Determination of trading plan and terms of its assembly

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R-squared. The proportion of the variation in the data explained by the model.

Production Planning

Production planning can be defined as the technique of foreseeing every step in a long series of separate operations, each step to be taken at the right time and in the right place and each operation to be performed with maximum efficiency (Kumar, 2008).

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Elements of production planning and control

1.7 Definitions of production planning

Production planning incorporates a multiplicity of production elements, ranging from the everyday activities of staff to the ability to realize accurate delivery times for the customer. With an effective production planning operation at its nucleus, any form of manufacturing process has the capability to exploit its full potential. Let us see what famous management gurus have to say about the function of planning and production planning in particular:

Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the predetermined goals

Planning is the determination in advance of line of action by which certain results are to be obtained

Planning is an intellectual process, the conscious determination of the course of action, the basing the decisions on purpose, facts and considered estimates

Planning is found amentally in a mental pre-disposition to do things in orderly way, to think before acting and to act in light of facts rather than of guesses.

Planning is the continuous process of making present entrepreneurial decisions systematically and with best possible knowledge of their futurity by organizing systematically the efforts needed to carry out these decisions and measuring the results of these decisions against the expectation through organized and systematic feed-back.

Planning is the process of selecting and relating of facts in the visualization and formation of proposed activities believed to be necessary to achieve the desired results

Production planning is the planning of production and manufacturing processes in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.

Production Planning is the administrative process that takes place within a manufacturing business and which involves making sure that sufficient raw materials, staff and other necessary items are procured and ready to create finished products according to the schedule specified.

Clothing production management

7.3 Production planning

Production planning is linked with sales planning, following product planning by type, quantity, and schedules over a planned period. Production planning can take into account days, weeks, or the whole season, see Fig. 7.2 . This type of production planning depends on an accurate and properly balanced production plan, determining what will be produced, the amount to be produced, and the time needed to produce it.

7.2 . Production planning.

7.3.1 Daily production planning

Daily production planning depends on three factors:

effective manufacturing time for a single product,

daily planned capacity.

Productivity as a measure of worker efficiency (productivity level Sp) is calculated by:

t1 manufacturing time for a single product in minutes,

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tef effective manufacturing time in minutes,

whilst the effective time tef is determined from the productivity level, using the equation:

Daily planned production capacity Cdp can be calculated as follows: D-td

Daily effective working time t d ef for a shift is determined on the basis of an 8 h working time td, and by taking into account the following:

tlb Lunch break 30 min
tpn Time for physiological needs 5 min
tpe Planned break in the form of physical exercise 2 × 5 min
tc Time necessary to clean the machine 5 min

Daily effective working time per shift can be expressed as:

td daily working time in minutes,

t d ef daily effective working time in minutes.

7.3.2 Weekly production planning

Weekly production planning is made for one or more weeks, and depends on the:

number of products or models,

time necessary to manufacture a single product or model,

number of operators,

flow-time or throughput-time.

The available number of working days for each work order is the starting point for calculating weekly capacity. The number of working days Nd required for a weekly plan is calculated using Equation [7.12] . A weekly capacity plan involves differing products and models. This means it is important to know the flow-time or through put-time. Flow-time consists in: time spent preparing and processing; the waiting time before and after processing; control and transport times. It is the time required for a product to pass through a manufacturing process (i.e. through cutting, sewing and finishing). Flow-time tpc is composed of three partial flow-times:

tpck cutting flow-time in minutes,

tpcs sewing flow-time in minutes,

tpcf finishing flow-time in minutes.

Individual partial manufacturing flow-times are defined as follows:

Kn number of products in the work order, in pieces,

Cdk cutting room daily capacity, in pieces,

Cds sewing room daily capacity, in pieces,

Cdf finishing daily capacity, in pieces,

tpk, tps and tpf time necessary for preparation, phase-transport and phase-storage in the cutting room, sewing room, and finishing.

There are three methods of workflow, from the point of view of an individual processing schedule:

In a consecutive workflow, individual manufacturing processes follow one another without interruption. It is characterised by the longest flow-time. Flow-time in this method is expressed as follows:

In an overlapping workflow, the activity of a planned process is performed, or initiated, whilst the activities of the previous process are still going on. Flow-time is reduced, and can be expressed as:

where tpck-zac is the initial cutting flow-time.

