need help finding the right method to solve question 2
CASE: HALDOR TOPSOE A/S Economic assessments about a new product Haldor Topsoe ASS (Topsoe) is the leaber in heterogeneous cacalysis and supples catalysts and process design to oll refeneries. power plart eahaust-gas treatment systems and cloan energy processes. The environment plays a significant role in the company's research and production, and throogh the introduction of new technologies, Topsoe supports a more sustainable une of the world's resources. Approwimately 2.600 employees work at the company's headquarters in Lyngby and subsidiaries in the USA. Russia, India, China. Bahrain. Iran, Argentina, Brazil, Malaysia and Canada, as well as manutactaring facilities in Frederikssund, Houston, USA and Tianjin, China. The annual turnover in 2016 amounted to 860 milion US Dollars. Over the past decade, Topsoe' 5 sale of process lechnology and catalysts for oll refineries has increased shapply. One reason for this was a strategic locus on the development of catalysts for the production of fuel with ultra-low sultur content (ULSD- Ultra-Low Sulphur Diesel) and a globeitrend toward Amvironmental legistation that tightens requirements for aliowable sulfur content. Topsoe has develcped and delivered catalysts for oll refineries worldwide. Catalysts, caled "TK series", are used for cleaning ol and for the production of refinery products - mainly gasolion, morosene, diesel, fuel ol and asphait in addition, raw maberials for a variety of other products were atso produced. More than 2,000 diflerent products can be-produced from crude oil. To refine probucts that meet emvironmental regulations, productw such as gasoline and diesel must first be cleansed of contaminants such as suftur compounds and nitrogen. This is done by mioing the products with tyorogen and then directing them through the vessels contairing the TK catalyta. The catalysts induce the various compounds in the ol to react with the tydrogen to produce the desired product. Afler several years of nesearch work. Topsoe wal whie to devviog a mew catalyat. IK. hetw, which is even fmote effecere than the grevichat talar pat. Th. Buring the part of the refring process where the catalyst is erwioyod importart in the producfon do UL9D By using the TK-new, the armart det recovered LCO increased from 25.0 s to. 29.2\%s of the mmount of oll founing info the calalyst. This added value in the producten ot LCD is set la be fob BNI. par turrel After several yetare of rebearch work. Topsoe wan able to derevico a new catalyst, TK, eew, which is even more efficiert than the proviosa cacalyst. TK. During the part ef te refring procosa where the caewyt in enployed a semi-processed prosuct LCD flight Cycle O0, is recovered tCO in importantin the groduction of ULSD. Ay uning the TKinew, the amount of reoovered LCO increased from 25 bN to 29 ath of the ampurd of ol fowing info the catalyst. This added value in the groduction of LCO is set to be 60 Dix per barre The basis of the following calculasione is a celinery that processen 10.000 barreis of ol a day and produces 365 diny a year. Fer a refinery of this site. 110 bons of catalyst must be used. Aher 2.5 yeare the catalyst most be repiaced Before Topsoe can attempt to selithe Tik-new to refiners. they must fist establsha seling price. A common method is to use a speofle margen for the variable munulacturing costs lna research-intensive company such as Topsoe, this method is mot suitable becaust the variable manufacturing costs are relatively amall in boecharison to the considerable develocment costs. To determine the selling price based on the derviopment oosts is aho not economicaby ramional as artedy incurred coste (sunk cost) should never inthuence future decisiont A mente of what will be an upper lmit for the seling proe can be ctianed from an assessmert of the product's usefulness to the customer EvC economic value for the Customer) GUESTION 1 it the refinery has previounly used TK. What is the abolite highest addional eost for TK-twew the refnery ahouda be expecied to socept? The development of TK-fww has taken 3 years and the develogitidert cost is calculated to be 3.5 millin bkik per yew. The proe of TK-rew than now been established, and on that basks. sales of TKnew in the neet 5 years wat be: Year 1: 400 tom Year 2.700 tom