Entrepreneurship for engineer 2021

Acknowledgement

Our group members want to extend their deepest thank to Zewdu Furniture and Nile Furniture
for the invaluable help they gave us during our quest on wood furniture, cost analysis and price
setting for the produces we make

We also want to thank Muluneh Furniture for assisting and allowing us to visit and record the
processes taken place during wood furniture production.

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 Entrepreneurship for engineer 2021

Abstract
This project covers all factors of furniture manufacturing feasibility study, the range from
description of the business idea up to organizational feasibility. Basically this project paper
discusses for classes of feasibility on house holding and office furniture manufacturing: market ,
technical , financial and organizational or managerial feasibility study. Usually these four
classes of feasibility study are important for any business feasibility study. Also to execute this
study properly market research, environmental assessment, making interview and reading
furniture related books are required. Description of the project is a brief overview of business
scenario (the way of production or manufacturing of the organization), definition of the project
(type and quantity of the product, technical process, size and location) and the business idea
relationship to the surrounding geographical area. We develop three types of business scenario:
 Scenario 1: making furniture based on customer ergonomics characteristics
 Scenario 2: manufacturing customized furniture and
 Scenario 3: manufacturing for rent.
This scenario came from market assessment and based on different points of view. We
selected the best model and ignored the other.
Our organization produces house hold and office furniture using different design and
decorative. House hold furniture are bed set, sofa set and other; office furniture are conference
table, computer table, file cabinet and others .
Market feasibility study includes enterprise description and competitiveness overview and
complete discussion of market potential of the proposed business idea.
Furniture manufacturing industry going through rapid change ,therefore the future direction of
the industry will be attractive .Technical feasibility discusses the type of production facility,
equipment ,production technology and other components used in furniture manufacturing .For
furniture manufacturing mortising machine ,thicknesses planer ,spindle molder and circular saw
The supplier source of this machine are local market (Addis Ababa ) .
The raw material for furniture manufacturer are play wood, hard wood, paint polish, screw, nail
etc; and they can find the local market.
Financial feasibility of this business idea gives clear over view of total capital requirement,
equity, credit needs and profit of the organization .Total capital requirement is a makeup of fixed
cost and working cost.

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 Entrepreneurship for engineer 2021

Table of Contents
Acknowledgement.......................................................................................................................................1
Abstract.......................................................................................................................................................2
Theoretical background...............................................................................................................................6
Scenario:......................................................................................................................................................6
Objectives....................................................................................................................................................7
Scenario 1................................................................................................................................................7
Scenario 2................................................................................................................................................8
Customize product...................................................................................................................................8
Business point of view.............................................................................................................................8
Scenario 3 (rent price).............................................................................................................................8
Manufacturing point of view...................................................................................................................8
Social and Environmental Impacts..............................................................................................................9
Economical impact....................................................................................................................................10
Definition of the payment and alternatives scenario..................................................................................10
Defining the products............................................................................................................................10
Description of production process.............................................................................................................10
1. Wooden loges are purchased from timber suppliers..............................................................................10
Market feasibility......................................................................................................................................12
Enterprise description............................................................................................................................12
Market Segmentation.............................................................................................................................13
Market potential....................................................................................................................................14
Competition...........................................................................................................................................15
Supplier.................................................................................................................................................15
Market outlet.........................................................................................................................................17
Technical feasibility..................................................................................................................................17
Facility needed for furniture manufacturing..........................................................................................17
Suitability of production technology.....................................................................................................18
Maintainability......................................................................................................................................19
Availability and suitability of the site....................................................................................................19
Availability of skilled man power..........................................................................................................20
Market...................................................................................................................................................20

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 Entrepreneurship for engineer 2021

Transportation...........................................................................................................................................20
Condition of the site..............................................................................................................................20
Complimentary plant:............................................................................................................................20
Raw materials........................................................................................................................................20
Financial feasibility...................................................................................................................................21
Technology /process option.......................................................................................................................24
Human resource requirement.................................................................................................................25
Land and building requirement..............................................................................................................26
Revenue calculation...............................................................................................................................30
Cooperative business organization............................................................................................................31
Implementation schedule...........................................................................................................................32
1. Selection of Site.................................................................................................................................32
2. Building Construction........................................................................................................................32
3. Plant Design......................................................................................................................................32
4. Machine Specification.......................................................................................................................32
5. Receiving Machinery.........................................................................................................................33
6. Layout Preparation............................................................................................................................33
7. Machine and utility installation.........................................................................................................33
8. Inspection..........................................................................................................................................33
9. Staffing..............................................................................................................................................33
10. Training...........................................................................................................................................34
Organization production structure.............................................................................................................34
Conclusion.................................................................................................................................................36
 Market feasibility study.................................................................................................................36
 Technical feasibility-.....................................................................................................................36
 Financial feasibility-......................................................................................................................36
References.................................................................................................................................................37

