MGT 314

CAPACITY PLANNING-PREMIER CEMENT MILLS LTD (PORTLAND COMPOSITE CEMENT)

PRESENTED BY NAFEES IMTIAZ I.D. 102 0009 030 PREENTED TO DR. KAIS ZAMAN LECTURER NORTH SOUTH UNIVERSITY MGT 314

PREFACE The main purpose of this project is to study the capacity planning of Premiere Cement Mills Ltd. The product chosen is Portland Composite Cement. To begin with, I needed some information regarding the capacity of the cement factory, so I contacted the Senior Operations Manager of the company, and visited the factory in person. Writing a report on the real operations is not an easy thing. It is also not easy for any student of operations management to get all the knowledge of an operation of a whole factory in one or two trips. This report is not just an academic requirement but also gives students a practical vision of operations of company. It provided me an opportunity to perceive the difference between theoretical studies and real life activities. By the grace of Almighty Allah, the most gracious and the most merciful, I applied all the learning, which was taught to me by my honourable teacher Dr. Kais Zaman, together with the book which I read. It gives me a greater practical knowledge about operations of a cement industry. Maximum efforts have been given to make this report easier to understand for its readers. I hope that the reader will find this report useful and practicable.

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INDEX
Topic Title page Preface Index Company Profile Vision & Mission Product Portfolio Capacity Planning Process Flow Diagram Storage Facility Raw Materials Cement packing Forecasting of Demand Forecast based on Time-Series Data Moving Average Forecast Actual Documents of Capacity Quality Assurance Capacity Measurements Aggregate Capacity Planning Page no. 1 2 3 4 5 5 7 9 12 13 13 15 16 17 18 20 21 21 23 Conclusion

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COMPANY PROFILE Premier Cement Mills (PCM) Ltd is one of the leading manufacturers of cement in Bangladesh. Premier Cement Mills Limited was incorporated on 14 October 2001 but they started
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their production commercially on 12 March 2004. Currently, the company runs with an annual production capacity of 9 Lacs tons (75,000 tons per Month). Their products are all around us, providing strength and durability to buildings of soaring dimensions, in infrastructure that speeds the lines of commerce and for housing that provides comfort and security to families across Bangladesh. The aim of the company is to relate their brand name in cement to best quality, dependability and technical excellence. The company employs about 450 employees out of which 330 workers works in the factory of West Muktarpur Munshiganj and in their registered office in Chittagong. The remaining number of employee works in the Corporate Office of PCML which is located in Karwan Bazar, Dhaka. The Company has purchased one of the most sophisticated plant and machineries entirely from its own funds, without any project borrowing. PCML has also purchased an ideal piece of Factory Land, measuring about 15 acres, at West Muktarpur, Munshiganj; Bangladesh. On the front side of the Land is Dhaka-Munshiganj Road and on the rear side is the river Shitalakhya, which meets the river Dhaleshwari about two kilometers down stream where both together falls at the mighty river Meghna. Thus the setting of this location provides a marvelous accessibility of both land and river for the factory site of the company. With a total installed cement capacity of almost a million tons per year at Muktarpul, Munshiganj, the Company is recognized as a leading cement producer possessing an abundant supply of raw materials, low production cost and an energy efficient operation. High quality and lower price are the main characteristics of Premier cement. Application of some special technology and presence of efficient workers enables to differentiate the companys products from that of the other companies. .
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VISION & MISSION Vision Working towards the development of the society through sustainable Growth and High Quality Performance. Mission Provide satisfaction to customers, an enjoyable working environment for the employees & to create value for the stakeholders.

PRODUCT PORTFOLIO Premier Cement consistently delivers quality products to its customers. Their automated manufacturing facilities and fully equipped laboratory with dedicated team ensures quality for each batch of production. Premier Cement adheres to the European Standards. The Cement gets its unique characteristics by using the high quality clinker, slag and lime stones. It provides the extreme of workability, durability and long-term strength. Premier Cement is produced according to the European norms EN 197-1:2000. From the beginning of their operation, the company has been consistently ensuring the following features for their products: Exceptional Strength: At Premier Cement the chemical composition and grinding fineness are closely monitored to ensure the Bangladeshi BDSEN, American ASTM, European EN, and Indian BIS standards are surpassed and the customers get cement of strength.

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Ideal setting time: In order to allow sufficient time for application, cement must have a quick initial settings time. The final settings should not take too long once it is in a place. At Premier Cement Mills Ltd, the ideal initial and final setting times are maintained. Currently Premier Cement is manufacturing the following types of cement:

1. Ordinary Portland cement: Ordinary Portland cement Type-II is the most common type of cement in general used around the world as it is a basic ingredient of concrete, mortar, stucco and most non-specialty grout. It is a fine powder produced by grinding Portland cement clinker (95%) and a limited amount of Gypsum which controls the setting time. It conforms to the Bangladesh Standard BDS EN 197-1:2003 CEM-I 42.5 N, European Standard EN 197 type CEM I, and American Standard ASTM C 150 Type I mark.