In a parallel or simultaneous workflow, an activity belonging to one process is performed simultaneously with the activities of the following process. Flow-time is significantly reduced and can be calculated as follows:

where tpcf-zak is the final processing time.

Planning flow-time plays an important role in production planning and management. A schematic representation of the methods of scheduling individual processing within clothing manufacture is given in the Gantt chart in Fig. 7.3 .

7.3.3 Seasonal production planning

Demand for garments is primarily seasonal, since most customers decide to buy spring or summer garments from April to mid-June, and autumn or winter garments from September to the beginning of December. This calls for adequate production planning . Seasonal production planning depends on the number of collections and generally includes two seasons:

Product capacity for a particular season is determined on the basis of daily- or yearly-planned capacities. The following aspects of preparation play an important part in seasonal production planning:

seasonal plan for collection preparation,

seasonal plan for collection manufacture,

seasonal manufacturing plan.

These plans include the time needed to prepare or manufacture the collection, or to manufacture the required garments. These plans define how long collection preparation takes, collection manufacturing and production flow, as well as requirements for equipment, materials and workers. When assigning orders, those generating higher profit should have preference, being more favourable for company development. The following factors in production should be taken into account during production planning ( Geršak and Pevec, 1993 ):

short procurement terms,

short innovative time for the preparation of new products or collections,

parallel production by different flexible working groups for various sizes, for example, manufacturing the collection and adapting the production programme to market demands and market abilities.

A well-planned production schedule has an important impact on the quality of the manufacturing process to be performed.

Planning and organisation of clothing production

4.2 Production planning and organisation within a company

Production planning can be represented by those functions and activities that unite and link clothing-pattern construction (design) and manufacturing technology (production), through four closely related organisational units:

Clothing-design analysis, pattern making, and planning production activities;

Planning and control of clothing-manufacturing activities;

Clothing production management; and

Only proper organisation ensures the optimal planning and coordination of the manufacturing process, as a basic process that transforms material inputs into products or services ( Geršak, 1993 ). In this regard, it is also worth mentioning the engineering function during manufacture, for this involves the design, planning and control of manufacturing processes and manufacturing production. A schematic representation of positioning production planning and organisation within the basic process can be seen in Fig. 4.1 .

4.1 . Positioning production planning and organisation within the basic process.

Because of the pressures within this dynamic marketplace, as in any other industry, in order to remain competitive clothing manufacturers need to:

deliver on time;

deliver to a given price;

reduce ‘work in progress’ 1 1 ;

reduce excess costs such as overheads;

introduce best practices; and

achieve accurate and consistent information ( Collins and Glendinning, 2004 ).

Good production planning and control are fundamental. In order to achieve specified planning and organisational objectives, it is necessary to be fully familiar with the properties and characteristics of the three basic elements present during every clothing-manufacturing process:

The raw material being processed – Material;

The processing equipment – Machines; and

The person executing the process – People.

It is also worth mentioning the so-called geometric principles of clothing design. Knowledge of a fabric’s behaviour during its transformation from a two-dimensional plane into a three-dimensional article of clothing, and characteristics of the materials involved, are of prime importance for efficient production. It is, therefore, necessary to be able to identify and understand the natural characteristics and the mechanical and physical properties of fabrics ( Kawabata et al., 1990, 1992; Geršak, 2008; Geršak and Zavec Pavlinic, 2000; Zavec Pavlinić and Geršak, 2004 ).

An important role is played by material testing: investigating and testing the materials to be included in the clothing with regard to the functional and technical requirements imposed upon them. It involves mechanical, physical and chemical tests on the basic and auxiliary materials and their accessories, as well as checking and defining the minimum quality criteria required. Planning and determining processing parameters will ensure a smooth manufacturing process and the required quality level. These parameters are directly related to quality-control requirements, some of which will be discussed in a later chapter dealing with quality requirements for clothing materials. Production planning includes the planning of manufacturing and assembly processes, as well as the process of clothing finishing. These processes and their order of application are precisely determined, so planning also needs to take into account the reliability of the equipment necessary to make the products.

Production planning is an organisational unit in itself. Effective data flow is of the utmost importance ( Geršak, 1993; Podlesek and Geršak, 1993; Kleindienst, 2008 ). The information system gathers the data that a production manager uses in order to know whether a basic process is on target or not. However, this information must be timely, and one of the problems organisations often have is that the data on process performance is gathered, fed into a mainframe computer, then batch processed and distributed over such large time intervals as to make the information useless for control. This is discussed further in the chapter on production monitoring and control.

