Food-Processing-Plant-Design-layout

Food Processing Plant Design & layout
alternative whose expected rate of return is less than the attractive rate of return is
rejected.
8. Payment: Known also as cost, outlay, expenditure or disbursement, payment is any
sum paid by a production concern for buying materials, paying wages etc.
9. Receipt(s): Known also as return, income, profit or revenue, receipt is any sum
received by a production concern from sales of products and services etc.
10. Cash flow: It is the series of actual or estimated payments and receipts of a
production concern over a period of time. The cash flow can be represented in the
form of a cash flow diagram as shown in Figure 12.1.
Figure 12.1 A typical Cash-flow diagram
11. Sunk costs: Engineering economic analysis is concerned with making
choices between engineering alternatives. For this purpose all past payments or
receipts (called Sunk Costs) 'concerning the alternatives are irrelevant, and
are therefore ignored. (sunk = done for)
12. Opportunity Costs:If a company invests certain sum of money into a
certain venture (or proposal) with an element of risk, that sum is no longer
available for investing in any other alternative venture. The profits or returns los
t as a result of not investing in a particular alternative is called the Opportunity Co
st.
13. Asset: An asset of a production concern is a valuable like land, building,
machine, material etc.owned by the concern.
14. Life of an Asset: The life of an asset can be considered in three ways,
(a) Actual or Technological Life of
an asset is the duration during which it can fulfil its required functions. It is
determined from technological considerations. (b) Accounting Life of an asset is the
duration during which the investment made in acquiring the asset is to be recovere
d from gross profits in the form of depreciation. (c) Economic life of
an asset is the duration during which an asset performs its technological function
economically. The asset is actually used by the production concern during its
economic life only.
15. Depreciation: A company invests in assets expecting to earn profits by
making use of those assets. However, net profits would accrue only
after the investment made in
acquiring the assets is recovered. Depreciation is systematic
procedure of recovering every year a portion of investment made on an
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