Feasibility Analysis of VCO Conventional Production Process

agriTECH, 44 (1) 2024, 26-38 Feasibility Analysis of VCO Conventional Production Process A. Anwardi*, Hafiz Abdillah, Ismu Kusumanto, H. Harpito Industrial Engineering Departement, Science and Technology Faculty, Universitas Islam Negeri Sultan Syarif Kasim Riau, Jl. HR. Soebrantas Km. 15 No. 155 Panam, Pekanbaru, Indonesia * Corresponding author: A. Anwardi, Email: anwardi@uin-suska.ac.id Submitted: June 11, 2020; Revised: March 21 2021, September 19, 2021, December 9, 2021, November 22, 2022, Januari 4, 2023, April 8, 2023; Accepted: April 11, 2023 ABSTRACT The economic uncertainty of the Inhil community is influenced by the fluctuating coconut price, which is the main source of income. This uncertainty necessitates derivative products that can be made and processed easily, such as Virgin Coconut Oil (VCO). Many types of VCO have been marketed, and produced from different raw materials. Therefore, this study aimed to analyze the feasibility of conventional VCO production businesses and examine sensitive indicators from each aspect. Business feasibility analysis parameters include market and marketing, technical, management and human resources (HR), legal, and financial aspects. Feasibility index was calculated using the Multi-Dimensional Scaling (MDS) method and all aspects were declared feasible. The feasibility index for each aspect showed a score of 53.28%, 60.91%, 65%, 40%, and 74.83% for technical, manager, HR, legal, and financial aspects, respectively, with a general score of 83.50%. Keywords: Business feasibility analysis; conventional process; VCO INTRODUCTION According to Central Bureau of Statistics of Indonesia in 2018, Indragiri Hilir Regency recorded a coconut plantation area of 295,380.24 hectares, with a total of 731,396 people working as farmers. Despite considering coconut as a strategic commodity with social and cultural benefits, the 2021 BPS data showed a significant decrease in the plantation area to 261,690 hectares. This reduction is due to several factors, such as conversion, deterioration of coconut plantations, and price instability. Currently, coconut is no longer a primary commodity due to reduced plantation area, DOI: http://doi.org/10.22146/agritech.56814 ISSN 0216-0455 (Print), ISSN 2527-3825 (Online) 26 unstable prices (IDR 800-1300/kg), and insufficient income for workers. Farmers have now diversified the processing, such as producing Virgin Coconut Oil (VCO), white copra, or selling young coconuts. Among these three opportunities, processing coconuts into VCO was considered the easiest and most profitable. This is due to the presence of entrepreneurs and VCO communities using conventional methods to achieve explicit results compared to the traditional methods commonly used by the community. According to Rindengan & Novarianto (2004), VCO is a processed coconut oil that contains high quality, low moisture content, low levels of free A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 fatty acids, clear color, and a pleasant aroma, which can last for up to 12 months. VCO does not contain cholesterol, and the soluble fatty acids are converted into monolaurin, resulting in the possession of antiviral properties. The processing of coconut into VCO still uses affordable and readily available technology, such as materials and equipment in every household. The products of VCO have several benefits and are priced high, ranging around IDR 55,000 per 250 mL (Retno et al., 2016). This business is attractive and has good prospects for development. However, the processing of coconut into VCO is still relatively limited and requires attention from the government to enhance the welfare of farmers. Based on the issues, a feasibility study on the production of VCO using conventional methods is required. This study is expected to have an impact on the development of the coconut commodity industry, employment generation, and the improvement of farmer’s welfare. Furthermore, a feasible study needs to be conducted to establish a VCO production business, covering market, technical, management, and human resources (HR), legal considerations, as well as financial aspects. This study aimed to analyze the feasibility of conventional VCO production, focusing on several aspects, namely market and marketing, technical, management and HR, legal considerations, and finance. The analysis includes Rapfish and Leverage analysis to determine indicators contributing to the feasibility index for each aspect. According to Pitcher and Preikshot (Soejarwo et al., 2019), MSD is the