Page 314 - Analysis, Synthesis and Design of Chemical Processes, Third Edition

The carbon steel pump is shown to be the preferred equipment using the EAOC method, as it was in
Example 10.7 using the ECC method.

Common Denominator Method. Another method for comparing equipment with unequal operating lives
is the common denominator method. This method is illustrated in Figure 10.6, in which two pieces of
equipment with operating lives of n and m years are to be compared. This comparison is done over a
period of nm years during which the first piece of equipment will need m replacements and the second
will require n replacements. Each piece of equipment has an integer number of replacements, and the time
over which the comparison is made is the same for both pieces of equipment. For these reasons the
comparison can be made using the net present value of each alternative. In general, an integer number of
replacements can be made for both pieces of equipment in a time N, where N is the smallest number into
which m and n are both exactly divisible; that is, N is the common denominator. Example 10.9 illustrates
this method.

Figure 10.6 An Illustration of the Common Denominator Method for the Analysis of Equipment
Alternatives

Example 10.9

Compare the two pumps given in Example 10.7 using the common denominator method. The discrete cash
flow diagrams for the two pumps are shown in Figure E10.9. The minimum time over which the

comparison can be made is 4(7) = 28 years.

Figure E10.9 Cash Flow Diagrams for the Common Denominator Method Used in Example 10.9