Presented to the

Decision Sciences and Innovation Department De La Salle

University-Manila
Term 1, A.Y. 2023-2024

In partial fulfillment of the course

DSIOPMA - K43

Team Harris

Andres, Joseph J.
Carlos, Roman S.
Ignacio, Denise O.
Garcia, Alberto P.
Serrano, Rose Anne K.
Troy, Jesse Mark Z.

Submitted to:
Mr. Melvin V. Moraga, MBA, LPT

Submitted on:
November 24, 2023
 Table of Contents

CHAPTER 1: INTRODUCTION/BACKGROUND OF THE COMPANY 4

CHAPTER 2: STATEMENT OF THE PROBLEM 14

CHAPTER 3: MODEL DEVELOPMENT AND MATHEMATICAL APPLICATION 15

CHAPTER 4: PRESENTATION OF SOLUTIONS 19

CHAPTER 5: ANALYSIS OF RESULTS 39

CHAPTER 6: RECOMMENDATIONS AND SUGGESTIONS 41

REFERENCES 43

APPENDICES

1
 Table of Figures

Figure 1. Comparison of Cost (Carrying Balance) 17

Figure 2. Graph of the Naive Approach Forecast for Stabile 22

Figure 3. Graph of the Naive Approach Forecast for Protect Products 24

Figure 4. Graph of the Naive Approach Forecast for Ortho Products 25

Figure 5. Graph of the Naive Approach Forecast for Tale Products 26

Figure 6. Four-month Moving Average for Stabile 28

Figure 7. Graph of the Four-month Moving Average Forecast for Protect Products 29

Figure 8. Graph of the Four-month Moving Average Forecast of Ortho Products 30

Figure 9. Graph of the Four-month Moving Average Forecast of Ortho Products 32

Figure 10. Graph of the Weighted Average Forecast for Stabile Products 33

Figure 11. Graph of the Weighted Average Forecast for Protect Products 34

Figure 12. Graph of the Weighted Average Forecast for Ortho Products 36

Figure 13. Graph of the Weighted Average Forecast for Tale Products 37

Figure 14. Graph of the Associative Forecasting for the Profit and Sales of Omnimed Phils 38

2
Table 1. Product Offerings of Omnimed Phils 14

Table 2. Days and Time of Operations for Hydraulic Press #1 16

Table 3. Days and Time of Operations for Hydraulic Press #2 16

Table 4. Comparison of Cost (Carrying Balances) 16

Table 5. Actual Monthly Sales of Omnimed Phils from January to May 2021 18

Table 6. Sales and Profit of Omnimed Phils from January to May 2021 19

Table 7. Allotted Time (in minutes) per Task 19

Table 8. Total Unit Sales 20

Table 9. Total Profit 20

Table 10. Naive Approach Forecast for Stabile 22

Table 11. Naive Approach Forecast for Protect Products 23

Table 12. Naive Approach Forecast for Ortho Products 25

Table 13. Naive Approach Forecast for Tale Products 26

Table 14. Four-month Moving Average for Stabile 27

Table 15. Four-month Moving Average Forecast for Protect Products 29

Table 16. Four-month Moving Average Forecast of Ortho Products 29

Table 17. Four-month Moving Average Forecast of Tale Products 31

Table 18. Weighted Average Forecast for Stabile Products 32

Table 19. Weighted Average Forecast for Protect Products 33

Table 20. Weighted Average Forecast for Ortho Products 34

Table 21. Weighted Average Forecast for Tale Products 36

Table 22. Associative Forecasting for the Profit and Sales of Omnimed Phils 37

Table 23. Allotted Time (in minutes) to Finish Tasks with Breaks 38

3
 CHAPTER 1
INTRODUCTION/BACKGROUND OF THE COMPANY

Change is inevitable in all aspects of life, whether it be in your personal life, in society or
in businesses. The world is currently undergoing a dramatic change as we transition from being
carefree into having more awareness in order to protect ourselves and each other. In the medical
field, professionals are becoming scarce as the number of COVID 19 cases arises. The world is
focused on the virus that it tends to overlook other existing illnesses/disabilities such as cancer,
mental health issues, and physical disabilities. Amidst the pandemic, one of the affected industries
is the Orthopedic and Equipment industry. According to Fortune Business Insights (2020), due to
professionals being occupied with the current global issue, they tend to neglect other areas in the
medical field which led to a loss in the industry. On the other hand, there is a forecasted increase
of 6.6% in the industry from 2019 to 2027 which could possibly be after the pandemic according
to the same source.

Information regarding the Orthopedic Equipment Industry involves certain companies in

the Philippines or Southeast Asia that are involved in manufacturing and exporting orthopedic
products. According to Penn Medicine (2019), Orthopedics is a branch of medicine that focuses
on the skeletal system. It is clear that the target market in this industry is those that are in need of
musculoskeletal support, which is mostly the working-age and elderly population. Furthermore,
these are specially sold to hospitals and clinics. Some of the companies that are tied to this industry
offer not only orthopedic products, but also services like consultation, checkups, and rehabilitation
which could help in their deals with their products. Most of the vision-mission of these companies
would be to provide their customers with the best quality products to support in their recovery.