evaluation of business sustainability based on certain factors and examining economic, institutional, and technological sectors. METHODS The research stages consisted of two steps i.e. conducting a feasibility analysis of conventional coconut oil production and determining the indicators that influence each related aspect (Figure 1). The first step included a literature review to understand the availability of raw materials, obtained from the data of Central Bureau of Statistics of Indonesia for Indragiri Hilir Regency. Subsequently, direct observations and interviews were conducted with VCO producers operating in the area. The results served as the basis for setting the study objectives, requiring a literature review and analytical methods to provide input and proposals as considerations for conventional VCO processing efforts. Market and marketing aspect covered market segmentation and target audience, product demand and sales, specifications and quality, pricing methods, and promotional strategies. The technical aspect covered the location positioning and layout arrangement. The management and HR aspect discussed organizational structure, job descriptions, wage determination, and workforce development. Similarly, the legal aspect examined organizational laws and licensing while the financial covered the preparation of working capital and investment. According to Sucipto (2011), the criteria and methods to evaluate the feasibility of a business from a financial perspective include payback period (PP), average rate of return (ARR), Net Present Value (NPV), Internal Rate of Return (IRR), and Profitability Index (PI). The calculation steps for each criterion are as follows. Payback Period (PP), and calculation stages (PP) are shown in Equation 1. Payback Period = Total of Investment Cash flow/ Year X 1 Year (1) Start Feasibility Analysis of Establishing a VCO Business Market and marketing aspects, technical, management and human resources, legal, and financial aspects Rapfish and Leverage Analysis Stage III Stage I Collect information related to the availability of raw materials and VCO business conditions Stage II Field and literature studies Determine the feasibility index value of each aspect indicator that contributes to the sustainability of the VCO business Finish Figure 1. Research stages 27 A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 The assessment criteria for the payback period are less than time period. When the PP value is lower than the specified time period, the business proposal was considered to meet the feasibility criteria. However, when the PP value is higher than time period provisions, the proposal does not meet the eligibility criteria. Average Rate of Return (ARR), and Calculation Stages (ARR) are shown in in Equation 2. ARR = Average Earning After Tax Average Investment X 100% (2) The assessment criteria for the average rate of return include ARR should be higher than return to meet the eligibility criteria. When ARR is lower than the return, the eligibility criteria are not satisfied. Net ∑Present Value (NPV), and NPV Calculation ( )in Equation 3. Stages are shown n NPV=-A0 ∑t=0 At (1 - r) (3) t ∑ ( to )Sucipto (2011), when the Net Present According ∑ Value assessment criteria are greater than zero (NPV> ( ) 0), then the investment proposal can be accepted, and ( ) vice versa. ( ) ∑ Internal (Rate) of Return (IRR), and Calculation Stages (IRR) are shown ( in )Equation 4. IRR = i1 + ( NPV1 ) (NPV1-NPV2) × (i1 -i2 ) (4) ( ) ) value is higher Capital Cost, the the IIRR proposed investment was considered feasible. In a case ∑ ( ) ) where the( IRR value is higher than Capital Cost, the PI value is ≥ proposed business proposed investment is 1, notthe feasible. ∑ ∑ Profitability Index (PI), and Calculation Stages (PI) ∑ are shown in Equation 5. ∑ ∑ PI value is ≥ 1, the proposed business When( ∑ PI = ∑ PV∑Kas Bersih ×100% (5) is ≥ 1, the proposed business BCR value ≥ 1 ∑ ∑ value is ≥ 1, the1,proposed business When PI value is ≥ the proposed business is ∑ ∑ PIthe PI value ∑ PV Investasi ∑ considered feasible, and vice versa. ∑ + TVC, BCRTFC value 1 TR TC= xthe P, dan л =Calculation TR PI ≥ value is = ≥Q 1,(BCR), proposed business Stages Benefit Cost Ratio and ∑ (BCR) are shown in Equation 6. BCR value ≥1 ∑ TC= TFC + TVC, TR = Q x P, dan л = TR ∑ Benefit BCR = value BCR ∑ Cost ≥ 1 TC= TFC + TVC, TR = Q x P, dan л = TR (6) BCRA value ≥ 1 ≥ 1 showed that the business proposal BCR value TC= TFC + TVC, TR = Q x P, dan л = TR is feasible and vice versa. Profitability Ratio (PR), and Calculation Stages TC= + TVC,inTR = Q