99% Oxygen Production with Zeolites 99% Oxygen Production with - PowerPoint PPT Presentation

Silica Gel Pretreatment Silica Gel Pretreatment  Pretreatment bed to remove water vapor and impurities Pretreatment bed to remove water vapor and impurities  such as carbon dioxide such as carbon dioxide – – Air at 100% humidity is approximately 3% water vapor Air at 100% humidity is approximately 3% water vapor  Water can impair the performance of adsorbents in the Water can impair the performance of adsorbents in the  PSA adsorption columns. PSA adsorption columns.  Silica gel beds are necessary to remove water vapor Silica gel beds are necessary to remove water vapor  from the air. from the air. – A heating coil used to evaporate the water from the silica A heating coil used to evaporate the water from the silica – gel gel

Kinetic Separation Kinetic Separation  Molecular Sieve Carbon (MSC) Molecular Sieve Carbon (MSC)  adsorbents using PSA technology adsorbents using PSA technology  Ideal for separation of Argon and Ideal for separation of Argon and  Oxygen Oxygen – MSCs MSCs in kinetic adsorption can adsorb in kinetic adsorption can adsorb – Oxygen 30 times faster than Argon Oxygen 30 times faster than Argon  Creates a problem in design, requiring two Creates a problem in design, requiring two  PSA systems to collect the adsorbed Oxygen PSA systems to collect the adsorbed Oxygen

Carbon Nanotubes Carbon Nanotubes  Sheets of carbon atoms rolled Sheets of carbon atoms rolled  into tubes of varying diameters into tubes of varying diameters  Nanotubes have extraordinary Nanotubes have extraordinary  strength strength  Potential uses in many industrial Potential uses in many industrial  processes, including adsorption. processes, including adsorption.

Carbon Nanotubes Carbon Nanotubes Advantages Advantages  Nanotubes have little interaction with nitrogen at Nanotubes have little interaction with nitrogen at  high temperatures due to oxygen’s higher packing high temperatures due to oxygen’s higher packing efficiency, smaller diameter, and entropic energies efficiency, smaller diameter, and entropic energies  Research has shown that single walled carbon Research has shown that single walled carbon  nanotubes (SWCN) of 12.53Å have a selectivity of Å have a selectivity of nanotubes (SWCN) of 12.53 O2/N2 of 100:1 at 10 bar. O2/N2 of 100:1 at 10 bar.  It has been indicated that Argon will have very little It has been indicated that Argon will have very little  interaction with nanotubes interaction with nanotubes

Carbon Nanotubes Carbon Nanotubes Disadvantages Disadvantages Nanotubes are so efficient the volume of Nanotubes are so efficient the volume of   nanotubes required for separation of air nanotubes required for separation of air is much smaller than the volume of feed is much smaller than the volume of feed air. air. – Nanotubes’ surface area is not large – Nanotubes’ surface area is not large enough to react with the volume of air enough to react with the volume of air required. required. – No current way to disperse nanotubes – No current way to disperse nanotubes effectively for PSA air separation effectively for PSA air separation Price range for nanotubes is $325 to Price range for nanotubes is $325 to   $500 per gram $500 per gram

Zeolites Zeolites  Microporous Microporous crystalline structures crystalline structures   Lifespan of 10 years Lifespan of 10 years   The The zeolite’s zeolite’s structure governs which structure governs which  molecules are adsorbed. molecules are adsorbed.  Various ways of controlling Various ways of controlling  adsorption adsorption – – separate molecules based on separate molecules based on differences of size, shape and differences of size, shape and polarity polarity

Zeolites Zeolites I on Exchange: I on Exchange:  Metal Metal cations cations (calcium, (calcium,  sodium, silver) are bound sodium, silver) are bound to the zeolite zeolite structure structure to the – Silver cation cation zeolites zeolites have be have be – Silver proven to be best for air proven to be best for air separation separation  Creates an electrostatic Creates an electrostatic  interaction between the interaction between the cation ion and the ion and the cation molecules being adsorbed molecules being adsorbed

LiAgX Zeolite Zeolite LiAgX  Useful for removing Nitrogen from Useful for removing Nitrogen from  Oxygen with product throughput .1 kg Oxygen with product throughput .1 kg 02/hr/kg adsorbent. 02/hr/kg adsorbent.  Can obtain 96.42% oxygen purity with Can obtain 96.42% oxygen purity with  62.74% Oxygen recovery. 62.74% Oxygen recovery.  Drawback is the selectivity of Argon to Drawback is the selectivity of Argon to  Oxygen is approximately 1:1. Oxygen is approximately 1:1.

