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Proceedings of the 9 Symposium on Applied Science, Business & Industrial Research – 2017
ISSN 2279-1558, ISBN 978-955-7442-09

Factors Affecting to the Material Consumption: A Case Study of A Tyre
Company in Sri Lanka

Rahubaddha RKDN, Dharmawardane PMN, Wickramasinghe WMPM
Department of Mathematical Sciences, Wayamba University of Sri Lanka
damithrahubaddha@rocketmail.com

ABSTRACT

Material consumption is one of the most important and widely mentioned indicators
in any manufacturing company. It is one of the major factors in determining profit of the
company. If the material consumption is very high, company management have to allocate
more financial resources. If they have some idea about consumption they can plan how to
allocate financial resources for production. Therefore, material consumption is a powerful
measure. The aim of this research is to identify the factors that affect material consumption
in a company with respect to stock and non-stock materials. Material master data and
secondary data of material consumption from October 2015 to October 2016 were used in
this research. Multiple regression analysis was used to build models for stock and non-
stock material consumption in the company. Research finding indicates safety stock,
reorder values, maximum stock, number of purchase requests, number of materials
requested, number of purchase orders and number of materials received affect the stock
material consumption while number of materials requested through purchase request,
number of material received through purchase order, number of direct purchase request
and number of direct purchase order affect non-stock material consumption.

KEYWODS: Material consumption, Non-stock materials, Stock materials

material through the purchase request and
1 INTRODUCTION
after checking the availability of the
ABC (Pvt.) Ltd is one of the popular materials company management releases
manufacturing industries in Sri Lanka and it them to users.
is a world leader in design, manufacturing
and distribution of off-the-road tires, wheels, However, when the requested materials
rubber tracks and tire systems for the are not available in any plant, company
material handling, construction industries. management checks their prices at the
The company has 24 manufacturing reorder levels and releases them. Material
facilities in North America, South America, consumption is updated daily by the
Europe and Asia including production inventory management department of the
facilities in 9 countries. The products of company. Identification of factors that affect
ABC (Pvt.) Ltd are sold in the replacement material consumption of the company is
market through a global distribution network vital in allocating financial resources
in more than 100 countries. effectively since the company consumes
many materials in various types of products.
In manufacturing industries material As a consequent, the company may earn
consumption plays an important role in more profit.
determining the profit. Here the material
consumption means the total usage of However, the company or any other
material in a given period of time. Mainly party had no attention in this matter.
there are two types of materials, namely, Therefore, this study aims to identify the
stock and non-stock according to the main factors that affect the material consumption
stores of the company. When workers need and to build a model for the material
materials for their daily works they request consumption of the company.

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