x P,7.dan л = TR (PR) TFC are shown Equation TC= TFC + TVC, TR = Q x P, dan л = TR – TC (7) According to Pasau et al. (2015) ,when the average rate of return is higher than 1, the business proposal is feasible. In a situation, where R/C = 1, the business is in a break-even position, If R/C lower than 1, it is not feasible. Break Event Point (BEP), Consists of Production Unit BEP (Q) and Rupiah Unit BEP (Rp). The BEP (Q) calculation stages are shown in Equation 8. BEP (Q) = TFC / (P/Unit– VC/Unit) (8) BEP Unit Rupiah (IDR), and BEP Calculation Stages (IDR) are shown in Equation 9. BEP (Rp) = TFC /1 - (VC/P) (9) A VCO production that exceeds the break-even point showed that the industry makes a profit. After all aspects have been analyzed, a multidisciplinary sustainability evaluation was conducted using Multi-Dimensional Scaling (MDS), with attributes covering ecological, economic, social, institutional, technological, and other relevant aspects to the study object (Wigiani et al., 2019). The stages in the MDS method, according to (Soejarwo et al., 2019), include identifying and assigning scores to each indicator through discussions with experts. Scored were assigned on an ordinal scale with a range of values between 0 (low or poor) to 2 (high or good). In this step, the positions of the good and bad points were determined by considering the distances on the Euclidean distance values (Eunike et al., 2018). The formula from Syarifuddin et al. (2016) was used to calculate the Euclidean distance, as shown in Equation 10. d 2 xy = √(𝑋𝑋 -𝑋𝑋 ) +(𝑌𝑌 -𝑌𝑌 ) 2 (10) Description: dxy=distance from point 1 to 2 X, Y = √ 𝑋𝑋 𝑋𝑋 𝑌𝑌 𝑌𝑌 Attribute The results of the ordination of an attribute in MDS were regressed on the Euclidean distance (dij) from point i to j with the origin (Dij). Furthermore, the results of attribute ordination in MDS were regressed on the Euclidean distance (dij) from point i to j with the origin (Dij), as expressed in Equation 11 (Ristianingrum et al., 2016). dij =a +bDij + e (11) Where: a = Intercept, b = Slope, and e = Error 28 √ ∑ ∑ ∑ ( ∑ ∑ ) A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 The ALSCAL algorithm is a regression technique used to make iterations to obtain the smallest possible e (error) and intercept value = 0 (a=0). The next step was to determine the m attribute, which showed the stress value, using the formulation shown in Equation 12 (Ristianingrum et al., 2016). 2 Stress = √ ∑m m k-1 2 (12) 2 [ ∑ ∑ d i j ijk RESULTS AND DISCUSSION General Description Community Business 2 ∑ ∑ ( D -d ) i i ijk ijk 1 (Ristianingrum et al., 2016). Based on the identification results, 24 indicators served as feasibility parameters for the Integrated Nyiur Community (KNT) business. ] Accuracy measurement of the point configuration that could reflect the original data in the MSD was shown in the Stress value, indicating the goodness of fit. Meanwhile, a low-stress value indicates a good fit and vice versa. When the S (stress) value is > 0.25, then the model is classified as good (Wahyudin et al., 2019a). Leverage analysis was conducted to determine indicators influencing the stability of the feasibility index. This was followed by a Monte Carlo analysis to evaluate the random error results from MDS ordination in Rapfish of Integrated Nyiur Integrated Nyiur Community (KNT), located in the Indragiri Hilir Regency, specifically in Kuala IndragiriSapat, focuses on agro-industry, particularly in the production of VCO. The majority of the production processes use conventional methods, except for the pressing and grating stages which include machinery. This community has a promising outlook due to the abundant and affordable availability of coconut raw materials. Despite operating on a small scale, KNT is capable of producing VCO 15 times each month, with an average production of 5 liters per session. A total of 50-60 mature coconuts are required as raw materials to produce 5 liters of VCO and packaged in 250 mL and 500 mL plastic bottles. Table 1. Parameters and indicators for assessing the VCO feasibility index Feasibility aspect indicators Good Bad Scale Form of Product Export 2 0 No export = 0, from second person=1, from first person=2 Marketing Area Coverage 2 0 Local market=0, National Market=1, Global market=2 Request Conditions 2 0 Decreased=0, Stagnant=1, Increased=2 Promotion (P) 2 0 None=0, Sometimes=1, Often=2 Origin of Raw Materials 2 0 There is only one source=0, 2-3 sources=1, >3 Sources=2 Nature of Supply Row Material 2 0 Intermittent=0, Occasionally intermittent=1, Current=2 Type of Technology and Machines used 2 0 