Complete CAPEX and OPEX Model for a 500 kg/h Potato Chips Factory

Equipment price is only one part of the economics of a potato chips factory.

A complete financial model should calculate both CAPEX and OPEX.

CAPEX

Capital expenditure may include:

Processing equipment

* potato preparation;
* frying;
* seasoning;
* conveying.

Packaging

* weighers;
* baggers;
* nitrogen;
* inspection.

Utilities

* electrical;
* gas;
* air;
* water;
* exhaust.

Factory

* building;
* flooring;
* drainage;
* warehouse.

Project execution

* design;
* freight;
* customs;
* installation;
* commissioning;
* training.

OPEX

Operating expenditure includes:

Potatoes

Use:

Potato cost/kg finished product = Potato price ÷ Yield

Cooking oil

Calculate fresh oil replenishment rather than simply fryer fill volume.

Packaging

For small retail packs, packaging can become a substantial cost per kilogram.

Energy

Include both:

* processing heat;
* electrical consumption.

Labor

Calculate:

Employees × Total employment cost

not only base salary.

Maintenance

Include:

* wear parts;
* lubrication;
* belts;
* sensors;
* filters;
* scheduled service.

Example Annual Production

500 kg/h
× 16 h/day
× 300 days
= 2.4 million kg theoretical production

At 85% effective utilization:

= 2.04 million kg/year

Calculate Cost per Kilogram

Use:

Total annual variable and operating cost ÷ Saleable annual output

This figure is more useful than simply knowing the hourly electricity consumption.

Break-Even

If:

Fixed annual cost = F
Selling price/kg = S
Variable cost/kg = V

Then:

Break-even volume = F ÷ (S − V)

ROI

A simplified ROI calculation is:

Annual return ÷ Total invested capital

But investors should model:

* conservative;
* base;
* optimistic

scenarios.

Changing potato price, yield or plant utilization by only a few percentage points can materially alter the result.

Final Procurement Principle

The correct question is not:

Which production line costs the least?

It is:

Which production system gives the lowest sustainable cost per kilogram while consistently producing the required quality and capacity?

That is the economic basis for evaluating an industrial potato chips project.