Cost-Prediction Models for Managing Transmission Units of locally-Fabricated Palm Nut Digesters

Abstract

The cost components of the transmission unit of locally-fabricated oil palm fruit digester were studied for the economic management of our local small-scale oil mills. 5 major oil mills in Orumba South Local Government Area of Anambra State Nigeria were studied and a representative company whose operational activities and available records were most amenable to the analytical models selected. Descriptive survey was adopted for this research. The records were painstakingly collated and processed, and the costs modeled using regression methods. The purchase price, maintenance cost and scrap value were each predicted with time as exponential models with R² values of 0.9833, 0.9572 and 0.9641 respectively. The scrap value and maintenance cost were each predicted as a 2nd order polynomial function of the new unit’s purchase price; with R² values of 0.9719 and 0.9351 respectively. The accumulated annual maintenance cost was predicted as a 2nd order polynomial function of the annual digested nut output with R² values of 0.8963. The annual depreciation increased with successive units change, reflecting the dependence of depreciation on purchase price. It also decreased for each successive year of use for any particular unit. The results of the study did not corroborate the general approach of estimating machinery salvage value as 10% of the purchase price, or the practice in some quarters of budgeting 10% of the machine price for its maintenance cost. Understanding these costs dynamics will facilitate our locally-fabricated oil palm fruit digester’s competitiveness via economic management of the transmission units.