Profitability analysis operating factor

It is desired to carry out a profitability analysis for the monochlorobenzene (MCB) separation process using (a) purchase costs and bare module factors, (b) purchase and installation costs estimated by Aspen IPE. In Section 16.7, the latter estimates were computed, beginning with the ASPEN PLUS simulation in the file, MCB.bkp. Plant location is the Gulf Coast. The design time is estimated to be one year, the construction time at one year, and the total operating life of the project at 15 years. Assume that 5% of the total permanent investment is... 

An analysis of costs and profits for any business operation requires recognition of the fact that physical assets decrease in value with age. This decrease in value may be due to physical deterioration, technological advances, economic changes, or other factors which ultimately will cause retirement of the property. The reduction in value due to any of these causes is a measure of the depreciation. The economic function of depreciation, therefore, can be employed as a means of distributing the original expense for a physical asset over the period during which the asset is in use. 

As a result of such accounting/marketing dialogues, methods to reduce the profit squeeze and to improve distribution effectiveness could be started. Many techniques previously noted such as value analysis, PERT, and operations research could be applied to the factors known and programmed through the computer for various decision design tables and profit information analysis. 

As in the case of unit cost kff, it is essential to interpret and estimate machine standstill time unit cost kjj. From the accounting point of view, the owner does not bear any maintenance expenses for old equipment units which are not being used. But in fact, frozen capital costs, unused operational potential cost (costs of lost profit, e.g. from renting equipment to external entities), unused equipment maintenance costs (storing costs, personnel costs, etc.) are incurred. Althou the costs are not financially significant, they represent an important factor which cannot be left out of the analysis and should be assessed by the owner/user of the machinery. It is proposed to assume cost kp on the basis of the rates which could be charged for renting the particular machines to external entities (lost profit costs). 

In a study of performance measurement related to lean manufacturing that affects net profit of SMEs in the manufacturing sector in Thailand, the researchers used factor analysis to find the factors. The study extracted factors using the principle component method and forecasted identify factors that affect net profit by using multinomial logistic regression analysis and grouping patterns of business operations of SMEs with statistical analysis. 

The activities of Levels 1, 2, and 3a in Fig. 1.8, are required for all manufacturing plants, while the activities in Levels 3b-5 are optional but can be very profitable. The decision to implement one or more of these higher-level activities depends very much on the application and the company. The decision hinges strongly on economic considerations (for example, a cost/bene-fit analysis), and company priorities for their limited resources, both human and financial. The immediacy of the activity decreases from Level 1 to Level 5 in the hierarchy. However, the amount of analysis and the computational requirements increase from the lowest level to the highest level. The process control activities at different levels should be carefully coordinated and require information transfer from one level to the next. The successful implementation of these process control activities is a critical factor in making plant operation as profitable as possible. 

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