Milk Production Business Plan

This assignment requires you to create a detailed business plan for a milk production company. Your plan should include an in-depth market analysis, examining consumer demand, competitor landscape, and pricing strategies. You'll also need to calculate the costs associated with production, including raw materials, labor, and overhead expenses. Furthermore, you will project revenue streams based on sales volume and pricing, ultimately assessing the profitability of your proposed business venture.

ECO3101
INTRODUCTION TO MICROECONOMICS
GROUP ASSIGNMENT
Fresh Milkyz Enterprise
Submitted to:
DR. ZURAINI ANANG
Submitted by:
GROUP: 14 (K4)
SEMESTER I SESI 2020/2021
BACHELOR OF MANANGEMENT(MARKETING) IN HONOUR
GROUP MEMBERS
NO. NAME MATRIC NUMBER
1. PUSPITA SREE A/P BALAKRISHNAN S60022
2. NUR ADLINA FARHANA BINTI YUSHIZA HAMLY S59866
3. CHONG YEE KEI S60018
4. AISHAH SYAFIQAH BINTI RADUAN S59992
5. FATIN AMIRA BINTI ROZAIMI S59939
TABLE OF CONTENTS
1

CONTENTS PAGE NO
1.0 INTRODUCTION 3-5
2.0 MICROECONOMICS ANALYSIS 6-20
3.0 CONCLUSION 21-22
REFERENCES 23
APPENDICES 24
1.0 INTRODUCTION
2

Fresh Milkyz product is a brand name under Uni-M Enterprise. This company was
founded in 2020 by a group of student University Malaysia Terengganu. Is an agriculture
company that provides milk to a consumer base in Malaysia. We decided to produce a milk
production because milk product is a product with various benefit. In the industry, they were
a lot type of milk like whole milk, low-fat milk, fat-free milk (skim milk), organic milk, lactose-
free milk, flavoured milk and raw milk. Uni-M Enterprise had decided to produce Semi-
skimmed milk and whole milk which is in high demand milk product in the industry. As our
name promises, Fresh Milkyz means dairy from our farms, delivered to the consumers as
freshly and naturally as possible. We believe that’s the way Fresh Milkyz should be just as
nature intended with no preservatives, colourings or any other foreign substances are added
into our products from the moment our cows are milked to the time it reaches to consumers.
We have started the company basic on the farmer’s market. Our headquarter are at
Semambu, Pahang.
This Fresh Milkyz Enterprise is one type of business organisation in Malaysia is
formation bound by the Registration of Business Act. Our company is an enterprise entity
which is a partnership. Uni-M Enterprise has more than one partnership involving in this
business entity which are Nur Adlina Farhana, Fatin Amira, Puspita Sree, Chong Yee Kei
and Aishah Syafiqah; together they created this Uni-M Enterprise with the brand name
product of Fresh Milkyz. We also believes that the key to the company’s success is
producing dairy products without chemical preservatives, colouring matter or
stabilisers.“Processed milk has a lot of added sugar, which causes obesity, diabetes and
other sicknesses. Formulated milk also causes children to become addicted to sugar. Thus,
we have opted for the traditional way and we’re going for natural products.
1.1 Vision
Our vision is to deliver quality, value and more satisfaction to our customer, employees and
communities that all our operation are run in a way that economically, socially and
environmentally sustainable.
1.2 Mission
Fresh Milkyz seeks to create and promote the great-tasting, healthier, organic beverage. We
strive to grow our business with the same honesty and integrity we use to craft our products,
with sustainability and great taste for all and to become the number one produce store in
main street by selling the highest quality , freshest farm produce, from farm to customer in
under 24 hours on 75% range and with 98% customer satisfaction.
LOGO
3