An adequate information system that connects production planning and basic process flow is a prerequisite for successful production. The information system should be designed so as to ensure data exchange between the management system and the production process, meaning that it creates a closed cybernetic 2 circle, as can be seen in Fig. 4.2 . The data obtained from the basic process, together with the data acquired from the environment, create the essential information for the information system.

4.2 . Data flow among different information systems within a company.

Software Architectures and Tools for Computer Aided Process Engineering

5.4.3.1 Planning

Production planning for individual batch plants and planning for entire supply chains consisting of multiple interacting batch plants can in principle be performed using generic planning tools. Thus, generic linear programming (LP) and mixed integer programming (MILP) packages such as CPLEX (ILOG) can be used providing that the user is prepared to develop the case specific formulation and provide the appropriate data interfaces. Alternatively, if manufacturing recipe details are aggregated and thus the plant treated as a black box, then various capacity planning tools offered by ERP vendors can be applied. However, in batch manufacturing applications, the details of the batch operations often prove to be important because equipment and other limited resources are shared among the various products under consideration, thus production capacity is constrained. Unfortunately, at the present time there are no commercial tools, which can accommodate this level of detail without explicit user developed models. Such a suite of tools is available for petroleum refinery planning and supplies chain applications in the form of Aspen Technology’s PIMS and Ref-Sked packages, which are based on LP methodology.

Sequencing and line balancing

24.1 Product sequencing

Production planning concerns the required level of production in a specified time horizon. Production scheduling concerns the allocation of finite resources to meet the demand of three requirements, paying heed to constraints such as capacity, precedence, and start and due dates. Production sequencing concerns the resource level ordering of jobs on a shared workstation.

In a job batch production, we may have to encounter several products manufactured on certain machines according to a predetermined sequence. To avoid the conflict between the machine capacity utilization and the adherence to the customer delivery dates for each product, product sequencing offers a satisfactory compromise between these two factors: machine utilization and customer delivery dates.

As an illustration, let us consider three components A, B, and C that are worked on three machines 1, 2, and 3 with the operational times as indicated in Table 24.1 .

Table 24.1 . Operational times for three components on three machines.

Operational times in hours
Product A Product B Product C
Machine 1 1 2 3
Machine 2 6 2 3
Machine 3 5 6 2
Total operational time 12 10 8

There can be six alternative sequences in which the three components can be produced: ABC, ACB, BAC, BCA, CAB, and CBA.

Let us represent these sequences and their operational times under each machine to take the shortest time to complete all their operations on all three machines with the respective times indicated in Fig. 24.1 .

Figure 24.1 . Illustration of machine interference affecting the product sequence.

From this, we can see that the sequence BAC takes only 17 hours for performing all three operations, and the sequence CAB takes 23 hours for performing the same three operations. This is reflected by the fact that an operation cannot commence unless its previous operation is finished, and this is called the machine interference. BAC is hence the preferred sequence.

Production planning in the apparel industry

4.2 Production planning

Production planning and control (PPC) are important aspects of the garment manufacturing industry. Precision in planning equates to on-time shipments, the best use of labor, and assurances that appropriate supplies and equipment are available for each order ( Ray, 2020 ). Production planning involves everything from scheduling each task in the process to execution and delivery of products. In most cases the production of garments is very time sensitive in order to ship goods to stores and boutiques for the upcoming season. In the context of apparel manufacturing, the primary roles of the PPC department are listed below. Each function is explained briefly, just as an overview of the task ( Sarkar, 2020 ).

Job or task scheduling: This requires preparation of time and an action calendar for each order from order receiving to shipment. The job schedule contains a list of tasks to be processed for the styles. Each task planner notes when to start a task and the deadline for that task. The name of the responsible person (department) for the job is listed, for example, scheduling planned cut date and line loading date.

Material resource planning (inventory): Preparation of a materials requirement sheet according to sample product and buyer specification sheet is necessary. Consumption of material (e.g. fabric, thread, button, and twill tape) is calculated and cost of each material is estimated.

Patterns and markers: Pattern making, grading, and markers are a crucial part in planning for production. Once markers of each style are finalized, one can easily calculate the yield of fabric needed for production and in turn can order the fabric. When planning for the production schedule one must speak to the fabric supplier about the turnaround of the fabric and any additional time needed for dyeing or washing the fabric ( www.ehow.com ).