2. Portland Composite cement: Premier Cement standard: BDS EN 197-1:2003 CEM II/AM or BM 42.5N which is Portland composite cement. It is the most common type of cement used in Bangladesh which consists of Clinker, Slag, PFA, Gypsum, and Limestone.

Portland composite cement plays a vital role in European market. It is made by inter grinding or blending clinker and Gypsum with one or more of the mineral components which are given below: y A latent hydraulic component: e.g. Ground Granulated Blast Furnace Slag, Pulverized Fuel Ash (PFA) y y A pozzolanic component: e.g. natural pozzolana, Fly Ash (Class F) An inert components: e.g Limestone and sand which usually do not have any real participation in the chemical hydration process and is produced by grinding or blending of the constituents.

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CAPACITY PLANNING

Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. Capacity planning is long-term decision that establishes a firms' overall level of resources. It extends over time horizon long enough to obtain resources. Capacity decisions affect the production lead time, customer responsiveness, operating cost and company ability to compete. Inadequate capacity planning can lead to the loss of the customer and business. Excess capacity can drain the company's resources and prevent investments into more lucrative ventures In the context of capacity planning, "capacity" is the maximum amount of work that an organization is capable of completing in a given period of time Capacity is the upper limit or ceiling on the load that an operating unit can handle Basic questions in the capacity planning of Premiere Cement are: a) What kind of capacity is needed? b) How much is needed? c) When is it needed? y Answer to (a) depends on the product intended to produce, e.g. Portland composite cement y Answer to (b) and (c) depends on forecasts

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PRODUCTION CAPACITY: Cement Industry

Currently, 31 cement companies are operating in Bangladesh. Shah Cement ,which is the top Cement Company in the industry, both among the local and foreign companies has the highest production capacity which amounts to 2,700,000.00 in MT/year and their upcoming capacity is also the highest among upcoming production capacities of other companies which is 1,800,000.00 MT/year. Their project is an on-going project. Premier Cement has the third highest production capacity as per this year 2010 which amounts to 1,200,000.00 MT/year similar to the capacity of Lafarge Cement and Akij Cement.

PRODUCTION CAPACITY: Premier Cement Mills Ltd EXISTING Production Capacity refers to the volume of products that can be generated by a production plant or enterprise in a given period by utilizing the resources available. Currently Premier Cement owns two ball mills whose production capacity is 2000TPD each. The company produces a total of 4000TPD each day by using these two ball mills. The present production capacity of the ongoing project of the year 2010 is 1,200,000.00 tons.

UPCOMING Premier Cement Mills bought National Cement for 80 crore taka which has the capacity to produce 1800 tonnes of cement a day.

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PREMIER CEMENT MANUFACTURING PROCESS

PROCESS FLOW DIAGRAM

Cement manufacturing process description Quarrying Two types of materials are necessary for the production of cement: one rich in calcium or calcareous materials such as limestone, chalk, etc., and one that is rich in silica or argillaceous materials such as clay. Extensive quarry drilling and analysis are being undertaken to reduce the variability of the raw material quality. The quality check that starts from the quarry ensures optimization in the utilization of the reserves. Limestone and clay are either scraped or blasted from the quarry and then transported to the crusher.

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Crushing The crusher is responsible for the primary size reduction of the quarried materials. Boulders as big as 1 meter are being crushed to material sizes less than 80 mm. Pre-blending The crushed materials pass through an on-line analyzer to determine the pile composition. A stacker is then used to create different piles of materials and to reduce variation in material beds. Raw grinding and blending A belt conveyor transports the pre-blended piles into individual bins where a weighing feeder proportions it according to the type of clinker to be produced. The materials are then ground into the desired fineness by the raw mill equipment. The powdered raw meal is then transported into a continuous blending storage silo where variations are further reduced by mixing using aeration. Burning and clinker cooling The homogenized raw mix is fed into the pre-heater, a heat exchange equipment composed of a series of cyclones wherein heat transfer between the raw mix feed and the counter current hot gases from the kiln take place. Calcination partially takes place in the preheater. Raw meal is fed directly from the preheater to the rotary kiln. The slight angle of inclination and rotation of the kiln causes the raw feed to slowly make its way through the kiln counter current to the burner flame. The heat of the kiln breaks the chemical components and brings the raw mix into a semi-molten state. At this point, raw materials form compounds that produce the cementitous properties. After the burning section of the kiln, the materials turn into solid nodules known as clinker and discharge into the clinker cooler. Clinkerization occurs between 1350-1400 C wherein fine coal, pulverized by
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coal milling, is often used as heating fuel. The clinker cooler cools the hot granular mass of clinker by quenching air into it bringing the temperature down to 100 C. So air becomes hot and clinker cold. This hot air is then utilized as combustion air for the firing system of the kiln. Conveyors transport then the cooled clinker to the clinker storage silo. Finish grinding From the clinker silo, clinker is transferred to the clinker bin. It passes through the weighing feeder, which regulates its flow in proportion with the additive materials. At this stage, gypsum is added to the clinker and then fed to the finish grinding mills. Gypsum serves as a retarder in the too rapid setting or hardening of cement. Either the mixture of clinker and gypsum for Type-1 cement or the mixture of clinker, gypsum and pozzolan material for Type-P cement is pulverized in a closed circuit system in the finish mills to the desired fineness, usually about 87% minimum passing 325 mesh sieve. Cement is now piped to cement silos. Packing and distribution The cement from the cement silos are packed into bags by rotary packers or loaded as bulk and are distributed either by land using forwarder trucks and bulk trucks or by sea using barges or bulk ships.

