Calculation of return on investment for the installation of an Insitec

Automated spreadsheet allows direct calculation of ‘Return on Investment’

The level of cost savings and hence the return on the investment made from the installation of an Insitec can be estimated using the Malvern Return on Investment Calculator (see the example below). Basic process parameters such as mass flow rate, annual operating costs, process efficiencies (% rework), as well as capital costs of the equipment are taken into account in the calculation. The total cost of production is then compared with savings made possible by in-line measurement to arrive at a total saving. A breakdown of the total savings in terms of waste and improvements in productivity is provided. The spreadsheet is available as a basic template along with worked examples from the food, cement and specialty chemical market segments where Insitec systems are already in use and providing significant benefits to our customers.

PARAMETER		INPUT VALUES	VALUE $ / hour	VALUE $ / year
Material		Powder Coating
Mass Flowrate	kg / hour	1,000
Annual Operation	hours	3,000
Number of employees / line		2
Product Recycle	%	2
Reuse Factor	%	50
Production Increase	%	5
Labor Cost / Person	$ / hour	35	70	210,000
Mill Capital Cost	$ / year	500,000	167	500,000
Mill Power Cost	$ / kg	0.10	100	300,000
Insitec Installation Total Cost		100,000
Insitec 1 year Payback Cost			33	100,000
Total Costs	$		370	1,110,000
Product Value	$ / kg	3	3,000	9,000,000
Wastage Savings	$		30	90,000
Productivity Savings	$		19	55,500
TOTAL SAVINGS	$		49	145,500

Mass Flowrate represents the amount of product handled in the process in kilograms/hour. Combines with the number of hours the line operates hourly/annually to provide product values.

Annual Operation represents the total number of hours the line is processing material during the year. When combined with Mass Flowrate, provides product value.

Number of Employees/Line represents the number of personnel the line requires in order to operate. When combined with Labor Cost determines hourly and yearly costs associated with personnel.

Product Recycle represents the percentage of material that is not within quality specifications and must be dumped or recycled. This amount of material, when combined with the Reuse factor and Product Value, determines the dollar cost of the material lost. The Insitec reduces this percentage by optimizing mill performance, minimizing time between process upset identification and correction, decreasing process start-up time and batch transition time, and by providing continuous QA/QC data.

Reuse Factor represents the amount of recycled material that can be recovered and used in the process to make product. When combined with Mass Flowrate, Annual Operation, Product Recycle, and Product Value it determines the Wastage Savings below.

Production Increase represents the percentage increase in product throughput, while still meeting the quality requirements. The real time Insitec measurements allow maximization of mill productivity along with Quality assurance. When combined with Mass Flowrate, Annual Operation, and Product Value this determines the Productivity Savings below. In many cases this improvement is unknown and must be estimated prior to optimization of the mill system.

Labor Cost per Person represents the total cost to the company for each employee working on the process line. When combined with Annual Operation and Number of Employees per Line, this measure determines the labor cost value.

Mill Capital Cost represents the required capital investment per year to install and maintain the mill on the process line.

Mill Power Cost represents the energy costs for the line per kilogram of processed material.

Insitec Installation Total Cost represents the total investment required to install the Insitec system including the Insitec itself, ancillary equipment, engineering costs, and so forth.

Insitec One Year Payback Cost allocates the entire Insitec capital cost to the first year. Compare this amount with the Wastage Savings and Productivity Savings below to determine how quickly the Insitec system will recover its investment on a productivity basis, independent of improved quality control issues.

Product Value is the appropriate production cost per kg of manufactured material.