For the demand in this industry, it is rising since the aging and geriatric population in the
Philippines is also growing (Ken Research, 2019). In relation to this, Statista (2021) reports that
the population of 15–64-year-olds and 65+ year-olds from 2009 were 61.34% and 4%, respectively;
while in 2019, these rose to 64.21% and 5.31% which are clear evidence for the continuous rise in
demand for orthopedic products. Due to the pandemic, companies in the industry have headed to
online selling through different platforms - some in their own websites, while others sell through
shopping applications, and/or social media.

4
 There are numerous competitors in the Orthopedic Equipment Industry since this industry
is connected to healthcare which is a necessity. Some retailers of orthopedic products like Golden
Horse Medical Supplies (n.d.) present several orthopedic products with different brands. Since
companies in the industry acquire hydraulic presses, sewing machines, and raw materials, entering
in the industry requires a significant amount of capital. This makes entering the industry quite
difficult. Furthermore, connections with hospitals or retailers are also needed. In terms of finding
substitutes for orthopedic products, there are no substitutes since these products are

5
specially made for treating or supporting orthopedic-related issues and are standard in the medical
field. Broken bones are treated using splints, braces, or casts which shows that there are no other
alternative products (Kids Health, n.d.). As products necessary for supporting injuries and
prescribed in hospitals, the bargaining power of consumers on such is low. Lastly, the bargaining
power of suppliers in terms of the raw materials of making such products is medium due to the
necessity of the orthopedic products.

Omnimed is a Philippine-based manufacturer and exporter of orthopedic soft products and

orthotics. These are medical devices that help support a person’s joints, bones, or skeletal parts
that may have been weakened due to birth, accidents, etc. Before it became what it is now, its
services were manufacturing and designing that aims to cater to European customers. It operated
under a different name which was Quality Sew Inc (QSI) until 2011 in which one of its customers
holding the brand in Switzerland, Salzmann Ag, bought shares to create a plant in the Philippines.
After some changes with its parent company in 2017, it became a part of the transition of Salzmann
Medico’s to become an independent company from SAG to SMedico. Omnimed’s mission is to be
able to develop and manufacture orthosis products that are cost-competitive and timely-delivered.
The company started its operations in the Philippines (specifically in Cabrera road, Barangay
Dolores, Taytay Rizal) in 2010, led by Mr. Samuel Peralta consisting of only 30 employees. The
company started with manufacturing and selling OMNIMED orthoses and supports.

The group aims to examine the operations of Omnimed and identify the main cause or the
root of the problem in the company's operations. In addition to that, conducting an interview with
the owner is necessary in order to have an in-depth understanding of the manufacturing process
and the issues involved, and be able to provide recommendations to increase efficiency and
productivity.

6
PRODUCT OFFERINGS OF OMNIMED PHILS

Omnimed Phils currently have 4 major product lines consisting of the Stabile, Ortho,
Protect, and Tale. To present the company’s product offerings, a table is presented below.

PRODUCT LINE: PRODUCTS:

7
Stabile Post-OP Universal

Stabile Post-OP Epi

Stabile Post OP Genu Universal

Stabile Post OP Genu Classic

8
Stabile Night Splint Classic

Ortho Omo Deluxe

Ortho Omo Davos

9
Ortho Omo Gilchrist

Ortho Manu Optima

Ortho Manu CTS

10
Ortho Lumbofix

Ortho TarsoLok

11
Tennis Elbow Support

Wrist Support

Wrist Band

Back Support

12
Back Bandage

Thigh Support

Calf Support

13
Wrist Support

Rib Belt for Women

Rib Belt for Men

14
4 Panel Abdominal Binder

Thigh Support

Ankle Support

15
Table 1. Product Offerings of Omnimed Phils

16
 CHAPTER 2
STATEMENT OF THE PROBLEM

In order to identify key problems concerning the operations of Omnimed Phils, an interview
with the company president, Mr. Samuel Peralta, was conducted. During the interview, several
problems were mentioned that primarily involved delays in their production process which
ultimately affect the daily operations of the company. To discuss further, details regarding the
problems mentioned by Mr. Peralta are explained below.

Prior to the sewing process of the prefabricated orthosis, the company cuts the raw materials
by following pre-cut stencils to ensure the uniformity of the sizes and outputs. However, one of
the major problems encountered by Omnimed Phils is the breaking down of the hydraulic press
responsible for the said task. According to MachineMfg (2021), a hydraulic press is a device that
uses liquid force to process metal, plastic, and other materials. Currently, the company owns two
of the said machines but frequently experiences a sudden breakdown of one or both machines at
the same time. As an effect, the production process is slowed down leading to delays in completing
the manufacturing of the orthosis. The availability of the hydraulic press is a concern worth looking
into to determine if they are worth replacing or not.