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STORAGE FACILITY Premier Cement has the capacity to keep their raw material at their shed & silo. Clinker shed capacity: 50,000ton Gypsum shed capacity: 2,000ton PFA Silo capacity: 2,000ton PFA Shed capacity: 1,500ton Slag shed capacity: 8,000ton Limestone storage capacity: 50,000ton

RAW MATERIALS

Now days, many cement industries are facing problems in terms of fixing up their incoming raw material sources. Premier Cement has however fixed two sources of clinker which includes the SCG-Thailand and WUHU CONCH CEMNT CO.LTD-China which is brought to Bangladesh by using the companys own transportation. The company also gets natural gypsum from Thailand & Oman as it provides it with more consistence of raw material. The slag is imported from Japan and India whereas the limestone is brought from India. Portland composite cement plays a vital role in European market. It is made by inter grinding or blending clinker and Gypsum with one or more of the mineral components which are given below: y A latent hydraulic component: e.g. Ground Granulated Blast Furnace Slag, Pulverized Fuel Ash (PFA) y A pozzolanic component: e.g. natural pozzolana, Fly Ash (Class F)

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An inert components: e.g Limestone and sand which usually do not have any real participation in the chemical hydration process and is produced by grinding or blending of the constituents.

CEMENT PACKING Premier Cement has 3 roto packers. These are used for packing the finished goods of the company. One of the packer is the world famous HAVER PACKER-German capacity 150ton/Hr and the other 2 packer is WAXI HAVER Roto packer -China origin with a capacity 120ton/Hr. each. Packer #1 capacity: 150ton/Hr Spout qty: 10 each Origin: Hover packer-German

Packer #2& 3 capacity: 240ton/Hr Spout: 8 each Origin: China Premier Cement has its own PP Bag manufacturing plant which has the capacity of packaging 200,000bags/day. PMCL produces both paper and plastic bags which are delivered to their customers as per the demand of the customers.

EQUIPMENT TECHNOLOGY y y y y KRUPP POLYSIUS AG (GERMANY) Haver & Boecker Man Takraf Foroertechnik GMBH SMB International GMBH

United Conveyors Corporation (USA)

Some of the other important technologies and machineries that are used are:
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y y y y y

Tape Stretching Line Starex-1400S/105, STARLINGER (AUSTRIA) Printing Machine Flexa 8045, WINDMOLLER & HOLSHER (GERMANY) AD Convertex, WINDMOLLER & HOLSHER, GERMANY Slitting Machine Roll slitter, STARLINGER (AUSTRIA) Hydraulic Sack Press, STARLINGER (AUSTRIA)

Capacity: y y y 2 NOS. gas fired caterpillar reciprocating engine Capacity of engine : 5.8 MW each Plant capacity : 11.6 MW

Operational Philosophies: y y y y Operated in 3 shifts Each shift having 4 persons Plant started in grid mode Running in island / parallel mode

PCM Ltd has its own Power Generated plant. The portfolio of the plant is given below: Latest technology of STARLINGER from Austria & Germany Total Machines: Seven Total Employees: 200 ( 2 shift and 6 day operation ) Total Production : 2,66,00000 Pcs. Cement Bag Yearly (Approx.)