AgA Zeolite Zeolite AgA  Argon to Oxygen Argon to Oxygen  selectivity of 1.63 to 1 selectivity of 1.63 to 1  7 cm 7 cm 3 3 /g of Argon /g of Argon  adsorbed at adsorbed at atmospheric pressure atmospheric pressure  Nitrogen to Oxygen Nitrogen to Oxygen  selectivity of 5 to 1 selectivity of 5 to 1

     0 1 1 F t L AN AN N 2 1 N 2 1 N 2 Equilibrium Adsorption Theory Equilibrium Adsorption Theory  Competition between the different Competition between the different  molecules on the adsorbent sites molecules on the adsorbent sites exists. exists. – Langmuirian Multi Multi- -component Theory component Theory – Langmuirian is used to determine the fractional is used to determine the fractional loading of each component on the loading of each component on the adsorbent adsorbent  Selectivity describes how selective Selectivity describes how selective  one component is to bind to the one component is to bind to the adsorbent over another adsorbent over another component component

     0 1 1 F t L AN AN N 2 1 N 2 1 N 2 Equilibrium Adsorption Theory Equilibrium Adsorption Theory  Material Balances Material Balances  – Nitrogen Nitrogen   – – Oxygen Oxygen   – – Argon Argon   –  

     0 1 1 F t L AN AN N 2 1 N 2 1 N 2 Equilibrium Adsorption Theory Equilibrium Adsorption Theory For the adsorption bed to remove both Nitrogen and Argon the For the adsorption bed to remove both Nitrogen and Argon the velocity ratio of the argon front must be greater than that of velocity ratio of the argon front must be greater than that of the nitrogen front the nitrogen front

Proposed Use of the Proposed Use of the Presented Presented Technologies Technologies

Proposed Use of Technology Proposed Use of Technology Pressure Swing Adsorption (PSA) will be used in the design for: Pressure Swing Adsorption (PSA) will be used in the design for:   – – Medium scale capacity Medium scale capacity – – Safety Safety – Cost savings – Cost savings An analysis of 4 designs using zeolites zeolites LiAgX LiAgX and and AgA AgA in the PSA in the PSA An analysis of 4 designs using   adsorption beds was performed. The column diameter and cycle adsorption beds was performed. The column diameter and cycle time was held constant. time was held constant. – – Design 1 Design 1 LiAgX zeolite zeolite LiAgX   – – Design 2: Design 2: AgA zeolite zeolite AgA   – – Design 3: Design 3: Mixed ratio of zeolites zeolites LiAgX LiAgX and and AgA AgA Mixed ratio of   – – Design 4: Design 4: Both LiAgX LiAgX and and AgA AgA zeolites zeolites separating them separating them Both  

Design 1: LiAgX LiAgX zeolite zeolite Design 1: Nitrogen Removal Nitrogen Removal   – – LiAgX removes nitrogen with a 96.42% purity Oxygen and 62.74% LiAgX removes nitrogen with a 96.42% purity Oxygen and 62.74% recovery. recovery. – The is the best zeolite zeolite for nitrogen removal for nitrogen removal – The is the best Argon Removal Argon Removal   – Argon to Oxygen selectivity of 1:1. – Argon to Oxygen selectivity of 1:1. – Requires a large volume of LiAgX LiAgX zeolite zeolite to accomplish required purity to accomplish required purity – Requires a large volume of Large volume of zeolite Large volume of zeolite is required. Costs and inlet airflow rate is required. Costs and inlet airflow rate   increases. increases.

Design 2: AgA AgA zeolite zeolite Design 2: Nitrogen Removal Nitrogen Removal   – – Nitrogen to Oxygen selectivity of 5 to 1 in AgA Nitrogen to Oxygen selectivity of 5 to 1 in AgA zeolite zeolite – Selectivity is lower than if using LiAgX LiAgX zeolite zeolite – Selectivity is lower than if using Argon Removal Argon Removal   – Argon to Oxygen selectivity of 1.63 to 1 – Argon to Oxygen selectivity of 1.63 to 1 – – Best design for Argon removal Best design for Argon removal Large volume of zeolite Large volume of zeolite is required is required   – Costs and inlet airflow rate increases. – Costs and inlet airflow rate increases.

Design 3: Mixed zeolites zeolites Design 3: Mixed  Nitrogen Removal Nitrogen Removal  – LiAgX LiAgX has a higher loading and selectivity of nitrogen than has a higher loading and selectivity of nitrogen than – AgA. . AgA – Not beneficial to mix them in order to rid of the nitrogen. Not beneficial to mix them in order to rid of the nitrogen. –  Argon Removal Argon Removal  – AgA AgA has a higher loading and selectivity toward argon, has a higher loading and selectivity toward argon, – selectivity being 1.63 than LiAgX LiAgX which has a 1:1 ratio which has a 1:1 ratio selectivity being 1.63 than – Mixing in Mixing in LiAgX LiAgX in the argon removal section would only in the argon removal section would only – hurt performance as well. hurt performance as well.

