Given the need to develop strategies and make decisions that allow a better management of the company's funds, the present investigation is carried out in the José Rodríguez Quarry of the Construction Materials Company, which could contribute to improving its financial credibility among the others companies of its kind. The scientific problem, the objectives and the hypothesis of the research are presented below:
Overall objective.
Determine the cash situation of the selected company through the application of short-term financial planning techniques and a linear programming model for material planning in conditions of risk and scarcity of monetary resources, with a view to reducing the costs.
Specific objectives.
- Application of a linear programming model in order to reduce costs. Prepare the Cash Budget to know the cash situation of the company.
Hypothesis
The use of scientific techniques to carry out operational planning will allow efficient short-term financial planning to be carried out, which will contribute to the achievement of short-term financial balance.
Information to use
Financial statements of the selected business organization.
Analysis of the results of the economic - financial management of the selected entities.
Normative documents, established procedures and current regulations.
Research Methods:
The Dialectical Materialist Method has been used for research as a universal method of knowledge, with emphasis on analysis and synthesis; In addition to particular methods associated with financial planning and a linear programming model applied by the author. Additionally, a documentary review was carried out to obtain the necessary information, statistical techniques for information processing, economic-financial analysis, computer techniques and cost-benefit analysis.
Characterization of the José Rodríguez Quarry.
Within the Construction Materials company, work was done specifically on the Quarry as it is the one with the greatest weight in the Company's profits, it contributes 71.35% of all the profits of the same.
The José Rodríguez Quarry is located in the town of Cañada Onda, in the Majibacoa Municipality in the province of Las Tunas. This is dedicated to the production of crushed stone of different granulometries, artificial sand, as well as blocks of 10, 15, 20 and vaults of Cuban technology, and for this it has the following centers.
“Rodolfo Rodríguez” quarry “José Rodríguez” quarry
Criollos block factory
Spanish block factory
Production Assurance Brigade.
Blasting and Baremation Brigade.
Powder keg
Mission
Produce aggregates in their different granulometries, artificial sand, concrete blocks and vaults, from raw materials from adjacent deposits, guaranteeing the level of competitiveness and presence in the economic scenario. And the destination of its production basically constitutes a source of raw materials for the Business Unit of Combined Base of Concrete and Carpentry “Guillermo Tejas and third parties; satisfying the demand for competitive products that show profitability and ensure the protection of the environment.
In order to contribute to the fulfillment of its objectives and mission, it has a workforce sufficiently trained to perform the tasks that correspond to it and are distributed as follows:
Table # 11 Distribution of workers by occupational category.
| Distribution By Areas | |||
| Category
Occupational |
Address | Stone and
Sand |
Factory of
Blocks |
| Leaders | one | one | - |
| Technicians | 7 | - | one |
| Services | 18 | - | - |
| Administrative | 4 | - | - |
| Operators | 7 | 35 | 36 |
| Total | 37 | 36 | 37 |
Source: Author's elaboration
This year, two important investments were made that will allow a significant increase in the volume of production and a better use of resources. A hydrocyclone and clarifier were started up in the sand production line to produce high quality artificial sand, allowing 40.0 m3 per year to be obtained. And the other investment is a high-tech block laying plant with the capacity to produce 2,400.0 thousand units per year.
Results of the application of financial economic planning techniques.
1.1 Balance Point Analysis
As one of the planning and analysis techniques described in the first chapter, the equilibrium point was applied in physical units and in values. To determine this point, the monthly average of the fixed costs, the monthly average of the variable costs and the sale price per product were taken as a basis. It is necessary to highlight that the quarry does not carry out a Balance Sheet, only an Income and Expenses Budget is made, the consolidated Balance Sheet of all units is made at the company level. The calculations performed are shown below.
Where:
Pv = Selling price of the product.
Cv = Monthly average of unit variable cost.
Cf = Monthly average of fixed costs.
Pq = Balance point in units.
The result of the calculation indicates that by producing 729.14 m3 of sand each month, the balance between sales and total operating expenses is achieved. Representing 29.2% of the 2,500 m3 of sand planned for the month. See Annex 13 and 14.
Calculation of the Balance Point in Value Vnt to the average of total net sales.
Pq (V) = $ 197 180 sc
Cft = the monthly average of total fixed costs.
Cvt = the monthly average of variable costs.
Vnt = the average total net sales.
Outcome
The result of the calculation indicates that $ 197 180 constitutes the level of monthly sales necessary to cover the total costs in that period.
