Manufacturing-Related Costs

Although details varied, similar ABC structures for manufacturing operations were developed at all six sites. The key common characteristics of these structures were  

Operating hours, not direct labor hours or dollars, were established as the primary driver of manufacturing activity costs. Depending on the company, these operating hours could be in the form of machine hours, cycle hours, cell hours, line hours, or press hours. It was agreed that operators, who had always been considered direct labor, were either one of the indirect costs required for the equipment to operate or an independent activity whose costs should be added to the operating hour related costs based on the relationship between operating hours and operator hours. 

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Eixed costs include corporate overhead and administration costs as well as those plant-related costs that do not vary with production and contribute 5 to 30% of the total manufacturing cost. 

Service. The basic idea of service extension is to capture more value in the intangible part of the product. This means that increasing revenue does not necessarily mean increasing the physical resources used, with their related costs and environmental impacts. This dematerialisation is a strong trend across industry, even within manufacturing. Solution... 

We can clearly state that the time has come when pharmaceutical manufacturing systems can be designed and built in an entirely digital domain, saving huge amounts of capital and other related cost, and simultaneously increasing quality. 

Figure 13. Manufacturing cost of ethanol by enzyme hydrolysis. Yearly production 25 million gallons (95%). Includes capital related costs, raw materials ir chemicals, utilities, labor, maintenance. Feed ...

Fixed cost effects are included in most production network design models but scale and scope effects related to variable costs and learning curve effects lead to concave cost functions (cf. Cohen and Moon 1990, p. 274). While these can be converted into piecewise linear cost functions, model complexity increases significantly both from a data preparation perspective (see Anderson (1995) for an approach to measure the impact on manufacturing overhead costs) and the mathematical solution process. Hence, most production network design models assume linear cost functions ignoring scale and scope effects related to variable costs. 

The manufacturing cost of a product is the sum of the processing or conversion cost and the cost of raw materials. The processing cost can be roughly broken down into three parts investment-related cost, labor-related cost, and utility cost. 

This entry will first survey the reasons for developing blood substitutes and outline the principles of oxygen delivery by PFC emulsions. It will then focus on the main challenges encountered in the development of such emulsions, namely the selection of an appropriate excretable PFC and the preparation of a stable, biocompatible emulsion. It will also allude to questions related to raw material procurement, product manufacture, and cost. Further sections will concern the pharmacokinetics, efficacy, and side effects of these oxygen carriers. Finally, the potential applications of these products will be outlined, including the status of their clinical trials, and some forward looking comments will be made. 

As far as manufacturing costs are concerned the yield of immobilized enzyme activity is mostly determined by the immobilization method and the amoimt of soluble enzyme used. Under process conditions, the resulting activity may be further reduced by mass transfer effects. More precisely, the yield of enzyme activity after immobilization depends not only on losses caused by the binding procedure but may be further reduced as a result of diminished availability of enzyme molecules within pores or from slowly diffusing substrate molecules. Such limitations, summarized as mass transfer effects, lead to lowered efficiency. On the other hand, improved stability under working conditions may compensate for such drawbacks, resulting in an overall benefit. Altogether, these interactions are a measure of productivity or of enzyme consumption, for example, expressed as enzyme units per kg of product. If we replace enzyme units by enzyme costs we obtain the essential product related costs, for example, in US per kg of product. 

The use of detachable balloons to occlude the ISV was first described in 1981 [31]. Due to a lack of FDA approval for some of the devices and manufacturer related issues, the balloons have not always been readily available in the USA. From a technical standpoint, balloons were similar to coils in that they needed to be deployed above and below collateral connections. However, since the balloon occluded the vein completely, much like the Amplatz Vascular Plug, only one was necessary at any given site. As with coils, it was common for users of balloons to perform some type of sclerotherapy on the vein segments between balloons to decrease the development of collaterals. Balloons suffered from two major drawbacks that severely limited their more widespread acceptance. The first was cost. The other was that the size of the catheter required to deliver... 

Usually, the so-called overheads include the non-project-related costs of the plant manufacturer. They comprise, inter alia, costs for central departments like the human resources department, computer centre or the company management... 

Latent defects are defects or damages not revealed during assembly and commissioning. They occur only after acceptance during normal operation of the plant Unless latent defects are attributable to faulty operation of the personal, the plant manufacturer, within the framework of his defects liability, is liable to remedy defects at his own costs. However, clever contractual arrangements with his subcontractor wiU entitle the plant manufacturer to pass these defects and thus the related costs on to the subcontractor. 

Example 4 Due to a delay on the construction site, the plant manufacturer calls off the larger vessels only one month after the agreed date of dehvery. If, for this period, in the contract with the vessel suppHer free storage has not been stipulated, he will claim the storage-related costs from the plant manufacturer. 

Factors Associated with the Manufacturing Cost of a Vessel Relationship relating Cost to vessel weight iff. ... 

Personnel or labor cost is usually a significant contributor to the overall production cost, which is especially true for the area of red biotechnology. In contrast to white biotechnology, the manufacture of biopharmaceuticals and, especially, cell therapy products is still characterized by a relatively low level of automation and dependence on manual operation by skilled operators. Additional personnel-related costs such as cost of QC (quality control) and QA (quality assurance) services are secondary costs. Maintenance, repair and external services, and general expenses refer to cost for keeping the facilities and equipment functional (typically 2-5% of investment) and to cash-out for externally sourced services such as, for example, cleaning of the facility or workwear and outsourced analytical services, respectively. 

At this stage, we have seen that even in the absence of inventory-related costs, quantity discounts play a role in snpply chain coordination and improved supply chain profits. Unless the manufacturer has large fixed costs associated with each lot, the discount schemes that are optimal are volume based and not lot-size based. It can be shown that even in the presence of large fixed costs for the manufacturer, a two-part tariff or volume-based discount, with the manufacturer passing on some of the fixed cost to the retailer, optimally coordinates the supply chain and maximizes profits given the assumption that customer demand decreases when the retailer increases price. 

Assume that DO faces a demand curve for Vitaherb of 300,000 — 60,000p. The normal price charged by the manufacturer to the retailer is Cr = 3 per bottle. Ignoring all inventory-related costs, evaluate the optimal response of DO to a discount of 0.15 per unit. 

This model was solved for a problem with a single manufacturer (located in the US), dealing with five suppliers. The probabilities of supplier disruption for all the suppliers (individually and in various combination) were considered as given. The relation cost was taken as 5,000 and the quantity required by the manufacturer was 520 units. The location, capacities and risks faced for each of the suppliers is listed below in Table 4. 

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