Facility location: Where a company has multiple factories (facilities) for production and factories are set for a specific product, the planner must identify which facility will be most suitable for new orders. Sometimes there may be a capacity shortage in a factory; in that case the planner must decide which facility will be selected for those orders.

Estimating quantity and costs of production: The planner estimates daily production (units) according to the styles’ work content. With the estimated production figure, production runs, and manpower involved, the planner also estimates production cost per piece.

Capacity planning: The PPC departments play a major role during order booking. They decide (suggest) how much order they should accept according to their production capacity, that is, allocating of total capacity or deciding how much capacity to be used for an order out of the total factory capacity.

Line planning: A detailed line planning with daily production targets for the production line is prepared. In most cases line planning is made after discussions with the production team and industrial engineers.

Cost control: Garment manufacturers cannot afford to lose time or materials in the production process. Raw material prices rise consistently, and poor planning can lead to missed opportunities and higher costs. With styles changing rapidly and vendors making increasingly smaller orders to keep up with changing trends, the planning phase of each production piece must be as accurate as possible.

Reduce loss: About 60–70% of the cost of a garment is in the fabric. As such, it is vital that one orders appropriately and tracks the cutting room processes to keep errors to a minimum. Effective production planning relies on the ability to order the appropriate amount of fabric for a run and to realize no more than a 2–3% rate of error in cutting. That means that the number of garment components produced should equal 97–98% of the garment components cut ( Ray, 2020 ).

Deliver timely shipments: Early delivery can be as harmful to the company’s future as late delivery, because buyers then must accommodate early deliveries with additional storage capacity. Ideally, the planning should allow for exact delivery when the customer demands. At the same time, there must be sufficient labor and raw material delivery in the exact proportions to meet the deadlines without having to pay extra for overtime.

Follow-up daily: Once the plans are set for a garment run and delivery deadlines, one must institute strict follow-up procedures to ensure that the plan is followed correctly. If the cutting room, for example, falls behind in its production schedule, then the sewing and finishing lines must wait, leading to backlogs and missed delivery deadlines for shipment. To avoid this, one must have a daily oversight of each step and keep the rest of the line updated with any delays so that plans can be adjusted to pick up the slack.

Financial Planing

The information contained in these two financial statements becomes more important when it is compared with corresponding information for previous

Financial Planing

Другие методички по предмету

Money is needed to start a business. Then the income from sales could be used to finance the firm’s continuing operations and to provide a profit.

But sales revenue does not generally flow evenly. Income and expenses may very from season to season or from year to year. Temporary financing may be needed when expenses are high or income is low. Then, the need to purchase a new facility or expand an existing facility may require more money than is available within a firm. In these cases the firm must look for outside sources of financing. Usually it is short- or long-term financing.

1. Short-term financing is money that will be used for one year or less and then repaid.

There are many short-term financing needs. Two deserve special attention. First, certain necessary business practices may affect a firm’s cashflow and create a need for short-term financing.

Cashflow is the movement of money into and out of an organization. The ideal is to have sufficient money coming into the firm, in any period, to cover the firm’s expenses during that period. But the ideal is not always achieved. For example, a firm that offers credit to its customers may find an imbalance in its cash flow. Such credit purchases are generally not paid until thirty or sixty days (or more) after the transaction. Short-term financing is then

needed to pay the firm’s bills until customers have paid their bills. Unanticipated expenses may also cause a cash-flow problem.

A second major need for short-term financing that is related to a firm’s cash-flow problem is inventory.

Inventory requires considerable investment for most manufactures, wholesalers, and retailers. Moreover, most goods are manufactured four to nine months before they are sold to the ultimate customer. As a result, manufacturers often need short-term financing. The borrowed money is used to buy materials and supplies, to pay wages and rent, and to cover inventory costs until the goods are sold. Then, the money is repaid out of sales revenue. Additionally, wholesalers and retailers may need short-term financing to build up their inventories before peak selling periods. Again, the money is repaid when the merchandise is sold.

2. Long-term financing is money that will be used for longer period than one year. Long-term financing is needed to start a new business. It is also needed for executing business expansions and mergers, for developing and marketing new products, and for replacing equipment that becomes obsolete or inefficient.

The amounts of long-term financing needed by large firms can be very great.