1.3 Description Of Product
All our products are made from fresh milk, contain no preservatives and colourings
and are freshly bottled before being transported to your local supermarket. We offer our
pasteurised, farm-fresh milk in full flavour and low-fat varieties. The economic resources our
company use is labour. We hired a few employees to get some physical and human effort
used in the process of production of the milks. The employees will take the milk from the
cows that we kept on our farm. It will be taken to the factory where we process the milk. We
also use other economic resources which is capital. We use our machinery as an asset to
help the process in the production of milk become faster. This is to make sure that we can
provide enough supply for the demand for milk in the consumer’s market. The machine is
used for pasteurisation of milk, packaging and labelling the product. By using these
economic resources in the production of our product which is milk, we can maintain the
supply of milk according to the demand needed in the market.
1.4 Potential Customer And Customer Base :
4

A market consists of all the potential customers sharing a particular need or want
who might be willing and able to engage in exchange to satisfy that need or want. Fresh
Milkyz has targeted its potential customer. Their potential customer will be at the age of 5 to
18 years old. This is because, at this age, they consume more quantity of milk for their
growth and health. They also drink flavoured drinks. Fresh Milkyz also produces milk in few
flavours so this will attract more attention for them to buy this product. We also targeted at
the age of 40 to 60 years old. This is because at this age they need to consume milk for their
bones to strengthen it. They also need to consume it daily. As a conclusion, the demand for
milk from this potential customer will be more.
The customer base is the group of customers who repeatedly purchase the goods or
services of a business. These customers are the main source of revenue for a company.
The customer base may be considered the business's target market, where customer
behaviours are well understood through market research or past experience. The Fresh
Milkyz product will be launch at supermarkets and the nearest store in the city and it also
can be located near the housing area. This is to make sure that the customer is able to find
and buy the products easily. This will increase the sales of milk. As a conclusion, the
targeted customer will find it easier to get the product at their nearest store.
2.0 MICROECONOMICS ANALYSIS
5

The microeconomic analysis attempts to explain the behaviour of individuals and
organizations in a given economy. Microeconomics fills this purpose by providing analysis on
a smaller scale. Simplified models and key definitions will help to understand
microeconomics. Microeconomics analysis can include production amount, number of
workers, necessary equipment, operation cost, revenue and more.
2.1 Determine The Price
Determining the price of milk is essentially a model where in prices for a concerned
good or service are determined within a given market. The prices of milk are determined
based on the balance of demand and supply in a market. While the demand related curve in
this particular bread production is set on the basis of consumers making an attempt to
enhance their utility on the basis of their budget, the supply related curve is determined by
entities making an attempt to increase profits, in view of bread production costs and the
intensity of demand of the bread manufactured by Fresh Milkyz Enterprise. In order to
increase profits, the price of milk related by designed on the basis of manufacturing quantity
of milk as per sale which the total revenue when deducted from total cost is maximum.
Following this, it is on the basis of supply and demand, within a market that helps in
determining who will be setting the prices goods. In a market that is competitive in the most
perfect way, like farming, entities have not many options but milk have to give acceptance to
the existing market prices due to many competitors, in case they really want to sell off their
products or goods. Supply and demand is an economic model of price determination in a
market. It concludes that in a competitive market, the unit price for a particular good will vary
until it settles at a point where the quantity demanded by consumers (at current price) will
equal the quantity supplied by producers (at current price), resulting in an economic
equilibrium of price and quantity.
2.1.1 Demand
6

As far as determining the price is concerned, economists are of the opinion that the
service or product price is one of the important factors that helps a consumer decided
whether consumers actually needs that product or not. However, they also believe that price
alone is not the determining factor. But according to a microeconomics principle, in case all
the other kinds of factors stand equal, when the price of bread rise, the demand for bread
will drop and if the price falls tn the demand rises. Thus, it is on the basis of determining the
price of milk that economists can predict with some amount of accuracy, about the milk that
consumers would purchase and the quantity of milk that they would buy. Table 1 and table 2
shows the price and quantity of milks demanded for 250ml and 500ml for 6 months
regarding to the survey from 127 responses of Fresh Milkyz Enterprise.
Price of milks (RM) Quantity of milks demanded (Unit)
0.00 2000
2.00 1750
4.00 1500
6.00 1250
8.00 1000
10.00 750
12.00 500
Table 1 : Shows the price and quantity of milks demand for (250ml)
Graf 1: Shows the demand curve for 250ml of milks
7
Quantity of milks (250ml)
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
500 750 1000 1250 1500 1750 2000
Demand

