Understanding and modeling the economics of ECM

Traditional economic analysis methods for manufacturing decisions include only the clearly identified immediate cost and revenue streams. Environmental issues have generally been seen as costs, in the form of waste material losses, conformance tests and pre-discharge treatments. The components of the waste stream often purchased as raw materials, become liabilities at the "end of the pipe" and their intrinsic material value is seldom recognized. A new mathematical treatment of manufacturing economics is proposed in which the costs of separation are compared with the intrinsic value of the waste materials to show how their recovery can provide an economic advantage to the manufacturer. The model is based on a unique combination of thermodynamic analysis, economic modeling and linear optimization. This paper describes the proposed model, and examines case studies in which the changed decision rules have yielded significant savings while protecting the environment. The premise proposed is that by including the value of the waste materials in the profit objective of the firm and applying the appropriate technological solution, manufacturing processes can become closed systems in which losses approach zero and environmental problems are converted into economic savings.