Process Economics Review

50 Process Economics Review

Total Capital Investment

T C I = F C I + W C

$TCI=FCI+WC$

Effect of capacity on equipment prices

\frac{C_{a}}{C_{b}} = (\frac{A_{a}}{A_{b}})^{n}

$\frac{C_a}{C_b}=\Big(\frac{A_a}{A_b}\Big)^n$

$ln(Ca)=ln(K)+n ln(A_a)$

Effect of time on equipment prices

C_{2} = C_{1} (\frac{I_{2}}{I_{1}})

$C_2=C_1\Big(\frac{I_2}{I_1}\Big)$

Preliminary Estimation of Purchased Equipment Costs

C_{e} = a + b S^{n}

$C_e=a+bS^n$

Lang Factor

C_{T M} = F_{l a n g} \sum_{i = 1}^{n} C_{p, i}

$C_{TM}=F_{lang}\sum^{n}_{i=1}C_{p,i}$

Return on Investment

R O I = \frac{r e v e n u e - C O M}{T C I} \times 100 %

$ROI=\frac{revenue-COM}{TCI}×100\text{%}$

Revenue

r e v e n u e = u n i t p r i c e o f p r o d u c t \times s a l e s

$revenue=unit\;price\;of\;product×sales$

Cost of manufacturing

\begin{matrix} c o s t o f m a n u f a c t u r i n g = d i r e c t c o s t + f i x e d c o s t + g e n e r a l e x p e n s e s \end{matrix}

$\begin{align*} &cost\; of\; manufacturing\\ &=direct\;cost+fixed\;cost\\ &\;\;+general\;expenses \end{align*}$

Number of operating labour

N_{O L} = (6.29 + 31.7 P^{2} + 0.23 N_{n p})^{0.5}

$N_{OL}=(6.29+31.7P^2+0.23N_{np})^{0.5}$

Cost of operating labour

\begin{matrix} # of operators = N_{O L} \times \frac{# of shifts in a year}{# of shifts per operator} \end{matrix}

$\begin{align*} &\text{# of operators}\\ &=N_{OL}×\frac{\text{# of shifts in a year}}{\text{# of shifts per operator}} \end{align*}$

C_{O L} = # of operators \times s a l a r y

$C_{OL}=\text{# of operators}×salary$

Total direct cost of manufacturing

\begin{matrix} total direct cost of manufacturing = C_{R M} + C_{W T} + C_{U T} + 1.33 C_{O L} + 0.03 C O M + 0.069 F C I \end{matrix}

$\begin{align*} &\text{total direct cost of manufacturing}\\ &=C_{RM}+C_{WT}+C_{UT}+1.33C_{OL}+0.03COM+0.069FCI \end{align*}$

Total fixed cost of manufacturing

\begin{matrix} total fixed cost of manufacturing = 0.708 C_{O L} + 0.068 F C I + d e p r e c i a t i o n (0.1 F C I) \end{matrix}

$\begin{align*} &\text{total fixed cost of manufacturing}\\ &=0.708C_{OL}+0.068FCI+depreciation(0.1FCI) \end{align*}$

Depreciation

\begin{matrix} depreciation = \frac{purchased value - salvage value}{life of equipment (n)} \end{matrix}

$\begin{align*} &\text{depreciation}\\ &=\frac{\text{purchased value}-\text{salvage value}}{\text{life of equipment }(n)} \end{align*}$

General expenses

\begin{matrix} general expenses = 0.177 C_{O L} + 0.009 F C I + 0.16 C O M \end{matrix}

$\begin{align*} &\text{general expenses}\\ &=0.177C_{OL}+0.009FCI+0.16COM \end{align*}$

Cost of manufacturing

$\begin{align*} &\text{cost of manufacturing}\\ &=0.180FCI+1.23(C_{RM}+C_{WT}+C_{UT})+2.73C_{OL}+depreciation(0.1FCI) \end{align*}$

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