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 Entrepreneurship for engineer 2021

List of figure
Figure 1: Production flow process.............................................................................................................14
Figure 2: production classification............................................................................................................36

List of table
Table 1: Quantity and time for production.................................................................................................17
Table 2: Cost is the major comparison factor, but also reliability, maintainability....................................20
Table 3: Equipment cost............................................................................................................................23
Table 4: Factory equipment requirement...................................................................................................26
Table 5: Human resource requirement.......................................................................................................26
Table 6: Factory covered areas details.......................................................................................................27
Table 7: Raw material costing (Dinning set).............................................................................................28
Table 8: Raw material costing (Bed set)....................................................................................................29
Table 9: Raw material costing...................................................................................................................30
Table 10: Raw material costing.................................................................................................................31
Table 11: Gantt chart.................................................................................................................................36

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Theoretical background

When people began to settle in one location, furniture started to appear; the furniture consisted of
stone beds and cupboards some of earliest furniture comes from stone civilization. The furniture
of ancient times has a bearing upon our heads today. Ancient people constructed their household
furniture in stone Marble, and bronze and the people of the middles ages in wood. Little of
furniture of that time is now in existence our knowledge is chiefly due to old drawings. The
house or home of the furniture of middle Ages contained one large room called a heal, which
served as a dinning, living and sleeping apartment. Adjoining it was the brewer chamber for the
ladies of the household. There is little furniture in main room. A long road table, composed of a
board laid upon trestles occupied the center of the floor and about it were place rough stool and
benches for the member of the family with the exception of the lord and his lady. For them well
placed to readily construct chairs usually the only chair in the house. Towards the later part of
the Middle Ages the chair and chests were decorated to some extent. Towards the end of 50 th
century a great change took place in all hand crafts. A new force born in Italy gradually spread
throughout Europe and supplanted gothic art. The renaissance was a sudden spontaneous
outburst of initial energy in arts and innovation knowledge and books, which had long lain
neglected during the middle age. The last great epoch in furniture made a role in early day of the
19th century. There was a great quantity of furniture manufactured but it was a combination many
old forms and little thought added. Nowadays wood furniture is the most popular furniture
developing gradually on its own especially with the idea of setting up show rooms for furniture
in Ethiopia increasing. The estimated over all furniture sales from Ethiopia is very large per
annum. This demand for furniture is gradually increasing with an increasing demand and quality
consequences of the customers. Local furniture manufactures are famous for the production of
low quality furniture because of inadequate labor skill. Presently most manufactures are
depending on traditional method i.e labor intensive technology that results in low productivity.
Identification and Exploration of Business Scenarios.
Scenario: is a way of running a company’s business. It developed by the following point of view
1. Core service
2. Business point of view
3. Manufacturing point of view

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 4. Sustainability point of view
Objectives
The objective of this project is conducting different feasibility studies on furniture manufacturing
and determines the viability of this business idea. The viability of the proposed business idea
depends on many factors, like.
1. Market feasibility study
2. Technical feasibility study
3. Organizational feasibility study
4. Financial feasibility study

These, market technical, financial and organizational feasibility study demonstrates the
probability of potential or organization’s success.
From the market we use 3 different scenarios
Scenario 1
Production office and household furniture based on the ergonomic requirement.
Core service

A family goes there for consultation in which they will create and order a new bedroom for their
kind. Users in need of furniture’s fitting their physical characteristics (to fit in the space or for
ergonomic requirement)
Business point of view

A cluster of regional furniture produce in order to provide in the local market a complete offer
for the household emphasizing high quality regional and environmental standards.
Manufacturing point of view

A company having very flexible production able to make pieces one by one at medium, low cost
and full interaction one with the other. For this purpose network of furniture manufacturing
together with machine tools manufacturing have developed high multipurpose manufacturing
equipment.
Sustainability point of view

Local production and coordinated logistic within the cluster and the home delivery.
 No over production (only one demand)

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  Lower product life span and quality
 No (less furniture packaging)
 Strong environmental standard
 Rapid manufacturing technology
 Modular machinery
Scenario 2
Customize product
Business point of view

The business model is based on light customization and on executive system of semi-component.
Manufacturing point of view

A series of specific automated machine tools have been developed for easy (quick modification
and finishing).
Sustainability point of view

 Work on limited number of components

 More long lasting product

Scenario 3 (rent price)

Options

 Availability of home delivery.

