GINMODEL. An Economic-Engineering Simulation of Cotton Ginning Costs. Wesley Wolfe Senior Research Assistant Department of Agricultural Economics

Transcription

1 GINMODEL j) R P, F Ow. D f Y I An Economic-Engineering Simulation of otton Ginning osts Wesley Wolfe Senior Research Assistant Department of Agricultural Economics O.A. leveland Extension Marketing Specialist Department of Agricultural Economics Earl A. Stennis Professor and Head Department of Agricultural Economics raig L. Slay Research Assistant Department of Agricultural Economics Published by the Department ofinformation Services, Division ofagriculture; Forestry, and Veterinary Medicine, Mississippi State University, Keith H Remy, Publications oordinator; over Design by lifton D. Jordan, Student Artist.

2 Acknowledgments Special recognition and appreciation are extended to Dale L. Shaw, Plains otton Grower's ooperative, for his comments and assistance in converting his original model to a microcomputer version. Appreciation is extended to the otton Foundation for the financial support of this project and to William Mayfield, Federal Extension Service, and Herb Willcutt, Mississippi ooperative Extension Service, for their assistance in this effort. The review of this manuscript by Stan Spurlock, Bill Herndon, and Wallace Killcreas of the Department of Agricultural Economics is greatly appreciated. Appreciation is also expressed to Madeline Oerter and Debra Green of the Department of Agricultural Economics for their patience and diligence in the preparation of this manuscript. 11

3 Table of ontents Acknowledgments...ii Introduction...1 Overview of the Program...1 Start-up Procedure...2 Data Management...2 opyfile...2 EditFile...3 PrintFile...4 reatefile...4 ontrolmenu...7 The GINMODEL Program...7 GINMODEL...7 ontrol Menu...8 Summary...8 References...8 Appendices...9 AppendixA...1 AppendixB...11 Appendix...12 AppendixD...13 AppendixE...14 AppendixF...15 Page W

4 GINMODEL An Economic-Engineering Simulation of otton Ginning osts Introduction This bulletin discusses and provides user instructions for a microcomputer program that estimates cotton ginning costs. The program uses an economicengineering model to calculate fixed and variable costs for simulated cotton ginning facilities in major cotton producing regions of the United States. The program was developed by Dale L. Shaw [1] at Texas Tech University and has been used on large computers to assist planning of cotton ginning facilities since Since the model was developed, microcomputer technology has advanced substantially and microcomputers have become widely used in business, education, and research. These technological advances made relatively inexpensive computing capabilities available to management of most cotton gins, thus creating a need for a microcomputer version of the program. This need provided the initiative for conversion of the program to operate on the IBM-P (International Business Machine orp.) and IBM-compatible microcomputers, which use the Microsoft Disk Operating System (MS-DOS; Microsoft orp.). While this bulletin discusses and explains the use of the model and presents program-specific computer startup procedures, it assumes that users are knowledgeable of routine operating procedures for their respective computers. Also, users should note that instructions provided here apply to the IBM-P and that some IBM-P compatible computers may differ slightly in operational procedures. In such situations, users must refer to the operator's manual [2] for their computer. Overview of the Program The microcomputer version of the program, GIN- MODEL, allows the user to store physical and economic data for a given ginning plant (gin) configuration in a uniquely named data file. These data are then used to calculate fixed and variable costs for the simulated gin at various levels of processing efficiency and gin capacities. After developing and running an initial model, one or more of these physical or economic data may be changed and the model rerun to evaluate the overall impact of these changes on the girfs financial position. GINMODEL output consists of a seven-page report, which includes a cover sheet and a summary sheet giving the physical and economic values used in the model. Also included in the output, is a list of capital assets included in the model and the physical and economic data related to these assets. apital asset data include: initial cost, type code, salvage value, estimated life in years or hours, and an estimated annual repair cost factor (percentage) for each asset. A summary of capital costs is also provided for the facility at 1% utilization. GINMODEL also presents several reports of total and per-bale costs separated into fixed and variable components. These costs are calculated for processing efficiency levels ranging from 1% to 1% in increments of 1%. A sample of GINMODEL output is provided in Appendix F The original model, which was written in the FOR- TRAN language, was converted to the Beginner's Allpurpose Symbolic Instruction ode (BASI) language and compiled using Quick-BASI (Microsoft orp.). The microcomputer version of the program was modified to provide interactive data entry while maintaining the original output format. Data entry was also modified in the microcomputer version of the program. One criticism of the original model [1] was that it required an excessive amount of data. It is proper to note that an investment in a ginning facility often involves several million dollars. Therefore, it is important to consider as much pertinent information as possible in the decision-making process. After carefully considering the amount of potential investment, the authors believe that the original program was appropriate and that the large quantity of data required is justified. The microcomputer version of the program requires essentially the same data. However, the microcomputer version modifies the data entry procedure by combining some data, fixing others as constants, and by calculating some values that were previously required to be entered. While the quantity of data entered in this version is only slightly