Design 4: LiAgX LiAgX and and AgA AgA Design 4: zeolites separated separated zeolites Nitrogen Nitrogen   – – LiAgX zeolite LiAgX zeolite with a 96.42% Oxygen purity and 62.74% recovery with a 96.42% Oxygen purity and 62.74% recovery Argon Argon   – – AgA zeolite AgA zeolite with an Argon to Oxygen selectivity of 1.63 to 1 with an Argon to Oxygen selectivity of 1.63 to 1 The volume is dramatically lower The volume is dramatically lower   – Save money on the zeolite zeolite cost and overall unit cost and overall unit – Save money on the The inlet air flow rate would be less due to the higher recovery of The inlet air flow rate would be less due to the higher recovery of   oxygen oxygen Has been determined most Has been determined most beneficial design beneficial design  

Zeolite Design Analysis Design Analysis Zeolite

Hospital Air Separation Hospital Air Separation Design with Pressure Design with Pressure Swing Adsorption Swing Adsorption

Proposed Design - - Proposed Design Hospital Hospital Large hospital information Large hospital information  Approximately 350 large Approximately 350 large  hospitals in the United States hospitals in the United States (500- -1000 beds). 1000 beds). (500  At any time have 150 users At any time have 150 users  using 5L/min. using 5L/min.

Proposed Design - - Hospital Hospital Proposed Design  Goals Goals  – Use PSA technology to produce 99% – Use PSA technology to produce 99% oxygen with all specifications. oxygen with all specifications. – Provide for maximum capacity of 300 – Provide for maximum capacity of 300 users at 5 L/ min of oxygen to adjust for users at 5 L/ min of oxygen to adjust for fluctuation in demands. fluctuation in demands. – Determine if product is profitable and a – Determine if product is profitable and a plausible option for large hospitals. plausible option for large hospitals.

Proposed Design - - Proposed Design Hospital Hospital First calculate inlet air flow rate of air: Calculation of Inlet Flow Rate 62.7 Recovery of Oxygen (LiAgX) (%) 55.0 Recovery of Oxygen (AgA) (%) 34.5 Total Recovery of Oxygen (%) Assume 30 second Cycle Time 1500 Oulet Oxygen needed for 300 users at 5L/min 2850 Oxygen Adsorbed per 2 columns (L) 4350 Inlet Oxygen (L/min) 21750 Inlet Air Mixture (L/min)

Proposed Design - - Proposed Design Hospital Hospital Adsorbent Results Inlet Air Mixture (L) 21750.0 Inlet Air Feed to each column (L) 10875.0 Flow rate air to each column (L/s) 362.5 LiAgX Section of Column Product Throughput kg O2/h/kg adsorbent 0.1 Total 96.42% Pure Oxygen from LiAgX 2729.2 Mass of LiAgX Zeolites (kg) 3303.0 AgA Section of Column Total Entering O2/Ar mixture (L) 1447.8 Product Throughput kg O2/h/kg adsorbent 0.2 Mass of AgA Zeolites (kg) 1229.5

Proposed Design - - Proposed Design Hospital Hospital Column Specifications Total Mass of Zeolites per Column (kg) 4532 Total Volume of Zeolites per Column (L) 4236 Column Data Volume of Column (L) 4236 Diameter of Column (cm) 80 Height of Column (cm) 421 Total Loading of N2/O2/Ar per Column (kg) 22

Proposed Design - - Proposed Design Hospital Hospital Final Components of Design Compressor (Palatek) Max Flow of Compressor (CFM) 900 Inlet Flow to be Compressed (CFM) 776 Power Consumption (hP) 200 Silica Gel Drying Column Volume (cm^3) 20291 Height (cm) 65 Diameter (cm) 20 Mass of Silica Gel (kg) 12

Proposed Design - - Proposed Design Hospital Hospital Components Continued High Pressure Storage Tank Volume to be stored in 60 minutes (L) 92100 Volume of stored air at 10 atm 9210 Compressor for High Pressure Storage (Palatek) Inlet Flow to be Compressed (CFM) 55 Max Flow of Compressor (CFM) 100 Power Consumption (hP) 50

Proposed Design - - Proposed Design Hospital Hospital Important Results Purity of Air (LiAgX) 96.42 Volume of O2/Ar out of LiAgX Section 1448 Purity of Air (AgA) >99 Vol. 99% Oxygen out of 1 Column/30 sec 750 Volume 99% O2 out in 1 min 1501 Users Supplied at 5L/min 300 Goals met: Producing 99% Oxygen Supply 300 users of oxygen at 5L/ min!

Portable Portable Oxygen Oxygen Concentrator Concentrator Design Design

Portable Oxygen Concentrators Portable Oxygen Concentrators Market Designs: Market Designs: – Only alternative to carrying Only alternative to carrying – bottles of oxygen. bottles of oxygen. – Uses PSA to purify air Uses PSA to purify air – stream. stream. – Small enough to carry. Small enough to carry. – Less than 30 lbs. Less than 30 lbs. – Uses battery power to Uses battery power to – increase portability. increase portability. – 85% 85% - -95% oxygen purity. 95% oxygen purity. –

Portable Oxygen Portable Oxygen Concentrators Concentrators Necessary Requirements Necessary Requirements 1. Weighs less than 30 lbs. Weighs less than 30 lbs. 1. 2. 99% oxygen purity at 5 liters per 99% oxygen purity at 5 liters per 2. minute. minute. 3. Battery life of at least 8 hours. 3. Battery life of at least 8 hours. 4. Small enough to take on airplane Small enough to take on airplane 4. 5. Low noise Low noise 5. 6. Less than $5,000/unit and covered by Less than $5,000/unit and covered by 6. medicare. medicare.