Aside from hydraulic presses, sewing machines are an integral part of the company’s
operation. Hence, as stated by Mr. Peralta, the company still uses JUKI sewing machines from the
’50s. In total, the company owns 30 sewing machines consisting of 5 machines designed for special
stitches, 5 machines from the 2017 model while the rest performs basic back and straight stitches
only. Although the old JUKI models are working at high-speed levels, there might be numerous
problems that may arise from using such. First, when a part of the machine becomes worn out,
there is a high possibility that its parts are no longer available in the market or have been faced out.
Secondly, since the older models only perform basic straight and back stitches, the employees still
necessitate transferring to a different machine whenever a special stitch is necessitated in
completing a product. However, in newer models, users are able to switch modes

17
and choose stitch styles instantly which saves more time and speeds up the entire process. Despite
the benefits of switching to newer models, buying sewing machines can be costly for the company.
Thus, it is vital to identify whether using modern sewing machines can significantly promote
productivity growth and will be more beneficial to the entity. Otherwise, additional costs for new
machines can just end up as a mere loss.

Another problem faced by the company is related to the impacts of the COVID-19
pandemic. Due to several months of ceased operations and lockdown protocols, the forecasted
monthly sales expected by the company did not materialize during the past months. From the
statement of the company president, the estimated sales every month-end is roughly Php.
2,000,000. Meanwhile, as per the company report, the actualized average monthly sales is only
approximately Php. 1,600,000 which is relatively lower than the forecasted amount. In line with
this, the company also struggles from losses due to excess production of goods as a result of a
decline in demand. To minimize the said losses, applying an effective and suitable forecasting
model is immensely important. In doing so, the company will be able to determine the estimated
number of products to be manufactured in accordance with the forecasted demand.

The last problem considered that the company is facing is idle time in workstations. The data
shows that the company creates 500 outputs in the given 8 hours in the workstation, yet this is
already the performance including the idle time in workstations. According to Jordyn in Drive your
Success (2019), idle time is often rationalized by manufacturers and these seconds transform into
minutes, and the expenses eventually become much to bear. This shows that once a company’s
workstation results are confronted with mostly seconds "every now and then," a producer would
simply conclude that such consequences become minor and so no additional research is necessary.
Nevertheless, these are the very brief respites that lead to different results. To downsize the idle
time in workstations, it's important to use an accurate and appropriate forecasting model. As a
result, the corporation will indeed be able to figure out how to make the most of their downtime at
workstations by reducing idle time.

18
 CHAPTER 3
MODEL DEVELOPMENT AND MATHEMATICAL APPLICATION

In this portion of the paper, the stated problems above are presented mathematically in
order to come up with optimal solutions using the topics discussed in DSIOPMA-Operations and
Technological Management. For a systematic presentation of data, the problems are enumerated
individually with their corresponding related problems. The solutions to this problem will be
presented in Part 4.

A. Breakdown of the Hydraulic Press

There are delays caused by the breaking down of the 2 hydraulic presses which make the
availability over a week between the two or both troublesome in maximizing operations. The
operation time per day and the required time to repair the hydraulic press including waiting time,
are 8 hours and 4 hours, respectively. Furthermore, they only operate during weekdays.

19
 Monday Tuesday Wednesday Thursday Friday

Operation time per day 8 hours 4 hours 8 hours 4 hours 8 hours

- 4 hours - 4 hours -
Repair time including
waiting time

Table 2. Days and Time of Operations for Hydraulic Press #1

For hydraulic press no. 2, it would break down only once a week. This would mean that the
operation time per week would be 36 hours while the repair time would still be 4 hours.
Monday Tuesday Wednesday Thursday Friday

Operation time per day 8 hours 8 hours 8 hours 8 hours 4 hours

- - - - 4 hours
Repair time including
waiting time

Table 3. Days and Time of Operations for Hydraulic Press #2

B. Lower Productivity due to outdated sewing machines

The company currently owns 25 sewing machines that have been used for over 20 years of
production. The general manager, Mr. Barnard Peralta stated that although the machines
are working efficiently, it is time consuming to switch from one machine to another. He
stated that there is a potential increase of 20% in production if they result in purchasing
new sewing machines. One of the decisions that managers should make is whether they
should replace or continue repairing their machines. In order to aid in the decision making
process, the detailed projections of the cost and opportunity cost for each decision would
be shown in a visual representation of the data, for comparison.

*balances are carrying amounts

Opportunity Cost using
# of months current Cost of buying new machines
1 ₱261,780.00 ₱438,567.36
2 ₱523,560.00 ₱438,567.36
3 ₱785,340.00 ₱438,567.36
4 ₱1,047,120.00 ₱438,567.36

20
 5 ₱1,308,900.00 ₱438,567.36
6 ₱1,570,680.00 ₱438,567.36
7 ₱1,832,460.00 ₱438,567.36
8 ₱2,094,240.00 ₱438,567.36
9 ₱2,356,020.00 ₱438,567.36
10 ₱2,617,800.00 ₱438,567.36
11 ₱2,879,580.00 ₱438,567.36
12 ₱3,141,360.00 ₱438,567.36

Table 4. Comparison of Cost (carrying balances)

Figure 1. Comparison of Cost (carrying balance)

C. Gap Between Supply and Demand

As already mentioned in the statement of the problem, Omnimed Phils majorly focused on
target sales in estimating the number of outputs to be manufactured in a given period which caused
a miscalculation because of recent events. Due to the impact of COVID-19, the actual sales of the
company are lower than expected, which caused losses to the company. Hence, given the table
below the following questions are aimed to be answered:

21
 ● Predict orders for the succeeding months until year end (June to December) using the
appropriate naive method.
● Predict orders for the succeeding months until year end (June to December) using a four
month moving average.
● Predict orders for the succeeding months until year end (June to December) using a
weighted average using 0.10, 0.30, and 0.60 for the last three months respectively.

