Harvest Company Case Analysis
Autor: guanghui liu • November 11, 2015 • Case Study • 823 Words (4 Pages) • 1,250 Views
When the Harvest Company decide to choose between pre-processing and source operation, the most important criteria the company should consider is the profit of the new entire process. The profit of the entire process of the Harvest has several components: tipping fee, sales of electricity, Renewable Energy Credit (REC), sales of compost.
DAta comparison |
Annual waste collected: 8*20*6*52=49920 tons
Facility factory cost: $12 million (2 million replace fee for engine generator every 10 years)
Engine: 1.3MW
Electricity generate: 250kWh/ton of organic waste
Labor: 1 supervisor and 2 operators: $90,000/year
Hauling waste cost: 49920*20=$998,400
Other costs: $670,000
Pre-processing | Source separation | ||
Cost | Capital cost | $4,000,000 | |
Labor costs | 8 workers, each $15/h | 1 management employee | |
Additional landing cost | $10/ton | ||
maintenance cost | $400000/year | ||
Revenue | REC | $0.02kWh | $0.02kWh |
Sale of Electricity | $0.06~$0.11/kWh | $0.06~$0.11/kWh | |
Recyclables | 25%*49920*$40=$499200 | $130/ton | |
Sale of compost | $20-$22/ton |
The article talks about the tipping fee is less than the landfill tipping fee, which is average $80/ton, in case (B) we found that when Harvest Company use Source Separation method, the tipping fee will drop to $50/ton, which is lower than the original tipping fee that Harvest Company charged waste generators. In addition, when the Harvest Company use pre-process method, they actually collect all kinds of waste that they could get in the market. We believe in that situation, the Harvest Company will charge more than just collect organic waste from waste generators. So the tipping fee in original recycle process should be range from $50 to $80. By our calculation, we can see that when tipping fee is blow $15/ton, the recycle process of the Harvest Company will no longer make any profit. So, the tipping fee is the key profitability drive in the original recycle process of Harvest Company.
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