Manufacturing-cost estimation annual

The current cost per unit for each utility is usually well known in a company. Thus, the annual cost for utilities and the utilities cost per unit of production can be estimated. The latter is normally much smaller than the raw-materials and labor costs. However, a great deal more work is involved in calculating the utilities cost than for any other item in the manufacturing cost. 

Economics. The manufacturer s retail price for the 66-lamp unit from Pure Water Systems, Inc. is 35,000. The cost of operation is based on energy usage, which is 1.5 KWH (manufacturer s estimate) if the current cost of electricity is 5 /KWH, then the daily operation would run 1.80/day or 657 annually. The cost of oxygen and the ozone generator are not included, nor do we have any estimate on long-term maintenance. 

Operating Labor The cost of operating labor is the second largest item of expense in the manufacturing cost. Labor requirements for a process can be estimated from an intelligent study of the equipment flow sheet, paying careful attention to the various primary process steps such as fractionation, filtration, etc. The hourly wage rate should be that currently paid in the company. Once the number of persons required per shift has been estimated for a particular production rate, the annual labor cost and the labor cost per unit of production can be estimated. 

Include estimates for wages and salaries, raw material and inventory cost, manufacturing costs, insurance, shipping, marketing and advertising, and whatever other annualized costs the innovation may incur above and beyond your current operating costs. Also include annual depreciation or any other factors that could impact the prohtability of your innovation in an ongoing manner. 

Repairs. For preliminary estimates, repairs can be taken as a percentage of the installed plant machinery and equipment cost. Maintenance charges range from 2 to 10 per cent of the plant costs on an annual basis which corresponds to 1 to 4 per cent of the manufacturing costs per unit. A consideration of the type of equipment and operation involved will. show whether repair charges should be high, low, or average. 

For use with approximate profitability measures, as applied here to the preliminary calculation of the annual manufacturing cost, depreciation, D, is estimated as a constant percentage of the total depreciable capital, This type of depreciation is referred to as... 

Estimate the capital cost and annual operating cost of the drug manufacture and coating systems. 

However, if the report shows that using three sheet sizes instead of two produces only a 300 annual scrap savings, the company can probably estimate that the scrap savings will be much less than the extra overhead and inventorycarrying costs that will be incurred. In this case, two sheet sizes probably represents the overall manufacturing cost to the company. 

When to Scrap an Existing Process Let us suppose that a company invests 50,000 in a manufacturing process that has positive net annual flows (after tax) Acp of 10,000 in each year. During the third year of operation, an alternative process becomes available. The new process would require an investment of 40,000 but would have positive net annual cash flows (after tax) of 20,000 in each year. The cost of capital is 10 percent, and it is estimated that a market will exist for the product for at least 6 more years. Should the company continue with the existing process (project H), or should it scrap project H and adopt the new process (project 1) ... 

Example 4 Seven-Tenths Rule A company is considering the manufacture of150,000 tons annually of ethylene oxide by the direct oxidation of ethylene. According to Remer and Chai (1990), the cost capacity exponent for such a plant is 0.67. A subsidiary of the company built a 100,000-ton aimual capacity plant for 70 million fixed capital investment in 1996. Using the seven-tenths rule, estimate the cost of the proposed new facility in the third quarter 2004. 

According to one estimate, the total dose of enzyme needed for each patient requires extraction of material from approximately 50,000 placentae or 100 millions placentae for the 2000 patients currently on enzyme replacement therapy. With the gene cloned and expressed in large quantities in a fully glycosylated human recombinant form in Chinese hamster ovary (CHO) cells, the availability of the enzyme is less restricted. However, the cost of manufacturing remains high, partly due to the relatively high dose of enzyme needed to produce therapeutic effects. Annual cost of enzyme replacement therapy may be upward of 80,000 for each patient. 

A reexamination of so-called renewability has shown that advantages for oleochemicals are not sufficiently dear (115), especially because manufacture of surfactants in the United States accounts for only 0.03% of annual crude oil consumption (62). On these bases, the primary determinants of surfactant choice will continue to be cost effectiveness and availability. The 1993 U.S. market has been estimated to be worth 3.7 x 109 (110). Approximatdy one-half was anionic surfactant ( 1.8 x 109) and one-third nonionic surfactant ( 1.2 x 109). The balance was made up by cationics ( 1.2 x 106) and amphoterics ( 600 x 106). The U.S. International Trade Commission (116) provides a minutdy detailed breakdown of surfactant production. 

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