Economics – Why Today?

• Collecting data

• Additional information for request – Single vs multiple units– Quantity– Quality

• Future decisions

• Economic analysis important

Budgets – keys• Cash flow• Cost estimates and planning• Assets vs Liabilities• Time value of money• FIX Costs - Purchase price, salvage value,

estimated life, taxes, insurance and coverage• Operating Costs – Based on time of use /

capacity– Power/Energy– Maintenance and Repair– Labor– Inputs

DiscountDiscount

ProfitProfit

Selling Selling ExpensesExpenses

OverheadOverhead

ToolingTooling

LaborLabor

Purchased Purchased partsparts

MaterialsMaterials

Example in Chemical ProcessDirect Costs:1. Purchase equipment2. Purchased-equipment installation3. Instrumentation and controls4. Piping5. Electrical systems6. Building (including services)7. Yard improvements8. Service facilities9. Land

Example in Chemical ProcessIndirect Costs:

1. Engineering and Supervision

2. Legal expenses

3. Construction expenses

4. Contractor’s fee

5. Contingency

Rules of Thumb

costmaterialrawC

costedmanufacturC

pricesaleretailP

C9C3P

m

g

s

mgs

Annual Costs

ZCcap

UCC o

aFa

Ca – annual cost, $/yrCf – fixed cost, $/yrUa – Units of annual usecap – capacity units/hrCo – operating cost, $/hrZ – timeliness penalty, $/hr

Fixed Costs

ZCcap

UCC o

aFa

Pr

2

SPr

n

SPC tis

ni

nF

Fixed Costs

Pr2

SPr

n

SPC tis

ni

nF

P – purchase priceSn – salvage valueri – interestrtis – taxes, insurance, othern - estimated life

Operating Cost

ZCcap

UCC o

aFa

MLRECo Units – Ua – Units of annual use

cap – capacity units/hrCo - $/hr

Operating Cost

MLRECo Co – operating cost, $/hrE – energy cost, $/hrR – repair and maintenance, $/hrL – labor, $/hrM – other inputs, $/hr

Poster Evaluation• Poster Layout & Format (30%)

– Creative Element– Good Use of Color/Texture– Balance of text, figures, pictures– Effective use of text – (Font selection & size)– Are you drawn to investigate in more detail?

• Content (50%)– Title and author clearly identified– Clear Headings – (example: Design Problem, Designs Considered,

Conclusions)– Do you understand the Design Problem?– Do you understand the Solution(s)?– Does it convey the BIG Picture? Are main points understood?– Use of other aids (models, video etc. appropriate)?– Can the poster stand alone or is the team needed?

• Poster Presentation (20%)– Contact was in professional manner– Attention getting – Team was a distraction– Answered questions effectively– Whole team was interactive

Final Report• Cover / Title page• Executive Summary• Problem Statement• Scope of Work• Introduction• Design criteria• Literature review• Preliminary/Alternative design details• Work plan - Timeline - Design schedule• Summary and conclusions• Resources / References• Appendices

– Design details including AutoCAD drawings– Detailed budget– Important design calculations– Data

Evaluation of Final Report• The design report will be graded as

follows:– Organization/Grammar/Neatness - 25%– Style and Clarity (appropriateness for

intended audience) - 10%– Effective use of graphics, tables, etc.-

5%– Technical content - 40%– Overall quality of the draft design

report – 20%

The Nine Stages of Design Confusion Frustration

Despair Resentment

Anger

Discovery

Elation

Disappointment

Compromise