Cost curves

Figure 8.6 Total cost curves for varying recycle inert concentration. (From Smith and Linnhoff, Trans. IChemE, ChERD, 66 195, 1988 reproduced by permission of the Institution of Chemical Engineers.)...

MW plant and 3.3% for the 200 MW plant. Not surprisingly, the savings become less as the plant becomes smaller. The costs ia Figure 12b are based on the capital cost curve (Fig. 12a) and fuel costs based on the modified EGAS reference steam plant efficiency of 34.3%. The cost comparisons are based on a coal price of 1.00/GJ ( 1.05/MBtu). Higher fuel costs would iacrease the attractiveness of MHD because of its more efficient use of the fuel. 

Optimum Pressure Drop. For most heat exchangers there is an optimum pressure drop. This results from the balance of capital costs against the pumping (or compression) costs. A common prejudice is that the power costs are trivial compared to the capital costs. The total cost curve is fairly flat within 50% of the optimum (see Fig. lb), but the incremental costs of power are roughly one third of those for capital on an aimualized basis. This simple relationship can be extremely useful in quick design checks. 

Good design ideas for new plants are also good for existing plants, but there are three basic differences. (/) Because a plant already exists, the capital—operating cost curve differs. Usually, this makes it more difficult to reduce utiHty costs to as low a level as in a new plant. (2) The real economic justification for change is more likely to be obscured by the plant accounting system and other nontechnical inputs. (2) The real process needs are... 

The cost of an initial hatch of 21 units, exchisive of special tools and setting-iip costs, averaged 120 per unit. The average cost of the next hatch of 80 units was 75.81. Let iis establish the learning curve implied hy these data and hence estimate the probable average cost of the next 50 units. We shall establish also the unit-cost curve to be used as a control during follow-iip orders. 

Values calculated in this way are plotted in Fig. 9-16 and also in Fig. 9-18. It will he noted that after about 10 units this latter curve becomes parallel to the cumulative-average-cost curve and that the Y values are (N + 1) times those obtained from the latter curve. 

FIG. 22-55 Typical capital-cost schematic for membrane equipment showing trade-off for membrane area and mechanical equipment. Lines shown are from families for parallel hues showing hmiting costs for membrane and for ancillary equipment. Abscissa Relative membrane area installed in a typical membrane process. Minimum capital cost is at 1.0. Ordinate Relative cost. Line with positive slope is total membrane cost. Line with negative slope is total ancillary equipment cost. Curve is total capital cost. Minimum cost is at 1.0. 

The application of control technology to air pollution problems assumes that a source can be reduced to a predetermined level to meet a regulation or some unknown minimum value. Control technology carmot be applied to an uncontrollable source, such as a volcano, nor can it be expected to control a source completely to reduce emissions to zero. The cost of controlling any given air pollution source is usually an exponential function of the percentage of control and therefore becomes an important consideration in the level of control required (1). Figure 28-1 shows a typical cost curve for control equipment. 

The most difficult feature of this method is that for each type of plant or plant product as well as for each type of equipment there is a break-point where the 0.6 no longer correlates the change in capacity. For small equipment or plants in reasonable pilot or semi-works size, the slope of the cost curve increases and the cost ratio is greater than 0.6, sometimes 0.75, 0.8 or 0.9. From several cost values for respective capacities a log-log plot of capacity versus cost will indicate the proper exponent by the slope of the resultant curve. Extrapolation beyond eight or ten fold is usually not too accurate. 

In addition to the direct operating quality costs, the indirect quality costs and their effect on the total cost curve must be considered. Indirect quality costs can be divided into three categories customer-incurred quality costs, customer-dissatisfaction quality costs, and loss-of-reputation costs. These... 

The problem of optimizing production from several plants with different cost structures and distributing the products to several distribution centers is common in the chemical industry. Newer plants often yield lower cost products because we learn from the mistakes made in designing the original plant. Due to plant expansions, rather unusual cost curves can result. The key cost factor is the incremental variable cost, which gives the cost per pound of an additional pound of product. Ordinarily, this variable cost is a function of production level. 

