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

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

3. Process Imported chemicals Other Raw Material*
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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
R&D IT
Finance Distribution *

4. 1. Why do the cost analysis ?*
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1. Why do the cost analysis ? *

5. 1.1 Maximization needs
Public Health
Economic
Environment

6. 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.

7. 1.3 Optimum production capacity is where unit cost starts to slope down.

8. 2.What make the unit cost?

9. Production Cost Capital investment cost Operating cost
Maintenance cost

10. 2.1Capital Investment Cost
Direct cost: Equipment and Building
Indirect cost: Engineering
Permission processes (EIA,
Licenses)
Paper works
Contingency

11. 2.2 Operating cost
Raw Materials
Chemicals
Water
Etc.

12. 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

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

14. Consumables
Filter Materials
Resins
Etc.

15. Utilities
Electricity
Water
Fuel

16. Transportation
Raw materials
Products
By-products

17. Quality control and quality assurance
Auditing systems
Chemical inventory

18. Environmental management*
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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? *

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

20. 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

21. 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

22. 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

23. 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”

24. Economy of Scale
Unit Cost
Optimum capacity
Production Capacity

25. Cost Analysis For RDR-1 1. Capital investment 11,556,000 $
- direct cost ,281,000 $
- indirect cost ,768,000 $
- contingency ,507,000 $
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26. Cost Analysis For RDR-1 2. Operating cost 2,998,000 $
- raw materials ,000 $
- Labor ,000 $
- Equipment-dependent 2,171,000 $
- Lab./QC/QA ,000 $
- Consumables ,000 $
- Utilities ,000 $
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27. 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 ,998,000 $
Note:
Production rate 144,821 kg/yr of feed for RDR-1
Unit production cost $/kg of feed for RDR-1
PAYBACK TIME 100,000 Years
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28. 4.Relationship of production cost and time

29. 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?

30. Cost
Operating Cost Maintenance Cost
Year

31. 4.3 Operating cost and plant capacity
Operation Cost
% Plant Capacity

32. * 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?

33. Resource Person
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