Table 2 : Shows the price and quantity of milks demand for (500ml)
Graf 2 : Shows the demand curve for 500ml of
milks
2.1.2 Supply
8
Quantity of milks (500ml)500 1000 1500 2000 2500 3000 3500
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
Demand
Price of milks (RM) Quantity of milks demanded (Unit)
0.00 3500
2.00 3000
4.00 2500
6.00 2000
8.00 1500
10.00 1000
12.00 500

The quantity of a milk that is supplied in the market depends not only on the price
obtainable for the product but also on potentially many other factors, such as the prices of
substitute products, the production technology, and the availability and cost of labour and
other factors of production. In basic economic analysis, analysing supply involves looking at
the relationship between various prices and the quantity potentially offered by producers at
each price, again holding constant all other factors that could influence the price. Those
price and quantity combinations may be plotted on a curve, known as a supply curve, with
price represented on the vertical axis and quantity represented on the horizontal axis. A
supply curve is usually upward-sloping, reflecting the willingness of producers to sell more of
the milk they produce in a market with higher prices. Any change in non-price factors would
cause a shift in the supply curve, whereas changes in the price of the milk can be traced
along a fixed supply curve. Table 1 and table 2 shows the price and quantity of milks that
Fresh Milkyz Enterprise supplies.
9
Price of milks (RM) Quantity of milks supplied (Unit)
0.00 500
2.00 750
4.00 1000
6.00 1250
8.00 1500
10.00 1750
12.00 2000

Table 3: Shows the price and quantity of milks supply for (250ml)
Graf 3 : Shows the supply curve for 250ml of milks
Table 4 : Shows the price and quantity of milks supply for (500 ml)
10
12.00
10.00
8.00
6.00
4.00
2.00
500 750 1000 1250 1500 1750 2000
Price (RM)
Quantity of milks
(250ml)
supply
Price of milks (RM) Quantity of milks supplied (Unit)
0.00 500
2.00 1000
4.00 1500
6.00 2000
8.00 2500
10.00 3000
12.00 3500

Graf 4 : Shows the supply curve for 500ml of milks
2.1.3 Elasticity
Elasticity is a measure of a variable's sensitivity to a change in another variable, most
commonly this sensitivity is the change in price relative to changes in other factors. In
business and economics, elasticity refers to the degree to which individuals, consumers or
producers change their demand or the amount supplied in response to price or income
changes. It is predominantly used to assess the change in consumer demand as a result of
a change in a good or service's price. Same goes to the production of milk.
Price of milks (250ml /500ml) Quantity of milks demanded (units)
11
12.00
10.00
8.00
6.00
4.00
2.00
0
Price (RM)
Quantity of milks (500ml)
500 1000 1500 2000 2500 3000 3500
supply

$0.00 2000 3500
$2.00 1750 300
$4.00 1500 2500
$6.00 1250 2000
$8.00 1000 1500
$10.00 750 1000
$12.00 500 500
2 1 2 1
2 1 2 1
( ) /[( ) / 2]
Price elasticity of demand = ( ) /[( ) / 2]
Q Q Q Q
P P P P
 
 
Ds = 1250 – 1500 / [1250 + 1500 / 2]
( 6 – 4) / [ 6 + 4 /2]
= - 250/2750/2
2/10/2
= - 0.05
0.1
= -0.5 (inelastic)
12
Price (RM)
Quantity of milks (500ml)
6.00
4.00
1250 1500