Business point of view

 The payment is made according to lease (rent).

 The payment streams are slow at the beginning and would require initial capital.
Manufacturing point of view
 The furniture is especially designed for easy maintenance and renewal.
 Easy disassembling and quick substitution of finished element.
 Made of high quality
Sustainability
 Flexible fixture
 Flexible pallet system

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  High flexible assembly system
 Very flexible painting

Relevant scenario
Scenario 1
 Data will be accessed
 On demand production
 No furniture packaging
 Rapid manufacturing technology
 Flexible production manufacturing point of view
 Modular machinery
Scenario2
 Work on limited number of components
 More long lasting product
Scenario3
Due to our financial constraint this scenario is difficult to implement because of adaptive
furniture for rent.
Social and Environmental Impacts
Therefore the relevant scenario is scenario 1.
Wood furniture manufacturing process uses many chemical and natural resources. It generates
considerable amount of waste material as well. The operation process including cutting, drying,
sawing, sanding& finishing all which may release pollutant into the air and may contribute to
health concerns in the operation and in community. Moreover, wood furniture manufacturing
facilities deal with many things that can affect the environment, materials such as paints, wood,
treatments, stains, varnishes, polishes and adhesives can harm the environmental people if they
are not properly managed. So the reduction or elimination of these pollutants holds potential to
obtain significant savings through reduction in disposal process and material cost.
People, who are exposed to toxic air pollutants at sufficient concentration for sufficient
durations, may increase their chance getting cancer or experiencing other series health effects,
such as reproductive problem, birth defects and etc.

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Adhesive are used in assembling wooden furniture parts; the use of adhesive for assembly and
veneer releases solvents into the air and damages the environment and health of the workers.
Furniture making requires the use of wood preservatives of coating materials all of which contain
solvents. This material can generate contaminated waste water as a result of the drip page (small
drop of liquid) from wood surface.
Economical impact
Furniture manufacturing companies have direct and indirect influences. Direct impacts are due to
employment in manufacturing firms. Indirect economic impacts are realized through industries
that provide goods and service to industry workers.
Definition of the payment and alternatives scenario
Defining the products
 There in a large number of products made by wood. Few can be defined as
 Sofa: upholstered seat for more than one person.
 Bed: piece of furniture that provides place to sleep.
 Chair: seat for one person with support for the back.
 Cupboard: a small room for used storage space.
 Office furniture is also manufactured in small quantities. The office furniture includes
 Office table
 Conference table
 Chairs
 Computer tables
 Cupboard etc
Description of production process
1. Wooden loges are purchased from timber suppliers.
2. Logs are cut into planks (using circular saw)
3. Planks are seasonal either naturally or in the seasoning plant. Natural seasonal requires 6
month to year or artificial seasonality takes 8-20 days.
4. Drawings and specification of furniture have to be drafted.
5. Cross cutting of planks according to the specification /drawings (using circular sew.)
6. Carving of cross cut planks in to the required size using (planner and thickness) and mortising
machine.

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7. Joining of different parts to assemble theartoole.
Glue is used hydraulic presses used for extra strength of joint.
8. Finishing the item polishing /painting Air compressor sprayers etc.
The household and office furniture have been partially identified in the table above. The reason
is that each manufacturing unit has developed its own production process steps according to the
product number of workers, machinery and other factors. This affects the quantity of the product.
Step-1
Wooden logs
Step -2
Cut in to planks
Step 3
Planks are seasoned
Step-4
Designing and specification
Step-5
Cross cutting
Step-6
Machining
Step-7
Machining
Step-8
Finishing

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Purchase of wood Wood cutting at Wood comes in Wood
trolley (circular saw) factory seasoning
(timber market)
pupp

Furniture
Carpenter Wood comes designing
Wood comes at
shape the wood machine to m/c man
wood in to
furniture

Furniture comes to Furniture Carpenter Furniture goes

spindle/molding comes to assembles the to store or
m/c carver for furniture polishing
carve ring

Figure 1: Production flow process

Market feasibility
Enterprise description
Furniture is a broad product group that encompasses very different types of furniture such as
chairs, table, wardrobes, shelves, cupboards etc with very different uses for (offices, chickens,
bathrooms, outdoors, special uses etc)