Income; profit; facility; sales revenue; expense; source; term; short-term financing; long-term financing; cash; cash flow; expand; provide; obtain; purchase; affect; be available; repay; borrow; transaction; supplies; marketing; equipment; merger; retailer; wholesaler; manufacturer; imbalance; merchandise; inventory; rent; sales revenue.

II. Find the English equivalents.

Финансовые потребности; арендная плата; стоимость; изготовитель; оптовый торговец; розничный торговец; (торговая) сделка; доход от продажи; припасы; товары; слияние (предприятий); определение; товарные запасы; оборудование; продажа; доход; прибыль; расход; срок; краткосрочное финансирование; долгосрочное финансирование; денежная наличность; движение наличности; обеспечивать; изменяться; покупать; быть в наличии; предлагать; заменять; влиять (на); конечный; устарелый; неэффективный; непредвиденный; тщательный.

1. Financial management begins with a determination of the firm’s. .

2. Temporary financing may be needed when . are high and . is low.

3. In these cases the firm must look for outside . of financing.

4. Short-term financing is . that will be used for one year or less and then .

5. Cash flow is the movement of . into and out of an organization.

6. A firm that offers credit to its customers may find an imbalance in its . .

7. A second major need for . financing that is related to a firm’s cash-flow problem is . .

8. The borrowed money is used to buy . and . , to pay . and to cover . until the goods are sold.

1. Финансовый менеджмент состоит из тех видов деятельности (activities), которые относятся к получению денег и эффективному их использованию.

2. Краткосрочное финансирование это деньги, которые будут использоваться в течение одного года или менее (less).

3. Существуют (there are) многие потребности краткосрочного финансирования, но движение наличности и товарные запасы представляют (are) две основные проблемы.

4. Товарные запасы требуют значительного инвестирования для большинства производителей, оптовых торговцев и розничных торговцев.

5. Занятые деньги возвращаются (is repaid) из дохода от продаж.

1. Is money needed to start a business?

2. When may temporary financing be needed?

3. What kinds (виды) of financing do you know?

4. What is short-term financing?

5. What is cash flow?

6. What is the ideal cash flow?

7. What can cause a cash flow problem?

8. Does inventory require considerable investment for most manufacturers, wholesalers and retailers?

9. Why do manufacturers often need short-term financing?

10. For what purpose (цель) is the borrowed money often used by the manufacturers?

11. When is the borrowed money usually repaid?

12. What is long-term financing?, .:

13. For what purpose is long-term financing needed?

14. Are the amounts of long-term financing greater than those of short-term financing?

VI. Make up a written abstract of the above text.

VII. Retell the prepared abstract.

Sources of Unsecured Financing

Unsecured financing is financing for which collateral is not required. Most short-term financing is unsecured. Sources of unsecured short-term financing include trade credits, promissory notes, bank loans, commercial papers, and commercial drafts.

Wholesalers may provide financial aid to retailers by allowing them thirty to sixty days (or more) in which to pay for merchandise. This delayed payment, which may also be granted by manufacturers, is a form of credit known as trade credit or the open account. More specifically, trade credit is a payment delay that a supplier grants to its customers.

Between 80 and 90 percent of all transactions between businesses involve some trade credit. Typically, the purchased goods are delivered along with a bill (or invoice) that states the credit terms. If the amount is paid on time, no interest is generally charged. In fact, the seller may offer a cash discount to encour-. age prompt payment. The terms of a cash discount are specified on the invoice.

2. PROMISSORY NOTES ISSUED TO SUPPLIERS

A promissory note is a written pledge by a borrower to pay a certain sum of money to a creditor at a specified future date. Unlike trade credit, however, promissory notes usually require the borrower to pay interest. Although repayment periods may extend to one year, most promissory notes specify 60 to 180 days. The customer buying on credit is called the maker and is the party that

issues the note. The business selling the merchandise on credit is called the payee.

A promissory note offers two important advantages to the firm extending the credit. First, a promissory note are negotiable instruments that can be sold when the money is needed immediately.

3. UNSECURED BANK LOANS

Commercial banks offer unsecured short-term loans to their customers at interest rates that vary with each borrower’s credit rating. The prime interest rate (sometimes called the preference rate) is the lowest rate charged by a bank for a short-term loan. This lowest rate is generally reserved for large corporations with excellent credit ratings. Organizations with good to high credit ratings may have to pay the prime rate plus 4 percent. Of course, if the banker feels loan repayment may be a problem, the borrower’s loan application may be rejected.

