Abstract:
Textile industry is primarily concerned with the design and distribution of yarn, cloth and
clothing.
The problems which is faced by most of the textile industries in Ethiopia especially the Bahir dar
textile share company is assessment of their full potential or manufacturing performance. So the
main objective of this research is assessing the manufacturing performance of the Bahir dar
textile share company using multivariate time series model with key performance affecting
factors namely air, water, employ, electrical and mechanical factors. The relevant monthly data
were obtained from Bahir dar textile Share Company for the period from 2005 to 2011 E.C. VAR
model is employed for modeling.
The methods of the data analysis were both descriptive and inferential statistics. The stationarity
of the series were tested by augmented dickey fuller (ADF) and Phillips-person (PP) test. The
cointegration relations among the variables were identified by applying Johansson’s
cointegration test. The orders of parameters were chosen using AIC, SIC and HQ information
criterion. The model adequacies were checking the portmanteau test for residual autocorrelation
and autocorrelation LM test was developed to perform the test. The normality of variables was
check by Jarque-Bera test statistic. While potential causal relations were examined by employing
Granger’s causality tests. Moreover, the short run interactions among the variables were
determined through the application of impulse response analysis.
Unit root tests of the series under study reveal that all the series are non-stationary at level and
stationary after first difference. The result of Johansen test indicates the existence of one
cointegration relation between the variables and there is long-term dynamics between spinning,
weaving, finishing and garment. Granger causality test indicates that in the long run spinning
used to forecast weaving and weaving used to forecast finishing and finishing to garment at 5
percent significance. The impulse response result indicates The result indicates a shock to
garment, spinning, weaving and finishing have a rising and falling impact on garment over the
twelve month period taken. But all have positive impact on it. It is recommended to minimize
absence of employers, electricity, and appropriate water and air supply