1.2 Linear Programming Model
Three types of blocks are produced at the Wualdemar Díaz de la Rosa Block Factory belonging to the Combinado José Rodríguez; 10, 15 and 20 cm. Those of 20 are made in a laying plant of Spanish technology blocks characterized by its high efficiency and productivity and for the production of blocks of 10 and 15 two Cuban technology machines are used with a high degree of over-exploitation.
Despite the fact that the modern plant operates with a large productive capacity and efficiently, it is not capable of satisfying the high demand for existing blocks, so the participation of Cuban technology machines plays an important role in achieving compliance with the requirements. company production plans. But the recent increase in the salary of workers has caused the cost of direct labor to rise, making the unit cost of production more expensive, affecting this more to Cuban machines, because to produce in the Spanish only three men are needed, while twenty-eight are involved in the productive process of Cuban women. All of the above makes it necessary to increase production efficiency, making the most of available resources, keeping costs at the lowest possible level.Taking into account the aforementioned, a linear programming model has been applied that allows knowing what is the maximum capacity of blocks to be produced, optimizing the available resources and at the same time incurring the minimum level of expenses. For the elaboration of the model, it was necessary to collect data on the elements that are used in the production process. Once the data was collected, the monthly production plan for 10 cm blocks was obtained. is 73600, and 15 is 57500. Having available 590 m3 of sand, 862.5 m3 of 3/8, 264 500 Kg. of cement and 368 hours of machines per month, in addition to 25,300 boards. To make each 10 cm block. 0.00325 m3 of sand, 0.00475 m3 of 3/8 Gravel and 1.3 kg of cement are needed, and to make each 15 cm block. 0.00432 m3 of sand, 0.00631 m3 of Gravel 3/8 and 1 are needed.9 Kg. Of cement. The unit cost of the 10 cm blocks. is 0.63756 pesos and that of the 15 cm. 0.73925 pesos.
The machines in optimal conditions make 500 blocks of 10 cm per hour of work. and 412.5 of 15 cm. Each one requires fourteen workers to carry out production, distributed as follows:
A heavy concrete mixer operator works with each machine, who is in charge of mixing the sand, water, cement and 3/8 gravel in the required quantities, an assistant to this operator, who is in charge of supplying the cement with a wheelbarrow, a shovel operator (tractor) who supplies the sand and 3/8 gravel to the mixer, an assistant who accommodates the boards on which the blocks are placed, the machine operator, an assistant who facilitates the placement of the blocks on the wheelbarrows, four workers who transport the blocks, two stevedores who lower the blocks from the wheelbarrows and place them, and two helpers who are in charge of removing the boards from the blocks after they have reached sufficient consistency.As can be seen, the human element plays a fundamental role in the flow of the production process, constituting a determining factor in the productivity of the process.
It is important to note before developing the model that the accounting is centralized, which makes the development of the quarry somewhat difficult since it is the unit that contributes the most to the company, that is, the company has profits from the quarry, the quarry has two types of technologies to make the blocks the Spanish line and the Cuban line lately the cost of the Spanish line has increased and that of the Cuban line decreases this is given because the workers of the Cuban line when they stopped due to breakages they were charged that spending to the Spanish line increasing the salary expense. Within, of the elements to be highlighted, it is necessary that in the Cuban line there is no weighing, so the measurement is by eye, which sometimes increases the expense of materials in said line.It is vital to take into account that in the model to be applied there are variables that are not significant for it and yet are generally significant.
1.2.1 The steps for the development of the linear programming model are detailed below.
Elaboration of the model.
1- Definition of the variables.
X1- Units of 10 cm blocks. to produce.
X2- Units of 15 cm blocks. to produce.
Starting from the requirements demanded by the linear programming model, the restrictions were constructed.
2- Construction of the system of restrictions.
R1-X1 = 73600 (Monthly production plan for 10 cm blocks.)
R2-X2 = 57500 (Monthly production plan for 15 cm blocks.)
R3-0.00325 X1 + 0.00432 X2 = 590 m3 of available sand.
R4-0.00475 X1 + 0.00631 X2 = 852.5 m3 of 3/8 available.
R5-1.3 X1 + 1.9 X2 = 264 500 Kg. Of cement.
R6-X1 / 500 + X2 / 412.5 = 368 h. machine available.
R7- X1 / 8 + X2 / 5 = 25 300 boards available.
As can be seen, the objective function is a problem of minimizing because it is about reducing costs. See Annex 15, 16, 17, 18.