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 The scope of the industry or our organization cover:-
1. In door furniture : this includes indoor furniture for business purpose example office and
school as well as for domestic purpose .It includes all free standing built in furniture units which
are used for storing ,handing ,lying ,sitting ,working and editing
2. Outdoor furniture: this includes mainly benches, tables and chairs.
Market Segmentation
According to current statistics there are many furniture buyer groups this fall in to the following
categories
1. Medium - end: this type of furniture is produced by the skilled manufacturers for home based
and offices in medium quality. We manufacture this type of furniture for mid standard living
people.
2. Low -end : a step down from the first category furniture are low quality and low price such as
dining chair that sell furniture which is targeted to up market buyers .
3. Unfinished furniture: we sell unfinished products to other manufacturer so that they can finish
the process by themselves.
The furniture industry promises significant growth opportunity in the near future as the economic
growth and worldwide real estate industry booming currently. The growing of income is also the
driving force for the growth of furniture industry .The furniture industry includes manufacturing
of a wide range of home furnishing product, offices and institution.
The furniture market in developed and emerging country as a significant growth opportunity in
near future .The growth in the economy, real estate industry and urbanization is driving the
growth of the world wide furniture industry .The furniture products are focusing more on
retailing their product to attract a new customer however scarcity of skilled labor, transportation
and cost optimization continues to be significant challenges to the furniture industry.
To the same point of view the future direction of the market increasing .Furniture consumption
has been completed by necessity ,practicality ,applicability to the grade change ,the furniture of
consumption in the future market is not only designed to self products is to sell ,selling the
concept of selling brand .The brand will reflect the quality of life consideration for consumer an
important criteria .The consumer become increasingly based on the price factor ,environmental
protector ,design attractiveness ,function color material strength ,shopping environment (nearest
to the customer ) ,service quantity ,product availability .

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Nature of industry globalization is changing the structure of labor intensive industries such as the
furniture industry, increased sales at lower price force the manufacturer to look for competitive
edges .Human needs are uncontrollable in day to day life needs comfort, safe environment an
modern life style so to fulfill this needs they want to the supplier of their needs, among their
needs furniture industry continuously fulfill their need.

Market potential
In local market the target market comprises the following segment.
Target customer
In local market the requirement for wooden furniture can be categorized in to four namely:
 For newly built house
 For renovation
 For institutional buyer
 For office (public in privet sector )
The majority of customers in domestic market belong to first and second category. This customer
require furniture for their newly built houses and usually bye range of product like bed shit,
dining sets and sofa sets with other decorative material for their entire house .
Our organization should target this customer to establish the business and to increase the
customer base. These potential customers can play a dominating role in the successful
breakthrough of the business.
Home furniture in Bahir Dar is available in wide ranges to fulfill different customer-needed
appliances, which is driven by the designs chosen, the input which comes from designers and
market feedbacks. To get potential market we consider several aspects related to the customer
(demography, life style and availability) and internal capability, expertise, quantity and
availability of labor, production process complexity and delivery time. Depending on the end
user we produce three categories of furniture: domestic furniture (low quality) for home use,
domestic furniture (medium quality) for home use, commercial furniture for offices.
Enterprise Competitiveness
Seasonal customer demanded and uncertainty in customer .the furniture manufacturing institute
are few large producer .furniture manufacturing company in Bahir Dar are few in number but
they produce a large amount of product including house hold ,office and industrial furniture. The
reason why they produce in large amount is the potential customer or demand of furniture is high

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 Competition
We will compete with many different companies which manufacture different quality furniture
and even larger factories such as Nile Furniture Company. Even though the exact number of the
competitors and their financial information is not determined, it is clear that big companies (e.g.
Nile Company) have a large share of furniture market.
Even though we will compete for the same share of their market, we will differ greatly in terms
of product quality and delivery system of the products. Many of the competitors concentrate on
certain product design and decoration, rather we are going to produce or manufacture with
different design by the help of qualified professionals.
Competitor: The companies mentioned in the above table are manufacturing all kinds of
furniture for our companies we will only be producing only house hold and office furniture. Few
of the company who is producing all kinds of furniture is listed below
1. Nile furniture company
2. Joanie furniture company and
3. Tana furniture company
Nile furniture company established since 15 years ago and the organization is supported by
experienced manager and workers by implementing some advanced technology and some latest
technology the above furniture factory has been able to gain the truest and good well in
competitive market in Bahir Bar therefore the furniture company are the major compotators
Supplier:
A) Hard board (play wood) chip board: these items are used in the manufacturing of furniture in
our organization .The supply source of the item are different play wood factory, these factory
include 3f (finina furniture factory).
B) Foam and cloth: are used in sofa sets and bad sets .they are available in local market
C) Hard wood: are most commonly used for furniture production cherry, walnut, oak, maple and
mahogany these row material are the main raw material used by our organization.
D) Paint /polish/other raw material: this includes 15 % of the total raw material used in furniture
manufacturing .This material are available at different companies who sale those material
directly to the manufacturer.
our organization are making all kinds of furniture products of office and house hold furniture
that includes sofa, table, conference table and other type of product in small quantity this article

