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Chapter 3 Appendix B Development of Objective Function. Chapter 3. Optimize L/D for a Pressure Vessel. Chapter 3. erroneous assumptions (1) dished ends (not flat) A e = 2(1.16 D 2 ) = 2.32 D 2 (2) thickness is a function of D (not constant) (3) fabrication costs $ ends > $ sides
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Chapter 3 Appendix B Development of Objective Function Chapter 3
Optimize L/D for a Pressure Vessel Chapter 3
erroneous assumptions (1) dished ends (not flat) Ae = 2(1.16 D2) = 2.32 D2 (2) thickness is a function of D (not constant) (3) fabrication costs $ ends > $ sides (1.5x) Chapter 3
Insulation example -- fixed vs. operating costs (Fi) annualization factor (repayment multiplier) for Fi= constant = F (cash flow) Chapter 3
There are several disadvantages to using IRR in optimization (requires iterative solution). NPV can be shown to be equivalent to using an annualization factor (series present worth factor). - Steam Generator Example Chapter 3
Steam Generator Flow Diagram Chapter 3
In the previous section we only briefly mentioned the • financial assumptions used in profitability analysis. • Any detailed analysis of a project requires specifying • the following parameters: • initial investment • future cash flows • salvage value • economic life • depreciation • depletion • investment tax credit • taxes • inflation • debt/equity ratio Chapter 3
MANUFACTURING (CASH OPERATING) REVENUE OPERATIONS SALES INCOME EXPENSES SALVAGE VALUE OPERATING INCOME (PROFIT) Chapter 3 DEPRECIATION NET INCOME BEFORE TAXES CASH FLOW FEDERAL INCOME TAXES NET INCOME AFTER TAXES Figure 3.3 Computation of Cash Flow
A summary of the calculations is Chapter 3