Manual=0, Mix of machines and humans=1, All machines=2 Process Standardization Conditions 2 0 Not yet implementing standardization=0, still in development stage=1, already implementing standardization=2 Product Standardization 2 0 Not yet implementing standardization=0, still in development stage=1, already implementing standardization=2 The number of workers 2 0 Poor=0, Fair=1, Very satisfactory=2 Existence of Work Arrangements 2 0 Not yet available=0, Still in development stage=1, already exists and implemented=2 The existence of a Business Association 2 0 There are no associations=0, There are only 1=1, >1 Association=2 Linkages with other MSMEs 2 0 Not closely=0, Quite closely=1, Very closely=2 Marketing Aspect Technical Aspects HRM aspects 29 A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Feasibility aspect indicators Good Bad Scale There is permission from the Department of Health (IDI) 2 0 Do not have permission=0, already have permission=2 Existence of an industrial business permit (IUI) 2 0 Not yet available=1, In progress=1, Already available=2 There is a Business Extension Institute (LPU) 2 0 No LPU yet=0, LPU present but not working=1, Available and working=2 Participate in an extension agency (KLP) 2 0 Didn’t participate=0, participated but didn’t walk=1, participated and walked=2 NPV value 2 0 Small NPV from 0=0, large NPV from 0=2 IRR value 2 0 Smaller IRR MARR=0, larger IRR MARR=2 Gross B/C Value 2 0 Gross B/C < 1=0, Gross B/C = 1=1, Gross B/C > 1=2 Homework value 2 0 Profitability ratio < 1=0, Profitability ratio = 1=1, Profitability ratio > 1=2 Origin of Capital Sources 2 0 (0) Bank loans (1) Interest on Bank Loans and Own Capital (2) Own capital Business Profit Position 2 0 Loss=0, Return on capital=1, Profit=2 Basis for Determining Salaries 2 0 Below regional minimum wage=0, Equal to regional minimum wage=1, Above regional minimum wage=2 Legal Aspects Financial Aspect Financial and economic Analysis of Market and Marketing Aspects In the analysis of market and marketing aspects, market growth was evaluated through increased demand and the extent of a product's share. The result of calculations using forecasting methods showed that the demand for VCO products is estimated to continue increasing. The projection of demand outcomes is shown in Table 2. The calculations are consistent with the results of interviews, which documented VCO demand from Pekanbaru, Batam, Pelalawan, Dumai, Kediri, and Ponorogo. Subsequently, the KNT business has successfully marketed VCO to Malaysia, but its primary market remains in Riau and the surrounding Table 2. Estimated product demand/year Year 2019 2020 2021 2022 30 Request (L) 1,534 2,058 2,581 3,105 areas, with an average annual sales volume of 8001,200 L. The quality of KNT VCO products is a key factor in increasing demand. This is consistent with the results of (Gotomo & Wahyudi, 2017) who showed a significant impact of product quality on purchase decisions. Experimental results showed that KNT VCO can endure for 12-15 months without experiencing changes in color and aroma. Furthermore, the clarification process using suliki stones, cotton, and tissues in the final stage ensured a colorless and non-rancid quality of VCO. The selection of raw material includes coconuts aged 6-10 months, and freshly harvested to maintain VCO quality. The selling price was set at IDR 120,000 per liter, as the business entity had not conducted a detailed calculation. A methods for determining the selling price is the Cost-based Price method. Table 3 showed the calculation results that considered fixed and variable costs, with the obtained profit percentage being 0.47%. According to Ramadhan & Setyowati (2023), the selling price of a product should cover the production cost along with a reasonable profit, as shown in Table 3 with a profit percentage of 0.47%. VCO products with a size of 259 mL are recommended to be sold at a price A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Table 3. Profit Data Year 2018 Income (IDR) 13,500,000 Variable costs IDR 227,500 Fixed cost IDR 2,015,291 Total cost IDR 4,292,791 Total Profit/month IDR 9,207,209 IDR 9,207,209 Figure 2. KNT VCO production layout between IDR 35,000 to IDR 40,000 per bottle. Similarly, the 500 mL size could be sold at a price between IDR 65,000 to IDR 70,000 per bottle. This recommendation suggests that the selling price should be equivalent to the production costs with a markup to achieve a reasonable profit. According to Pasaribu & Kusnawan (2022), promotion plays a vital role in the marketing mix of a company to inform, persuade, and remind