6.6: Process Economics Review
- Page ID
- 101184
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)Important Equations
Total Capital Investment\(\) | \(TCI=FCI+WC\) |
Effect of capacity on equipment prices | \(\frac{C_a}{C_b}=\Big(\frac{A_a}{A_b}\Big)^n\)
\[\ln(Ca)=\ln(K)+n \ln(A_a)\] |
Effect of time on equipment prices | \(C_2=C_1\Big(\frac{I_2}{I_1}\Big)\) |
Preliminary Estimation of Purchased Equipment Costs | \(C_e=a+bS^n\) |
Lang Factor | \(C_{TM}=F_{lang}\sum^{n}_{i=1}C_{p,i}\) |
Return on Investment | \(ROI=\frac{revenue-COM}{TCI}×100\text{%}\) |
Revenue | \(revenue=unit\;price\;of\;product×sales\) |
Cost of manufacturing | \begin{align*} &cost\; of\; manufacturing\\ &=direct\;cost+fixed\;cost\\ &\;\;+general\;expenses \end{align*} |
Number of operating labour | \(N_{OL}=(6.29+31.7P^2+0.23N_{np})^{0.5}\) |
Cost of operating labour | \begin{align*} &\text{# of operators}\\ &=N_{OL}×\frac{\text{# of shifts in a year}}{\text{# of shifts per operator}} \end{align*}$$C_{OL}=\text{# of operators}×salary$$ |
Total direct cost of manufacturing | \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{align*} &\text{total fixed cost of manufacturing}\\ &=0.708C_{OL}+0.068FCI+depreciation(0.1FCI) \end{align*} |
Depreciation | \begin{align*} &\text{depreciation}\\ &=\frac{\text{purchased value}-\text{salvage value}}{\text{life of equipment }(n)} \end{align*} |
General expenses | \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*} |
Terms to Know
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