Cost of Manufacturing

8/13/2019 Cost of Manufacturing

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Copyright - R.Turton and J.Shaeiwitz 2008

Chapter 8 - Estimation ofManufacturing Costs

Chemical Engineering Department

West Virginia University


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Outline

Estimation of costs

Direct, fixed, and general expense costs

Operating labor

Utility costs

Raw materials

Waste treatment costs

others


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Estimation of Manufacturing Costs

Direct Costs

Vary with production rate but not necessarily

directly proportional Fixed Costs

Do not vary with production rate but relatedirectly to production function

General Expenses Functions to which operations must contribute

overhead burden


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Direct Costs Raw Materials

Waste Treatment

Utilities

Operating Labor

Supervisory and

Clerical Labor

Maintenance andRepairs

Operating Supplies Laboratory Charges

Patents and

Royalties


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Fixed Costs Depreciationcover as a separate topic

in Chapter 9

Local Taxes and Insurance

Plant Overhead Costs


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General ExpensesAdministration Costs

Distribution and Selling Costs

Research and Development


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Manufacturing Costs Table 8.1

Description of Items

Table 8.2 Factors for Estimating Costs

* We relate (historically) the relationship

between items in Table 8.1 to Direct Costs A(RM) , B (WT) , C (UT) , D (OL), and FCI ofPlant


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Manufacturing Costs - examples

Maintenance and Repairs 210 % FCI

Proportional to Size of Plant Supervisory and Clerical Labor

1025 % COL

Proportional to Operating Labor Depreciation

some % of FCI


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Manufacturing Costs

0.280 2.73 1.23OL UT WT RM COM FCI C C C C (8.1)

RMWTUTOLd CCCCFCICOM 23.173.2180.0 (8.2)

COM without Depreciationwe use this since we

calculate depreciation more accurately in Chapter 9

with depreciation as 10% FCI


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How Do We Get.. FCIChapter 7 CTMor CGR COL CRM CUT

CWT

Look At These Separately


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Cost of Operating Labor

Example - Acetone Flowsheet - Figure B.10.1

2 0.5(6.29 31.7 0.23 )OL npN P N

NOL= the number of operators per shift

P= particulate processing steps

Nnp= non-particulate processing stepscompression,

heating/cooling, mixing, separation, and reaction

Important noteAbove equation based on data from chemical plants andrefineries where number of particle processing steps is low. For units withmore than 2 solids processing steps ignore middle term and add 1 operatorper solids step


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Operating LaborAcetone Facility

Equipment Number of Nnp

Compressors 0 0

Exchangers 8 8Fired Heaters 1 1

Pumps 5 -

Reactors 1 1

Towers 3 3

Vessels 4 -

Total 13


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Operating LaborAcetone Facility

NOL= [6.29 + (31.7)(0)2+ (0.23)(13)]0.5= 3.05

Number of operators required for one operator per shift

= 4.5

= (49 wk/yr)(5 shifts/operator/wk)

= 245 shifts/year/operator

Total shifts per year = (365)(3 shifts per day)= 1095 shifts/year

1095 / 245 = 4.5 operators (for a single shift)


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Operating Labor

Acetone FacilityTotal Operators = (3.05)(4.5) = 13.7514

Salary = $55,000/yr (2007 gulf coastaverage)

COL= (55,000)(14) = $770K


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Cost of Raw Materials, Utilities, and

Waste Treatment Flow Rates

Get these from PFDuse stream factor

Costs Utilities and Waste Treatment - Table 8.3

see Section 8.6 for Utilities Estimation

Common ChemicalsTable 8.4, ChemicalMarket Reporter,http://www.icis.com/StaticPages/a-e.htm#top
http://www.icis.com/StaticPages/a-e.htmhttp://www.icis.com/StaticPages/a-e.htmhttp://www.icis.com/StaticPages/a-e.htmhttp://www.icis.com/StaticPages/a-e.htm


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Stream Factor

Operating hours per year divided bytotal hours per year

Typical 8000 Operating Hours

0.90.95 Typical

8000/8760 = 0.913

Note - Flows on PFD are kmol/operatinghour not kmol/hourwhy?


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UtilitiesFuel and Electricity

Fuel for Fired Heaters PFD gives process load ( energy balance) but total flow is

more due to efficiency70-90% from Table 11.11item

13. Fuel Costs may vary wildlyFigure 8.1

Electricity for pumps and compressorsFigure 8.7

Shaft PowerFluid Power/Efficiency Power to DriveShaft Power/Drive Efficiency

* PFD usually gives Shaft Powerbut be careful!


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Cost of FuelUtility costs


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Utilities - Steam

Pressure Levels* Low (3090 psi)

Medium (150250 psi) High (525680 psi)

Available saturated but sometimes

superheated* These are the standard conditions used for the processes in thetextbookin reality, lp, mp, and hps levels will differ somewhatbetween plants.


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Utilities - Steam

Large chemical complexes generatehigh pressure steam and use excess

pressure to generate electricityFigure8.6.

Steam can be used as a drive mediumfor compressors and pumps Thermodynamic efficiency - Table 8.5

Drive efficiencyFigure 8.7


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Utilities - Steam

Figure 8.6: Typical Steam Producing System for a Large Chemical Facility


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Utilities - Condensate Returnand Boiler Feed Water

Process

Steam

Condensate returned to steam

generating systems* Just use Steam Costs


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If Steam Lost in ProcessGas and Steam

Stripping Steam

Use Steam Cost + BFW

since Condensate is not returned


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Steam Generated in Process(waste heat boilers)

Process

BFW

Steam

* Just Take Credit for Steam unless Steam is lost in Process


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Utilities - Cooling Water

Process

30C 40C

Make Up and Chemicals

Purge (blowdown)

Evaporation +

entrainment loss


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Utilities - Cooling Water

Makeup based on DT(40 - 30) !

Should charge cw based on energy

used Table 8.3

Does not matter (much) if cw returned

at 40C or 45Csame energy 45C is absolute maxdue to fouling


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Utilities - Refrigerated Water

Same as Previous Slide in that EnergyCosts are not DTDependentbut cost

based on 5C supply temperature. Figure 8.4 shows cost of refrigeration as

a function of temperature.


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UtilitiesRefrigerated Water

Figure 8.4: Ideal Work for Refrigeration Cycles as a Function of Refrigeration Temperature


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Summary

Basic approach is to account for all the costsassociated with the operation of a chemicalprocess. An estimate of all these costs canbe made with a knowledge of FCI

COL CUT From these get COMdthese can be

calculated using CAPCOST CWT CRM


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User specifiedequipment efficiencies

Cost of labor

Unit costs for utilities

Cost of Manufacturing

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