Progress Presentation on: Production Cost Analysis By

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Progress Presentation on Production
Cost Analysis By

• Siranee Sreesai
• Department of Environmental Health Science,
  Faculty of Public Health, Mahidol University

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Economic Analysis

• Macro-Economic
• Micro-Economic
• Production cost analysis
• Others Logistic, Material management

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Process Imported chemicals Other Raw
Material

• Equipment/Plant Synthesis
• Infrastructure Packaging Materials
• Water
• Electricity Purification By
  Product
• Fuel Oil , Gas
• Product Waste
• Admin
• Production
• Maintenance Packaging Waste
  Treatment
• RD
• IT
• Finance Distribution

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1. Why do the cost analysis ?
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1.1 Maximization needs

• Public Health
• Economic
• Environment

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1.2 Economy of Scale

• Unit Cost
• Optimum capacity
• Production Capacity
• The higher capacity the lower unit cost.
• The higher capacity the higher financial burden.

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• 1.3 Optimum production capacity is where unit
  cost starts to slope down.

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2.What make the unit cost?
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Production Cost

• Capital investment cost
• Operating cost
• Maintenance cost

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2.1Capital Investment Cost

• Direct cost Equipment and Building
• Indirect cost Engineering
• Permission processes (EIA,
• Licenses)
• Paper works
• Contingency

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2.2 Operating cost

• Raw Materials
• Chemicals
• Water
• Etc.

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Note

• Select suitable chemicals and other raw
  materials in order to minimize waste generating
• Type of raw materials V.S. Cost V.S. Waste
  generation
• How good quality the raw materials could we
  get?
• We propose to get best raw materials available
  in the world

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Labor number, salary, allowance, promotion,
training

• Workers
• Technicians
• Engineers
• Scientists
• Managers
• Etc.

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Consumables

• Filter Materials
• Resins
• Etc.

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Utilities

• Electricity
• Water
• Fuel

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Transportation

• Raw materials
• Products
• By-products

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Quality control and quality assurance

• Auditing systems
• Chemical inventory

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Environmental management

• Occupational health and safety
• Waste Treatment and Disposal
• Environmental monitoring
• By-product management
• Could we sell the by-product?
• and How many return?

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• 3.How to get these cost numbers?12 important
  steps are required

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• 3.1 Knowing chemicals to be used and
• operation steps(i.e. store, blend,
  reaction, homogenization, chromatography,
  distillation, extraction, drying, absorption,
  filtering, packaging)
• 3.2 Batch process or continuous process
• 3.3 Make flow sheet

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• 3.4 Solve mass balance and energy balance to
  know
• Ratio of various chemicals to put into process,
  and when to put in
• What are the chemicals, by-product or waste
  obtained from the process
• How much energy to put into each step
• How much energy to obtain from each reaction
  steps

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• 3.5 Obtain quantity of each raw material for the
  required throughput and the cost
• 3.6 Obtain amount of energy to be used and the
  costs
• 3.7 Obtain size of equipment to be used in each
  process step, and the cost of equipment
• 3.8 Obtain waste treatment process and the cost

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• 3.9 Knowing what to do/check/analyze, and how
  many people needed, Obtain labor cost
• 3.10 Adjust process flow sheet if necessary
• 3.11 Calculate costs, obtain unit cost
• 3.12 Scale-up or scale-down to get the curve
  Economy of Scale

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Economy of Scale

• Unit Cost
• Optimum capacity
• Production Capacity

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Cost Analysis For RDR-1 1. Capital investment
11,556,000 - direct cost 6,281,000
- indirect cost 3,768,000 -
contingency 1,507,000
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Cost Analysis For RDR-1 2. Operating cost
2,998,000 - raw materials
130,000 - Labor
600,000 - Equipment-dependent 2,171,000 -
Lab./QC/QA 90,000 -
Consumables 6,000 -
Utilities 2,000
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Conclusion Cost Analysis For RDR-1(1998
prices) 1. Capital Investment Cost 12,200,000
2. Operating cost 2,998,000
Note Production rate 144,821 kg/yr of feed
for RDR-1 Unit production cost 20.70 /kg of feed
for RDR-1 PAYBACK TIME 100,000 Years
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4.Relationship of production cost and time
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• 4.1 Operating cost high during start up, until
  people knows how to work without much mistakes
  then, it will be decreased.
• How to wrap up operating skill of the worker at
  all levels?
• 4.2 Maintenance cost low during start up. It will
  increase after using the equipment for a few
  years and the equipment deteriorated.
• How long the equipment life?

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• Cost
• Operating Cost Maintenance Cost
• 
  
• Year

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• 4.3 Operating cost and plant capacity
• Operation Cost
• Plant Capacity

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• How much should we produce in the first year?
• We should invest smallest size as possible and
  expand later in order not to pay too much without
  good return
• We purpose to build facilities to produce 25
  of the forecast volume, however, infrastructure
  and waste treatment system have to be 100 or
  not?

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Resource Person