{"id":316,"date":"2020-08-05T14:19:49","date_gmt":"2020-08-05T14:19:49","guid":{"rendered":"https:\/\/libraryresources.nse.org.ng\/chbe220\/chapter\/process-economics-review-2\/"},"modified":"2026-03-16T13:53:40","modified_gmt":"2026-03-16T13:53:40","slug":"process-economics-review-2","status":"publish","type":"chapter","link":"https:\/\/libraryresources.nse.org.ng\/chbe220\/chapter\/process-economics-review-2\/","title":{"raw":"Process Economics Review","rendered":"Process Economics Review"},"content":{"raw":"

Important Equations<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Total Capital Investment[latex][\/latex]<\/td>\n[latex]TCI=FCI+WC[\/latex]<\/td>\n<\/tr>\n
Effect of capacity on equipment prices<\/td>\n[latex]\\frac{C_a}{C_b}=\\Big(\\frac{A_a}{A_b}\\Big)^n[\/latex]\n\n[latex]ln(Ca)=ln(K)+n ln(A_a)[\/latex]<\/td>\n<\/tr>\n
Effect of time on equipment prices<\/td>\n[latex]C_2=C_1\\Big(\\frac{I_2}{I_1}\\Big)[\/latex]<\/td>\n<\/tr>\n
Preliminary Estimation of Purchased Equipment Costs<\/td>\n[latex]C_e=a+bS^n[\/latex]<\/td>\n<\/tr>\n
Lang Factor<\/td>\n[latex]C_{TM}=F_{lang}\\sum^{n}_{i=1}C_{p,i}[\/latex]<\/td>\n<\/tr>\n
Return on Investment<\/td>\n[latex]ROI=\\frac{revenue-COM}{TCI}\u00d7100\\text{%}[\/latex]<\/td>\n<\/tr>\n
Revenue<\/td>\n[latex]revenue=unit\\;price\\;of\\;product\u00d7sales[\/latex]<\/td>\n<\/tr>\n
Cost of manufacturing<\/td>\n\\begin{align*}\n&cost\\; of\\; manufacturing\\\\\n&=direct\\;cost+fixed\\;cost\\\\\n&\\;\\;+general\\;expenses\n\\end{align*}<\/td>\n<\/tr>\n
Number of operating labour<\/td>\n[latex]N_{OL}=(6.29+31.7P^2+0.23N_{np})^{0.5}[\/latex]<\/td>\n<\/tr>\n
Cost of operating labour<\/td>\n\\begin{align*}\n&\\text{# of operators}\\\\\n&=N_{OL}\u00d7\\frac{\\text{# of shifts in a year}}{\\text{# of shifts per operator}}\n\\end{align*}$$C_{OL}=\\text{# of operators}\u00d7salary$$<\/td>\n<\/tr>\n
Total direct cost of manufacturing<\/td>\n\\begin{align*}\n&\\text{total direct cost of manufacturing}\\\\\n&=C_{RM}+C_{WT}+C_{UT}+1.33C_{OL}+0.03COM+0.069FCI\n\\end{align*}<\/td>\n<\/tr>\n
Total fixed cost of manufacturing<\/td>\n\\begin{align*}\n&\\text{total fixed cost of manufacturing}\\\\\n&=0.708C_{OL}+0.068FCI+depreciation(0.1FCI)\n\\end{align*}<\/td>\n<\/tr>\n
Depreciation<\/td>\n\\begin{align*}\n&\\text{depreciation}\\\\\n&=\\frac{\\text{purchased value}-\\text{salvage value}}{\\text{life of equipment }(n)}\n\\end{align*}<\/td>\n<\/tr>\n
General expenses<\/td>\n\\begin{align*}\n&\\text{general expenses}\\\\\n&=0.177C_{OL}+0.009FCI+0.16COM\n\\end{align*}<\/td>\n<\/tr>\n
Cost of manufacturing<\/td>\n\\begin{align*}\n&\\text{cost of manufacturing}\\\\\n&=0.180FCI+1.23(C_{RM}+C_{WT}+C_{UT})+2.73C_{OL}+depreciation(0.1FCI)\n\\end{align*}<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Terms to Know<\/h2>\nThe original version of this chapter contained H5P content. You may want to remove or replace this element.","rendered":"

