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Solid waste can also be indexed to inputs, such as raw materials, dollar value of raw materials, or the number of employees. This is not a commonly used metric, but it can offer several advantages including
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Raw material data and employee numbers are easily available. The information is widely applicable to different processes and facilities.
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This index is similar to an output index, but links solid waste generation to an intermediate product generated, not a nal product. This may be bene cial and more meaningful in some situations, such as a company that would like to measure and track its solid waste generation for an internal unit that supplies another unit within the company. For example, with the nal assembly plant for automobiles, the unit that produces the seats for the cars could use this index to measure the waste per car seat assembly produced. This measure would be more meaningful to the seat assembly unit versus a nal product index (vehicles produced) since the seat assembly unit may produce a different number of seats for different car models (a sports car may only have two seats whereas a sports utility may have eight seats).
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Finally, solid waste generation may be indexed to a business activity, such as the number of times a waste generating activity occurs not necessarily related to production levels. In some cases an activity ratio may be a more accurate measure than a production ratio. For example, at a university, how often the school holds orientation sessions or training sessions will impact waste generation in terms of paper and food waste. An index to the number of training sessions conducted may be more meaningful than the number of students or faculty at the school.
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From a business standpoint, projects are evaluated based on their impact to the bottom line of the organization. An understanding of the nancial bene ts of a solid waste minimization project is critical in determining, evaluating, comparing, and selecting projects. In addition, a thorough understanding of the nancial impact of the project will aid in promoting the project to upper management and other stakeholders. From a nancial standpoint, the three areas on which solid waste minimization projects are evaluated are
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METRICS AND PERFORMANCE MEASUREMENT FOR SOLID WASTE MANAGEMENT
1 Initial investment 2 Payback period (and discounted payback period) 3 Internal rate of return
The initial investment is the start-up funds required to begin a given solid waste minimization program. This includes the cost for recycling bins, recycling provider fees, recycling equipment costs (balers, grinders, or electric hand dryers), and training costs. The payback period is the period of time (usually given in years) required for the project s pro t or other bene ts to equal the project s initial investment. The equation is Payback period = cost uniform annual benefits
The payback period measures how long the project will take to recoup the initial investment, or in other words gauges the rapid return of investment for an organization. Many organizations use the payback period as a litmus test to screen projects based on a predetermined threshold, say 3 to 4 years for many companies. There are some limitations to the payback period, such as
The payback period is an approximation, not and exact economic analysis. All costs and all pro ts (or savings) of the investment before payback are included
without considering differences in timing. All economic consequences after the payback period are ignored. Being an approximation, the payback period may not select the optimal project. The internal rate of return (IRR) is the interest rate at which the present worth and equivalent annual worth of a project are equal to zero. Another way to think about the IRR is the annualized interest rate that a project earns over its life. In most cases, organizations have a predetermined minimum attractive rate of return (MARR), which is the minimum interest rate that the organization could accept as the return on a project and still remain pro table. For a given project, if the IRR is greater than or equal to the MARR, it is a pro table decision to accept the project. To solve IRR, the net present worth (NPW) is set equal to zero, as shown in the following equation: NPW =
t t =1 (1 + r )
where t = the time of the cash ow n = the total time of the project r = the discount rate (the rate of return that could be earned on an investment in the nancial markets with similar risk) Ct = the net cash ow (the amount of cash) at time t
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