Chapter 8 - Cost of Manufacturing

Chapter 8 Estimation of Manufacturing Costs
Chemical Engineering Department West Virginia University
Copyright - R.Turton and J. Shaeiwitz 2012
Estimation of Manufacturing Costs
Direct Costs
Vary with production rate but not necessarily directly proportional Do not vary with production rate but relate directly to production function Functions to which operations must contribute overhead burden
Copyright - R.Turton and J.
Fixed Costs
General Expenses
Direct Costs

Raw Materials Waste Treatment Utilities Operating Labor Supervisory and Clerical Labor
Maintenance and Repairs Operating Supplies Laboratory Charges Patents and Royalties
Fixed Costs
Depreciation cover as a separate topic in Chapter 9 Local taxes and insurance Plant overhead costs
General Expenses

Administration costs Distribution and selling costs Research and development
Manufacturing Costs
Table 8.1
Description of items Factors for estimating costs
Table 8.2
* We relate (historically) the relationship between items in Table 8.1 to direct costs A (RM) , B (WT) , C (UT) , D (OL), and FCI of plant
Manufacturing Costs examples
Maintenance and repairs

2 10 % FCI Proportional to size of plant 10 25 % COL Proportional to op. lab some % of FCI
Supervisory and clerical labor

Use mid-point values from Table 8.2
Depreciation
Note: using the mid-point values from Table 8.2 is a non-biased way of estimating COM but actual COM may be quite different depending on the plant and industry sector
Manufacturing Costs
with depreciation as 10% FCI
COM = 0.280 FCI + 2.73COL + 1.23 ( CUT + CWT + C RM ) (8.1)
COM d = 0.180FCI + 2.73COL + 1.23( CUT + CWT + C RM )
(8.2)
COM without depreciation we use this since we calculate depreciation more accurately in Chapter 9
How Do We Get..

FCI Chapter 7 CTM or CGR COL CRM Look at these separately CUT CWT
Cost of Operating Labor

N OL = (6.29 + 31.7 P + 0.23N np )
P = particulate processing steps Nnp = non-particulate processing steps compression, heating/cooling, mixing, separation, and reaction
0.5
NOL = the number of operators per shift
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 - acetone process

Operating Labor Acetone Facility

Equipment Compressor s Exchangers Fired Heaters Pumps Reactors Towers Vessels Number of 0 8 1 5 1 3 4 Nnp 0 8 1 1 3 11
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)

Total Operators = (3.05)(4.5) = 13.75 14 Salary = $59,580/y (2010 Gulf-Coast
average)
COL = (59,580)(14) = $834K

Cost of Raw Materials, Utilities, and Waste Treatment
Flowrates
Get these from PFD use stream factor Utilities and waste treatment - Table 8.3 see Section 8.6 for utilities estimation Common chemicals Table 8.4, Chemical Market Reporter,
http://www.icis.com/StaticPages/a-e.htm#top
Costs
Stream Factor
Operating hours per year divided by total hours per year

Typical 8000 operating hours 0.9 0.95 typical 8000/8760 = 0.913
* Flows on PFD are kmol/operating hour not kmol/hour why?

Utilities Fuel and Electricity
Fuel for Fired Heaters
PFD gives process load (energy balance) but total flow is more due to efficiency 70-90% from Table 11.11 item 13. Fuel costs may vary wildly Figure 8.1
Electricity for pumps and compressors Figure 8.7

Shaft power fluid power/efficiency Power to drive shaft power/drive efficiency
* PFD usually gives shaft power but be careful!