consumers about the product. KNT engaged in promotions through direct marketing, supermarkets in Tembilahan, collaboration with Mitra Insani Pekanbaru, and social media. In addition, the company maintains and maintains a presence at Bank Syariah Mandiri as part of the market strategy. In an effort for global expansion, KNT planned to promote through the web and leverage social media platforms. Data analysis showed that KNT markets and marketing aspects are worthy of further development. Technical Aspect Analysis The technical aspects include determining the business location, raw materials, and the technology used in the production process. KNT has a strategic location because the raw material is very close and abundant, obtainable from local farmers in the region. The technology needed in the VCO production process is still conventional, facilitating easy operation. KNT packages VCO products in plastic bottles of 250 mL and 500 mL. The accessibility of raw materials significantly impacts the production process, facilitating straightforward operation, including the use of equipment and machinery. Similarly, the packaging of VCO also maintains high quality, making the technical and technological aspects of the business worthy of further development. The layout of the KNT VCO production process can be seen in Figure 2. The production layout of KNT VCO used a U-shaped configuration, where the entrance and exit points for materials and finished products are in the same location. This is aimed at providing flexibility in adjusting the workforce, either by increasing or reducing the number of workers, in response to changes in demand. The condition of this layout is capable of handling unpredictable demand based on data. According to (Safitri et al., 2018), a well-coordinated layout arrangement could support the smoothness of the production process, enhance efficiency, and contribute to business sustainability. Processes A and B include the separation of coconut meat from the shell through peeling, splitting, and scooping using simple tools, such as peelers and splitters. Process C Includes grating the coconut meat using a machine, which is then pressed into coconut milk (D). The separation of the kernel from the water 31 A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Director Production manager Production Departement Staff Marketing & Sales Manager Financial Staff Figure 3. Integrated nyiur community organizational structure plan members optimally and achieve business objectives. The proposed organizational structure plan for KNT business is shown in Figure 3. The development of KNT's business required a planned organizational structure for systematic task distribution. Workforce planning became crucial, ensuring that the job descriptions for each position were executed effectively. HR quality needs to be consistent with technological advancements. Therefore, recruitment must meet the needs, both in terms of quantity and quality, to achieve a competitive advantage (Harianja, 2010). Analysis of Legal Aspects (E) was carried out manually with a specialized tool. Coconut Virgin Oil (CVO) the sedimentation (F) of VCO was carried out in a basin for 6-10 hours, followed by filtration (G) using a self-designed tool to reduce water and color content. The final processes include manual packaging, labeling (H), and storage (I). nd Analysis Based on Management and HR Aspects KNTn business was managed at a household level on with a small scale and an organizational structure, was not clearly defined. The analysis of human resource (HR) management was conducted to evaluate workforce readiness, including the type, quality, and quantity needed. Business management was entirely handled by the owner, g from raw material procurement to marketing. Although the payroll system was not yet professional, the VCO production process ran smoothly, showing the potential for business development. Furthermore, the development of a more systematic organizational n of structure was necessary to define the roles of entity The completeness of administrative requirements related to licensing in a business was discussed in the legal aspect. KNT has obtained production permit indicates that the KNT business conducts production activities legally. The legality of this production showed that the VCO products of the KNT business could be marketed both domestically and internationally. KNT Business is currently in the development process of applying for an Industrial Business License (IUI). This is regulated in the Minister of Industry Regulation No. 15 of 2019 concerning