Banks generally offer short-term loans through promissory notes. Promissory notes that are written to banks are similar to those discussed in the last section.

4. COMMERCIAL PAPER

A commercial paper is a short-term promissory note issued by a large corporations. A commercial paper is secured only by the reputation of the issuing firm; no collateral is involved. It is usually issued in large denominations, ranging from $5,000 to $100,000. Corporations issuing commercial papers pay interest rates slightly below those charged by commercial banks. Thus, issuing a commercial paper is cheaper than getting short-term financing from a bank.

Large firms with excellent credit reputations can quickly raise large sums of money. They may issue commercial paper totaling millions of dollars. However, a commercial paper is not without risks. If the issuing corporation later has severe financing problems, it may not be able to repay

Determination of trading plan and terms of its assembly

of November 20, 2009

About Rules of determination of the country of goods’ origin in the Commonwealth of Independent States

Article 1

For the purpose of application of measures of tariff and non-tariff regulation of the Party accept the Rules of determination of the country of goods’ origin which are integral part of this agreement.

Article 2

By mutual consent of the Parties changes and additions which are its integral part which are drawn up by the protocols which are becoming effective according to Article 4 of this agreement can be made to this agreement.

Article 3

The matters of argument between the Parties arising in case of application and interpretation of provisions of this agreement are solved by consultations and negotiations of the Parties.

Article 4

This agreement becomes effective after 30 days from the date of receipt by depositary of the third notification on accomplishment by the Parties of the interstate procedures necessary for its entry into force which signed it.

For the Parties which performed interstate procedures later this agreement becomes effective after 30 days from the date of receipt by depositary of the relevant documents.

This agreement is signed sine die. Each of the Parties can leave this agreement, having sent the written notice of it to depositary. In this case this agreement stops the action concerning this Party in 6 months from the date of receipt by depositary of such notification.

Article 5

This agreement after its entry into force is open for accession of any State Party of the Commonwealth of Independent States by transfer to depositary of the document on accession.

For the joining state this agreement becomes effective after 30 days from the date of receipt by depositary of the document on accession.

It is made in the city of Yalta on November 20, 2009, in one authentic copy in Russian. The authentic copy is stored in Executive committee of the Commonwealth of Independent States which will send to each state which signed this agreement, its verified copy.

For the Government of the Azerbaijan Republic

For the Government of the Russian Federation

For the Government of the Republic of Armenia

For the Government of the Republic of Tajikistan

For the Government of the Republic of Belarus

For the Government of Turkmenistan

For the Government of the Republic of Kazakhstan

For the Government of the Republic of Uzbekistan

For the Government of the Kyrgyz Republic

For the Government of Ukraine

For the Government of the Republic of Moldova

to the Agreement on rules of determination of the country of goods’ origin

Rules of determination of the country of goods’ origin

The procedure for determination of the country of goods’ origin, the State Parties of the Agreement imported on customs areas from the third countries and taken out to the third countries from these states, is regulated by the national legal system of the State Parties of the Agreement and international treaties.

Section 1. Terms and concepts

For the purposes of these rules the following terms and concepts are used:

the country of goods’ origin – the country in which the goods were completely made or subjected to sufficient processing / conversion according to these rules;

criterion of sufficient processing / conversion – one of criteria of determination of the country of goods’ origin according to which the goods if two countries or more participate in its production, are considered the events from that country in the territory of which it was subjected to the last essential processing / conversion sufficient for giving to goods of its characteristic properties;

the cumulative principle – the principle of determination of the country of goods’ origin according to which the goods origin as a result of consecutive processing / conversion of goods in the State Parties of the Agreement is determined by the country of production of final goods;

production/production – accomplishment of any kinds of production or technological operations, including assembly or any special transactions which purpose is product receipt;

material – any ingredient, raw materials, the component or detail, etc. used for production of product;

material of foreign origin – the material which is not occurring from the territories of the State Parties of the Agreement or material which origin is not established;

product (products) – the made (made) product even if it is intended for further use in other production operation;

set of products – group of the elements/products classified as set according to the 3rd Basic rule of interpretation of the Commodity Nomenclature of Foreign Economic Activity;

goods – any property, both material, and product, including thermal, electric, other types of energy and vehicles, moved through customs border (except for the vehicles performing international carriages of passengers and goods);