PRICE ELASTIC OF SUPPLY = ( ∆ Q
∆ P )( P
Q )×100
ε s = (1250 - 1000) (4)
(6 - 4) (1000)
= 0.5 (inelastic)
13
Price of milks (250ml /500ml) Quantity of milks supplied (units)
$0.00 500 500
$2.00 750 1000
$4.00 1000 1500
$6.00 1250 2000
$8.00 1500 2500
$10.00 1750 3000
$12.00 2000 3500

2.2 PRODUCTION AMOUNT
Production is a process of combining various material inputs and immaterial inputs in
order to make something for consumption. Economic well-being is created in a production
process, meaning all economic activities that aim directly or indirectly to satisfy human wants
and needs.
Price of milks (RM) Quantity of milks demanded
(Unit)
Quantity of milks supplied
(Unit)
0.00 2000 500
2.00 1750 750
4.00 1500 1000
6.00 1250 1250
8.00 1000 1500
10.00 750 1750
12.00 500 2000
Table 5 : Shows the price and quantity of milks demand and supply for (250ml)
Price (RM)
14
Price (RM)
Quantity of milks (250ml)
6.00
4.00
750 1000

Demand Supply
6
4
Shortage
0 1000 1250 1500 Quantity of Milk (Unit)
Graf 5 : Shows the demand curve and supply curve for 250ml of milks
Uni-M Enterprise produces Fresh Milkyz has divided two capacities are 250ml and
500ml. Through the demand and supply curve of Fresh Milkyz (250ml), the equilibrium price
is RM6 and the equilibrium quantities demanded and supplied are 1250 units. When the
government probable imposes the price ceiling of RM4 to lower that price of Fresh Milkyz
and help the poor. At this price, the quantities demanded is 1500 unit and the quantities
supplied is 1000 unit. This situation will occur the shortage in the market of Fresh Milkyz, so
there is a shortage of 500 unit.
The demand for the customer for Fresh Milkyz has more and more that is because
milk has many benefits to health. Firstly, is prevent stroke. A study confirmed that drinking
more than one glass of milk a day can prevent stroke. Another study also confirmed that
regular drinking milk can reduce the risk of ischemic stroke. Under the same calcium intake,
milk calcium has a stronger ability to reduce the risk of stroke. Secondly, is lower blood
pressure. Milk is rich in calcium, which helps lower blood pressure, and high blood pressure
is an important cause of stroke.
15

Price of milks (RM) Quantity of milks demanded
(Unit)
Quantity of milks supplied
(Unit)
0.00 3500 500
2.00 3000 1000
4.00 2500 1500
6.00 2000 2000
8.00 1500 2500
10.00 1000 3000
12.00 500 3500
Table 6 : Shows the price and quantity of milks demand and supply for (500ml)
Price (RM)
Demand Surplus Supply
8
6
16

0 1500 2000 2500 Quantity of Milk (Unit)
Graf 6 : Shows the demand curve and supply curve for 500ml of milks
Converse, the demand and supply curve of Fresh Milkyz (500ml), the equilibrium
price is RM6 and the equilibrium quantities demand and supplied are 2000 units. When the
government probable imposes the price floors of RM8 to higher that price of Fresh Milkyz
and help the producer. At this price, 2500 units are quantities supplied and only 1500 unit
are quantities demanded, there is a surplus of 1000 unit in the market of Fresh Milkyz. In
addition, Uni-M Enterprise will constantly be striving to produce new products that can
benefit the consumer's body. That can increase revenue and improve customer satisfaction
to build good customer relationships.
2.3 NUMBER OF WORKERS, NECESSARY EQUIPMENT AND OTHER MATERIALS
Uni-M Enterprise hires 500 employees to produce Fresh Milkyz. Additionally, the
company has organized training camps to improve the skills and technical capabilities of
employees, which can greatly improve the good quality and productivity of Fresh Milkyz. The
complete production line of Fresh Milkyz mainly includes milk collection system, mixing
system, milk purification and standardization system, as well as homogenization system,
sterilization system, filling system, etc.
Uni-M Enterprise uses advanced technology to faster the process of producing
milk. The company uses complete equipment for fresh milk includes storage tanks, beverage
pumps, milk receiving tanks, hot and cold tanks, cream separators, deaerators, mixing tanks,
homogenizers, ultra-high temperature sterilizers, plate heat exchangers, seed tanks and
fermentation cans, sterilizers, automatic filling machines.
Firstly, employees will extract milk from the cows we raise on the farm. The
company feed the better to cows that can increase the quality of milk. After that, employees
will conduct activities filtration and instant sterilization of milk in the processing factory. Next,
is the filling and packaging. After completing these steps, the new product can be sold to the
consumer on the market. To ensure that the company's mission and vision can be achieved,
the company provides a highly skilled workforce so that the implementation of tasks and
services will be able to be implemented more efficiently and productively.
17

