S07 Chap 6-5 - DesignEconomics Lecture No.6-5 Chapter 6...

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Design Economics Lecture No.6-5 Chapter 6 Contemporary Engineering Economics Copyright © 2006
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Concept : Total cost is given in terms of a specific design parameter Goal : Find the optimal design parameter that will minimize the total cost Typical Mathematical Equation : where x is common design parameter Analytical Solution : AE i a bx c x ( ) = + + x c b * = Minimum Cost Analysis
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O & M Cost Capital Cost Total Cost Design Parameter ( x ) Optimal Value ( x *) Cost ($) Typical Graphical Relationship
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Power Plant Substation 1,000 ft. 5,000 amps 24 hours 365 days A copper conductor Copper price: $8.25/lb Resistance: 0.8145x10 -5 in 2 /ft Cost of energy: $0.05/kwh Density of copper: 555 lb/ft Useful life: 25 years Salvage value: $0.75/lb Interest rate: 9% Example 6.10 Optimal Cross-Sectional Area
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Energy loss in kilowatt-hour ( L ) Operating Cost (Energy Loss) L I R A T = 2 1000 L A A = × = 5000 0 008145 1000 24 365 1 783 755 2 ( . ) ( ) , , kwh I = current flow in amperes R = resistance in ohms T = number of operating hours A = cross-sectional area Energy loss cost kwh($0.05) = $89,188 = 1 783 755 , , A A
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