Contribution efficiency

As for the contribution efficiency T[, it is the ratio of (1) the annual profit that can actually be achieved in a given year for a given sales volume to (2) the profit that could be obtained if no repayment of capital or interest were required and all fixed-expense items were credited free to the project. It is defined by... 

If the project gets a free ride, i.e., if App is zero, then T[ takes on its maximum possible value of unity. Conversely, if the project and its prodiicliou rate are only at the breakeven point, then T becomes zero. Therefore, contribution efficiency can be regarded as a measure of the probability of success for the project. 

The relationship between the number of payback periods, the contribution efficiency, and the measiired-siii vival fiiucliou as set out in Eq. (9-117) is plotted in Fig. 9-33. 

The contribution efficiency defined by Eq. (9-119) may vary from year to year. In that case, Eq. (9-117) can be written in the modified form... 

Thus, (MSF) should in practice be regarded as a given or predetermined variable, and Eq. (9-117) accordingly becomes more useful if it is rearranged. For instance, the values of contribution efficiency for a given value of (MSF) are related to the number of elapsed payback periods by... 

Let us consider a project having a contribution efficiency of 0.684 and a payback perioa of 3 years. Figure 9-33 shows that when two payback periods have elapsed, a measured-sui vival function of 0.9 has... 

Contribution Analysis Contribution analysis can be used to make rapid assessments of the effect of changes in manufacturing costs on profitability. A dimensionless contribution efficiency T can be defined by rewriting Eq. (9-12) in the form... 

Equation (9-234) illustrates the enormous influence that go-slow tactics can have on the profitability of companies and processes which have low contribution efficiencies, since a slowdown has little effect on Aee- B L sometimes the case that in different countries productivity per worker varies considerably in similar industries. When poor productivity is not the result of technical or capital inadequacy, it should be possible to increase profitability without a proportionate increase in Aee-... 

The contribution efficiency at the scheduled output qo L given by substituting the value of the scheduled output into Eq. (9-229) to give... 

FIG. 9-33 Relationship between measured-survival function, number of payback periods, and contribution efficiency. 

The onset of general inflation does not change the value of the contribution efficiency T], as can be seen from Eq. (9-119), and it does not affect the value of 3 if the cash flows in Eq. (9-118) are converted to their purchasing power in Year 0. Thus, general inflation does not cause the measured-survival function to change. 

Substitution reactions of xenobiotics with glutathione are the most important and contribute efficiently to detoxification. Nevertheless, in some cases, such as vicinal dihalogenated compounds, glutathione conjugation produces monosub-stituted derivatives, which may cycUze into a highly electrophilic episulfonium ion (Figure 33.17). ... 

---