Important Equations<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Total Capital Investment[latex][\/latex]<\/td>\n[latex]TCI=FCI+WC[\/latex]<\/td>\n<\/tr>\n
Effect of capacity on equipment prices<\/td>\n[latex]\\frac{C_a}{C_b}=\\Big(\\frac{A_a}{A_b}\\Big)^n[\/latex]<\/p>\n

[latex]ln(Ca)=ln(K)+n ln(A_a)[\/latex]<\/td>\n<\/tr>\n

Effect of time on equipment prices<\/td>\n[latex]C_2=C_1\\Big(\\frac{I_2}{I_1}\\Big)[\/latex]<\/td>\n<\/tr>\n
Preliminary Estimation of Purchased Equipment Costs<\/td>\n[latex]C_e=a+bS^n[\/latex]<\/td>\n<\/tr>\n
Lang Factor<\/td>\n[latex]C_{TM}=F_{lang}\\sum^{n}_{i=1}C_{p,i}[\/latex]<\/td>\n<\/tr>\n
Return on Investment<\/td>\n[latex]ROI=\\frac{revenue-COM}{TCI}\u00d7100\\text{%}[\/latex]<\/td>\n<\/tr>\n
Revenue<\/td>\n[latex]revenue=unit\\;price\\;of\\;product\u00d7sales[\/latex]<\/td>\n<\/tr>\n
Cost of manufacturing<\/td>\n\\begin{align*}
\n&cost\\; of\\; manufacturing\\\\
\n&=direct\\;cost+fixed\\;cost\\\\
\n&\\;\\;+general\\;expenses
\n\\end{align*}<\/td>\n<\/tr>\n
Number of operating labour<\/td>\n[latex]N_{OL}=(6.29+31.7P^2+0.23N_{np})^{0.5}[\/latex]<\/td>\n<\/tr>\n
Cost of operating labour<\/td>\n\\begin{align*}
\n&\\text{# of operators}\\\\
\n&=N_{OL}\u00d7\\frac{\\text{# of shifts in a year}}{\\text{# of shifts per operator}}
\n\\end{align*}$$C_{OL}=\\text{# of operators}\u00d7salary$$<\/td>\n<\/tr>\n
Total direct cost of manufacturing<\/td>\n\\begin{align*}
\n&\\text{total direct cost of manufacturing}\\\\
\n&=C_{RM}+C_{WT}+C_{UT}+1.33C_{OL}+0.03COM+0.069FCI
\n\\end{align*}<\/td>\n<\/tr>\n
Total fixed cost of manufacturing<\/td>\n\\begin{align*}
\n&\\text{total fixed cost of manufacturing}\\\\
\n&=0.708C_{OL}+0.068FCI+depreciation(0.1FCI)
\n\\end{align*}<\/td>\n<\/tr>\n
Depreciation<\/td>\n\\begin{align*}
\n&\\text{depreciation}\\\\
\n&=\\frac{\\text{purchased value}-\\text{salvage value}}{\\text{life of equipment }(n)}
\n\\end{align*}<\/td>\n<\/tr>\n
General expenses<\/td>\n\\begin{align*}
\n&\\text{general expenses}\\\\
\n&=0.177C_{OL}+0.009FCI+0.16COM
\n\\end{align*}<\/td>\n<\/tr>\n
Cost of manufacturing<\/td>\n\\begin{align*}
\n&\\text{cost of manufacturing}\\\\
\n&=0.180FCI+1.23(C_{RM}+C_{WT}+C_{UT})+2.73C_{OL}+depreciation(0.1FCI)
\n\\end{align*}<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Terms to Know<\/h2>\n

The original version of this chapter contained H5P content. You may want to remove or replace this element.<\/p>\n","protected":false},"author":1,"menu_order":6,"template":"","meta":{"pb_show_title":"","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-316","chapter","type-chapter","status-publish","hentry"],"part":303,"_links":{"self":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapters\/316","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/wp\/v2\/users\/1"}],"version-history":[{"count":1,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapters\/316\/revisions"}],"predecessor-version":[{"id":317,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapters\/316\/revisions\/317"}],"part":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/parts\/303"}],"metadata":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapters\/316\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/wp\/v2\/media?parent=316"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/pressbooks\/v2\/chapter-type?post=316"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/wp\/v2\/contributor?post=316"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/libraryresources.nse.org.ng\/chbe220\/wp-json\/wp\/v2\/license?post=316"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}