2.4 OPERATIONAL COSTS AND REVENUES
Operating costs are those required for the day-to-day maintenance and
administration of the business. Operational costs can include the cost of purchasing
machinery and equipment, salaries of employees, cow's feed and other. Generally, the
prices of all set of machinery and equipment are probably RM5000. For example, is storage
tanks, beverage pumps, milk receiving tanks, ultra-high temperature sterilizers and more.
In addition, Uni-M Enterprise raises 70 cows, that cost is RM55000 have involved
disinfection fee, treatment costs, quarantine fee, etc. The company will pay the salaries of
500 employees is RM750000. The total of operational costs is probably RM810000.
Moreover, the total operational costs are probably RM4830000 for 6 months, that involves
the costs of raising cows, maintenance of machinery and equipment, salaries of employees
and more.
Price (RM)
18

Initial Equilibrium
6
Demand Supply
0 1250 Quantity of Milk (Unit)
Graf 7 : Shows the demand curve and supply curve for 250ml of milks
Price (RM)
Initial Equilibrium
6
Demand Supply
0 2500 Quantity of Milk (Unit)
Graf 8 : Shows the demand curve and supply curve for 500ml of milks
Revenue is the value of all sales of goods and services recognized by a company in
a period. The revenue for product sales, it is calculated by taking the average price at which
goods are sold and multiplying it by the total number of products sold. The equation is as
follows:
Revenue 1 = No. of Units Sold x Average Price
19

= 1250 unit x RM6
= RM7500
Revenue 2 = No. of Units Sold x Average Price
= 2500 unit x RM6
= RM15000
According to supply curves of Fresh Milkyz (250ml), the equilibrium price is RM6 and
the equilibrium quantities supplied is 1250 unit. Revenue 1 represents the income of Uni-M
Enterprise for sold Fresh Milkyz (250ml) is RM7500. In line with supply curves of Fresh
Milkyz (500ml), the equilibrium price is RM6 and the equilibrium quantities supplied is 2500
unit. Furthermore, revenue 2 represents the earnings of Uni-M Enterprise for sold Fresh
Milkyz (500ml) is RM15000. Total revenue is probably RM22500. For 6 months, total
revenue of Uni-M Enterprise is RM135000.
3.0 CONCLUSION
In conclusion, our company Fresh milkyz Enterprise decide to produce a milk
production because it a product with various benefit to all generations in society especially
for the growth of children. There were two type of product that we decide to sell which is
semi-skimmed milk and whole milk which is in high demand milk product in the industry. Our
company believe that Fresh Milkyz should be just as nature intended with no preservatives,
colourings or any other foreign substances are added into our products milk and we have
opted for the traditional way and going for nature product. In addition, we have several part
of department to maintain our good customer service and manage this company. All the
departments that involved in this company are managing director, human resources
manager, sales and marketing manager , productions and operations manager and
accounting and financial manager which has provided specific business planning. From
marketing management, we do some surveys and research to get more information about
the business to create good strategies and targets in order to attract buyers including use
google form for our information about customer and can achieve our vision and mission to
deliver quality and satisfaction to our customer.
Moreover, We use microeconomics analysis to explain the behaviour of individuals
and organizations in a given economy. In the microeconomic analysis they have determine
the price and demand. From the analysis of table 1 and table 2 that shows the price and
quantity of demanded for 250ml and 500ml for 6 month, we can assume that when the price
20