MONTH (2020) ACTUAL SALES IN QUANTITY / UNITS

STABILE PROTECT ORTHO TALE

JANUARY 1,629 114 2,450 984

FEBRUARY 1,702 123 2,330 1,006

MARCH 1,576 129 2,367 899

APRIL 1,657 137 2,419 1,102

MAY 1,699 135 2,264 1,056

JUNE 1,534 133 2,298 976

JULY 1,700 127 2,456 1,034

AUGUST 1,606 119 2,387 1,111

SEPTEMBER 1,626 122 2,145 945

OCTOBER 1,649 126 2,463 892

NOVEMBER 1,711 123 2,333 1,072

DECEMBER 1,615 111 2,426 1,001

Table 5. Actual Monthly Sales of Omnimed Phils from January to May 2021

After completing the computations for each question, the next step is to determine the best
forecasting model for the company that would provide the best results. By doing so, Omnimed
Phils would be able to mitigate the potential loss due to any wrong estimate of outputs to be
manufactured.

In addition, the company can also apply the concept of associative forecasting techniques
to identify related variables that are useful in predicting values for variables of interest.
Specifically, Omnimed Phils can utilize a regression equation to predict the company’s profit
assuming a value for sales. In order to do so, the table below presents the unit sales from the months
January through May and its corresponding profit earned by the company.

22
 MONTH (2020) Sales Profit

JANUARY 1,648,397.58 708,810.96

FEBRUARY 1,591,209.05 642,052.45

MARCH 1,567,901.63 642,839.67

APRIL 1,622,438.09 683,046.44

MAY 1,600,034.43 697,295.00

Table 6. Sales and Profit of Omnimed Phils from January to May 2021

D. Idle Time in Workstations

As mentioned in the statement of the problem, the company is reviewing idle time in its
workstation as a problem. Data showed that the company produces 500 outputs in a span of 8 hours
including both the idle time and production itself. The table below shows the different tasks with
the corresponding time allotted for each listed in minutes.

Cycle time = 0.96 (8hrs or 480 mins 500 outputs)

Task Time to Finish the task
(minutes)

a. Cutting 0.1

b. Metal bending 1.0

c. sewing 1.5

d. Silk press 0.7

e. Packaging 0.5

Table 7. Allotted time (in minutes) per task.

23
 CHAPTER 4

PRESENTATION OF SOLUTIONS

After developing mathematical models for the problems identified in the case of Omnimed
Phils., this part of the paper presents the solutions and computations performed to address the said
problems.

A. Breakdown of the Hydraulic Press

24
 In order to show the delays caused by the breaking down of the 2 hydraulic presses, finding
the probability of the equipment’s availability over a week would be vital to identify which one
between the two or both should be replaced to maximize operations and availability.

Availability = MTBF/(MTBF+MTR) = 12hrs/(12hrs+4hrs) = 0.75 (*100) = 75%

Through Table 1 it is clear that the mean time between failures (MTBF) is 12 hours, and the mean
time to repair (MTR) would be 4 hours. Using the formula for availability, it would reveal that
hydraulic press 1 is losing around 25% of availability and only able to have a 75% availability rate.

Availability = MTBF/(MTBF+MTR) = 36hrs/(36hrs+4hrs) = 0.90 (*100) = 90%

Through Table 2 it is visible that the mean time between failures (MTBF) is 36 hours, and the
mean time to repair (MTR) would be 4 hours. Using the formula for availability, it would reveal
that hydraulic press 2 is losing only around 10% of availability and is able to have a 90%
availability rate.

B. Outdated sewing machines

In order to compare the cost of buying new sewing machines and having the current ones,
we first determined the fixed cost of buying new machines. Each industrial sewing machine
costs Php 18,273.64 and in order to replace the current ones, the company should purchase
30 pieces. The cost per unit is multiplied by the quantity in order to get the fixed cost of
purchasing new machines.

Php 18,273.64 x 30 pieces = ₱438,567.36 total fixed cost

As for the current sewing machines, the group computed for the opportunity cost of not
replacing them. We first need to determine the estimated net profit per unit. In order to
compute for the estimated net profit, the total profit is divided by the total unit sales.

Stabile Protect Ortho Tale Total Unit Sales

8,263 638 11,830 5,047 25,778

Table 8. Total Unit Sales

Profit
January ₱708,810.96
February ₱642,052.45

25
 March ₱642,839.67
April ₱683,046.44
May ₱697,295.00
Total ₱3,374,044.52

Table 9. Total Profit

₱3,374,044.52 net profit / 25,778 unit sales = ₱ 130.89 net profit per unit

The next step is to calculate the carrying balance of the opportunity cost per month. It is
estimated that the company can produce 100 more units a day if they replace their old sewing
machines. On a monthly basis, that is 2,000 units, therefore, the equation for the carrying balance
is :
y = [2,000 units (x)] x ₱ 130.89 net profit per unit
Where x = number of months

C. Gap Between Supply and Demand (Target Sales)

In the model constructed, the primary variable to be identified for this particular
problem is the forecasted number of orders in units for the succeeding months of 2021.
Different forecasting techniques were also utilized to find the most appropriate model to
be used in the case of Omnimed Phils. To present the solutions, please refer to the graphs
shown as follows:

Naive Approach

As discussed, the naive approach generally uses the previous actual values in
order to determine the forecasted values for a specific situation.

