The theory of economic analysis states that any increase in constant costs leads to growth of break-even cost, so it is necessary to make and encash additional products to cover them. The increase of variable costs produces the same effects, but even their slight rise leads to much greater operation lowering of the refinery due to the effect of operating leverage, as the loss of raw materials, energy, and the finished commodity directly affect the value of variable costs and marginal revenue. Such factors as intensity of use, energy consumption and labor intensity influence the loss of resources. Such figures are determined by production methods and can`t be changed without changing of them.
Therefore, the main reason of raw materials, energy, and finished commodity losses during production is equipment failures caused by operation schedule failures, or intolerable state of production facilities. This leads to a suspension of production, faulty production, and in some cases, the destruction of material resources, including raw materials, finished commodity and fixed assets. Size of situational costs depends on the amount of material and labor costs to the equipment repair and the amount of losses from accidents and downtime.
Thus, the main vector of the cost-effective use of resources in the enterprise is prevention of growth and decrease of situational costs that appear during the production, which allows save material, labor and financial resources of the refinery, as well as cut losses of other types of resources - human, environmental, etc. Moreover, the decrease of situational costs allows increase the duration of the production and reduces schedule shutdowns.
Kostyukov A.V. Estimating the efficiency of repairs to oil refineries // Controlling management technologies. - 2008. - №2 (26). - p. 38-45
Download the publication
You can order the translation by e-mail: email@example.com