Friday, March 5, 2010

Economic Feasibility Test.

A factory established if feasible meets several requirements including guaranteed his safety and of course can bring profit. In this case we will focus on the economic feasibility only. To set up a factory required substantial capital. This capital may come from investors or from bank loans. Capital used there are 2 kinds of fixed capital and working capital. Includes the purchase of fixed capital equipment, installation, piping, instrumentation, insulation (if necessary), electricity, utilities, buildings, land, engineering and construction, contractor's fee and contingency. Amount of working capital depends on the type of plant and capacity. This working capital includes raw materials inventory, in process inventory, product inventory, extended credit and available cash.

Both the above capital used for production costs which is divided into 3 kinds of direct costs, indirect production costs and fixed costs. Direct production costs are the costs for direct financing of a process, such as raw materials, workers and supervisors, maintenance, plant supplies, patents and royalties, and utility. Indirect production costs are costs incurred to fund things that are not directly assist the production process, such as payroll overhead (such as recreation staff), laboratory, plant overhead, packing and shipping. Fixed costs are fixed costs incurred at the time of factory production or not. These costs include depreciation, taxes and insurance. There was also general expenses include administrative, sales expenses, research and finance. Gains or profits derived from the selling price reduction in production costs.

In addition to the acquisition of profit-oriented, companies also should be able to return capital especially if the capital came from loans. Time for payback percentages expressed by Return On Investment (ROI) is defined as the ratio of earnings to fixed capital. Can also be expressed dalan Pay Out Time (POT). The amount of Return On Investment, and Pay Out Time is different for each type of plant depends on the risk posed by the process in the factory.

Test of economic feasibility is also expressed in graphical form the relationship of production capacity and cost. 2 pieces will form the point of Shut Down Point and Break Even Point. Shut Down Point is a point where the condition that if the process does not run the company will earn a profit but also caused no damage. If the plant operates at a capacity below the Shut Down Point the plant will get lost. Point Break Even Point is a condition that occurs when the plant operates at full capacity. Value Break Even Point is good for a chemical plant generally ranges between 40% - 60%.

By considering all elements, from site selection, technology selection, capacity, and processing technologies and processes supported by the process control and systems of human resource management is good, it can be obtained optimum profit.

A factory established if feasible meets several requirements including guaranteed his safety and of course can bring profit. In this case we will focus on the economic feasibility only. To set up a factory required substantial capital. This capital may come from investors or from bank loans. Capital used there are 2 kinds of fixed capital and working capital. Includes the purchase of fixed capital equipment, installation, piping, instrumentation, insulation (if necessary), electricity, utilities, buildings, land, engineering and construction, contractor's fee and contingency. Amount of working capital depends on the type of plant and capacity. This working capital includes raw materials inventory, in process inventory, product inventory, extended credit and available cash.

Both the above capital used for production costs which is divided into 3 kinds of direct costs, indirect production costs and fixed costs. Direct production costs are the costs for direct financing of a process, such as raw materials, workers and supervisors, maintenance, plant supplies, patents and royalties, and utility. Indirect production costs are costs incurred to fund things that are not directly assist the production process, such as payroll overhead (such as recreation staff), laboratory, plant overhead, packing and shipping. Fixed costs are fixed costs incurred at the time of factory production or not. These costs include depreciation, taxes and insurance. There was also general expenses include administrative, sales expenses, research and finance. Gains or profits derived from the selling price reduction in production costs.

In addition to the acquisition of profit-oriented, companies also should be able to return capital especially if the capital came from loans. Time for payback percentages expressed by Return On Investment (ROI) is defined as the ratio of earnings to fixed capital. Can also be expressed dalan Pay Out Time (POT). The amount of Return On Investment, and Pay Out Time is different for each type of plant depends on the risk posed by the process in the factory.

Test of economic feasibility is also expressed in graphical form the relationship of production capacity and cost. 2 pieces will form the point of Shut Down Point and Break Even Point. Shut Down Point is a point where the condition that if the process does not run the company will earn a profit but also caused no damage. If the plant operates at a capacity below the Shut Down Point the plant will get lost. Point Break Even Point is a condition that occurs when the plant operates at full capacity. Value Break Even Point is good for a chemical plant generally ranges between 40% - 60%.

By considering all elements, from site selection, technology selection, capacity, and processing technologies and processes supported by the process control and systems of human resource management is good, it can be obtained optimum profit.

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