CHAPTER 6 Estimation of Manufacturing Costs Don Scott ENCH 430 2/7/06

Factors Direct manufacturing costs: vary with production rate Fixed manufacturing costs: i.e. Taxes, insurance, depreciation. General expense: i.e. Management, sales financing.

Cost of manufacturing (COM) = Direct Manufacturing Costs(DCM) + Fixed Manufacturing Costs(FMC) + General Expenses(GE)

COM can be determined if the following are known Fixed capital investment (FCI) Cost of operating labor (C OL ) Cost of utilities (C UT ) Cost of waste treatment(C WT ) Cost of raw materials

From table 6.2 DMC=C RM +C WT +C UT +1.33C OL FCI+ 0.03COM FMC=0.708C OL FCI+depreciation GE=0.177C OL FCI+0.16COM COM=0.280FCI+2.73C OL +1.23(C UT +C WT + C RM ) COM d =0.180FCI+2.73C OL +1.23(C UT +C WT +C RM )

C OL N OL =( p N np ) 0.5 N OL = number of operators per shift. p = number of processing steps for particulate N np = number of non-particulate processing steps, which is the number of pieces of equipment. Note: Chemical plant operators are relatively highly paid. (Bureau of Labor and Statistics, Oil and Gas Journal, and Engineering News Record.

C UT Influenced largely by cost of fuel for electricity, steam, and thermal fluids Purchase from public or private utility Supplied by the company Self generated adn used by single process unit. Table 6.3

Cooling Tower Considerations Total heat load and circulation rate. Composition and saturation compositions of inorganics in feed water Required chemical addition Desired supply and return temperatures Cost of tower and pumps Cost of chemicals, electricity, and makeup water

Refrigeration Carnot Efficiency Cop rev =Evap T/(Temp difference of condenser and evaporator) An increase in Temp difference means an increase in the work required for evaporator

Steam Determine pressure levels Number of process users at different levels Which users will return condensate Determine condensate return header pressure Estimate blow down losses Complete a balance on the steam and condensate Determine capacity of the steam boiler Additional power generation possible with turbines.

Raw Material Costs Chemical Market Reporter Seasonal prices Contract pricing

Yearly Costs and Stream Factors Stream factor(SF) is the fraction of time a plant will be operating during a year in order to calculate yearly costs of materials and utilities. SF = Number of days operating/365

Liquid and solid waste streams Environmental regulations are primary cause for increase cost to waste treatment. Alternatives to treatment.