Oxygen Concentrator Weight kg Price Cost Parts # Column and Tanks Adsorption Columns (Al) 1.5 liter 2 1.86 $100.00 $200.00 Drying Column (Al) 1 liter 1 0.0115 $100.00 $100.00 Low Pressure Storage tank (Al) 2 liter 1 1.86 $100.00 $50.00 Packing 5 $.4/g $2,000.00 LiAgX Zeolites (Adsorbent) Silver Zeolite A (Adsorbent) 1.4 $.4/g $560.00 Silica Gel (Drying) 0.08 $.05/g $4.00 Other items Inlet Feed Compressor 1 2.73 $100.00 $100.00 Nitrogen Exhaust Muffler 1 0.23 $3.00 $3.00 3 Way Ball Valve 2 0.09 $100.00 $200.00 2 Way Solenoid Valve 2 0.09 $100.00 $200.00 Battery 3 0.93 $100.00 $300.00 Control Computer 1 0.09 $300.00 $300.00 Frame (Aluminum) 1 0.91 $100.00 $100.00 Casing (Plastic) 1 0.09 $75.00 $75.00 Final Total Weight (kg) 9.35 Total Cost = $4,192.00 Final Total Weight (lb) 20.57

Portable Oxygen Portable Oxygen Concentrators Concentrators Goals met with portable oxygen Goals met with portable oxygen concentrator from initial estimates: concentrator from initial estimates: Purity: 99% Oxygen 99% Oxygen Purity: Cost: $4200 under $5000 $4200 under $5000 Cost: Weight: 20.5 lb under 30lb 20.5 lb under 30lb Weight: Small: Estimated Volume .6ft x 1ft x 1ft Estimated Volume .6ft x 1ft x 1ft Small:

Portable Oxygen Portable Oxygen Concentrators Concentrators

Portable Oxygen Portable Oxygen Concentrators Concentrators Conclusions/ Recommendations: Conclusions/ Recommendations: A competitive/lightweight portable A competitive/lightweight portable oxygen concentrator with 99% oxygen oxygen concentrator with 99% oxygen can be produced. can be produced. Perform extensive design estimates and Perform extensive design estimates and economic analysis. economic analysis.

Consumer Consumer Utility Utility and and Preference Preference

Consumer Utility and Preference Consumer Utility and Preference  Method used to determine relationship Method used to determine relationship  between: between: – consumer preference – consumer preference – satisfaction – satisfaction in order to predict in order to predict product price and product price and product demand. product demand.

Consumer Utility and Preference Consumer Utility and Preference Theory Theory The solution to consumer utility maximization is The solution to consumer utility maximization is given by: given by:    1       Y p d        1 1   ( d ) p d   p d 0  1 1 1 2 1     p 2 α = Inferiority Function (Knowledge of product, function of time) Β = Superiority Function (Consumer preference, comparison to competition “preference”) Y= Consumer budget= p1* d1+ p2* d2

Consumer Utility and Preference Consumer Utility and Preference H   β Further Quantification of β 2  Further Quantification of  (ratio of consumer (ratio of consumer H 1 preference) preference) Preference values must be between 0 and 1. A value of 1 indicates maximum preference toward a product. If the competitor preference H2= .69 and H1= 1 (max) then the β = .69/1 = .69 overall β = .69/1 = .69

Consumer Utility and Preference Consumer Utility and Preference H   2  H  1 H w y  Consumer Preference i i i wi= weight based on consumer preference characteristics, smaller than 1 yi= consumer utilities based on evaluation, can be changed to meet specific preference values. Range between 0 and 1. 1 is 100% satisfaction in the product

Consumer Utility and Preference Consumer Utility and Preference Determining weights Determining weights   1. Identify Important Characteristics for general 1. Identify Important Characteristics for general oxygen supply for a hospital oxygen supply for a hospital 2. Determine consumer importance placed on 2. Determine consumer importance placed on characteristics through surveys characteristics through surveys 3. Characteristic relation to product properties 3. Characteristic relation to product properties 4. Determine weights to each characteristic from 4. Determine weights to each characteristic from importance surveys importance surveys

Consumer Utility and Preference Consumer Utility and Preference  Important consumer characteristics for Important consumer characteristics for  hospital design and weights assigned to hospital design and weights assigned to them. them. Characteristics Weights (wi) 0.175 Noise 0.147 Ease of Use 0.112 Appearance 0.184 Frequency of Maintenance 0.205 Reliability 0.177 Durability

Consumer Utility and Consumer Utility and Preference Preference   Determining yi yi (% preferences) (% preferences) Determining H w y i i i of consumer values of consumer values Develop expression between % preference and Develop expression between % preference and 1. 1. words used to describe each characteristic by words used to describe each characteristic by consumer description. consumer description. Relates the characteristic descriptions to physical Relates the characteristic descriptions to physical 2. 2. attributes. attributes. Combine the first two expressions to yield a % Combine the first two expressions to yield a % 3. 3. preference of characteristic versus physical preference of characteristic versus physical attributes. attributes.

