Cost/volume relationship

Figure 28.3 illustrates two views of the cost/volume relationship. The straight line depicts the way many executives view costs — increased volume brings economies of scale. The more work there is, the more overhead is absorbed. This sometimes leads to an appeal from manufacturing to sales to raise their forecasts so the factory s labor and investment will be fully utilized. 

Figure 28.4 illustrates the broadening of the cost/volume relationship curve to target a production range in which to operate. The shape changes from a V to a U. The bottom of the U is the range of operation with the lowest costs. 

Another cause of variability lies in the way management views the cost-volume relationship. There are many misconceptions among managers of companies about the behavior of unit costs with changes in volume. One company president, whose background happened to be financial, likened the factory to a radio. "To get more volume, you just turn up the... 

If there is minimal byproduct formation, then the reactor costs (volume, catalyst, heating, etc.) can be traded off against the costs of separating and recycling unconverted reagents to determine the optimal reactor conversion. More frequently, the selectivity of the most expensive feeds for the desired product is less than 100%, and byproduct costs must also be taken into account. The reactor optimization then requires a relationship between reactor conversion and selectivity, not just for the main product, but for all the byproducts that are formed in sufficient quantity to have an impact on process costs. 

After applying the indirect requirements, SAMIS translated total process resource requirements into a process cost. It relied on the Cost Account Catalog for this function. The catalog contained price/volume relationships for all categories of cost — labor, material, and other factors. One could construct cost catalogs for different regions to evaluate cost factors in different areas. Model outputs included process costs by step and enterprise financial statements, including income statements and balance sheets. 

As with ah thin-film PV technologies, the projected manufacturing costs of a-Si H ahoy PV modules fah rapidly with annual manufacturing volume, ie, MWp /yr. The primary driver of this volume cost reduction is the volume—cost relationship of commercially available thin-film processing equipment. Thin-film coating machines often have capacities equivalent to 3—5 yr, so that manufacturing economies of scale are more fully realized at the... 

In terms of the derived general relationships (3-1) and (3-2), x, y, and h are independent variables—cost and volume, dependent variables. That is, the cost and volume become fixed with the specification of dimensions. However, corresponding to the given restriedion of the problem, relative to volume, the function g(x, y, z) =xyh becomes a constraint funedion. In place of three independent and two dependent variables the problem reduces to two independent (volume has been constrained) and two dependent as in functions (3-3) and (3-4). Further, the requirement of minimum cost reduces the problem to three dependent variables x, y, h) and no degrees of freedom, that is, freedom of independent selection. 

In a production line that has a relatively long run, the cost for equipment in relationship to producing the product including its financial amortization, usually is about 5% with probably maximum of 10% Plastic material cost could be at about 50% with as high as 80% for high volume production. The other costs include power, water, labor, overhead and taxes. With precision, short runs, costs could be equipmentwise at 20 to 30%, material 45 to 50%. Thus, as it is usually stated, do not buy equipment just because it cost less since more profit could occur with the more expensive equipment study what is to be purchased. Of course the reverse is possibly true. So, you the buyer, have to know what you want and are ordering to a specification properly determined based on the designed product requirements. 

It should be noted that in all cases the size (and hence cost) of end-of-pipe treatment has a direct relationship to both the volume of effluent to be treated and the concentration of pollutants contained in the discharge. For example, the size of most physicochemical reactors (balancing, neutralizing, flocculation, sedimentation, flotation, oxidation, reduction, etc.) is determined by hydraulic factors such as surface loading rate and retention time. 

In general, microsomes/S9 and cofactor (NADPH or UDPG A) are the most costly components of an incubation, but substrate, especially for early discovery compounds, is sometimes scarce. Higher enzyme concentration will lead to higher volume productivity and less amount of the cofactor to maintain the same cofactor concentration. However, the relationship of reaction rate and enzyme concentration may not be linear, so a higher enzyme concentration may yield lower enzyme productivity (amount of product per milligram enzyme used). Therefore, different protein concentration levels should be screened to obtain a good balance between volume and enzyme productivities. 

Stationary and mobile fuel cells could have a potential relationship that goes beyond cost and volume. A fuel cell in a vehicle is a multi-kilo-watt power generator on wheels, which is driven about 5% of the time and parked the other 95% of the time. 

Many factors act together to determine the optimum scale of a process. These include the demand for the product, competitors share of the market, any technical limitations on the size of operation and also economies of scale effects. There is an approximate logarithmic relationship between the unit production costs for a product and the volume of production, whereby considerable economies of scale can be achieved. If the costs of a process of one size (C ) is known then the costs of larger or smaller factories (C ) can be approximately obtained from the relationship C = Cx (or n° ), where n is the scale-up ratio, i.e. n=l for a plant that is twice as big. Alternatively, a graph of log capital costs vs. log of plant capacity gives a straight line with a slope equal to the scale-up factor (n). The power term varies from case to case, but is invariably less than one. This scale effect is one reason why unit production costs are inversely proportional to the scale of manufacture. For example, most amino acids are expensive and can only be used in... 

Reduction in AC usage - Stable sulphur asphalt emulsions can be produced with up to 40%/wt. sulphur. Since binder volume is the critical factor in the paving mix, and since the relative density of the emulsion binder is greater than regular AC, the substitution of AC by sulphur is not a one-to-one relationship. With a 40 60 emulsion, AC usage is reduced by approximately 27%/wt. This can provide a significant cost saving as well as a lesser dependence on not-always reliable asphalt supplies. 

If it is calculated that the volume of the gas space in the test cell will decrease significantly during the test, due to liquid thermal expansion, then account needs to be taken of this. Either the test can be performed at a lower fill level (at the cost of increased thermal inertia) or some estimate of the relationship between gas space volume and temperature should be made and the following equation used to find the pad gas pressure at any temperature ... 

Breakeven occurs at that volume rib where net revenue / = 0. This results in a relationship between breakeven volume, fixed cost, and contribution margin as follows ... 

The method of choice is dependent upon the analyte, the assay performance required to meet the intended application, the timeline, and cost-effectiveness. The assay requirements include sensitivity, selectivity, linearity, accuracy, precision, and method robustness. Assay sensitivity in general is in the order of IA > LC-MS/MS > HPLC, while selectivity is IA LC-MS/MS > HPLC. However, IA is an indirect method which measures the binding action instead of relying directly on the physico-chemical properties of the analyte. The IA response versus concentration curve follows a curvilinear relationship, and the results are inherently less precise than for the other two methods with linear concentration-response relationships. The method development time for IA is usually longer than that for LC/MS-MS, mainly because of the time required for the production and characterization of unique antibody reagents. Combinatorial tests to optimize multiple factors in several steps of some IA formats are more complicated, and also result in a longer method refinement time. The nature of IAs versus that of LC-MS/MS methods are compared in Table 6.1. However, once established, IA methods are sensitive, consistent, and very cost-effective for the analysis of large volumes of samples. The more expensive FTMS or TOF-MS methods can be used to complement IA on selectivity confirmation. 

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