Year 3:2 400 tons Year 4:300 tone Year 5.4.200 tons For the next 5 yeurt. the marketing costa for TK-thew are plarned bo te 200.000 Dok per year Assume that the goes margin on TKi-hew ar the established seling price is 30.000 OKK per ion. FuTther, assume thar Topsoe intes an interest rate of 20% per arumum. Ore probiem in assesilng profitabilty in developing a new iechnologe (here TK- new) that replaces an ewsting techerology (here TKC. is that the assesement whould te based of assumptons about what would have happened it the new technologr had not bees developed. It the refinery has previously used TK. what is the absolute highest additona 407 A. KKrotw hat taken 3 yourn and the develagment cost in cacuaved wo do a a malion DKK per yoar. The prioe of TKinew has noe been established. and on that tasis. sales of TK. new in the neet 5 years wit be: Year 1-400 tors Year 2 700 tons Yoar 3:2 400 tons Vear 4: 3 emotons Year 5:4.200 tons For the next 5 yvark. the marketing costs for TK-new are planned to be 200,000 DEaK per year. Mssume that the goss mangin on TK-nee at the established seling peice is 30,000 DKK per tan Futher, assume that Topsoe uses an intarest ratn of a0ks per annum. Oow problem in assessing proftabily in develoging a new incheology (here TK- few) bal replases ans ewisfing tochatogy (hert TK ), is that the aseessment should be based on assumptome about whaf would have happened if the new lechrology had not been deroloped. QuESTICN 2 What is the payback penod for the develogment of TK-eved, if it is assurned that is would het have been porstele to sell TK in yoarst-5? Who previously used compeding products. In this case, TK-new wil corterbute to Increased sales of cabalysti. However, when TK-eew neplacen TK. in is expochod bat exating easiomern will wwich ever fram IIK ao TK-tew, with relererce to Question 1 . In this case, the contrbution of TK-new wit only be an addional gross peoft with respect so TK. Qutstign 3 Assuming that the Thenew does not contrabute to increased sales, but merely replaces a simily sale of TK that could be achieved ever the five years, whats should the additional groes prodt on TK-hew te for the prophet parytack to be 3 puars? CASE: HALDOR TOPSOE A/S Economic assessments about a new product Haldor Topsoe ASS (Topsoe) is the leaber in heterogeneous cacalysis and supples catalysts and process design to oll refeneries. power plart eahaust-gas treatment systems and cloan energy processes. The environment plays a significant role in the company's research and production, and throogh the introduction of new technologies, Topsoe supports a more sustainable une of the world's resources. Approwimately 2.600 employees work at the company's headquarters in Lyngby and subsidiaries in the USA. Russia, India, China. Bahrain. Iran, Argentina, Brazil, Malaysia and Canada, as well as manutactaring facilities in Frederikssund, Houston, USA and Tianjin, China. The annual turnover in 2016 amounted to 860 milion US Dollars. Over the past decade, Topsoe' 5 sale of process lechnology and catalysts for oll refineries has increased shapply. One reason for this was a strategic locus on the development of catalysts for the production of fuel with ultra-low sultur content (ULSD- Ultra-Low Sulphur Diesel) and a globeitrend toward Amvironmental legistation that tightens requirements for aliowable sulfur content. Topsoe has develcped and delivered catalysts for oll refineries worldwide. Catalysts, caled "TK series", are used for cleaning ol and for the production of refinery products - mainly gasolion, morosene, diesel, fuel ol and asphait in addition, raw maberials for a variety of other products were atso produced. More than 2,000 diflerent products can be-produced from crude oil. To refine probucts that meet emvironmental regulations, productw such as gasoline and diesel must first be cleansed of contaminants such as suftur compounds and nitrogen. This is done by mioing the products with tyorogen and then directing them through the vessels contairing the TK catalyta. The catalysts induce the various compounds in the ol to react with the tydrogen to produce the desired product. Afler several years of nesearch work. Topsoe wal whie to devviog a mew catalyat. IK. hetw, which is even fmote effecere than the grevichat talar pat. Th. Buring the part of the refring