% Preference for Appearance Characteristic 1 0.9 0.8 0.7 y(% Preference) 0.6 0.5 0.4 0.3 0.2 0.1 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Ugly Poor Good Beautiful Stunning Appearance

Appearance Characteristic 5 Stunning 4.5 4 Beautiful 3.5 Appearance 3 Good 2.5 2 Poor 1.5 1 Ugly 0.5 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Does not blend with S omewhat blends with hospital, Some Blends with hospital, hospital, Limited color, architecture, and texture options many architectual, color, color and texture and texture options Color and Texture Options options

Appearance Characteristic 1 0.9 0.8 0.7 y(%preference) 0.6 0.5 0.4 0.3 0.2 0.1 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Does not blend with S omewhat blends with hospital, Some Blends with hospital, hospital, Limited color, architecture, and texture options many architectual, color, color and texture and texture options Color and Texture Options options

Consumer Utility and Preference Consumer Utility and Preference Appearance Appearance  Utility function ( Utility function ( yi yi) generated ) generated  Y(%preference)= )= - -0.0134x3 + 0.1248x2 0.0134x3 + 0.1248x2 - - Y(%preference 0.0888x + 0.0063 where x= Color/Texture 0.0888x + 0.0063 where x= Color/Texture The appearance of the oxygen concentrator The appearance of the oxygen concentrator depends on the outer casing. depends on the outer casing.

Consumer Utility and Consumer Utility and Preference Preference Appearance Appearance  To draw in the most To draw in the most  consumers, 3 types of consumers, 3 types of siding materials were siding materials were looked at: Veneer, looked at: Veneer, Aluminum, and Vinyl. Aluminum, and Vinyl. Material Quoted Price Total Cost $1.6/ sq ft [30] $1,760 Vinyl Siding $1.7/ sq ft [30] $1,870 Aluminum Siding $3.5/ sq ft [31] $3,850 Veneer Stone Siding

% Preference for Noise Characteristic 1 0.9 0.8 0.7 y (% Preference) 0.6 Tolerant People 0.5 0.4 Non Tolerant People 0.3 0.2 0.1 0 0 20 40 60 80 100 120 Threshold of Noisy Very Noisy Threhold of Not Noisy Hearing Pain Noise (dB)

Noise Characteristic 120 Threhold of Pain 100 Very Noisy 80 Noise (dB) Noisy 60 Not Noisy 40 20 Threshold of Hearing 0 0 1 2 3 4 5 6 Quiet office or Conversation Passing Car 10 Night club Rustling leaves, home ft/disposal 3ft w/ band no noise Common Noises

Noise Characteristic 1 0.9 0.8 y (% preference) 0.7 0.6 Non Tolerant People Tolerant People 0.5 0.4 0.3 0.2 0.1 0 0 20 40 60 80 100 120 Quiet office or Passing Car 10 Rustling leaves, Conversation Night club w/ home ft/disposal 3ft no noise band Common Noises

Consumer Utility and Consumer Utility and Preference Preference Noise Noise  Utility function ( Utility function ( yi yi) )  generated generated Y(%preference)= )= - -4E 4E- -06x3 06x3 - - 0.0007x2 0.0007x2 Y(%preference + 0.0278x + 0.724 + 0.0278x + 0.724 where x(common x(common noise) noise) where

Consumer Utility and Consumer Utility and Preference Preference Noise Noise  To draw in the most To draw in the most  consumers, a layer of consumers, a layer of noise soundproofing noise soundproofing foam will be added to foam will be added to the casing of the the casing of the concentrator. concentrator. Material Reduction % Total Cost ($) 95 10141 Ultra Barrier 90 4412 Quiet Barrier 80 2119 Econo Barrier 65 2406 Sound Proof Foam

Consumer Utility and Preference Consumer Utility and Preference Ease of Use (amount of training) Ease of Use (amount of training) – Utility Function Utility Function – Y(% preference)= 0.0366x2 + 0.0227x )= 0.0366x2 + 0.0227x - - 0.0089 0.0089 Y(% preference where x= (Training Needed) where x= (Training Needed) If no training is needed If no training is needed than the hospital design than the hospital design is easy for anyone to is easy for anyone to use. use.

