaknesses, and capitalize on market opportunities. The research design aims to provide valuable insights and
applications of capacity planning to enhance operational efficiency. Key operations management concepts under
capacity planning like chase, level, and transportation strategies of aggregate planning are selected in order to
accomplish the objective of the study. Data collection involves a mix of qualitative and quantitative methods,
including interviews with the staff, and site observations, to gather insights into operational challenges and
customer expectations. The analysis of this data will inform capacity expansion strategies, leading to
recommendations for optimizing production processes and increasing output during peak seasons. Aggregate
planning will serve as a crucial tool within this framework to address production capacity issues and drive
improvements in the tofu chips manufacturing facility.

4. Results and Discussions

4.1 Summary of Overtime and Costs

Table 6: Monthly Overtime and Costs for Year 2022-2023

​
​
​ Overtime per Day
​ Month for Year 2022-2023 (Hours) Overtime Cost per Month (₱)
​
October - 0
​
​ November - 0
​
​ December - 0
​ January - 0
​
​ February 1 hour ₱5, 625
​
March 2 hours ₱11, 250
​
​ April 2 hours ₱11, 250
​
​ May 1 hour ₱5, 625
​ June - 0
​
​ July - 0
​
​ August - 0
​ September - 0
​ In the year 2022-2023, overtime hours were observed only in February, March, April, and May, while the
rest of the months had no overtime, indicating relatively stable demand. February and May required 1 hour of
overtime daily for 20 days, translating to an overtime cost of ₱5,625 each month. March and April, on the other
hand, experienced higher workloads with 2 hours of daily overtime for 20 days, resulting in monthly costs of
₱11,250 each. The total overtime cost for the year was ₱23,760, reflecting a controlled yet periodic need for
additional labor during certain months, likely due to seasonal demand spikes or operational inefficiencies.

​
​
Table 7: Monthly Overtime and Costs for Year 2023-2024​

Month for Overtime per Day

Year 2023-2024 (Hours) Overtime Cost per Month (₱)
​
​ October - 0
​
​ November - 0
​ December 1 hour ₱5, 625
​
​ January - 0
​ February 1 hour ₱5, 625
​
​ March 3 hours ₱16, 875
​
​ April 4 hours ₱22, 500
​ May 2 hours ₱11, 250
June 3 hours ₱16, 875
July - 0
August - 0
September - 0

​ In 2023-2024, there was a noticeable increase in overtime compared to the previous year. While October,
November, January, and the last quarter of the fiscal year (July to September) had no recorded overtime, the
months from December to June saw significant overtime hours. December, February, and May had 1 to 2 hours of
overtime per day, resulting in moderate costs ranging from ₱5,625 to ₱11,250. However, March, April, and June
experienced high demand, with 3 to 4 hours of overtime daily, leading to substantial monthly costs of ₱16,875 to
₱22,500. The total overtime cost for 2023-2024 surged to ₱78,750, indicating either a substantial rise in demand,
inadequate staffing, or inefficiencies that required more hours to meet production targets. This highlights the need
for better resource planning and operational adjustments to mitigate these costs.
 Table 8: Total Overtime Costs per Year​
​
​
​
​ TOTAL OVERTIME COST
​
​ Year 2022-2023 Year 2023-2024
​
​ 23, 760 78, 750

​ The overtime costs tripled from 2022-2023 to 2023-2024, with the latter showing not just increased
overtime but also more months affected by it. This points to a growing misalignment between workforce
capacity and production demand, stressing the importance of strategic forecasting and workforce optimization.​

​
4.3 Workforce Capacity
Table 10:

Possible Revenue Possible Profit

Revenue if the Profit if the if the Demand is if the Demand is
Demand is met in Demand is met not met in not met in
Month 2023-2024 in 2023-2024 2023-2024 2023-2024
December &
February 280, 000 158, 225 249, 600 135, 100
March & June 343, 200 193, 930 249, 600 135, 100
April 374, 400 212, 900 249, 600 135, 100
May 308, 880 161, 380 249, 600 135, 100

Workload per Worker

Time Period Packs per Worker

Per 7 hours and 40 mins 52 packs

Per hour 6 packs

Per min 1 pack

​ The table illustrates the productivity of workers across various time periods. Each worker produces 52
packs during a complete workday of 7 hours and 40 minutes, accounting for an 8-hour shift with a 20-minute break.
On average, a worker manages 6 packs per hour, which translates to 1 pack per minute. This detailed breakdown
offers valuable insights into workforce capacity and can aid in analyzing productivity and effectively planning
workloads​
​
4.4 "Muda", "Muri",and "Mura"

In Lean manufacturing, "Muda," "Muri," and "Mura" are key principles used to improve efficiency by
reducing waste and balancing workloads. Muda refers to waste—activities that consume resources but don’t add
value to the product. Muri is the overburdening of people or equipment, which can lead to errors and breakdowns.
Mura represents unevenness in demand or workflow, creating imbalances that lead to inefficiencies. Together, these
concepts help organizations streamline processes, cut costs, and ensure a smoother, more productive workflow.

Muda (Non-Value-Added): LBCaluag identifies five types of wastes - overtime, waiting, unnecessary motion, and
defect.

