CH13 Process Engineering Economics - James R. Couper

CH13 Process Engineering Economics - James R. Couper - 13...

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13 The Economic Balance An engineering cost analysis can be used to find either a minimum total cost or a maximum benefit, such as a maximum profit for a venture. Such a cost analysis is frequently called an economic balance because it involves the balancing of economic factors to determine an optimum design or optimum operating conditions. In engineering work, correct economic analyses of both designs and operations are essential skills. An understanding of the underlying concepts of such analyses is needed for the solution of many problems and forms the basis for decisions; these can be on-the-spot or detailed investigations. In the early days of chemical engineering, the process economics course was a course in economic balance. In recent times, the economic balance part of a process economics course has been referred to as simple optimization of process equipment . Peters and Timmerhaus [1] call this topic optimum design . The goal is to attain the “best” situation by applying simple optimum- seeking techniques. The major challenge is to recognize the existence of an economic balance problem and then to formulate the problem for a solution. An economic balance then is a study of all costs, expenses, revenues, and savings that pertain to an operation or equipment size. Linear programming, dynamic programming, geometric programming, and other sophisticated optimum-seeking techniques are beyond the scope of this text. For more on these types of optimization methods, the author suggests the reader may wish to consult Refs. [1–5].
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13.1 GENERAL PROCEDURE The initial step in the development of an economic balance is to determine what variable(s) is to be optimized. Before we begin discussing the methodologies, there is terminology that needs to be defined. The term cost refers to a one-time purchased price of capital equipment, such as a heat exchanger. If an item is a recurring “cost,” it is called an expense , such as utilities or maintenance expense. Although this terminology is different from that found in some texts, at least it is consistent with the material in this text. For the simplest case, all costs and expenses are related to an arbitrarily selected controllable variable. This variable might be the number of pounds of product manufactured, the area of a heat exchanger, the number of evaporator effects, the internal rate of return, etc. Those items in the cost analysis that increase with an increase in the controllable variable are balanced against those items that decrease as the controllable variable increases. Any costs or expenses that are constant, that is, independent of the controllable variable, do not need to be included in the analysis since they do not affect the final result of the analysis and only complicate the mathematics.
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This note was uploaded on 10/28/2008 for the course N n taught by Professor N during the Spring '08 term at Punjab Engineering College.

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CH13 Process Engineering Economics - James R. Couper - 13...

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