CHPE404 Engineering Economy Estimation of Manufacturing Costs Dr Mustafa Nasser

Outline

Estimation of Manufacturing Costs

Direct Costs

Fixed Costs

General Expenses Administration Costs Distribution and Selling Costs Research and Development

Manufacturing Costs

Manufacturing Costs - examples Cost associated with management level and administrative activities not directly related to the manufacturing process.

Manufacturing Costs

Manufacturing Costs with depreciation as 10% FCI (8.1) (8.2) COM without Depreciation

How Do We Get…..

Cost of Operating Labor NOL = the number of operators per shift P = particulate processing steps Nnp = non-particulate processing steps – compression, heating/cooling, mixing, separation, and reaction Important note – Above equation based on data from chemical plants and refineries where number of particle processing steps is low. For units with more than 2 solids processing steps ignore middle term and add 1 operator per solids step

Example 8.2: Estimate the operating labor requirement and costs for the Toluene hydrodealkylation facility shown in fig 1.3 and 1.5

Example 8.2 solution Pumps & Vessels are Not counted in evaluating Nnp

Example 8.2 solution

Example 8.2 solution

Cost of Raw Materials, Utilities, and Waste Treatment

Stream Factor not kmol/hour

Utilities – Fuel and Electricity

Cost of Fuel – Utility costs This graph clearly shows the recent trend in petroleum based fuels. This data is prior to the $140 per barrel surge that occurred in 2008 so the costs for ng and fuel oil are even higher. Not the relatively stable cost of coal.

Utilities - Steam

Can you see the huge difference between part d & e?

On the Utilities Summary of CAPCOST, each piece of equipment that may use a utility is flagged. For drives (compressor) and pumps, the electrical load is calculated. For fired heaters and exchangers the utilities must be specified. For example the exchanger above is using mps at a rate of 10,000 MJ/h. This data is input and the yearly utility cost is calculated. Note – for utilitiy generators such as a waste heat boiler use a negative duty (negative cost = revenue)

Likewise, other equipment are added and the annual utility costs is calculated. Note that in the users section of the CAPCOST program, the user may specify the efficiencies of the different equipment and the cost of different utilities as shown on the following slide

Unit costs for utilities All these values may be changed by the user to customize a process User specified equipment efficiencies Cost of labor