3- Construction of the objective function.
Min Z = 0.63756 X1 + 0.73925 X2
R1 = 79 127.30 (10 cm blocks)
R2 = 77 045. 44 (15 cm blocks)
R3 = 0 m3 of sand
R4 = 0.49 m3 of 3/8
R5 = 15 248 kg of cement
R6 = 22.99 machine h
R7 = 0 boards
Min Z = 107 404.2 pesos
1.2.2 Analysis of the results.
The block maker reaches its optimum production producing 79,127 blocks of 10 cm. and 77 045 15 cm blocks. in the month, with a production cost of 107 404.2 pesos. This means an increase of 5 527 blocks of 10 cm. and 19,545 blocks of 15 cm. above plan, for 107% and 133% overcompliance; This is the optimal solution that allows the greatest efficiency in the production process because the total amount of sand is consumed when using all the boards, a minimum gravel surplus of 0.49 m3 of 3/8 gravel with 22.99 less machine hours than the normal ones and a saving of cement of 15,248.13 Kg. which are not necessary to achieve optimal production, and can be used for other purposes.
Table # 12 Optimal Solution of the Linear Programming Model.
Source: Author's elaboration based on the application of the model
1.3 Additional factors that determine the result of the production process not included in the model.
For this research to consider the objective reality that the block manufacturing process goes through, it is necessary to take into account a series of factors that directly influence the productive results of the process and that are not dealt with in the model.
First Factor: Current technical state of the machines.
The current technical state of the machines is largely unfavorable, fundamentally affecting the high degree of over-exploitation to which they have been subjected, already exceeding the limits of their useful life. This causes unexpected, small, medium, and large breakages to occur, instantly paralyzing the production process and leading to excessive expenses. But the greatest repercussion is centered on the low probability of making up for lost time, because although machines can produce 500 and 412.5 blocks per hour respectively in optimal conditions, what determines the rate of production is not the machines but the physical energy of men to carry out the work, because of the twenty-eight men who participate directly in the process,Twelve perform intense and exhausting physical work (representing 43% of the total productive force), these are the eight Workers and the four stevedores.
Second Factor: Use of the Labor Force.
The distance between the machines and the farthest point where the
blocks is 150 m, and the closest point is 20 m, the dimensions of the width of a board are 45 cm., in each wheelbarrow 2 boards fit, at the rate of 16 blocks of 10 cm. and 10 of 15 cm., the weight of a block of 10 cm. is 22 lb. that when multiplied by 16 which is the number of blocks per wheelbarrow is 352 lb. and the 15 cm. It weighs 36 lb., which when multiplied by 10 which is the capacity of the truck add up to 360 lb.. Assuming that the order of pick-up and delivery of the operators is always the same, and they start from back to front, the following happens.
Table # 13 Workforce Utilization
|
Number of Travels |
Distance traveled (m) |
Weight
accumulated block 10 cm. (lb.) |
Quantity
accumulated of blocks Per trip |
Weight
accumulated block 15 cm. (lb.) |
Quantity
accumulated blocks Per trip |
| one | 300 | 352 | 16 | 360 | 10 |
| two | 292.8 | 704 | 32 | 720 | twenty |
| 3 | 285.6 | 1056 | 48 | 1080 | 30 |
| 4 | 278.4 | 1408 | 64 | 1440 | 40 |
| 5 | 271.2 | 1760 | 80 | 1800 | fifty |
| 6 | 264 | 2112 | 96 | 2160 | 60 |
| Total | 1692 | 2112 | 96 | 2160 | 60 |
| 1.69Km. | 0.96t | 0.98t |
Source: Author's elaboration
The table shows the physical effort a driver must do to make just six trips. And although in the first hours the rhythm of the process is on the rise, there comes a time when fatigue begins to take effect and then from there the rhythm of production begins to decrease, which shows that as time passes the The worker is inevitably being exhausted, his energies are decreasing and therefore the rate of production decreases in a linear way to his physical wear. Proving that it is very difficult to recover the time lost due to breakages by increasing the workload.
But we can know what is the distance that a carter travels and what is the weight of the load that he carries to meet the 73 600 blocks of 10 cm. and with the 57 500 of 15 cm. that are planned to be produced per month and to meet the monthly optimized production of 79 127 10 cm blocks. and 77 045 of 15 cm. and compare them.