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FORECASTING OF DEMEND DEMAND AND SUPPLY SCENARIO OF CEMENT INDUSTRY IN BANGLADESH

35 30 25 20 15 10 5 0 2010 2012 2014 DEMAND SUPPLY

The current statistics of demand and supply of cement in Bangladesh are given below: Year 2010: Demand of cement = 12.5 m/ton per annum Supply of cement = 18.5 m/ton per annum According to some industrialists, it has been forecasted that these statistics are likely to change within the next two years. The forecasted statistics are as follows: Year 2012: Demand of Cement = 21 m/ ton per annum Growth Rate= 13 to 14 m/ton per annum

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Forecast Year 2014: Demand of Cement= 28 m/ton per annum Supply should be adequate to meet demand

FORECAST BASED ON TIME- SERIES DATA

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2010 2012 2014 2016 Series 2 GROWTH

Time series refers to a time-oriented sequence of observations taken at regular intervals. Forecasting techniques based on time-series data are made on the assumption that future values of the series can be estimated from past values. There are three behaviour pattern of time-series data: a) Trend b) Seasonality c) Cycle

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From my analysis of the cement industry, I have observed that the industry demand follows a Trend. The main reason for this is that the demand for cement is increasing each year, and the growth rate is quite high. Therefore, there is a long-term upward movement in the data of the demand for cement.

MOVING AVERAGE FORECAST Moving Average is a technique that averages a number of recent actual values, updated as new values become available.

MOVING AVERAGE FORECAST APPLIED TO CEMENT INDUSTRY IN BANGLADESH YEAR 2006 2008 2010 2012 DEMAND (m/tons) 6.72 8.14 12.5 21

The three period moving average is

F2014= 8.14+12.5+21
3

= 13.88 m/ton

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ACTUAL DOCUMENTS OF CAPACITY IN THE CEMENT INDUSTRY

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QUALITY ASSURANCE Following tests are performed for quality assurance of Premier Cement:

Expansion The expansion test checks that up to what extent the cement is expanded after addition of water. It is a complex test. According to world standard the expansion of cement should not be more that 10-mm. The company mostly test shows the expansion of 0.5 to 5.5 mm.,which is obviously excellent. Setting Time The setting time shows the time taken by cement to become solid. Fineness Test / Blaine Test Blaine test measures the small size of the particles in specific weights. The world standard for the fineness test is that the should not be less than 2250 cm2/gm while in D G Cement it is 2800 Cm2/gm. Strength Test The strength test checks the strength of cement after passing different number of days. The world standard and their standard are given below: Strength 3 days 7 days 28 days Unit PSI PSI PSI Company Std. 3800-4400 4800-5400 6000-7000 World Standard 2200 3400 5000

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CAPACITY MEASUREMENTS Actual output= 4000 tonnes/day Effective capacity= 4800 tonnes/day Design capacity= 5300 tonnes/day y Efficiency= 4000/4800=83.33% y Utilization=4000/5300=75.5%

AGGREGATE CAPACITY PLANNING Premier Cement Mills has a family of cement types which consists of two cements- Ordinary Portland cement and Portland Composite cement. They make their aggregate plan keeping in view the demand of cement and capacity of plant. There are two types of alternatives: y Demand alternative (Reactive Alternatives) y Capacity alternative (Aggressive Alternatives) Premier Cement Mills apply both the alternatives to aggregate planning. We discuss these alternatives one by one.

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Demand Alternatives (Reactive Alternatives) This alternative is applied to cope with demand of the cement. In summer, the demand of cement is very high. To cope with this demand, they hire extra unskilled and semiskilled labor. They also offer overtime to highly specialized and skilled person. Mostly unskilled labor is taken from subcontractors. The Company allows vacation schedule in winter, the month of Ramadan and rainy days. The plant is shut for repairing and maintenance work. The company always keeps the anticipation inventory to meet the unexpected demand e.g. in the peak season both the silo are filled most of the time to cope with any mishaps sometimes the bricks of the kiln shell were broken and work was stopped at least 3 days. During these 3 days anticipated inventory cope with the demand. The company also gives relaxation to their workers during the peak season. Schedules are formed to give the employee more rest. Capacity Alternatives (Aggressive Alternatives) The company uses these alternatives during the slack. When the demand is less than their capacity, a question arises How to utilize the idle capacity? The answer is to apply the aggressive or capacity alternatives. Aggressive alternatives allocation attempts to modify demand and resource requirement. In the slack season, when the demand of ordinary portland cement is low the company change the production OPC to sulphate resistance cement and supply to the export market. Another method is also used to enhance the demand by lowering the prices. When the price of cement will reduce the demand will increase.

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CONCLUSION After working on this project for 3 months -reading various books, journals, web materials, magazines, etc, in the process, time has come to draw a conclusion. After my extensive research, I do conclude that PREMIER CEMENT MILLS LTD is doing quite well in the industry and should always look forward for improvements. The Cement industry of Bangladesh is a booming industry and all the companies should perform the Capacity Planning efficiently to meet the demands and flourish in business. This is a very broad topic that I have worked on, and further researches and investigations are needed to fully understand the matter. I would like to suggest all those interested to do a research project on the same matter to work with patience, punctuality and confidence. The scope of working in this topic is broad.

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