Progress Presentation on: Production Cost Analysis By Siranee Sreesai Department of Environmental Health Science, Faculty of Public Health, Mahidol University

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

Process Imported chemicals Other Raw Material * 07/16/96 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 R&D IT Finance Distribution *

1. Why do the cost analysis ? * 07/16/96 1. Why do the cost analysis ? *

1.1 Maximization needs Public Health Economic Environment

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.

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

2.What make the unit cost?

Production Cost Capital investment cost Operating cost Maintenance cost

2.1Capital Investment Cost Direct cost: Equipment and Building Indirect cost: Engineering Permission processes (EIA, Licenses) Paper works Contingency

2.2 Operating cost Raw Materials Chemicals Water Etc.

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

Labor: number, salary, allowance, promotion, training Workers Technicians Engineers Scientists Managers Etc.

Consumables Filter Materials Resins Etc.

Utilities Electricity Water Fuel

Transportation Raw materials Products By-products

Quality control and quality assurance Auditing systems Chemical inventory

Environmental management * 07/16/96 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? *

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

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

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

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

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”

Economy of Scale Unit Cost Optimum capacity Production Capacity

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 $ 4/11/2019

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 $ 4/11/2019

Cost Analysis For RDR-1(1998 prices) 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 4/11/2019

4.Relationship of production cost and time

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?

Cost Operating Cost Maintenance Cost Year

4.3 Operating cost and plant capacity Operation Cost % Plant Capacity

* 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?

Resource Person 4/11/2019