Production planning and costing systems in plant nurseries : A thesis submitted in partial fulfilment of the requirement for the degree of Master of Commerce and Management at Lincoln University

Abstract

Information provides the basis for decisions and therefore, the quality of a decision will be affected by the type and quality of information available. The information requirements of plant nursery businesses, with special reference to production planning and costing systems, were determined. To achieve this a three-stage approach was undertaken. A survey of management information systems in 343 plant nurseries was conducted. Information requirements and the types of information systems were ascertained. Nursery managers mainly use financial and accounting information systems, such as accounts payable (90%), accounts receivable (93%) and payroll (65%) with only 20% of nurseries having production labour recording systems. Most nurseries are small to medium sized businesses with 71 percent of respondents having a turnover of less than $0.5m. Seventy one percent of larger nurseries (>$1m turnover) are intending to implement additional information systems. In contrast, only 35 percent of small (<$100,000) businesses are seeking to implement more comprehensive systems. Their main pricing methods were cost-plus, perceived value and comparative pricing. However, only 30 percent had records of resource use per crop to enable costing of plants. Time (63%) and cost (21%) were the main constraints. The second stage involved developing a computer planning model as a catalyst for discussion in case study interviews. This model was designed to aid the scheduling plant production to meet a sales plan. The model allowed a specified sales plan to utilise plant production details and resource inputs and produced production schedules and consequent resource use information. The third, and main, stage involved intensively interviewing selected nursery managers about their information requirements. The 10 nursery managers were identified from the survey as having an interest in information systems. Managers use historical sales' records to make product mix and production timing decisions. Nurseries are a complex ' biological manufacturing system' where techniques developed in manufacturing industries show potential in overcoming many information problems. The main constraints on information system development, maintenance, adoption and use were time and cost and the collection and processing of plant production field data. A system of descriptive crop labelling is suggested to overcome the data collection problem by utilising activity-based costing techniques developed in manufacturing industries, and bar codes from the retail sector. Improved production planning and control systems with linkages to a costing and accounting system are required. An activity-based costing system could be used to overcome many of the problems and reduce data collection and administrative time.