Cost of Fuel Utility costs
Utilities - Steam
Pressure levels

Low (30 90 psi) Medium (150 250 psi) High (525 680 psi)
Available saturated but sometimes superheated
Utilities - Steam
Large chemical complexes generate high-pressure steam and use excess pressure to generate electricity Figure 8.6. Steam can be used as a drive medium for compressors and pumps

Thermodynamic efficiency Table 8.5 Drive efficiency Figure 8.7

Note: Modern supercritical power plants operate to give steam at 250 bar (3675 psi) and 1075F (580C)
Utilities - Steam
Utilities - Condensate Return and Boiler Feed Water

Steam
Process
* just use steam costs
condensate returned to steam generating systems
If Steam Lost in Process

gas and steam
use steam cost + bfw since condensate is not returned
stripping steam
Steam Generated in Process

bfw
process
steam * just take credit for steam unless steam is lost in process
Utilities - Cooling Water

evap + loss make up and chemicals
30C
Process
40C
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purge (blowdown) - R.Turton and J.
Utilities - Cooling Water

Make-up based on T (40 - 30C) ! Should charge cw based on energy used
Table 8.3
Does not matter (much) if cw returned at 40C or 45C same energy 45C is absolute max due to fouling
Utilities - Refrigerated Water
Same as previous slide in that energy costs are not T dependent but cost based on 5C supply temperature Figure 8.4 shows cost of refrigeration as a function of temperature
Utilities Refrigerated Water
Figure 8.4:
Utilities Refrigerated Water

Costs ($/GJ) CW = 0.354 RW = 4.43 -20C = 7.89 -50C = 13.11 y5 = 0.144
y-20 = 0.257 y-50 = 0.426 C-20 = 4.43(0.257/0.144) C-50 = 4.43(0.426/0.144)
Figure 8.4:
Summary

FCI COL CUT CWT CRM
From these get COMd

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Chapter 8 Estimation of Manufacturing Costs

Chemical Engineering Department West Virginia University

Copyright - R.Turton and J. Shaeiwitz 2012

Estimation of Manufacturing Costs

Copyright - R.Turton and J.

Copyright - R.Turton and J.

Administration costs Distribution and selling costs Research and development

Copyright - R.Turton and J.

Description of items Factors for estimating costs

Manufacturing Costs examples

Maintenance and repairs

Supervisory and clerical labor

Use mid-point values from Table 8.2

COM d = 0.180FCI + 2.73COL + 1.23( CUT + CWT + C RM )

Copyright - R.Turton and J.

Cost of Operating Labor

NOL = the number of operators per shift

Example - acetone process

Operating Labor Acetone Facility

Copyright - R.Turton and J. Shaeiwitz 2012

Operating Labor Acetone Facility

Copyright - R.Turton and J.

Operating Labor Acetone Facility

COL = (59,580)(14) = $834K

Cost of Raw Materials, Utilities, and Waste Treatment

Operating hours per year divided by total hours per year

* Flows on PFD are kmol/operating hour not kmol/hour why?

Utilities Fuel and Electricity

Fuel for Fired Heaters

Electricity for pumps and compressors Figure 8.7

Shaft power fluid power/efficiency Power to drive shaft power/drive efficiency

* PFD usually gives shaft power but be careful!

Cost of Fuel Utility costs

Copyright - R.Turton and J.

Available saturated but sometimes superheated

Copyright - R.Turton and J. Shaeiwitz 2012

Thermodynamic efficiency Table 8.5 Drive efficiency Figure 8.7

Copyright - R.Turton and J.

Utilities - Condensate Return and Boiler Feed Water

* just use steam costs

Copyright - R.Turton and J.

condensate returned to steam generating systems

If Steam Lost in Process

use steam cost + bfw since condensate is not returned

Steam Generated in Process

Utilities - Cooling Water

purge (blowdown) - R.Turton and J.

Utilities - Cooling Water

Make-up based on T (40 - 30C) ! Should charge cw based on energy used

Copyright - R.Turton and J.

Utilities - Refrigerated Water

Utilities Refrigerated Water

Copyright - R.Turton and J.

Utilities Refrigerated Water

Copyright - R.Turton and J.

FCI COL CUT CWT CRM

From these get COMd

Copyright - R.Turton and J.

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