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Rahubaddha, Dharmawardane & Wickramasinghe
2 LITERATURE REVIEW production. Findings of this study showed
that final demand structure has a very
Consumption is the largest component
of Gross Domestic Product (GDP). In most limited effect on the change in material
developed economies, consumption flows.
accounts for about two third of GDP. In 3 METHODOLOGY
modern macroeconomics, consumption is This research is mainly focuses factors
typically viewed as part of a dynamic that affect the material consumption. Under
decision problem. Since the 1950s the life the descriptive analysis bar chart, pie chart,
cycle and the permanent income models frequency tables were drawn to understand
have constituted the main analytical tools to the distribution of each independent variable
the study of consumption behavior, both at properly. Pearson correlation test was
the micro and at the aggregate level carried out to find out whether there is a
(Attanasio, 1999).
linear relationship between consumption and
Spangenberg, Hinterberger, Moll and each independent variable.
Schutz (1999) studied about material flow In this study, multiple regression
analysis. As a strategic goal, an increase of analysis was performed to identify the
the life-cycle-wide resource productivity by factors affecting to material consumption.
a factor 10 is suggested, including the Mainly materials were divided into two
materials bought and sold and the not- categories, namely, stock and non-stock for
valued materials. Material flows are best the analysis. In each category the total
measured at the input side of the economy, material consumption is considered as the
where their number as well as the number of dependent variable.
entry gates is limited. Thus here regulation
and economic incentives can work more For stock materials, lead time (time
efficiently and less bureaucratically than taken to receive material after order it),
today. safety stock, reorder points, maximum
stock, number of purchase requests, number
Schobert, Weinzettel, Kovanda, of material requested, number of purchase
Geigrich and Lauwigi, (2012) presented the orders and number of materials received are
concept, calculation method, and first results considered as independent variables and for
of the “Raw Material Consumption” (RMC) non-stock materials lead time, number of
economy-wide material flow indicator for purchase requests, number of material
the European Union (EU). The RMC requested through PR, number of PO,
measures the final domestic consumption of number of material received through PO,
products in terms of raw material number of direct PR and number of direct
equivalents. Results of this study showed PO are the independent variables.
that services, often considered as a solution
for dematerialization, account for a 4 DATA COLLECTION AND
significant part of EU raw material ANALYSIS
consumption. Finally, results demonstrated Secondary data were used in this study.
that internalizing capital formation has Material master data sheet for all non-stock
significant influence on the calculated RMC. and stock materials belongs to the central
Weinzettel and Kovanda (2011) stores of the company were considered in
conducted study on structural decomposition the data collection. A total of 9718 material
analysis of raw material consumption. The consumption data were collected from
aim of their study was to quantify the October- 2015 to October-2016 and 2704
drivers for the changes in raw material and 7014 of them were stock materials and
consumption in terms of technology, which non-stock materials, respectively. Data of
refers to the concept of sustainable purchase requests and purchase order (Non-
stock and Stocks) of materials for last year
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