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recycling streams, resulting in less waste being sent to the land ll for disposal and lower hauler charges. These include disposal fees, transportation costs, and predisposal treatment costs. Input material cost savings Options that reduce scrap, reduce waste, or increase internal recycling tend to decrease the demand for input materials. Changes in utility costs Utility costs may increase or decrease depending on the installation, modi cation, or removal of equipment. Changes in operating and maintenance labor/bene ts An alternative may increase or decrease labor requirements and the associated bene ts. This may be re ected as changes in overtime hours or as the number of employees. Changes in operating and maintenance supplies An alternative may result in increased or decreased operating and maintenance supply usage. Changes in overhead costs Large projects may increase or decrease these values. Changes in revenues for increased (or decreased production) An alternative may result in an increase in the productivity of a unit. This will result in changes in revenue. Increases in revenue from by-products An alternative may generate a by-product that can be sold to a recycler or sold to another company as raw material. This will result in increased revenue.
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It is suggested that savings in these costs be taken into consideration rst, because they have a greater impact on the project economics and involve less effort to estimate reliably. The remaining elements usually have a smaller impact and should be included in an on-needed basis or to ne-tune the analysis. A project s pro tability is measured by estimating the net cash ows each operating year over the life of the project. A net cash ow is calculated by subtracting the cash outlays from the cash incomes starting in year zero (the year the project is initiated). Figure 8.25 is an example of a cash- ow diagram. If a project does not have an initial investment, the project s pro tability can be judged by whether an operating cost savings occurred or not. If such a project reduces overall operating costs, it should be implemented. For example, suppose an organization
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STEP 7: DETERMINE, EVALUATE, AND SELECT WASTE MINIMIZATION ALTERNATIVES
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Positive cash flows (in) F1 F2 Fn
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0 period
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Cash- ow diagram example.
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currently recycles plastics and metals. If the organization currently ships comingled plastics and metals to a recycling processor, a process change could be implemented that requires employees to separate plastics from metals before shipment. There is little to no initial investment with the example, but there will added labor costs for separation versus additional revenue generated by the ner sort to the processor. If the additional revenues outweigh the additional costs, the alternative should be implemented. For projects with signi cant initial investments or capital costs, a more detailed pro tability analysis is needed. The three standard measures of pro tability are
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1 Payback period 2 Internal rate of return (IRR) 3 Net present value (NPV)
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The payback period for a project is the amount of time it requires to recover the initial cash outlay for the project. The formula for calculating the payback period on a pre tax basis in years is Payback period = capital investment annual operating cost savings
For example, suppose a manufacturer installs a cardboard baler for a total cost of $65,000. If the baler is expected to save the company $20,000 per year, then the payback period is 3.25 years. Payback period is typically measured in years. However, some alternatives may have payback periods in terms of months. Many organizations use the payback period as a screening method before conducting a full nancial analysis. If the alternative does not meet a predetermined threshold, the alternative is rejected. Payback periods in the range of 3 to 4 years are usually considered acceptable for low-risk investments. Again, this method is recommended for quick assessments of
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