the Issuance of Industrial Business Permits and Expansion Permits. Based on the statement in the documents owned by KNT that the business can produce its products legally, the KNT business is legally suitable for development. Financial Aspect Analysis Financial and economic analysis was used to evaluate business performance by calculating investment criteria. KNT initiated the business with IDR Table 4. Duties and functions of each position Position Job description Leader Coordinating all business resources and managing manager performance Responsible for the policies that have been taken 1 Production manager a. Organize and check production activities b. Create production results reports c. Plan every purchase of raw materials and adjust to production targets Responsible for the smooth running of production activities 1 Marketing and sales manager a. Marketing the production results b. Check sales results reports c. Check and prepare financial reports and business debts Responsible for the accuracy of marketing and sales reports 1 Production staff Run and supervise the course of production activities Responsible for determining production standards 1 Financial staff Make financial reports to the Manager Responsible for incoming and outgoing money 1 32 Responsibility Total A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Table 5. Details of fixed costs No Item Cost/month Cost/year 1 Labor IDR 1,800,000 IDR 21,600,000 2 property tax IDR 4,333 IDR 52,000 3 Electricity IDR 120,000 IDR 1,440,000 4 Call IDR 100,000 IDR 1,200,000 5 Tool Depreciation IDR 90,958 IDR 1,091,500 IDR 2,115,292 IDR 25,383,500 Total Table 6. Details of variable costs No Variable costs/year Item 2019 2021 2022 IDR 24,696,000 IDR 30,972,000 IDR 37,260,000 IDR 8,643,600 IDR 10,840,200 IDR 13,041,000 4,717,050 IDR 6,328,350 IDR 7,936,575 IDR 9,547,875 4,200,000 IDR 4,200,000 IDR 4,200.000 IDR 4,200,000 1 Raw material IDR 18,408,000 2 Fuel IDR 6,442,800 3 Packaging IDR 4 Marketing IDR IDR 33,767,850 Total 2020 IDR 43,867,950 IDR 53,948,775 IDR 64,048,875 Table 7. Projected income from virgin coconut oil (VCO) Year Request (L) Price/L Income 2019 1,534 IDR 130,000 IDR 199,420,000 IDR 59,151,350 IDR 140,268,650 2020 2,058 IDR 130,000 IDR 267,540,000 IDR 69,251,450 IDR 198,288,550 2021 2,581 IDR 130,000 IDR 335,530,000 IDR 79,332,275 IDR 256,197,725 2022 3,105 IDR 130,000 IDR 403,650,000 IDR 89,432,375 IDR 314,217,625 115,000,000, including building and working capital, as well as production equipment. The total investment value reached IDR 182,983,000, obtained through a loan with a 12% interest rate. Additionally, KNT also incurs fixed and variable costs, and the details are shown in Table 5. The fixed costs that must be incurred to run a KNT VCO production business is IDR 25,383,500/year. This consists of labor costs for 1 employee and depreciation costs for the equipment used. Based on the estimated demand and the occurrence of price increases in the materials, variable costs experience differences in amount every year. The income calculation based on the data in Table 2 results in the presentation of the revenue from the production of Virgin Coconut Oil (VCO). The investment evaluation criteria used to assess the feasibility of the KNT business in terms of financial Expenditure Net cash aspects are Net Present Value (NPV), Internal Rate of Return (IRR), Gross Benefit Cost Ratio (Gross B/C), Profitability Ratio (PR), Payback Period ( PP) and Break Even Point (BEP). Table 8 showed the assessment results of investment criteria in financial and economic aspects. Based on the analysis results, the financial and economic aspects of the KNT VCO business were declared very suitable for development. This is because all the investment criteria met the requirements. Feasibility Index Assessment The feasibility index assessment used Rapfish analysis and Leverage, which generates a status diagram. Furthermore, leverage analysis was used to identify the sensitivity of indicators from each aspect influencing feasibility. The final feasibility index assessment for the five aspects is shown in Figure 4. 