batch – goods which go at the same time according to one or several commodity transport documents to one consignee from one consignor and also goods which are sent on one post delivery note or move as baggage one person crossing border;

commodity nomenclature of foreign economic activity (Commodity Nomenclature of Foreign Economic Activity) – The commodity nomenclature of foreign economic activity of the Commonwealth of Independent States applied according to the Agreement on the single Commodity nomenclature of foreign economic activity of the Commonwealth of Independent States of November 3, 1995;

the price on conditions ex-works – the goods price which is subject to payment to the manufacturer at whose company the last processing / conversion, on conditions ex-works was made;

resident – any physical persons and legal entities, the companies or the organizations which do not have the status of the legal entity which by the legislation of the State Party of the Agreement are exposed in it to the taxation based on residence, the permanent residence, the place of management, registration and creation or any other similar characteristic.

However the specified concept does not join persons who are exposed to the taxation in the State Party of the Agreement only concerning income gained from the transactions which are not connected with production and/or sales of goods;

the consignor/consignee – person specified in commodity transport documents who according to the assumed liabilities transferred/accepted or intends to transfer/accept goods to carrier / from carrier;

the exporter – the resident of one of the State Parties of the Agreement, being the party of the foreign trade agreement / transaction which delivers goods to resident of other State Party of the Agreement;

the importer – the resident of one of the State Parties of the Agreement, being the party of the foreign trade agreement / transaction which receives goods in the State Party of the Agreement delivered by resident of other State Party of the Agreement;

the applicant (customs applicant) – the person who addressed to authorized body (organization) of the country of export behind receipt of the certificate of origin, confirming and bearing responsibility for reliability of data on the goods specified in the certificate of origin.

The exporters, consignors of goods or persons representing them the interests according to the national legal system of the country of export can be applicants (customs applicants) (based on the power of attorney, the agreement of the order and other documents).

The specified concept can join also the importer, the consignee of goods or person representing them the interests according to the national legal system of the country of export (based on the power of attorney, the agreement of the order and other documents);

the certificate of origin – the document issued by authorized body and testimonial of the country of goods’ origin;

the declaration on goods origin” – the statement for the country of goods’ origin made by the seller, the manufacturer or the sender in the invoice or other business document concerning goods and allowing to carry out unambiguous identification of the goods which are rather declared for the purposes of customs clearance. The text of the declaration is stated in annex 5, being integral part of these rules;

the central customs authority – the executive body performing according to the national legal system of the State Party of the Agreement of function on development of state policy and to normative legal regulation, control and supervision in the field of customs affairs;

the central authorized body – the body (organization) authorized by the State Party of the Agreement to issue certificates of origin and performing maintaining single electronic system of certification of goods origin in the territory of this state and also control of proper functioning of the specified system;

authorized body – the body (organization) authorized by the State Party of the Agreement to issue certificates of origin of the ST-1 form;

electronic system of certification of goods origin – the information system of the central authorized body of the State Party of the Agreement including information databases of electronic forms of the certificates of origin of the CT-1, form issued by authorized bodies in the territory of the respective State Party of the Agreement.

the document on goods origin – the certificate of origin or the declaration on goods origin;

the checking (verifying) body – the state body authorized by the State Party of the Agreement on control of justification of issue of documents on goods origin, reliability of the data containing in them, and also on implementation of checks of accomplishment by producers of the criteria of determination of the country of goods’ origin provided by these rules


Section 2. Criteria of determination of the country of goods’ origin

2.1. The State Party of the Agreement in the territory of which the goods were completely made or subjected to sufficient processing / conversion according to these rules is considered the country of goods’ origin.

2.2. As the goods which are completely made in the State Party of the Agreement are considered:

a) natural resources (minerals and mineral products, water, land resources, resources of atmospheric air) got from subsoil of this country in its territory or in its territorial sea (other reservoir of the country) or from its bottom, or from atmospheric air in the territory of this country;

b) the products of plant origin which are grown up and/or collected in this country;

c) the live animals who were born and grown up in this country;

d) products received in this country from the animals who are grown up in it;

e) products received as a result of hunting and fishing trade in this country;

e) products of sea fishing trade and other products of sea trade received by the vessel of this country or leased (affreighted) by it;

g) products received onboard the overworking vessel of this country only from products specified in the subitem “e”;

h) products received from seabed or from sea subsoil outside the territorial sea of this country provided that this country has exclusive rights on development of this seabed or this sea subsoil;

i) the waste and scrap (secondary raw materials) received as a result of production or other operations on conversion, and also which were in the use of product, collected in this country and suitable only for conversion in raw materials;

j) products of high technologies received in outer space in the space courts belonging to this country or leased (affreighted) by it;

k) the goods made in this country of products specified in subitems “a” – “to” this Item.