1. STABILE
Period Actual Forecast Error |Error| Error2

JAN 1,629

FEB 1,702 1,629 73 73 5,329

MAR 1,576 1,702 -126 126 15,876

APR 1,657 1,576 81 81 6,561

MAY 1,699 1,657 42 42 1,764

26
JUN 1,534 1,699 -165 165 27,225

JUL 1,700 1,534 166 166 27,556

AUG 1,606 1,700 -94 94 8,836

SEP 1,626 1,606 20 20 400

OCT 1,649 1,626 23 23 529

NOV 1,711 1,649 62 62 3,844

DEC 1,615 1,711 -96 96 9,216

JAN 1,615

MAD = 86.18

MSE = 10,713.60

Table 10. Naive Approach Forecast for Stabile

Figure 2. Graph of the Naive Approach forecast for Stabile

27
 2. PROTECT
Period Actual Forecast Error |Error|

JAN 114

FEB 123 114 9 9

MAR 129 123 6 6

APR 137 129 8 8

MAY 135 137 -2 2

JUN 133 135 -2 2

JUL 127 133 -6 6

AUG 119 127 -8 8

SEP 122 119 3 3

OCT 126 122 4 4

NOV 123 126 -3 3

DEC 111 123 -12 12

JAN 111

MAD = 5.73

MSE = 46.70

Table 11. Naive Approach Forecast for Protect Products

28
 Figure 3. Graph of the Naive Approach forecast for Protect Products

3. ORTHO
Period Actual Forecast Error |Error|

JAN 2,450

FEB 2,330 2,450 -120 120

MAR 2,367 2,330 37 37

APR 2,419 2,367 52 52

MAY 2,264 2,419 -155 155

JUN 2,298 2,264 34 34

JUL 2,456 2,298 158 158

AUG 2,387 2,456 -69 69

SEP 2,145 2,387 -242 242

OCT 2,463 2,145 318 318

NOV 2,333 2,463 -130 130

DEC 2,426 2,333 93 93

29
JAN 2,426

MAD = 128.00

MSE = 25,861.60

Table 12. Naive Approach Forecast for Ortho Products

Figure 4. Graph of the Naive Approach Forecast for Ortho Products

4. TALE
Period Actual Forecast Error |Error| Error2

JAN 984

FEB 1,006 984 22 22 484

MAR 899 1,006 -107 107 11,449

APR 1,102 899 203 203 41,209

MAY 1,056 1,102 -46 46 2,116

JUN 976 1,056 -80 80 6,400

JUL 1,034 976 58 58 3,364

30
AUG 1,111 1,034 77 77 5,929

SEP 945 1,111 -166 166 27,556

OCT 892 945 -53 53 2,809

NOV 1,072 892 180 180 32,400

DEC 1,001 1,072 -71 71 5,041

JAN 1,001

MAD = 96.64

MSE = 13,875.70

Table 13. Naive Approach Forecast for Tale Products

Figure 5. Graph of the Naive Approach Forecast for Tale Products

31
 Four-month Moving Average

Another forecasting technique specified in this case is the four-month moving

average. In doing so, two primary forecast errors of measure, specifically the mean absolute
deviation (MAD) and mean square error (MSE) were also computed and presented in the
succeeding tables.