33 A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Table 8. Results of feasibility analysis for financial and economic aspects No Investment criteria Analysis results Condition Description IDR 482,378,746 NPV>0 Feasible 93.88% IRR>MARR (12%) Feasible NPV: Net Present Value 2 IRR: Internal Rate of Return 3 Gross (B/C): Gross Benefit Cost Ratio 2.193 Gross B/C>1 Feasible 4 PR: Profitability Ratio 3.64 PR>1 Feasible 5 PP: Payback Period 1 year 8 days PP< Capital Payback Period Feasible 6 BEP: Break Even Point BEP< Payback Period Feasible 2 Years 15 Days Leverage of Attributes RAPFISH Ordination Up 60 P 40 20 Bad 83,50 Good 0 -20 0 50 100 150 Attribute Other distingishing features 1 16,47 TP 5,79 WP 6,59 EP 7,60 -40 0 -60 5 10 20 15 The root mean square percentage The root mean square percentage Down Market and marketing aspects (a) (b) Figure 4. (a) index of market and marketing aspects, (b) sensitive factors that influence the feasibility of market and marketing aspects Leverage of Attributes 100 Up Good Bad 50 52,28 0 -50 -100 0 50 100 150 Down Technical status (a) Attribute Other distingishing features RAPFISH Ordination SPk SPs PTT PBB SBB 7,43 12,33 3,36 10,95 7,59 0 5 10 15 The root mean square percentage (b) Figure 5. (a) technical aspect index, (b) sensitive factors that influence the feasibility of technical aspects Based on the Multi-Dimensional Scaling (MDS) analysis results in Figure 6, the sustainability value of the market and marketing dimensions is 83.50%. This value showed that the market and marketing dimensions are in a good category, signifying a high potential for sustainability, given the index value falls within the range of 76 to 100. (Wigiani et al., 2019). Meanwhile, the results of the Leverage Analysis showed that the most sensitive attribute to influencing the sustainability of the KNT Business was promotion with a 34 value of 16.47. This result showed that appropriate and sustainable promotion methods are needed to increase the KNT VCO business. The sustainability of the technical and technological dimension is 52.28%, suggesting that the technical and technological dimension was in the fair category or had moderate sustainability potential (on a scale of 0 to 100) when the index value is between 51 75 (Wigiani et al., 2019). Furthermore, the results of the Leverage Analysis showed that the most sensitive A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 Other distingishing features Rapfish Ordination Leverage of Attributes Good 60,91 50 100 150 -40 -60 Attribute Up 60 40 20 Bad 0 -20 0 KSU 4,88 KU 11,21 MK 11,22 JTK 4,89 15 0 5 10 The root mean square percentage Down Status of Management and Human Resources (a) (b) RAPFISH Ordination 100 Up 50 Bad -100 0 KLP Good 65,40 0 -50 Leverage of Attributes 50 100 150 Attribute Other distingishing features Figure 6. (a) index of management and HR aspects, (b) sensitive factors that influence the feasibility of management and HR aspects 8,52 LPU 11,07 IUI 11,50 ID 6,60 Down Legal status (a) 0 5 10 The root mean square percentage 15 (b) Figure 7. (a) legal aspect index, (b) sensitive factors that influence legal feasibility attribute influencing the sustainability of KNT business was process standardization with a value of 12.33. This suggests that standardization is required for every processing stage. The raw material attribute was also important for consideration with a value of 10.92. The MDS analysis results showed that the sustainability value of the management and HR dimensions was 60.91%. This implies that the management and HR dimensions are in the sufficient category (scale 0 to 100) when the index value ranges from 51 to 75 (Wigiani et al., 2019). Meanwhile, the results of the Leverage Analysis showed that the most sensitive attributes that influence VCO business sustainability are work management and business community with 11.22 and 11.21, respectively. The results of the MDS analysis showed that the legal dimension and legality of KNT Business reached 65.40%, categorized as sufficient (51-75) (Wigiani et al., 2019). Furthermore, leverage analysis showed the Industrial Business License (IUI) and Business Extension Institution (LPU) attributes as the most sensitive, with 11.50 and 11.07, respectively. This result suggested that business sustainability was greatly influenced by operational permits from the government and educational support from business institutions. The MDS analysis in Figure 10 showed that the sustainability value of the financial and economic dimensions was 74.83%, categorized as fair or even close to good (51-75) (Wigiani et al., 2019). Leverage analysis highlights the Capital Source (SM) attribute as the most sensitive, with a value of 16.39. This result suggests that the sustainability of VCO businesses needs to pay attention to capital sources, both the amount and form of investment in the business. Feasibility Status of VCO Manufacturing Business The assessment of the feasibility index for conventional VCO-making business in Indragiri Hilir Regency was carried out on five aspects. Figure 9 showed the feasibility