2.3. For the purposes of the determination of the country of goods’ origin made in the State Party of the Agreement the cumulative principle which determines origin of these or those goods in case of its consecutive processing / conversion can be applied.

If in production of final goods in one of the State Parties of the Agreement the materials coming from another or other State Parties of the Agreement, confirmed with the certificate (certificates) on goods origin of the ST-1 form are used (further – the certificate of the ST-1 form or the certificate) and subjected to step-by-step subsequent processing / conversion in the friend or other State Parties of the Agreement, then the country in the territory of which it was last time subjected to processing/conversion is considered country of source of such goods.

In the absence of the certificate (certificates) of the ST-1 form of origin of materials from other State Parties of the Agreement determination of country of source of final goods is performed based on criterion of sufficient processing / conversion (subitems “a”, “b”, “v” of Item 2.4 of these rules).

2.4. In case of participation in production of goods of the third countries, in addition to the State Parties of the Agreement, the country of goods’ origin is determined according to criterion of sufficient processing / conversion of goods.

The criterion of sufficient processing / conversion can be expressed by accomplishment of the following conditions:

a) the change of goods item according to the Commodity Nomenclature of Foreign Economic Activity at the level of at least one of the first four signs which resulted from processing/conversion;

b) accomplishment of necessary conditions, production and technological operations in case of which accomplishment the goods are considered the events from that country in the territory of which these transactions took place;

c) the rule of ad valorem share when the cost of the used materials of foreign origin reaches the fixed percentage share in the price of end products.

The main condition of criterion of sufficient processing / conversion is change of goods item according to the Commodity Nomenclature of Foreign Economic Activity at the level of at least one of the first four signs. This condition is applied to all goods, except for the goods included in the List of conditions, production and technological operations in case of which accomplishment the goods are considered the events from that country in which they took place (further – the List) (appendix 1, being integral part of these rules).

The rule of ad valorem share as independently, and in combination with accomplishment of other necessary conditions, the production and technological operations stated in the subitem “b” of this Item can be included in this List as one of conditions.

If the rule of ad valorem share is applied, cost indicators are calculated:

for materials of foreign origin – on customs value of such materials in case of their import to the country in the territory of which production of final goods, or at documentary confirmed price of their first sale of territories of the country in which production of final goods is performed is performed;

for final goods – at the price on conditions ex-works.

2.5. For the purpose of determination of the country of goods’ origin according to criterion of sufficient processing / conversion the materials coming from the State Parties of the Agreement according to these rules are not considered as materials of foreign origin and are equated to coming from the country in which the final goods are made.

2.6. In case of determination of the country of goods’ origin according to criterion of sufficient processing / conversion use of the materials of foreign origin having goods item (at the level of the first four signs), identical with final goods is allowed provided that their cost does not exceed 5% of the price of final goods on conditions ex-works and such materials are necessary component in case of production of final goods (except for those goods for which in the List other conditions are specified) in case of obligatory confirmation of accomplishment of these conditions in the conclusion about the goods origin or the appraisal certificate issued by authorized body or other organizations according to the national legal system of the State Party of the Agreement.

2.7. If the product which origin answers conditions of these rules is used in production of other goods, then the requirements to origin applied to the materials used for production of this product are not considered in case of determination of the country of goods’ origin.

Section 3. The transactions which are not answering to criterion of sufficient processing / conversion of goods

3.1. Are considered not answering to criterion of sufficient processing / conversion of goods:

a) transactions on ensuring safety of goods in storage time or transportations;

b) transactions on preparation of goods for sale and transportation (crushing of batches, forming of sendings, sorting, repacking), transactions on disassembly and assembly of packaging;

c) sink, cleaning, removal of dust, covering oxide, oil or other substances;

d) ironing or pressing of textiles (any kinds of fibers and yarn, woven materials from any kinds of fibers and yarn and product from them);

e) transactions on painting or polish;

e) peeling, partial or complete bleaching, grinding and polish grain and rice;

g) transactions on coloring of sugar or forming of lump sugar;

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