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are based on different design and specification that includes traditional and modern design at
high fine and normal quality .Therefore, the potential customer of our organization are all types
of people in each economy level
 100% utilization
Table 1: Quantity and time for production

Types of product Quantity per month Price per unit Production time per
(Br) unit
Bed set 2 2500 2 week
Dining set 4 4500 1 week
Sofa 2 15000 2 week
Cupboard 2 7750 2 week
Conference table 2 22000 2 week
Chair 4 3000 1 week
Computer table 4 3000 1 week

Note: the price of conference table depend on their shape and size
Total quantity produced in a year
We produce the following in the first month
 Two bed set per month
 Four dining sets per month
 Two sofa per month
 Four chair per month
The next month productions are:
 Two cupboard per moth
 Two conference table per month
 Four computer table per month
Therefore, the annual production units are:
= (2+4+2+4) * 6 month + (2+2+4) * 6 months
= 120 units
Annual sales
 Bed set =2*2500*6 = 30000

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 Dining set = 4*4500*6 = 108000
 Sofa = 2*15000*6 = 180000
 Chair = 4*3000*6 = 72000
 Cupboard = 2*7750*6 = 96000
 Conference table = 2*22000*6 = 264000
 Computer table = 4*3000*6 = 72000
Total = 1,049,000

Market outlet
Furniture is sold to domestic customer by the manufacturer or traders .The larger manufacturer
have their own market share and distribution channel .In our case the potential buyers are local
customer so we don’t need distribution channel. Therefore our customer will take the product
from the production place.
Technical feasibility
Facility needed for furniture manufacturing
Furniture manufacturing facilities eligible for coverage under these facilities are identified by the
following.
 Wooden kitchen cabinet
 Household furniture
 Office furniture
The manufacturing processes for furniture manufacturing aren’t typically exposed to storm
water. However, unloading operation and storage of some raw materials and waste products may
be exposed to precipitation.
There are two types of furniture manufacturing facility. The distinction is based on the primary
raw material wood or metal. The manufacturing process and significant material to produce
wood and plastic metal furniture are not similar. This manufacturing activities and wood
resource are not exposed to precipitation.
Furniture manufacturing facility includes material handling sites and raw material storage area.
Primary raw material, industrial processes, waste and buy products and final products offer for
the production of wood furniture and other furniture’s. With each subsector the number of
industrial activities and corresponding significant materials waste products may also vary.

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Industrial activities and significant material associated with manufacturing of furniture. Due to
limitations with production of furniture with in sub activities material are fairly uniform.
The process of manufacturing furniture begins with delivery and storage of wood. There are
different raw wood materials delivered raw material allowed to dry up. Then dried lumber is
taken to process area. Remaining furniture manufacturing processes are all completed in days.
The size numbered is taken through sanding and machine. Fine working surface can include
boring routing, lathe operation, miter cutting. From this point each process of wood is dedicated
to specific product.

Suitability of production technology

Our organization requires latest technology to ensure that our product are the high quality and
high efficient. We are able to fulfill our valuable technology requirement with timely delivery of
our products.
Some of the reasons how companies have become the leader in global market is type of
technology they use.
There are four machines types are needed for furniture manufacturing, circular saw, spindle
molder, mortising machine and thickness planner.
There are two company providers of this machine quire (in India) and in china. Nowadays some
other company also produces and exports these machine but the above two are better.
Comparing these two providers based on the following criteria:
1. Cost
2. Reliability of the machine
3. Maintainability of the machine
4. Durability of the machine

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 Table 2: Cost is the major comparison factor, but also reliability, maintainability

Machine Italy machine China machine

Cost Mortising machine 44,000 40,000
Circular saw 21,000 20,000
Spindle molder 42,000 40,000
T. planner compound 60,000 60,000
Reliability Mortising machine High Moderate
Circular saw Moderate Moderate
Spindle molder Moderate High
T. planner compound Moderate Moderate
Maintainability Mortising machine Easily maintained Easily maintained
Circular saw Easily maintained Easily maintained
Spindle molder Easily maintained Easily maintained
T. planner compound Easily maintained Easily maintained
Durability Mortising machine Highly maintained Highly maintained
Circular saw Highly maintained Highly maintained
Spindle molder Highly maintained Highly maintained
T. planner compound Highly maintained Highly maintained

Maintainability: is the ability of machine that easily restore to its original position when it
break down.
The cumulative sum of the above table tells us china is a good technology provider. But the
machines can be available in a local market in Addis Ababa.