status of the KNT business, which produces VCO conventionally in Inhil Regency. Based on Figure 6, the percentage of the feasibility status of KNT business in VCO production, consisting of five aspects is determinable. The aspect with the highest and lowest feasibility scores was market and technical, with 83.50% and 52.28%, respectively. The basis for determining the status of the VCO production business 35 RAPFISH Ordination Up 60 40 Leverage of Attributes 74,83 Good 20 Bad Attribute Other distingishing features A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 0 -20 0 50 100 150 -40 -60 TG KU SM PR GBCR IRR NPV Down Financial status 9,91 4,47 16,39 5,83 5,51 6,23 7,15 0 5 10 15 The root mean square percentage (a) 20 (b) Figure 8. (a) financial aspect index, (b) sensitive factors that influence financial feasibility Table 7. Validation of stress values and r2 values Feasibility aspect Error R^2 Description Markets and marketing 0.15 0.94 Valid Technical 0.15 0.94 Valid Management and HR 0.16 0.92 Valid Law 0.16 0.93 Valid Financial 0.14 0.94 Valid conventional methods obtained an average score of 67.38%, which was deemed feasible. Validation of Feasibility Index Results Figure 9. Flyover diagram of VCO business feasibility status was based on the average feasibility index of the five assessed aspects. The system could be considered sustainable when the sustainability value was ≥50% and declared unsustainable at <50% (Syarifuddin, Andayani, Novianti, et al., 2016). The evaluation of the five aspects of KNT business producing VCO using The results of the feasibility index using the MDS Method were subjected to a validation stage. The validation of the assessment results against the feasibility index was determined based on stress and R2 values, showing how well the values reflect the actual data. When the stress value is less than 0.25 and the R2 value is more than 0.80, it showed that the results of the feasibility index evaluation are valid. Table 7 showed the stress and R2 values for the five measured aspects. According to Wahyudin et al. (2019b), a stress value less than 0.25 (S < 0.25) showed a good model. Table 8. Feasibility comparison with Monte Carlo simulation results Feasibility index Feasibility aspect 36 Error Description 80.83 2.67 Valid 52.28 51.51 0.77 Valid Management and HR 60.91 59.19 1.72 Valid Law 65.39 63.66 1.73 Valid Financial and economic 74.83 73.21 1.62 Valid Rating result Simulation results Markets and marketing 83.50 Technical A. Anwardi et al. / agriTECH, 44 (1) 2024, 26-38 The validation results showed that all five aspects have stress values < 0.25 and R2 > 0.80. This result suggests that the feasibility index of the five aspects can explain the real conditions. The second validation, which is the difference between the feasibility index and the results of the Monte Carlo simulation, ensures validity by comparing the difference in index values with the simulation analysis results, which should be less than 5%. Table 8 showed the simulation results and the difference in feasibility index values. All five aspects had an error value > 5%, showing that the feasibility index was considered valid. Another assessment could be conducted using index value criteria with different categories, such as bad, poor, fair, and good when the index value is 0 - 25, 26 50, 51 - 75, and 76 - 100, respectively (Wigiani et al., 2019). The assessment results showed that the market and marketing aspects had a good sustainability index value, while others were in the moderate category. This condition showed that the sustainability of KNT VCO business was valid. CONCLUSION In conclusion, the result of the feasibility analysis showed great potential for the development of the KNT VCO business. Furthermore, the market and marketing aspect showed stable demand growth with market penetration reaching Malaysia, suggesting that the business development was very feasible in terms of market and marketing. In terms of technical and technological aspects, standardization constraints were still in development, but the availability of raw materials and manually operated technical equipment showed reasonably good technical feasibility. Human resource (HR) management was proven to be highly feasible but continued to experience development. The legal and legality aspect was also recognized as feasible with the presence of a business license, and financially, the indicators showed a high level of feasibility, especially with NPV, IRR, and other indicators supporting business sustainability. 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