1. STABILE
Period Actual Forecast Error |Error| Error2

JAN 1,629

FEB 1,702

MAR 1,576

APR 1,657

MAY 1,699 1,641 58 58 116

JUNE 1,534 1,659 -125 125 15,625

JUL 1,700 1,617 84 84 7,056

AUG 1,606 1,648 -42 42 1,764

SEP 1,626 1,635 -9 9 81

OCT 1,649 1,617 33 33 1,089

NOV 1,711 1,645 66 66 4,356

DEC 1,615 1,648 -33 33 396

JAN 2022* 1,650

MAD = 56.25

MSE = 4,354.71

Table 14. Four-month moving average for Stabile

32
 Figure 6. Four-month moving average for Stabile

2. PROTECT
Period Actual Forecast Error |Error|

JAN 114

FEB 123

MAR 129

APR 137

MAY 135 126 9 9

JUNE 133 131 2 2

JUL 127 134 -7 7

AUG 119 133 -14 14

SEP 122 129 -7 7

OCT 126 125 1 1

NOV 123 124 -1 1

DEC 111 123 -12 12

33
 JAN 2022* 121

MAD = 6.63

MSE = 74.94

Table 15 . Four-month moving average forecast for Protect Products

Figure 7. Graph of the Four-month moving average forecast for Protect Products

3. ORTHO
Period Actual Forecast Error |Error|

JAN 2,450

FEB 2,330

MAR 2,367

APR 2,419

MAY 2,264 2,392 -127.5 127.5

JUN 2,298 2,345 -47 47

JUL 2,456 2,337 119 119

34
AUG 2,387 2,359 27.75 27.75

SEP 2,145 2,351 -206.25 206.25

OCT 2,463 2,322 141.5 141.5

NOV 2,333 2,363 -29.75 29.75

DEC 2,426 2,332 94 94

JAN 2,342

MAD = 99.09

MSE = 15,096.96

Table 16. Four-month moving average forecast of Ortho Products

Figure 8. Graph of the Four-month moving average forecast of Ortho Products

35
 4. TALE
Period Actual Forecast Error |Error| Error2

JAN 984

FEB 1,006

MAR 899

APR 1,102

MAY 1,056 998 58.25 58.25 3393.0625

JUN 976 1,016 -40 40 1580.0625

JUL 1,034 1,008 25.75 25.75 663.0625

AUG 1,111 1,042 69 69 4761

SEP 945 1,044 -99.25 99.25 9850.5625

OCT 892 1,017 -124.5 124.5 15500.25

NOV 1,072 996 76.5 76.5 5852.25

DEC 1,001 1,005 -4 4 16

JAN 978

MAD = 62.16

MSE = 5,945.18

Table 17. Four-month moving average forecast of Tale Products

36
 Figure 9. Graph of the Four-month moving average forecast of Ortho Products

Weighted Average Forecasting

The third forecasting method applied in this paper is the weighted average technique. Using
the date provided by the management of Omnimed Phils, the values 0.10, 0.30, and 0.60 were used
to identify the forecasted value for the last 3 months respectively.

1. STABILE
Period Actual Forecast Error |Error| Error2

JAN 984

FEB 1,006

MAR 899

APR 1,102 940 162 162 26,374

MAY 1,056 1,032 25 25 600

JUN 976 1,054 -78 78 6,084

JUL 1,034 1,013 21 21 441

AUG 1,111 1,019 92 92 184

SEP 945 1,074 -129 129 16,641

37
 OCT 892 1,004 -112 112 12,544

NOV 1,072 930 142 142 20,164

DEC 1,001 1,005 -4 4 16

JAN 1,011

MAD = 85.00

MSE = 10,381.00

Table 18. Weighted average forecast for Stabile Products

Figure 10. Graph of the Weighted average forecast for Stabile Products

2. PROTECT
Period Actual Forecast Error |Error|

JAN 114

FEB 123

MAR 129

APR 137 126 11 162

38
 MAY 135 133 2 25

JUN 133 135 -2 78

JUL 127 134 -7 21

AUG 119 130 -11 92

SEP 122 123 -1 129

OCT 126 122 4 112

NOV 123 124 -1 142

DEC 111 124 -13 4

JAN 116

MAD = 85.00

MSE = 7,025.62

Table 19. Weighted average forecast for Protect Products

Figure 11. Graph of the Weighted average forecast for Protect Products

3. ORTHO

39
Period Actual Forecast Error |Error|

JAN 2,450

FEB 2,330

MAR 2,367

APR 2,419 2,364 55 162

MAY 2,264 2,395 -131 25

JUN 2,298 2,321 -23 78

JUL 2,456 2,300 156 21

AUG 2,387 2,389 -2 92

SEP 2,145 2,399 -254 129

OCT 2,463 2,249 214 112

NOV 2,333 2,360 -27 142

DEC 2,426 2,353 73 4

JAN 2,402

MAD = 85.00

MSE = 9,513.41

Table 20. Weighted average forecast for Ortho Products

40
 Figure 12. Graph of the Weighted average forecast for Ortho Products

4. TALE
Period Actual Forecast Error |Error| Error2

JAN 984

FEB 1,006

MAR 899

APR 1,102 940 162 162 26,374

MAY 1,056 1,032 25 25 600

JUN 976 1,054 -78 78 6,084

JUL 1,034 1,013 21 21 441

AUG 1,111 1,019 92 92 184

SEP 945 1,074 -129 129 16,641

OCT 892 1,004 -112 112 12,544

NOV 1,072 930 142 142 20,164

DEC 1,001 1,005 -4 4 16

41
 JAN 1,011

MAD = 85.00

MSE = 10,381.00

Table 21. Weighted average forecast for Tale Products

Figure 13. Graph of the Weighted average forecast for Tale Products

Associative Forecasting

Aside from using the naive method, four-month average, and moving average technique,
the group also applied associative forecasting to determine whether the entity’s profit and sales
have any relation. Shown below is a table presenting the computation and solutions. In order to
systematically present the relation of the two variables, a graph was also illustrated below.
MONTH (2020) Profit Sales Forecasted

JANUARY 708,810.96 1,648,397.58 710,132.3829

FEBRUARY 642,052.45 1,591,209.05 662.465.7432

MARCH 642,839.67 1,567,901.63 643.039.0086

42
 APRIL 683,046.44 1,622,438.09 688,495.148

MAY 697,295.00 1,600,034.43 669,821.6974

Table 22. Associative Forecasting for the Profit and Sales of Omnimed Phils

Figure 14. Graph of the Associative Forecasting for the Profit and Sales of Omnimed Phils

D. Idle Time in Workstations

In order to reduce Idle time in the workstations, we decided to compare the usual lunch
break only with giving them frequent breaks. According to an article by Bright Hup, in order to
eliminate idle time is to determine the actual hours worked in a given work cell which is done
above, then capture lost time and identify root causes, and we conclude that offering frequent
breaks to them eliminate this. During an eight-hour shift, you must take one 30-minute continuous
break and two additional 15-minute breaks.

