Determination of Product Cost in a Steel Plant...

Determination of Product Cost in a Steel Plant The term ‘product cost’ means the amount of expenses [actual or notional] incurred on or attributable to the production of the specified product. Product cost refers to the costs used to produce the product. It is the measurement in monetary terms of the amount of resources used for the purpose of production of the product. For effective monitoring, specific product cost (cost per unit of product produced) is usually determined. A steel plant consists of several processes which are integrated. These processes produce many intermediate products as well as semi-finished and finished products. Many of intermediate products and semi-finished products along with all the finished products are saleable products. There are also a large number of by-products which are being produced from these processes. These by-products are used either internally within the plant or are being sold to different customers. In such a situation, the cost of the saleable products is determined in the steel plant in several stages. Each stage has a product for which the cost is determined. This product may be a saleable product or may be an intermediate product used as a raw material for the next stage. In case the intermediate product of a certain stage is the raw material for next stage then the determined cost of the product along with the cost of handling losses for the product is assigned to the next stage to the extent the product is consumed in the next stage. The product cost in a steel plant is determined the way it is done in any other manufacturing organization. The total cost of producing a product basically consists of two components (Fig 1) namely (i) fixed cost, and (ii) variable cost. Fig 1 Component of...

AMR Schemes

AMR Schemes  Acronym AMR stands for additions, modifications and replacements. In a steel plant which is operating for a number of years, implementation of AMR schemes is a necessity if the efficiency and productivity of the plant is to be maintained over a large numbers of years. Expenditures on AMR schemes are capital in nature and usually these expenditures are not very large and they are small in nature. However these expenditures change the capital structure of the organization. This is in contrast to the maintenance activity in the steel plant where equipment parts or equipments are replaced and the expenditures incurred during maintenance are part of the operating expenses of the plant. Necessity of AMR schemes in an operating steel plant occurs due to the following reasons. The design deficiencies become visible once the steel plant has been operated for a number of years. These deficiencies come in the way of plant being operated at the desired efficiency and productivity levels. For removal of these design deficiencies, some additional equipment may be needed or some modifications in the process may be necessary. May be some equipment need replacement with different but similar equipment. AMR schemes help management in removing design deficiencies and bring back the steel plant to the designed efficiency and productivity levels. All the steel plant equipments donot have the same expected life. Some equipment has a long life while life of some other equipment can be enhanced by replacing some worn out components during maintenance. But in some the life is not long, nor can it be increased by maintenance. Such equipment become  a weak link in obtaining the desired efficiency levels and the productivity levels of the process since the break downs in these equipment increase drastically once their...

Computerized Maintenance Management System...

Computerized Maintenance Management System Computerized Maintenance Management System (CMMS) is a computerized data base designed to optimize the management of maintenance activities in an organization. It is an orderly and systematic approach to planning, organizing, monitoring and evaluating maintenance activities and their costs. It is a management tool for planning and budgeting of equipment maintenance (routine, break down, preventive and predictive), capital repairs and equipment replacement activities. A good CMMS coupled with knowledgeable and capable maintenance work force can prevent problems related to equipment health, safety and environment deterioration. It CMMS also ensures that the organization maximizes the available maintenance resources it has at a plant, minimizes the operational downtime of its equipment, reduces the overall maintenance costs within the organization, improves the quality of the management decisions, helps in the verification of the regulatory compliance, and extends the life of the equipment at the plant. It also contributes into lowering of capital costs and improvement in quality of life. CMMS automates most of the functions performed by the maintenance personnel in an organization and hence improve their effectiveness. The main component of a CMMS is shown in Fig 1. Fig 1 Main components of a CMMS Objectives of CMMS The primary objectives of a CMMS are as follows. • To optimize the use of available funds, personnel, facilities and equipment through effective maintenance management methods. • To monitor the equipment conditions. • To provide accurate data for decision making regarding maintenance activities. • To identify systematically maintenance needs and equipment deficiencies as well as needs for capital repairs. • To determine the maintenance backlog and made provision for this maintenance. • To determine the maintenance priorities and plan accordingly • To enable preparation of maintenance budget using systematic standardized procedures. • To monitor...