Is Not for the Profits

Still, it s not every company that even has that sort of reputation to milk. It s not every company that takes as its motto We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have... 

The market for tar-based road binders has declined considerably for a variety of reasons. Less cmde tar is available and the profits from the sales of electrode pitch and wood-preservation creosote or creosote as carbon-black feedstock are higher than those from road tar. In most industrial countries, road constmction in more recent years has been concentrated on high speed motorways. Concrete, petroleum bitumen, or lake asphalt are used in the constmction of these motorways. In the United Kingdom, for example, the use of tar products in road making and maintenance had fallen from 330,000 t in 1960 to 100,000 t in 1975 and is less than 100 t in 1994, mainly based on low temperature pitch which is not suitable for electrode or briquetting binders, but which is perfectly satisfactory as the basis for road binders. 

The gross annual profit Acp in Table 9-36 is dependent on the balance-sheet annual depreciation charge Abd, whicm is not necessarily the same as the depreciation allowance used for tax purposes. Since Abd is arbitrarily chosen, it can be used to make the gross annual profit Agp high or low according to the company policy. 

Considering the energy and maintenance costs during the life cycle, the cheapest investment is not always the best. It may, for instance, be profitable to buy a ventilation unit with a heat recovery system, which may increase the unit investment by 50%. The return on the investment in such a case may be in excess of 20%. 

The use of a Fischer-Tropsch (FT) process to produce long-chain hydrocarbons is well known in industry, and achieving the desired selectivity from the FT reaction is crucial for the process to make economic sense. It is, however, well known that a one-alpha model does not describe the product spectrum well. From either a chemicals or fuels perspective, hydrocarbon selectivity in the FT process needs to be thoroughly understood in order to manipulate process conditions and allow the optimization of the required product yield to maximize the plant profitability. There are many unanswered questions regarding the selectivity of the iron-based low-temperature Fischer-Tropsch (Fe-LTFT) synthesis. 

The occurrence of the set-up procedure in period i is denoted by the binary variable Wi (0 = no, 1 = yes). The production costs per batch are denoted by p = 1.0 and the cost for a set-up is y = 3.0. Demands di that are satisfied in the same period as requested result in a regular sale Mi with a full revenue of a = 2.0 per unit of product. Demands that are satisfied with a tardiness of one period result in a late sale Mf with a reduced revenue of aL = 1.5 per unit. Demands which are not satisfied in the same or in the next period result in a deficit Bf with a penalty of a = 0.5 per unit. The surplus production of each period is stored and can be sold later. The amount of batches stored at the end of a period is denoted by Mf and the storage costs are a+ =0.1 per unit. The objective is to maximize the profit over a horizon of H periods. The cost function P contains terms for sales revenues, penalties, production costs, and storage costs. For technical reasons, the model is reformulated as a minimization problem ... 

The objective is to maximize the profit which is calculated by a cost model of sales revenues, production costs, storage costs, and penalties for lateness and for finishing line start-ups and shut-downs. The cost model adds some equality and inequality constraints with associated real valued variables for the sales, deficits, and the storage, but it does not further restrict the feasibility of the production decisions. 

In business, money is either borrowed or loaned. If money is loaned, there is the risk that it may not be repaid. From the lender s standpoint, the funds could have been invested somewhere else and made a profit therefore, the interest charged for the loan is compensation for the forgone profit. The borrower may look upon this interest as the cost of renting money. The amount of interest charged depends on the scarcity of money, the size of the loan, the length of the loan period, the risk that the lender feels that the loan may not be repaid, and the prevailing economic conditions. Engineers involved in the presentation and/or the evaluation of an investment of funds in a venture, therefore, need to understand the time value of money and how it is applied in the evaluation of projects. 

Pay-back time is the period required to recover the money initially invested in the project. Thus, the pay-back time is represented by the period (1-6) in the cash-flow diagram (Figure 13.5). The pay-back time is not just the period required for profits to be first generated—sufficient profits then have to be made to cover the initial expenditures made. 

Accumulation of losses is not modeled. The effective tax rate can be set to zero for time periods where accumulated losses offset profits. 

Last but not least, top-line and bottom-line results are exceeding expectations, and the extra profits UCB Pharma is making compensate for the profits lost due to the divestment of Surface Specialties. 

In the light of the scale of profits made by the electricity-generating sector in countries with competitive markets (empirical evidence set out in Sijm et al., this issue), this proposition is now more widely accepted. The electricity sector is barely exposed to foreign competition and, unlike other sectors, it does not face electricity price increases in inputs. In countries with competitive markets, greater cutbacks for the power sector have no direct implications for other sectors, since the price is predominantly set by the opportunity cost of carbon, not by the profit/loss balance of power generators. 

An important question is how the pass-through of C02 opportunity costs affects the profitability of power stations. A main purpose of the free allocation of emissions allowances under the US cap-and-trade programmes for S02 and NOx, as well as under the EU ETS for C02, is to obtain the political support of large emitters. Thus, the free allocation aims to ensure that the introduction of the ETS does not reduce the profitability of the eligible companies. 

---