Manufacturing-cost estimation value

Figure 16-12 shows the four sensitivities that are usually calculated the effects of changes in development time, sales volume, manufacturing cost and development cost. Experience shows that changes are usually more or less linear in these variables, and that the estimation of changes is more reliable than that of the value of the project. 

Let s consider that under the current operating conditions the values of x fall within a rectangle Xcurrent = x e [200 4000] Ax2 e [10 20]. Furthermore, we will assume that the two decision variables (xj and x2) are independent and have uniform probability distributions. Using the available model, fix), we computed the current average total manufacturing cost, (y Xcurrent) = 743.5, a reference value that can be used to estimate the savings achieved with the implementation of any uncovered final solutions, X. ... 

The chapter starts by introducing the basic concepts of an economic analysis, as prices, breakdown of the capital and manufacturing costs, profit, as well as the formation of cash flow. Because the time-value of money plays a central role the next section presents some basic elements of financial methods. Two other sections deal with the detailed estimation of capital and operation costs. Simplified equations based on typically cost ratios can be used for quick estimations. These ratios are also helpful for the control of more detailed computations. The chapter ends with a more detailed description of the profitability analysis, both by traditional and modem methods. Note that the methods developed in this chapter can be applied using spreadsheets. 

The data presented in Table 1.3 are the estimated values of the parameters that are accurate within 10%. The manufacturing techniques for Pb-acid batteries are highly optimized and the key electrochemical contents lead and sulfuric acid are inexpensive, whereas the non-Pb-acid-type batteries are continuously undergoing design variations because of changes in material technology and material costs. 

In Section 2. the information needed to assess the economic feasibility of a process is covered. This includes the estimation of fixed capital investment and manufacturing costs, the concepts of the time value of money and financial calculations, and finally the combination of these costs into profitability measures for the process. 

Table 8.2 gives data to estimate the individual cost items identified in Table 8.1 (both tables carry the same identification of individual cost terms). With the exception of the cost of raw materials, waste treatment, utilities, and operating labor (all parts of the direct manufacturing costs). Table 8.2 presents equations that can be used to estimate each individual item With each equation, a typical range for the constants (multiplication factors) to estimate an individual cost item is presented. If no other information is available, the midpoint value for each of these ranges is used to estimate the costs involved. It should be noted that the best information that is available should always be used to establish these constants. The method presented here should be used only when no other information on these costs is available. 

Without knowledge of the time value of money and cost estimation, engineers are likely to make bad choices about the design [3]. There are also plans to add business students to manage the costs of the project development and manufacturing. These costs will be assigned to the tasks and materials used during the process. 

Abrasives have evolved iato an essential component of modem iadustry. Sandstone, emery, and comndum were the abrasives of choice until the late 1800s when artificial materials were developed. Today synthetic abrasives offer such improved performance that the natural ones have been largely replaced except for jobs where cost is paramount. In 1987 U.S. statistics (4) showed natural abrasive production to be about 7 million while that of cmde manufactured abrasives was over 182 million. Total value of abrasives and abrasive products worldwide is estimated to be over 6 biUion dollars. 

Economic Aspects. Manufacturing facilities for CFG alternatives are just now coming on line. The size of the markets for the alternatives is estimated to be quite large (several thousand t/yr), but it will not be as large as the prior markets for CFCs themselves. This is largely because of the higher cost of the alternatives, typically 3—5 times that of the incumbents. Low value-in-use appHcations which caimot support the cost of the alternatives will disappear or will switch to not-in-kind alternatives such as hydrocarbons for foam blowing. 

Ashby has taken his approach a stage further with the introduction of physically based estimates of material properties where these have not been measured (Ashby 1998. Bassett et al. 1998), where an independent check on values is thought desirable or where property ranges of categories of materials would be useful. Figure 5.5(c) is one example of the kind of estimates which his approach makes possible. A still more recent development of Ashby s approach to materials selection is an analysis in depth of the total financial cost of using alternative materials (for different number of identical items manufactured). Thus, an expanded metallic foam beam offers the... 

The capital costs for a VaporSep system installed at a plastics manufacturing plant were 300,000. The waste stream contained 5 Ib/hr of hydrogen, 172 Ib/hr of nitrogen, 328 Ib/hr of ethylene, 7 Ib/hr of ethane, and 288 Ib/hr of butene. The system recovered 290 Ib/hr ethylene and 284 Ib/hr of butene. Based on a value of 300 per ton for each ethylene and butene, the plant saved an estimated 700,000 per year by recycling the hydrocarbons (D205549, p. 6). 

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