Muri (Overburdening people): Muri involves pushing a worker beyond their natural limits, leading to overburden.
When employees are overworked, it can cause safety risks, decreased quality, and increased potential for errors.
Overburdening not only strains workers but also disrupts consistent performance, ultimately impacting productivity
and overall workplace well-being.

Mura (Unevenness): There are times when the workload exceeds what people or machines can manage, while at
other times, there are overtimes of work. This unevenness stems from irregular scheduling or fluctuating work
volumes caused by unexpected demand changes.

Table 11: Mura, Muri and Muda

Mura (Unevenness)

Muri (Overburdening people) Muda (Non-Value-Added)

●​ Safety problem ●​ Overtime

●​ Quality problem ●​ Waiting
●​ Unnecessary motion
●​ Defect

Muda (Non-value-added) and Muri (overburden) are results of Mura (unevenness). Since the concept of
Heijukais leveling out the work schedule, or balancing the workload, therefore, achieving Heijunka is fundamental
to eliminating Mura,which is fundamental to eliminating Muriand Muda (Liker, 2017).

In discussing workload leveling, Liker presents a Toyota case study on how an engineering organization
achieved leveling by establishing a clear manpower profile and creating a stable development process (Liker &
Meier, 2006). Leveling, or Heijunka, establishes a standardized core framework to which all resource requirements
are aligned and integrated.

However, numerous studies highlight the importance and benefits of forecasting, workload leveling, and
manpower assessment in improving operational efficiency.

4.5 ANOVA
 Figure 3: ANOVA Result

The researchers conducted an ANOVA analysis and it resulted in a p-value of 0.0503, which shows that
there are no significant differences in demand across the three years being studied. This means that the variations in
demand from year to year are likely due to random factors, not real differences. Therefore, the demand data can be
considered consistent across the three years.

Because there are no significant differences, the three-year demand data is valid for use in the study. This
means it can be confidently used in further analysis, such as forecasting or modeling. Although the p-value is close
to the significance level of 0.05, it is slightly above it, supporting the idea that the demand over these years is similar
enough for the study’s purposes.​

​
4.6 Seasonal Index ​
​

​
​ ​ ​ ​ ​
 The image above presents a table and a line graph, both illustrating data about a seasonal index of the
three-year demand record of LB Caluag Food Products. The table displays monthly values for three years
(2021-2022, 2022-2023, and 2023-2024), along with the average value for each month and the calculated seasonal
index.

The line graph visually represents these monthly values for each year, using distinct colors to differentiate
them. The data reveals a clear seasonal pattern. The graph shows that the values reach their peak in April and May,
indicating a peak season during these months. The values are lowest in July and August, suggesting a low season
during this period. This seasonal trend is further supported by the seasonal index values in the table. For instance,
the seasonal index for April is 1.525, the highest among all months, confirming a strong peak season in April.​

4.7 Forecasting Result

Table 12:Forecasting Results

Month 2021-2022 2022-2023 2023-2024 2024-2025

October 85 150 185 167
November 150 300 350 317
December 330 400 450 370
January 300 400 400 349
February 325 450 450 486
March 385 495 550 567
April 400 500 600 595
May 300 440 495 490
​ June 350 400 550 516
​ July 95 150 200 177
​
August 100 150 150 159
September 185 285 300 305
Total: 3005 4120 4680 4498

​
The forecasting results indicate a steady increase in demand from 2021-2022 to 2023-2024, rising from
3005 units to 4680 units, followed by a slight decline to 4498 units in 2024-2025. Monthly trends show that March,
April, and June consistently experience the highest demand, reflecting seasonal or operational peaks, while October,
July, and August remain low-demand periods. The significant increase over the years suggests growing market
demand.

Table_:Forecasted Demand for 2026

The demand trends across the months for 2022-2023, 2023-2024, and 2024-2025 show varying patterns with
significant seasonal fluctuations. Most months experienced growth from 2022-2023 to 2023-2024, such as
November and March, but saw some declines in 2024-2025, with a notable decrease in December and January.
However, predictions for 2026 indicate recovery or stabilization in many months, especially after the drop in
2024-2025. April, May, and June saw significant growth in 2023-2024 but are expected to experience slight declines
in 2026. In contrast, months like October, November, and December show a more stable pattern, with moderate
increases or decreases. Overall, while demand fluctuates seasonally, the trend for 2026 suggests recovery after the
drops in previous years.

Table_:Forecasted Demand for 2027

 The demand trends from 2023-2024 to 2025-2026 show both fluctuations and some stabilization across
various months, with notable shifts observed in 2027. For example, October shows a decline from 2023-2024 to
2024-2025, but demand dramatically increases in 2027 to 515, suggesting a significant surge. November and
December show slight decreases leading into 2025-2026, but a minor recovery is expected in 2027, particularly
in December. The months of March, April, and June maintain relatively high demand, with a small decline over
the years, but a moderate recovery is predicted for 2027, particularly in April. Meanwhile, months like May, July,
and August show relatively stable demand but with slight decreases, except for August, which experiences a
large increase in 2027. Overall, while there is some volatility in the short term, the demand for 2027 indicates
larger-than-expected growth, especially in months like October and August, possibly due to market or seasonal
changes not reflected in prior years.