Repetitive exercises or staying in one position for an extended period of time may be taxing
on the body and the ability to concentrate. When seated at a desk or operating a system, mistakes
are easy to make due to mental or physical exhaustion.

With the idle time in workstations, the company is already producing 500 outputs in a span of
8 hours. The table below shows the comparison of output and time shows the different tasks with
the corresponding time allotted for each listed in minutes before and after the frequent breaks.

Task Time to Finish the task Time to Finish the task

43
 with only lunch break with lunch break and two
(minutes) 15 minute breaks
(minutes)

f. Cutting 0.1 0.1

g. Metal bending 1.0 0.8

h. sewing 1.5 1.0

i. Silk press 0.7 0.5

j. Packaging 0.5 0.3

Table 23. Allotted time (in minutes) to finish tasks with breaks

44
 CHAPTER 5
ANALYSIS OF RESULTS

A. Delays Caused by the Breaking down of the 2 Hydraulic Press

The results showed an availability rate for hydraulic press #1 of 75% while an
availability rate of 90% for hydraulic press #2. The availability rates of the hydraulic press
can decrease over time but should be maintained at a certain rate. For a standard on the
availability rate of an equipment, it should be above and around 95% availability (Gager,
2017). This would mean that the company is not maximizing the use of its hydraulic
presses.

In order to meet the standard availability for the hydraulic presses, it would mean
that they would need to make adjustments on the hydraulic presses. For hydraulic press #1,
it would need to increase the availability by at least 20%. As for hydraulic press #2 it would
only need around 5% more availability to at least meet the standard.

B. Lower Productivity due to outdated sewing machines

According to the computations, the company can produce 2,000 more units a month
which shows that the company’s operations can increase to an estimate of 20% once they
replace their sewing machines. In terms of costing, it can be observed that there is an
estimated opportunity cost of around three million in net profit which is incomparable to
the cost of purchasing new sewing machines. If the company chooses to stick to the current
machines, they are missing out on the potential productivity of the employees. In addition
to that, it contributes to the cycle time per product unit. However, if they decide to purchase
new machines, it will lessen the cycle time per product allowing the employees to be more
efficient and produce more units than usual.

45
C. Gap Between Supply and Demand (Target Sales)

The primary solution in addressing this problem is to develop an effective

forecasting model that would provide Omnimed Phils. the best results to minimize probable
losses due to mismatch in output produced and sales. Given the computations in part 4, the
analysis of the results will be highly focused on the obtained measures of error according
to the corresponding product line.

Starting with the product line called Stabile, the naive approach provided a MAD
of 86.18 and MSE of 10,713.60. However, using the four-month moving average
technique, the MAD and MSE for the said product line amounted to 56.25 and 4,354.71,
respectively. Thus, the moving average method provided a MAD of 85.00 and an MSE of
10,381.00. Observing the values, it is evident that the least measure of error among the
different techniques used is the four-month moving average method for Stabile products.

Moving to Protect products, the naive method gave a MAD of 5.73 and an MSE of
46.70. The four-month moving average technique resulted in a MAD of 6.63 and an MSE
of 74.94. Meanwhile, the moving average method provided the values 85.00 and 7,025.62
for the data’s MAD and MSE, respectively. With the said values, the least value for the
measurement of error particularly in Protect products is the naive method.

For Ortho products, the MAD using the naive method reached 128.00 and an MSE
of 25,861.60. On the other hand, the four-month moving average resulted in a MAD of
99.09 and an MSE of 15, 096.96. Hence, the moving average method provided a result of
85.00 for the MAD and 9,513.41 for the MSE. Evidently, the values present that the
forecasting technique which portrayed the least value of error in measurement for Ortho
products is the moving average method.

For the forecast of profits based on sales for Omnimed Ph shows different results
per each month. For the month of January forecasted profit is 710, 132.3829, which is
1321.4229 higher than the profit data given. For the month of February, the forecasted profit
is 662,465.7432, which is higher than the profit by 20413.2932. For the month of March, the
forecasted profit is 643,039.058, which is higher than the profit data by 199.3386. For the
month of April, the forecasted amount of profit is 688,495.148 which is higher than the
profit data by 5448.708. Lastly, for the month of May, the forecasted amount of profit is
669,821.6974 which is less than the profit data by 27473.3026.

D. Idle Time in Workstations

With the results, Omnimed Ph can produce an estimated 5% more output within the
given 8-hour period if the employees and machines are given more than just one break. This
also comes to show that the given breaks have also other benefits such as employee morale
increases dramatically, resulting in a spike in employer earnings, as
46
accidents and deaths in the workplace decline due to inattention; posture may be improved
by working at a desk or machine for extended periods of time; Employee satisfaction rises.