Availability and suitability of the site

Our furniture company is located in Bahir Dar which is one of the medium and small size
furniture manufacturing and distributing center. With the advantage of:
 Near the river
 Availability and low cost of raw material
 Availability and low cost of labor
 Neighbor to non-modern furniture manufacturing countries like Adet and Warta, etc
And Bahir Dar have better transportation facility and production input (electricity, water, etc).
We attract the local buyers by creating different type of design.
And other reason that we select Bahir Dar for our business organization site is
Availability of skilled man power: in current situation Bahir Dar has many skilled people with
low age rate.

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Market: the center of the buyer must be the center of the market this site has many furniture
buyer people.
Transportation: as compared with other Ethiopian country this site has better transportation.
Condition of the site: a ground has to have good resistance to the load induced by the
foundation.
Complimentary plant: an industry to produce has intended may need material, service and
assistance from other plants.
Generally Bahir Dar has raw materials then cost of the product kept to minimum, with large
market share, the least risk and the minimum social gain.
It is the place of maximum net advantage or which gives lowest unit cost of production and
distribution.

Raw materials
The basic raw materials for manufacturing of furniture are wood. Wood is obtained from forest with

primary quality. Generally dray wood is recommended for manufacturing of quality wooden furniture.

Forest wood is easily available in the market, other type of wood used in manufacturing furniture are:

Play wood

Walnut wood

Mahogany

Raw material wood is easily available from the forest reserve which comprise of 40% of the area. Other

materials used in the furniture manufacturing process are:

Nails
Screws
Glue
Sprit
Thinner
Lacquer
Sealer
handler

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This raw material is easily available in the market. The amount of product that we produce in a year is

220 units. For this we need 300 timber wood form timber merchant.

Financial feasibility
Estimate the total capital requirement
Basically four types of machines used to manufacture furniture. This machine includes:
 circular saw
 thickness planner
 spindle molder
 mortising machine
Capital requirement for this machines are
 circular saw=20,000
 thickness planner:
 Internal machine =40,000
 Compound machine =60,000
 spindle molder:
 Soldering machine =20,000birr
 Wood work machine =20,000
 mortising machine =40,000
Other fixed cost
Land for factory =400,000
Buildings and insurance cost for factory =200,000
Pre operating cost =50,000
Contingency capital needed: technology may fail to function normally if they use improper way.
But we want use this machine improper work environment; so they don’t need contingency
capital.

Total capital
Fixed cost = (land for factory cost + building for factory cost + equipment cost +pre operating
cost)
Table 3: Equipment cost

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 No Item Quality price
1 Thickness planner
1.1 Internal machine 1 40,000
1.2 Compound machine 1 60,000
2 Circular saw 1 20,000
3 Spindle molder
3.1 Soldering machine 2 40,000
3.2 Wood work machine 1 20,000
4 Mortising machine 1 40,000
Total 7 220,000birr

There for total capital needed =220,000+600,000+50,000=870,000Br

Among the total expenditure we borrow from governmental banks =470,000 by 10% interest per
annum.
Calculation of interest for the next year
F=p(1+i)n
=470,000(1+0.1)2
=568,700birr
Total expenditure with interest =400,000birr+568,700birr
=968,700birr
Working capital needs
Working capitals are raw material inventory and cash requirement cost.
Cash requirement (production cost)
Our organization makes all kinds of house holding furniture and office furniture in small quanti

Table 4: Production of cost of each item

bed set 2,000birr

Cupboard 4,750birr
Sofa 10,000birr
dining table 3,000birr
conference table 18,000birr
Chair 2,000birr
computer table 2,000birr
and for the other product 10,000birr

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Number of quantity produced in a year
From the previous table 120 quantity and 100others
=220quantity/year
Production per month in the previous table
 2 bed set
 2 dining set
 2 sofa
 4 chairs and others Production for next month
 2 conference table
 2 cupboard
 4 computer table and other 6
Manufacturing cost per month
 bed set=2*2,000=4,000
 dining set=2*3,000=6,000
 sofa=2*10,000=20,000 and other (6) =1,000
 4 chair = 4*2,000= 8,000
Manufacturing cost per month for next month
 Cupboard =2*4750=9,500
 Conference table=2*18,000= 36,000
 Computer table= 4*2,000=8,000
 Other (6)= 1000

Annual manufacturing cost=6(the sum of first month cost)+6(the sum of net month
cost)=6(39000)+6(54500)=561,000 Birr
Employment cost
12 person in our organization are directly involved in the furniture manufacturing. There person
can be divided into the categories of polishes, up Holston workers and general laborers average
payment for the worker was 150 therefore the total cost for the worker
=18000Birr/month*12
=216,000Birr
Finally total production cost = 216,000+561,000 = 777,000Birr

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Technology /process option
Imported and locally manufactured machinery is available in local market. This project requires
those imported machinery and technological advancement, therefore technology has high impact
on the business. Imported machinery and plants are available for seasoning, cutting, molding,
finishing, etc.