% Preference for Ease of Use Characteristic 1 0.9 0.8 y (% Preference) 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 No Training Extensive Training Needed Needed for Training Needed Operation Amount of Training

Consumer Utility and Consumer Utility and Preference Preference Reliability (MTBF) Reliability (MTBF)  Utility function ( Utility function ( yi yi) )  generated generated Y(%preference)= 0.0037x3 )= 0.0037x3 - - Y(%preference 0.0796x2 + 0.5394x - - 0.159 0.159 0.0796x2 + 0.5394x where x(MTBF x(MTBF) ) where

% Preference for Reliability Characteristic 1 0.9 0.8 0.7 y (% preference) 0.6 0.5 0.4 0.3 0.2 0.1 0 0 1 2 3 4 5 6 7 8 9 10 MTBF (years)

Consumer Utility and Consumer Utility and Preference Preference Manipulation: Manipulation: Increase consumer preference Increase consumer preference by including parts with large by including parts with large MTBF values. MTBF values. Adding a backup unit to the Adding a backup unit to the primary unit will increase primary unit will increase reliability. If one unit breaks reliability. If one unit breaks down, the other unit will turn down, the other unit will turn on. on.

Consumer Utility and Consumer Utility and Preference Preference Durability (time to Durability (time to revamp) revamp)  Utility function ( Utility function ( yi yi) generated ) generated  Y(% preference)= 0.014x3 )= 0.014x3 - - 0.0475x2 0.0475x2 Y(% preference + 0.0881x - - 0.0037 0.0037 + 0.0881x where x(Time x(Time to Revamp) to Revamp) where Manipulation: Increase consumer Manipulation: Increase consumer   preference by including valves and preference by including valves and compressors with long term resistance compressors with long term resistance to wear. to wear.

% Preference for the Durability Characteristic 1 0.9 0.8 0.7 y (%preference) 0.6 0.5 0.4 0.3 0.2 0.1 0 0 1 2 3 4 5 Time to Revamp (years)

Consumer Utility and Consumer Utility and Preference Preference Maintenance(visits per year) per year) Maintenance(visits Utility function ( yi yi) generated ) generated Utility function ( Y(%preference Y(%preference)= )= - -0.0083x3 0.0083x3 - - 0.0607x2 0.0607x2 - - 0.1012x + 1.0036 0.1012x + 1.0036 where x(Maintenance x(Maintenance visits/year) visits/year) where Manipulation: Greater MTBF leads to less Manipulation: Greater MTBF leads to less maintenance. maintenance.

% Preference for Frequency of Maintenance Characteristic 1 0.9 0.8 y (% Preference) 0.7 0.6 Tolerant People 0.5 Non Tolerant People 0.4 0.3 0.2 0.1 0 0 1 2 3 4 5 6 Maintenance Visits per Year

Consumer Utility and Preference Consumer Utility and Preference All utility functions are used to find % All utility functions are used to find % preference to be multiplied by characteristic preference to be multiplied by characteristic weights to achieve the preference value. weights to achieve the preference value. Y(Appearance Y(Appearance)= )= - -0.0134x3 + 0.1248x2 0.0134x3 + 0.1248x2 - - 0.0888x + 0.0063 0.0888x + 0.0063 Y(Noise)= )= - -4E 4E- -06x3 06x3 - - 0.0007x2 + 0.0278x + 0.724 0.0007x2 + 0.0278x + 0.724 Y(Noise Y(Ease of Use)= 0.0366x2 + 0.0227x of Use)= 0.0366x2 + 0.0227x - - 0.0089 0.0089 Y(Ease Y(Reliability)= 0.0037x3 Y(Reliability )= 0.0037x3 - - 0.0796x2 + 0.5394x 0.0796x2 + 0.5394x - - 0.159 0.159 Y(Durability)= 0.014x3 )= 0.014x3 - - 0.0475x2 + 0.0881x 0.0475x2 + 0.0881x - - 0.0037 0.0037 Y(Durability Y(maintenance)= )= - -0.0083x3 0.0083x3 - - 0.0607x2 0.0607x2 - - 0.1012x + 1.0036 0.1012x + 1.0036 Y(maintenance   H w y i i i

Business Model Business Model Competitor (liquid oxygen) % Preference (yi) Preference/Characteristic (Hi) 0.930 0.163 Noise 0.950 0.140 Ease of Use 0.580 0.065 Appearance 0.360 0.066 Frequency of Maintenance 0.900 0.185 Reliability 0.760 0.135 Durability 0.753 Now found competitor H2 value can vary oxygen product to produce several new Example Designs preference values H1 for different β values. Beta Values 0.85 Design1 0.92 Design2    1       0.95 Design3 Y p d        0.97 Design4 1 1   ( d ) p d   p d 0  1.05 1 1 1 2 1 Design5     p 1.12 Design6 2

Business Model for Hospital Business Model for Hospital Design Design

Business Model Business Model Goals Goals β value that will maximize Determine β  Determine value that will maximize  NPV at the best price for design. NPV at the best price for design.  Determine the effect of varying Determine the effect of varying  α (knowledge) with time with a set β α (knowledge) with time with a set β value. value.