process where the catalyst is erwioyod importart in the producfon do UL9D By using the TK-new, the armart det recovered LCO increased from 25.0 s to. 29.2\%s of the mmount of oll founing info the calalyst. This added value in the producten ot LCD is set la be fob BNI. par turrel After several yetare of rebearch work. Topsoe wan able to derevico a new catalyst, TK, eew, which is even more efficiert than the proviosa cacalyst. TK. During the part ef te refring procosa where the caewyt in enployed a semi-processed prosuct LCD flight Cycle O0, is recovered tCO in importantin the groduction of ULSD. Ay uning the TKinew, the amount of reoovered LCO increased from 25 bN to 29 ath of the ampurd of ol fowing info the catalyst. This added value in the groduction of LCO is set to be 60 Dix per barre The basis of the following calculasione is a celinery that processen 10.000 barreis of ol a day and produces 365 diny a year. Fer a refinery of this site. 110 bons of catalyst must be used. Aher 2.5 yeare the catalyst most be repiaced Before Topsoe can attempt to selithe Tik-new to refiners. they must fist establsha seling price. A common method is to use a speofle margen for the variable munulacturing costs lna research-intensive company such as Topsoe, this method is mot suitable becaust the variable manufacturing costs are relatively amall in boecharison to the considerable develocment costs. To determine the selling price based on the derviopment oosts is aho not economicaby ramional as artedy incurred coste (sunk cost) should never inthuence future decisiont A mente of what will be an upper lmit for the seling proe can be ctianed from an assessmert of the product's usefulness to the customer EvC economic value for the Customer) GUESTION 1 it the refinery has previounly used TK. What is the abolite highest addional eost for TK-twew the refnery ahouda be expecied to socept? The development of TK-fww has taken 3 years and the develogitidert cost is calculated to be 3.5 millin bkik per yew. The proe of TK-rew than now been established, and on that basks. sales of TKnew in the neet 5 years wat be: Year 1: 400 tom Year 2.700 tom Year 3:2 400 tons Year 4:300 tone Year 5.4.200 tons For the next 5 yeurt. the marketing costa for TK-thew are plarned bo te 200.000 Dok per year Assume that the goes margin on TKi-hew ar the established seling price is 30.000 OKK per ion. FuTther, assume thar Topsoe intes an interest rate of 20% per arumum. Ore probiem in assesilng profitabilty in developing a new iechnologe (here TK- new) that replaces an ewsting techerology (here TKC. is that the assesement whould te based of assumptons about what would have happened it the new technologr had not bees developed. It the refinery has previously used TK. what is the absolute highest additona 407 A. KKrotw hat taken 3 yourn and the develagment cost in cacuaved wo do a a malion DKK per yoar. The prioe of TKinew has noe been established. and on that tasis. sales of TK. new in the neet 5 years wit be: Year 1-400 tors Year 2 700 tons Yoar 3:2 400 tons Vear 4: 3 emotons Year 5:4.200 tons For the next 5 yvark. the marketing costs for TK-new are planned to be 200,000 DEaK per year. Mssume that the goss mangin on TK-nee at the established seling peice is 30,000 DKK per tan Futher, assume that Topsoe uses an intarest ratn of a0ks per annum. Oow problem in assessing proftabily in develoging a new incheology (here TK- few) bal replases ans ewisfing tochatogy (hert TK ), is that the aseessment should be based on assumptome about whaf would have happened if the new lechrology had not been deroloped. QuESTICN 2 What is the payback penod for the develogment of TK-eved, if it is assurned that is would het have been porstele to sell TK in yoarst-5? Who previously used compeding products. In this case, TK-new wil corterbute to Increased sales of cabalysti. However, when TK-eew neplacen TK. in is expochod bat exating easiomern will wwich ever fram IIK ao TK-tew, with relererce to Question 1 . In this case, the contrbution of TK-new wit only be an addional gross peoft with respect so TK. Qutstign 3 Assuming that the Thenew does not contrabute to increased sales, but merely replaces a simily sale of TK that could be achieved ever the five years, whats should the additional groes prodt on TK-hew te for the prophet parytack to be 3 puars