The Hogshooter plant, located in the United States, has a range of operation from 120 X 106 to 200 X 106 lb/year. The variable cost structure is rather complicated due to the effects of extreme reaction conditions, separation tower limitation, and several byproducts, which are affected by environmental considerations. These considerations cause a discontinuity in the incremental variable cost curve at 140 X 106 lb/year as given by the following equations ... 

Charts, correlations, and tables in the sources cited earlier relate capital costs to various parameters characteristic of the equipment to be evaluated. Table B.2 lists typical parameters used to correlate equipment costs for common types of process equipment. Figure B.3 is an example of such correlations for the cost of heat exchangers as a function of exchanger area. These forms of cost curves generally appear as nearly straight lines on log-log plots, indicating a power-law relationship between capital cost and capacity, with exponents typically ranging from 0.5 to 0.8. 

The boundary between reserves, resources and other occurrences is current. For several reasons, reserve and resource quantities and related supply-cost curves are subject to continuous revision. Production inevitably depletes reserves and eventually exhausts deposits, while successful exploration and prospecting add new reserves and resources. Price increases and cost reductions expand reserves by moving resources... 

Well-to-wheel analysis needs to be applied for all relevant time steps to understand the evolution of environmental effects and possibly costs in the short to long term. This is of specific importance when innovative processes are considered, as these are characterised by technology development and cost curves with high gradients. 

The delivered hydrogen cost over time is given by the aggregate hydrogen cost curve developed from our infrastructure modelling for this same vehicle introduction rate (Fig. 15.6). 

This plan does not require the government to estimate what the R D costs are, but it still places a heavy informational and organizational burden on it. It would have to know the demand or marginal benefit curve, as well as the marginal cost curve. If it provided the product, it would have to be able to be sure that only the demanders up to Q got access to it, not those from Q to the x-intercept who have positive but small marginal benefits. 

Pk, P], and Pf indicate unit prices of capital, labor, and fuel, respectively, Q is output and C is total cost. The purpose of the generalization was to produce a u-shaped average total cost curve. (See Example 7.3 for discussion of Nerlove s (1963) predecessor to this study.) We are interested in the output at which the cost... 

The cost curve is fairly flat, with a minimum at d = 0.50 ft, corresponding to 1.25 in. thickness of insulation. Some trials are shown with the computer program. A more detailed analysis of insulation optima is made by Happel and Jordan Chem. Process Econ., 380 (1975)], although their prices are dated. Section 8.12 also discusses insulation. 

The sum of all these costs is shown as the total cost curve. The minimum is approximately 4°F. TTD. A cross plot of the data indicated that a concentration of 1.7 times sea water had a slight economic advantage over either 1.5 or 2.0 times sea... 

The concept of the producer cash cost curve, that aligns and ranks producers in ascending order based on their cash costs of production and the intersection of which with market demand identifies the marginal - and therefore price-setting -producer, is universally known in commodity industries and requires no further explanation here. 

Given the low technological differentiation in commodity chemicals and - since much chemical production is ultimately based on crude oil - worldwide raw material price homogeneity, the cost curves for many chemicals are relatively flat. 

We noted earlier that commodity chemicals have earned superior returns to other commodity industries. Closer analysis that we have undertaken of the key differentiating factor behind chemicals higher profitability compared to other commodities shows it to be the recurrence of fly-ups, resulting from robust demand growth, limits on low-cost new capacity, and relatively flat cash cost curves. 

We have used the concept of the full cost curve and determination of the margins... 

Global cost curve - integrated ethylene/HDPE based on early 2005 capacities and prices... 

Cash coat of plants in the Middle Easl, North Africa include USD 100/tonne derivative transport cost lo other markets Full analysis must also consider differences in plan I gate product prices linear programs or margin curves are alternatives to cost curves to address Ihis. 

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