of milk increase the quantity of demand will be decrease. While for supply analysis table 3
and table 4 show that when the price of milk increase the quantity of milk supply will be
increase. Other than that we measure the elasticity of the demanded and supply. Elasticity
a measure of a variable's sensitivity to a change in another variable, most commonly this
sensitivity is the change in price relative to changes in other factors. From the analysis price
elasticity of demanded is in inelastic same goes to price elasticity of supply which is
inelastic. Fresh Milkyz also make an analysis about Production of amount demand and
supply of milks. Production is a process of combining various material inputs and immaterial
inputs in order to make something for consumption. We also combine the analysis data for
measure the operational cost and revenue to maintenance and administration of the
business.
In addition, we also hired a few employees and use machinery as an asset to used in
the process of production of the milks to make sure that we can provide enough supply for
demand of milk in the consumer’s market. Fresh Milkyz also has targeted potential
customer that will be at the age of 5 to 18 years old and the age of 40 to 60 years old. It is
because at this ages they really need to consume milk for their growing and strengthen
their bones. The Fresh Milkyz production will be launch at supermarkets and the nearest
store in the city and located near the housing area so that customer will easier to get the
product. We can conclude that this business will be able to stand firm and have the
opportunity to make more profit.
21

REFERENCES
1) Book
S. pindyck and L. Rubinfield (2013). Microekonomi . 8th ed. United States: Pearson
Education, sally (Eds) ( p.47 – 135 ). Prentice Hall.
2) Website
Cigna, ( 2020, November 3). What are different type of milk. Retrieved from
https://www.cigna.com.hk/en/smarthealth/what-are-the-different-types-of-milk
Riky lufti hamzah ( 2020, November 6). Price of milk product. Retrieved from
https://www.happyfresh.my/blog/
Tesco, (2020, November 6). Price of milk. Retrieved from
https://eshop.tesco.com.my/groceries/en-GB/shop/chilled-and-frozen/milk/all
Megan Sullivan, (2020, November 8 ) Operating costs: Understanding and reducing
them for your business. Retrieved from https://quickbooks.intuit.com/r/expenses/8-ways-
reduce-operating-costs/
Derek senft, ( 2020 November 8 ), revenue. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/accounting/revenue/
22

Caleb silver, (2020, November 11 ). Microeconomics vs. Macroeconomics: What's the
Difference?. Retrieved from https://www.investopedia.com/ask/answers/difference-
between-microeconomics-and-macroeconomics/
Sallyransom, (2020, November 24 ) APA Format Citation Guide. Retrieved from
https://www.mendeley.com/guides/apa-citation-guide
Wikipedia, (2020, November 9 ), Production (economics). Retrived from
https://en.m.wikipedia.org/wiki/Production_(economics)
APPENDICES
1) Survey Questions
https://docs.google.com/forms/d/e/1FAIpQLScWnVJGTKIbNwXSUjmI-
TQ89ou9XTe68fnrRXl09gB2uoSJ7g/viewform?usp=sf_link
2) Management Team
23

3) Products
24
MANAGING
DIRECTOR
NUR ADLINA
FARHANA
ACCOUNTING &
FINANCIAL
MANAGER
PUSPITA SREE
SALES &
MARKETING
MANAGER
CHONG YEE KEI
PRODUCTIONS &
OPERATIONS
MANAGER
AISHAH
SYAFIQAH
HUMAN
RESOURCES
MANAGER
FATIN AMIRA