Business Model Business Model Determining P1 and D1: Example of prices and demands from consumer utility maximization with Beta= .85    1       Y p d      1 1   p d   p d 0  1 1 2 1     p 2 Price Demand 150000 291 175000 202 200000 140 225000 98 250000 69 275000 50 300000 36 325000 27 350000 20

Business Model Business Model Items now needed to find NPV Items now needed to find NPV  Total Product Costs Total Product Costs  – Raw Materials Raw Materials – – Variable Production Costs Variable Production Costs – – Administrative Costs Administrative Costs – – Advertising Costs Advertising Costs – – Distribution Costs Distribution Costs – – Fixed Charges Fixed Charges –  TCI TCI   Total Equipment Costs Total Equipment Costs 

Business Model Business Model Total Product Costs per year Total Product Costs per year Raw materials (depend on demand) Raw materials (depend on demand) R aw M aterials C ost $ Basis for Estim ate R ate or Q uantity $.22/100g quote 20 units sold in first year 920 g $20 Silica G el $.4/100g quote 20 units sold in first year 4130 kg $165,200 LiA gX Zeolite $.4/100g quote 20 units sold in first year 1230 kg $49,200 Silver Zeolite A Q uote: $361/sheet 16 sheets to cover casing of unit $115,520 Q uiet B arrier N oise Proof Foam Q uote: $1.6/sq ft 1400 sq ft to cover $44,800 Vinyl Sidiing Total R aw M aterials C ost $214,420

Business Model Business Model Total Product Costs Total Product Costs  Variable Production Costs (utilities, supplies, Variable Production Costs (utilities, supplies,  maintenance) maintenance) Variable Production Costs Utilities Basis for Estimate Rate or Quantity 150 bulbs, 23W, full year operation $.13/kWh $3,884 Electricity Office heating/cooling/electronics 900W/hr $1,157 Assume 100 gal/day $1.98/1000 gal (Georgia cost) $723 Water Operating Supplies (variable costs) Pencils 12 BIC Mechanical Pencils $5.50 Use 288 per year $132 Staples Swingline $1.50 per box Use 3 boxes per year $5 Ink for Printer $60 per black/color ink combo package Use 6 per year $360 Pens 12 Bic Pens $5.50 Use 96 per year $44 Paper $33 per case of multipurpose paper Use 2 per year $66 Estimate of .05 of FCI $1,150 Maintenance and repairs on building Total variable production costs $7,520

Business Model Business Model Total Product Costs Total Product Costs  Administrative Costs Administrative Costs  Administrative Costs Employees # employees 1 Assume $60,000 salary/year $60,000 Engineers 1 Assume $30000 salary/year $30,000 Accountant 2 Assume $30000 salary/year $60,000 Skilled Labor 1 Assume $35000 salary/year $35,000 Traveling Salesman 1 Assume $25000 salary/year $25,000 Secretary 1 Assume $35000 salary/year $35,000 Traveling Maintenance Total Administrative Costs $245,000

Business Model Business Model Distribution and marketing expenses Distribution and marketing expenses Basis for Estimate Rate or Quantity Assume visits 70% large hospitals = 175, only 3 day/ trip estimate, 35 trips/year Sales personnel expenses Airfare $400/trip $14,000 Hotel $100/trip per day $10,500 Food $50/trip per day $5,250 Rental Car / Gas $80 per day for rent and gas $8,400 Total Sales Expenses per Year $38,150 Assume high advertising from calculations Estimated $100,000 Advertising Brochures $1/brochure, send 50 to each hospital/year $12,500 DVD $8/DVD, send 10 to each hospital/year $20,000 Mailing expenses Assume 10lb per box at $20/box $10,000 Total Adversing Expenses (high advertisement rate) $42,500 20 units shipped in first year from demand est $.3/kg, unit weight ˜ 16000kg $192,000 Shipping Total Distribution and marketing expenses $272,650