Table 5: Factory equipment requirement

Description Required Cost/unit (Br) Total cost(Br)

Manager office table 1 1500 1500
sheet
Visitor chairs 1 800 800
Table & chair for 3 1500 1500
administration, store
&production
Total 5 3800 3800

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Human resource requirement

The labor required for manufacturing process is easily available on monthly wage and
permanently employed. It is recommended that selective highly skilled labor should be employed
permanently.
Table 6: Human resource requirement

Description Requirement Monthly salary(Br) Total month salary

Production 1 2500 2500
supervisor
Carpenter 5 1000 5000
Machine man 1 2000 2000
Polish man 1 1500 1500
Drafts man 1 2000 2000
Purchaser 1 1500 1500
Guard/get keeper 1 400 400

Land and building requirement

The land sufficient for setting up the proposed wooden furniture manufacturing unit is
approximately (1254m2) production.
Table 7: Factory covered areas details

Description Area (m2)

Factory main hall 371.6
Carving room 139.35
Polishing room 139.35
Store for un finished product 92.9
Store for finished product 213.6
Office for factory administration 46.45
Open space 250.8
Total 1254

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Table 8: Raw material costing (Dinning set)

costing dinning set normal quality

Raw material cost
Description No of units Rate/unit Total amount
Wood cubic(m) 4 200 800
Polish/seat 8 40 320
Nails/screws 1 80 80
Glue /solution 1 50 50
Hardener 1 60 60
Lasani 1 320 320
Thinner (in trs) 10 6 60
Point 1 200 200
Varnish 1 40 40
Glass top 12mm in 8 40 320
(m2)
Foam 1 60 60
Tapestry (in meters) 3 40 120
Misc 1 60 60
Direct labor 1 510 510

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 &electricity cost
Total 1 3000 3000

Table 9: Raw material costing (Bed set)

Costing bed set normal quality

Raw material cost
Description Number of units Rate /unit Total amount
Wood(cubic) 3 200 600
Lasani 2 150 300
Nais/screws 1 40 40
Glue 1 40 40
Pain(Lt ) 1 50 50
Thinner (in Lt) 10 6 60
Varnish(Lt) 1 40 40
Wooden mattress 1 100 100
frame
Tapestry dressing (in 0.5 60 30
meters)
Foam 1 80 80
COB (alternate for 1 60 60
hardener)
Channels, handles 1 300 300
Direct labor & 1 300 300
electricity cost
Total 1 2000 2000

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Table 10: Raw material costing

Costing sofa set normal quality

Raw material cost
Description Number of unit Rate /unit Total amount
Wood(cubic m) 6 200 1200
Polish/seat 6 250 1500
Nails/screws 1 100 100
Glue /solution 1 200 200
Spring(DOZ) 7 120 840
Tat (in meters) 10 10 100
Rubber petti 25 2 50
Dori (in kgs) 0.5 80 40
Foam 1 2500 2500
Tapestry( in meters) 20 100 2000
play wood 1 650 650
Direct labor& 1 920 920
electricity cost
Total 10,000 10,000 10,000

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Table 11: Raw material costing

Costing office furniture normal quality

Raw material cost
Description Number of unit Rate /unit Total amount
Wood(cubic meter) 2 200 400
Nails /screws 1 50 50
Glue /solution 1 100 100
COB 1 100 100
Paint 2 250 500
Lasani 2 200 400
Thinner (in Ltrs) 10 6 60
Lacquer (Ltrs) 2 50 100
Channel, handles 1 250 250
Executive chair 1 2500 2500
Visitors chair 1 1500 1500
Direct labor & 1 550 550
electricity costs

Revenue calculation

Sailing price /unit

Bed set =2500 Birr
Dinning set=4500 Birr
Sofa set=15,000 Birr
Cupboard=7750 Birr
Conference table=22,000 Birr
Chair =3000 Birr
Computer table=3000 Birr