47
 CHAPTER 6
RECOMMENDATIONS AND SUGGESTIONS

A. Breakdown of the Hydraulic Press

A recommendation for the hydraulic press would be to improve the availability to the
standard availability of 95% or higher by increasing the reliability of the hydraulic presses. One
way of improving the availability would be to get better quality replacement components of what
is causing the hydraulic press to malfunction. Another way would be to replace one of the hydraulic
presses if it is breaking down every few days despite the repairs. This might entail a significant
amount of cost that includes time on setting up but continuous and frequent repairing also has its
cost that accumulate or could go higher than the cost of buying a new hydraulic press to replace
the old one. Lastly, an important adjustment would be to increase maintenance by checking the
status of the equipment more frequently to make the necessary adjustments and avoid the
breakdown of the hydraulic presses.

B. Outdated sewing machines

As for the sewing machines, the group recommends the company to purchase new sewing
machines in order to improve productivity. However, the quantity depends on [Link]. If
they are content with the current number of production which is 500 units per day, the group
suggests that they purchase only 24 sewing machines. If they would like to increase the quantity
of their production, then it would be better to buy 30 sewing machines which is the same number
in their current operations.

C. Gap Between Supply and Demand (Target Sales)

In terms of matching the output produced and the company’s sales, it is vital for the
management to develop a forecasting model that would provide the highest accuracy to avoid any
losses due to overproduction or underproduction of inventories. However, as shown in the
computation and analysis, each product line illustrates a different trend which may require a
differing forecasting model for each line. For instance, the data above showed that the least error
observed for Stabile products was when the four-month moving average was applied. However,
for Protect products, the least error was computed using the naive approach. Although this may be
used by the company as these are the best results observed in this paper, it may be more time
consuming to use varying forecasting models to different product lines. Ultimately, it is
recommended for the company to invest in more accurate forecasting methods, if possible one
model that would encompass all the product lines for easier management of data. However, prior
to doing so, the company should consider other factors such as its cost and whether the benefits it
may provide will impact the company’s operation and profitability significantly.

48
 Another recommendation for Omnimed Ph is to adjust their forecasted profit to avoid losses
due to mismatch in output produced and target sales. They need to update their data so that in this
matter they will not be able to have possible losses due to the miscalculations. Although, these
forecasts are unsure and cannot be ensured to be real because there are other factors to be
considered but it is much better that they update their data based on the solutions that are given
above because it can be very beneficial to see the possible profits based on their sales.

D. Idle Time in Workstations

With the other stations, we recommend giving the employees and machines more than one
break-time since it gives them more time to rest and stretch. And if robots and servers are idle for
a few minutes, taking breaks at work increases productivity. Employees may stretch sore limbs,
find relaxation from prolonged positions and postures, and maintain whatever insight they might
have gained in the previous hour or so during this brief break. We also believe that employees
would be refreshed as a result of the brief breaks, which would reduce costly workplace injuries.
However, how workers spend their work breaks is almost as critical as how long and how much
they take them.

Another recommendation is for sewing machines, the group recommends the company to
purchase new sewing machines in order to improve productivity. However, the quantity depends on
[Link]. If they are content with the current number of production which is 500 units per day,
the group suggests that they purchase only 24 sewing machines. If they would like to increase the
quantity of their production, then it would be better to buy 30 sewing machines which is the same
number in their current operations.

49
 References

Exceed Prosthetics & Orthotics. (n.d.). About Us. Retrieved from

[Link]
Exceed Prosthetics & Orthotics. (n.d.). Our Products. Retrieved from
[Link]
Fortune Business Insights (n.d.) In the Philippines, Omnimed is a Philippine-based manufacturer
and exporter of orthopaedic soft products and orthotics. These are medical devices that help
support a person’s joints, bones or skeletal parts that may have been weakened due to
birth or accidents. Retrieved from
[Link]
Gager, A. (2017, June 13). Maintenance, Measurement and Equipment Reliability. Facilities Net.
Retrieved from
[Link]
d-Equipment-Reliability--17255
Golden Horse Medical Supplies. (n.d.). Home. Retrieved from
[Link]
Golden Horse Medical Supplies. (n.d.). Rehabilitation Supports. Retrieved from
[Link]
Ken Research. (2019, August 6). Philippines Medical Devices Industry Revenue is Expected to
Reach Around USD 1,300 Million by 2023: Ken Research. Retrieved from
[Link]
[Link]
Kids Health. (n.d.). Broken Bones. Retrieved from
[Link]
are%20treated,or%20brace%20is%20put%20on.
MachineMfg. (2021, March 11). Hydraulic Press Machine (The Essential Guide). MachineMfg.
Retrieved from [Link]
Penn Medicine (2019, December 4) Orthopedic Surgeons: Seven Things You Need to Know.
Retrieved from
[Link]
cember/ortho-surgeons-7-things-to-know?fbclid=IwAR0kDuUSkzbRFouj_LWaKEnI5E
KKUhlHnclAGOXItMpjteK1vOgyhQd40pA
OmnimedPhils Inc. (n.d.). About Us. Retrieved from
[Link]
OmnimedPhils Inc. (n.d.). Shop. Retrieved from
[Link]
ORTHOPAEDIE FREY FAR EAST, INC. (n.d.). Home. Retrieved from
[Link]

50
ORTHOPAEDIE FREY FAR EAST, INC. (n.d.). Orthotics. Retrieved from
[Link]
y-orthosis
Statista. (2021, April 1). Age structure in the Philippines 2019. Retrieved from
[Link]

51