To ta l P ro d u ct C o s t fo r F irs t-Y e a r P ro d u c t: P re s s u re S w in g A d s o rp tio n fo r L a rg e H o s p ita ls O perating tim e day /ye ar 250 F C I($) 1370 6 E stim ated units fab ricate d/ye ar 20 B asis fo r E stim ate R ate o r Q u an tity $ S ilica G el $.22 /100g quote 2 0 units sold in first y ear 1840 g $81 $.4/1 00g q uote 20 units sold in first y ear 82 60 k g $ 660,8 00 L iA g X Z eo lite $.4/1 00g q uote 20 units sold in first y ear 24 60 k g $ 196,8 00 S ilver Z e o lite A Q uote: $ 361/shee t 16 sheets to c ov e r c asing of unit $ 115,5 20 Q u iet B arrier N o ise P ro o f F o am Q uote: $1.6/sq ft 1400 sq ft to cov er $44,8 00 V in yl S id iin g $ 1,018 ,001 T o tal R a w M a terials C o st V aria b le P ro d u ctio n C o sts U tilities 1 50 bu lbs, 23W , fu ll y ear ope ra tion $.13 /kW h $3,88 4 E lectricity O ffice h eatin g/co oling/electron ics 90 0W /hr $1,15 7 A ssum e 1 00 ga l/day $1.98/1000 g al (G eorgia c ost) $72 3 W ater O p era tin g S u p p lie s (v aria b le co s ts ) P en cils 1 2 B IC M ech anic al P enc ils $ 5.50 U se 2 88 per y ear $13 2 S taple s S w ingline $1 .50 pe r b ox U se 3 box es per ye ar $5 Ink fo r P rinter $60 p er b lac k/c olor ink com b o pac ka ge U se 6 per y ear $36 0 P ens 12 B ic P ens $5 .50 U se 9 6 per y ear $44 P ap er $3 3 per ca se of m ultipurpose p aper U se 2 per y ear $66 $50 00 pe r m a inten anc e v isit E stim a te 1/10 bre ak d ow n in y ear 1 $10,0 00 M ain te n an ce T o tal va riab le p ro d u c tio n co sts $10,6 07 F ixe d C h arg e s $22,0 80 W areh o u se $ 6.9/sq ft/y ear q u o te 3200 sq ft, A tlan ta, G e o rg ia (2 0% o ffice ) $22,0 80 T o tal F ix ed C h arg es A d m in istra tiv e C o sts E m p lo ye es # em p lo yee s 1 A ssu m e $60,000 sala ry /y ear $60,0 00 E n g in eers A cco u n tan t 1 A ssu m e $300 00 sala ry /ye ar $30,0 00 2 A ssu m e $300 00 sala ry /ye ar $60,0 00 S killed L ab o r 1 A ssu m e $350 00 sala ry /ye ar $35,0 00 T ra velin g S ales m an 1 A ssu m e $250 00 sala ry /ye ar $25,0 00 S ecretary 1 A ssu m e $350 00 sala ry /ye ar $35,0 00 T ra velin g M ain te n a n c e T o tal A d m in istrative C o sts $ 245,0 00 D is trib u tio n a n d m arketin g e xp e n s es A ssum e v isits 70% larg e hospitals = 175 , only 3 da y/ trip estim ate, 3 5 trips/y ear S ales p erso n n el e xp en ses A irfa re $400 /trip $14,0 00 H ote l $100 /trip per da y $10,5 00 F ood $50/trip per day $5,25 0 R en tal C ar / G as $80 p er day fo r ren t and g as $8,40 0 T otal S ale s E x pen se s p er Y ear $38,1 50 A ssum e h igh a dv ertisin g fro m ca lcu lations E stim a ted $10 0,000 A d v ertisin g B roc hures $1/broc hure, send 50 to e ach hospita l/y ear $12,5 00 D V D $8/D V D , send 10 to eac h ho sp ital/yea r $20,0 00 M ailing ex penses A ssum e 10 lb pe r b ox at $ 20/bo x $10,0 00 $42,5 00 T o tal A d versin g E xp en ses (h ig h ad ve rtisem en t rate) 20 u nits ship ped in first year from de m and e st $.3/k g, un it w eight ˜ 1 6000 kg $ 192,0 00 S h ip p in g $ 272,6 50 T o tal D is trib u tio n a n d m arketin g ex p e n se s T o ta l P ro d u c t C o s t $ 1 ,5 6 8 ,3 3 7

Business Model Business Model  Now find TCI Now find TCI  Capital Investment for Hospital Design Assumptions Costs Office Furniture and Related Equipment Quantity Desks $250/desk (office depot) 4 $1,000 Chairs $115/chair (office depot) 6 $2,760 Phones $60/phone (multi line) (office depot) 6 $360 Computers $800/computer (Dell Precision) 4 $3,200 Office Supplies (stapler, rulers, paper) $300 for all supplies N/A $150 Printer/Copier/Fax Machine $300 (Intellifax-400e) (office depot) 1 $300 House keeping supplies (Vaccum, Mop) $200 (Dirt Devil - Bagless Upright) 1 $300 Tools including nuts and bolts $3000/tool set (home depot) 3 $9,000 Bobcat Forklift $3000 used price 1 $3,000 Total estimated fixed capital investment $20,070 Working Capital 15% of TCI $3,542 Total Capital Investment $23,612

Business Model Business Model  Lastly, Equipment Costs Lastly, Equipment Costs  Estimation of Equipment Cost of 1 Unit Basis for Estimate Quantity Equipment Costs Quote 4 $32,000 Nitrogen Removal Column Quote 1 $200 Drying Column Quote: $9800 2 $19,600 Palatek Compressor 200UD Quote: $5000/unit 2 $10,000 Palatek Compresser H30D7 Fig.12.53 in P&T 1 $12,000 High Pressure Storage Tank Quote: $700/unit 8 $5,600 3 Way Control Valve Quote 1 $600 Control Computer Total Equipment Costs $80,000

NPV v Price B=.85 $2,500,000 B=.92 B=.91 B=.97 Net Present Value (NPV) $1,500,000 B=1.05 B=1.12 $500,000 $125,000 $175,000 $225,000 $275,000 $325,000 ($500,000) ($1,500,000) ($2,500,000) Price of Unit ($)

ROI v Price 6000% B=.88 5000% B=.92 4000% B=.95 Return on Investment (ROI) B=.97 3000% B=1.05 B=1.12 2000% 1000% 0% $125,000 $175,000 $225,000 $275,000 $325,000 -1000% -2000% -3000% -4000% Price of Unit ($)