Annual revenue

Bed set=2*2500*6=300,000
Dining set=4*4500*6=108,000

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 Sofa=2*15,000*6=180,000
Chair=4*3000*6=72,000
Cupboard =2*7750*6=93,000
Conference table=2*22000*6=264,000
Computer table=4*3000*6=72,000
Other =50,000
Total =1,09,000 Birr
Profit=Revenue-Cost
=1,049,000-777,000
=272,000 Birr/annum
Breakeven point calculation
X=F/CM, CM= Contribution Margin
X=F/S-V = 870,000/1,049,000-777000
=870/270
=3.2 Year
Break even quantity
BEQ=F/1-(V/S)
=870,000/(1-777000/1,049,000)=1243 unit
Cooperative business organization
A duly registered association of persons ,with a common bond of interest and have voluntary
joined together to achieve allow full common social or economical ends, and making equitable
contribution to the capital required and accepting a year “share of “the risks and benefits of the
undertaking in accordance with cooperative principle.
We choose cooperative business organization because it has the following advantages
1. Elimination of middle men
The management of the customer cooperative society directly purchases the finished goods
from the producers.
2. Saving in management expenses
Cooperative society annoys some economic sin the field of management due to voluntary
services performed by the members themselves. Thus, it is possible to minimize the express

of management and supervision.

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 3. Minimum stock society purchases the same goods which are actually demanded by its
members. Those there is need to have minimized stock out land due to constant and regular

demand.
4. Economy in distribution and production expenditure.
5. Integration under this type of organization, compute integration between producers
wholesalers and retailers is always possible.
Implementation schedule
Type of work and no of data require implementing this business organization.
1. Selection of Site
 Determine suitable production area
 Getting contact to buy the size
 Getting permission from the government
 receiving the land
Days required 35
2. Building Construction
 Determine construction group and give contract
 Facilitating necessary materials
Total days 180
3. Plant Design
 Determine necessary facilities.
 Determine necessary office and workshop (production)
Total days 35
4. Machine Specification
 Determine number of machine
 Determine or select suppliers
Total days 20
5. Receiving Machinery
 Inspection
 Counting
 Receiving and checking agreement paper
Total days 10

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6. Layout Preparation
 Layout of production room
 Layout of sales room
 Layout of office
 Layout of other service
 Layout if machine
 Layout of inventory /storage house
 Layout of aisles
Total days 10
7. Machine and utility installation
 Arrangement of facilities
 Lubrication
 Foundation preparation
 Leveling preparation
 Total days 60
8. Inspection
 Checking the correct installation
 Check its function
Total days 15
9. Staffing
 Determine the number of worker.
 Determine the required performance of workers.
 Workers allocation
Total days 15

10. Training
 Aware workers and orientations
Total days 5
11. Start Up
Organization production structure

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 Figure 2: production classification

Table 12: Gantt chart

No Activity Duration Start date Finishing Predecesso

date r
1 Site selection 35 1/ 2/2010 6/3/2010 0
2 Building 150 6/3/2010 6/8/2010 1

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 contraction
3 Plant design 35 6/8/2010 11/9/2010 2
4 Machine 20 11/9/2010 1/10/2010 3
specification
5 Receiving 10 1/10/2010 11/10/2010 4
machinery
6 Machine and utility 60 11/10/2010 11/12/2010 5
installation
7 Inspection 15 11/12/2010 26/12/2010 6
8 Staffing 15 26/12/2010 11/1/2010 7
9 Training 5 11/1/2010 16/1/2010 8
10 Start up 0 16/1/2010 16/1/2010 9

Conclusion

This project is a feasibility study for a small business of Furniture Company. As we see it, this
business has many advantages; among these it is likely to be financially successful since we have
demonstrated through conducting this feasibility study. Therefore it can fulfill our desire as
graduated to capitalize in our education and become entrepreneurs rather than working or others.
As we see it we develop three business scenarios: Furniture manufacturing with ergonomic
requirement, customize furniture and furniture for rent. Each has its own point of view:
 Manufacturing point of view
 Business point of view

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  Sustainability point of view
When we compare these three scenarios based on their business viability, scenario two and three
have getting challenge to implement.
The marketing feasibility, technical feasibility and finical feasibility studies indicate that this
proposed business are feasible.
 Market feasibility study-as we have seen that furniture manufacturing industry going
through rapid change. In that the furniture company has good wall in the furniture.
 Technical feasibility-necessary machine, equipment and input raw material are available
in local market. The suppliers directly sell to the company.
 Financial feasibility-payback period of the project in 3 years.
Therefore this proposed business idea has many advantage .we want to capitalize on our
education as entrepreneurs instead of working for other organization and under leader ship of
boss after graduation.
Although limitation built to this feasibility study and barriers and Challenges involved in this line
of business but we clearly see that this business is feasible.

References

[1]. Entrepreneur for engineers hand out.

[2]. Yusrin G.longeeker. Six editions. Small business management
[4]. Engineering economics for professional engineers
[5]. Naile furnitur Nile furniture company
[6]. Joanie furniture company and
[7]. Tana furniture company

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