Cost reduction case study example

Illustrations of these and other examples appear in the chapters on cost reduction in the supply chain and the case studies in Part IV. Regardless of the solution, the steps listed in this chapter section will improve the chances for success. 

In one study, the cost of natural gas is expected to rise to 3.29/1000 ft3 by the year 2000, while the cost of 02 is expected to decline by 10% as a result of a decrease in the cost of electricity and an increased production efficiency of generating oxygen.15 In the previous example, the normalized cost of oxygen to fuel would then become ( 1.45)(0.9)/( 3.29) = 0.397, which is a reduction of 27% compared with 0.541. Then the normalized cost would be NC = (0.50)[(0.397)(2.0) + 1] = 0.90, which is now lower than the base case. 

As a matter of fact, the vast majority of experimental studies focuses on a relatively well-defined set of parameters. Taking as an example the important case of NMR spectroscopy of organic molecules, the characterization is usually based on measurements of proton and carbon chemical shifts in solution, homonuclear (and possibly heteronuclear) coupling constants, and proton-proton nuclear Overhauser enhancements [or the corresponding rotating-frame effects (ROEs)]. This set of data is certainly reductive if compared with the information content potentially accessible by NMR measurements however, it does represent a reasonable balance of such factors as operator and instrument time, apparatus availabihty, costs, amounts of material required, completeness of information, and ease of interpretation. 

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