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Moulded Versus Conventional Chairs- a Comparative Financial Analysis

M. G. Kibria
Junior Research Officer
Forest Economics Division, Bangladesh Forest Research Institute, Chittagong-4000, Bangladesh.

A. Rahman
Senior Research Officer
Forest Economics Division, Bangladesh Forest Research Institute, Chittagong-4000, Bangladesh.

N. A. Reza
Senior Research Officer
Forest Economics Division, Bangladesh Forest Research Institute, Chittagong-4000, Bangladesh.

M. Mahbub Ali
Divisional Offier (in-charge)
Veneer & Composite Wood Products Division, Bangladesh Forest Research Institute, Chittagong-4000, Bangladesh.

Abstract/ Executive Summary:

This paper attempts to compare the efficiencies of moulded chairs and conventional chairs from financial view point. The financial impacts of moulded and conventional chairs were evaluated through a case study. The study areas were Bangladesh Forest Research Institute (BFRI) and three other locations of Chittagong city. The study revealed that the net present value, benefit-cost ratio and internal rate of return stood at Tk. 113.06, 1.36 and 105.39% respectively for moulded chairs compared to Tk. 58.53, 1.16 and 48.85% respectively for conventional chairs. The cross over discount rate was 29.71 %. Further, the internal rate of returns due to production of moulded chairs were found less sensitive to changes in costs and prices. The study, therefore, found the moulded chairs to be a better choice within some limitations.

Keywords: Conventional chair, Financial analysis, Moulded chair

Location: Chittagong City

Start Date: 01-01-1987

End Date: 30-06-1988

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

To compare the efficiencies of moulded chairs and conventional chairs from financial view point.

Methodology:

Cost comparison between the two products with different functional lives, Cost-benefit analysis (NPV, IRR & B/C ratio), Cross over Discount Rate (CDR) were analysis. Data on quantity of wood, raw material requirement, labour hour, labour cost, repairing and polishing cost, market price and expected service life of both moulded and conventional chairs were collected from four locations of Chittagong City, namely Bangladesh Forest Research Institute (BFRI), Firingi Bazar, Dewan Bazar and Ashkardighi in a designed questionnaire. The three bazars cited above were different regarding availability of different types of timber, high quality furniture and medium and low quality furniture. Since the moulded chair was absent in the market, the relevant information were supplied by the Veneer and Composite Wood Products Division of BFRI. For conventional chairs required data were collected from the Wood Working and Timber Engineering Division of BFRI and from six shops of three purposively sampled bazars, taking two shops from each bazar.

Source of Information: Bangladesh Journal of Forest Science, Jan-June. 1995, Vol.24(1), pp:52-57, ISSN:1021-3279.

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The study revealed that the net present value, benefit-cost ratio and internal rate of return stood at Tk. 113.06, 1.36 and 105.39% respectively for moulded chairs compared to Tk. 58.53, 1.16 and 48.85% respectively for conventional chairs. The cross over discount rate was 29.71 %. Further, the internal rate of returns due to production of moulded chairs were found less sensitive to changes in costs and prices. The study, therefore, found the moulded chairs to be a better choice within some limitations.

Knowledge Management: Journal