Table # 14 Analysis of the model solution and the Current Parameters
| Product | Plan | Optimal Production | Daily Production According to Plan | Daily Production Optimal Prod. | Blocks to Transport According to Plan | Blocks to Transporta Prod. Optimal | Number of trips According to Plan | Number of trips Optimal Prod. |
| Block
10cm |
73600 | 79129 | 3200 | 3680 | 800 | 920 | fifty | 57.5 |
| Block
15cm |
57500 | 77045 | 2500 | 3583 | 625 | 896 | 62.5 | 89.6 |
Source: Author's elaboration
Table # 15 Analysis of the model solution and the Current Parameters
| product | Number of trips according to plan | Number of trips prod. optimal | Dif. | Distance to travel according to plan | Distance to travel prod. optimal | Dif. | Load weight according to plan | Product load weight optimal | Dif. |
| Block 10 cm | fifty | 57.5 | 7.5 | 9.6 km | 11 km | 1.4 | 8 t | 9.2 t | 1.2 |
| Block 15 cm | 62.5 | 89.6 | 27.1 | 11.7 km | 16.4 km | 4.7 | 10.2t | 14.6t | 4.4 |
Source: Author's elaboration
Third Factor: Climatic conditions.
And the third factor that directly affects the results to be achieved in the production process is related to the existence or not of good weather conditions, specifically related to rain. The patio where the 10 and 15 cm blocks are placed. It does not have a roof or paved floor, causing production to be affected in rainy seasons, specifically because while it is raining it cannot be produced as the blocks would be damaged due to their quality standard and on the other hand, as the floor is not paved, the The terrain becomes muddy and water accumulates, and therefore the operators have to make a greater physical effort to move with the load, causing an accelerated decrease in their energy and therefore the rhythm of the production process.
1.4 Cash budget
Taking into consideration the information on how the company charges and pays, the budgeted cash flow for 2006 was carried out, taking as a basis the income and expense budget prepared by the company. This budget must be corrected monthly, in order to adjust it to the real conditions that arise and that have been foreseen, thus placing an additional tool in the hands of the entity for the improvement and improvement of its work.
As the entries to be considered in the cash budget, the total sales that are planned with respect to the previous year were included, which are 25%, divided into credit and cash sales to which the actual collection pattern was applied. they added other income that includes sales of dining rooms and cafeterias as well as other income for various concepts.
In the case of disbursements, merchandise purchases to which the determined payment pattern was applied were taken into account.
Table # 16 Collection and Payment Pattern
| 1st month | 2nd month | 3rd month | 4th month | |
| Collection pattern | 51% | twenty-one% | 10% | 18% |
| Payment pattern | 80% | fifteen% | 5% | - |
Source: Author's elaboration
The patterns described above refer to the real situation of the company's collections and payments, making it clear that it is better as a payer than as a collector since 80% of its short-term debts are settled before 30 days and before 90 days. days all the others, while it presents a high percentage in the charge that is collected after 90 days. This situation affects the short-term financial management of the company because the longer it can delay payments and accelerate collections, the less severe will be the problems that may cause the operating cycle and the better the solvency of the entity. Without deteriorating your credit situation.
With all these elements, we proceeded to calculate the cash budget with the patterns of real inflows and outflows applied to credit sales and as a result, the monthly cash flows for 2006 were obtained, presenting from January to April a deficit of cash, so the company will need external financing in the aforementioned months or better use of credit lines.
When analyzing the cash conversion cycle:
Cash conversion cycle = inventory cycle + collection cycle - payment cycle
As analyzed in Chapter II in the 2004-2005 period, the collection cycle had a favorable behavior, since the payment cycle decreased by 8 days, the payment cycle increased by 6 days, which led to the cash cycle also decreasing Factor This contributes to reducing financial requirements, although they are not yet sufficient.
It is then observed that any variation in the inventory conversion period, in the accounts receivable conversion period and in the accounts payable deferrable period affect the cash conversion cycle, and thus influence the needs. financing of the company. Taking into account the foregoing, the author's proposal is a tentative inventory period that allows to achieve a more profitable cash cycle based on estimated figures.
Conclusions
- The line of concrete blocks of Cuban technology does not have the required conditions to face large productions with the expected level of efficiency The linear programming model was applied finding the optimal solution that minimizes costs, which affects the financial situation of the quarry and therefore of the Company. Factors that affect the objectivity of the plans are not taken into account in the planning process. The working conditions in the Quarry are somewhat difficult to be able to comply with the production plans. of cash allowed to know that in the months of January, February, March, and April there is a deficit of cash and in the rest excess that can be used in the payment of the factors.
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