Economics of scale

Until World War 1 acetone was manufactured commercially by the dry distillation of calcium acetate from lime and pyroligneous acid (wood distillate) (9). During the war processes for acetic acid from acetylene and by fermentation supplanted the pyroligneous acid (10). In turn these methods were displaced by the process developed for the bacterial fermentation of carbohydrates (cornstarch and molasses) to acetone and alcohols (11). At one time Pubhcker Industries, Commercial Solvents, and National Distillers had combined biofermentation capacity of 22,700 metric tons of acetone per year. Biofermentation became noncompetitive around 1960 because of the economics of scale of the isopropyl alcohol dehydrogenation and cumene hydroperoxide processes. 

For these technics there are nearly no economics of scale because the amount of ventilation air is directly connected to the number of animals. Both the air-washer and the biobed have a maximum load. 

On the other hand, the manufacturer may determine that the advantages of process scale-up are compromised by the increased cost of production on a larger scale and/or the potential loss of interest or investment income. Griskey (1) addresses the economics of scale-up in some detail in his chapter on engineering economics and process design, but his examples are taken from the chemical industry. For a more extensive discussion of process economics, see Ref. 2. 

If we should consider the total transportation cost formula we must at least include the compressor costs. It is easily demonstrated (see for example Dahl and Osmundsen (2002)) that the compressor costs do not invalidate the demonstrated economics of scale. The work done by the compressors depend on the so-called compression ratio Pt (compressor outlet pressure) divided by the pressure at the compressor inlet (the suction pressure). If we keep the compressor ratio fixed, the necessary compressor work per unit gas, and hence the compressor related cost per unit gas, will not increase as the diameter and flow increase.37... 

Although the gas flow equation indicates substantial economics of scale, there are still some technical constraints" that limit the chosen diameter and hence the lowest possible average transportation cost. 

If several pipelines are constructed and operated in order to satisfy the transportation demand in a given geographical region, the diameter economics of scale demonstrated above will be of minor importance if we consider the total transportation systems. 

However, the integrated system and the single operator arguments presented in this sub-section take the basic idea of natural monopoly from a single pipeline level to the network level. Although the economics of scale may be exempt on the pipeline level, there are economics of scale and scope at the network level that make the network a natural monopoly. This simply means that the total cost is least when the network is operated as a single, integrated unit. 

Economics of scale occur when the average cost per unit decreases as the number of units produced increases. 

Fayos-Sola, E. and Pedro, A. (2000) Economics of scale. In J. Jafari (ed.) Encyclopedia of Tourism (pp. 164-165). London Routledge. 

Another important consideration is that Medium-Btu plants require oxygen. If an oxygen plant must be built with the gasification unit, the economics of scale dictate that plants of larger than 30 billion Btu/day output would be necessary. A plant of 50 billion Btu/day is estimated to cost about 200 million. The cost of the clean gas produced at the gate has been estimated to be 3.75 - 4.50/MM Btu depending on cost of coal, capital and other factors. 

Because of the inherently high cost for collecting and transporting biomass, a biomass gasification plant will be limited in size, will not make full use of the economics of scale, and will be limited to certain geographic regions in the United States. 

The emulsification properties of the crude oil must be determined. Some crude oils can be emulsified with surfactant mixtures, others with caustic. Some crudes, such as Hasley Canyon (Table III), are difficult to emulsify. Experiments can be performed to determine if in situ emulsification is feasible, or if an emulsion must be injected. If in situ emulsification is feasible, loss of chemicals to reservoir rock is a problem to be addressed. If in situ emulsification is employed in conjunction with steam, it must be determined if chemicals are most effective when injected with the flowing steam or when chemical/steam injections are alternated. Relative permeabilities of the injected fluids should be determined. All of this information is needed to calculate the economics of scale-up to a specific field situation. 

Select packing (irregular vs. spherical) based on lifetime, feed purity and operating pressure Evaluate and design solvent recycling strategy Economics of scale... 

Potential economics of scale for large plants were often negated by establishing too many job categories and placing too many people into them. 

There are two reasons why a sonochemist should be interested in dosimetry. The first is that it might be possible to calculate the power required to perform an operation in order that the economics of scale-up can be assessed. The second reason relates to the need to normalize results obtained in different laboratories or with different equipment. If a suitable dosimeter is chosen then it should be possible to perform sonochemical reactions anywhere under precisely comparable conditions. 

In addition to immediate response options, we also examined a variety of longer-term options. The two most reasonable options were long-term storage of the contaminated soil in a centralized landfill or incineration in a specially designed, large-scale incinerator, with appropriate economics of scale (1, ). 

On such a basis, a comparison of film and supports deposition technologies was illustrated to better understand how from a lab technique it is possible to move to an industrial manufacturing process and reach a volume high enough to sustain important economics of scale. 

As matter of fact, the experience curve combines four sources of costs reduction learning, economics of scale, process innovation, and improved production design. 

Economics of scale, conventionally associated with manufacturing operations, is probably the most important of these costs drivers and exists wherever as the scale of production increases unit costs fall. A plant capacity has then an economic sense if a minimum efficiency plant capacity is reached. 

A precondition for such behavior is the emerging of one or two technologies which can sustain costs reduction based on economics of scale. 

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