5 less than that for the large computer version, those data, once established, may be copied into succeeding files and only a few selected items changed to modify the original model for further use. This capability greatly simplifies the data entry procedure. Start-up Procedure GINMODEL consists of two compiled BASI program modules and a library module, BRUN2.EXE (a Microsoft run module distributed with Quick- BASI). These programs build, print, or edit data files and calculate and print the reports for a simulated gin. These programs are distributed on a formatted diskette without an operating system and must be transferred to the user's system prior to use. The procedures used to install the programs on the user's system and to start program execution are presented in Appendix A. The start-up procedure automatically loads and displays the title page, which remains on the screen until a key is pressed. When a key is pressed, the program displays the control menu for GINMODEL. The control menu provides the following options: 1 - Data Management 2 - GINMODEL 3 - System Option 3 closes all files and returns control to the operating system (MS-DOS). Options 1 and 2 select the data management program or GINMODEL. Data management options and GINMODEL are discussed in detail in the following sections. Data Management The data management program is selected as option one on the control menu and presents the following data management menu: 1 - opy File 2 - Edit File 3 - Print File 4 - reate File 5 - ontrol Menu Prior to discussing each of the data management options, the two types of data files maintained by the GINMODEL system and the naming convention associated with each must be discussed. The first file type is a base data file and second is a user-created file. The GINMODEL system contains three base data files - TEXAS.GIN, SOUTH.GIN, and WEST.GINone for each of the three ginning regions to which this model is applicable. Base data files may be used to produce a sample report from the GINMODEL system or to produce a listing of a sample data set; however, they cannot be edited. A base data file may, however, be copied into a new file with a file extension USE and which may be edited. Base data files are distinguished from usercreated files by use of the file name extension.gin in lieu of the filename extension.use, which is automatically appended to user-created files. GINMODEL accepts any allowable MS-DOS file names, including drive designator and path directions. These file naming rules are applicable throughout the GINMODEL system (see reference [21 for assistance with file names and path designations). In addition to the file name entered by the user, a file name extension.gin or USE is selected from a menu and appended to the file name, while in other cases, the extension USE is automatically appended to the file name to indicate that it is a user-created file. While the number of files using the extension.gin is limited to the three base data files, the number of user-created files (.USE) is unlimited except for computer system data storage limits. With the above file types and naming convention in mind, data management options are discussed in the order in which they appear on the data management menu. The original model [1] contained 6 data items common to most gins and were required data entries. This version of the model reduces the number of data items entered. However, it does not reduce the total number of data items used by the model. In the original model, there were some items entered that could have been calculated from previously entered data. This version of the model does exactly that. Additionally, some items, such as the dryer fuel rates for each of four blocks, were required entries even though some ginning regions required non-zero entries for only one rate block. This version of the model only prompts for data that are required for the particular region being modeled. The net result is that several of the original 6 data items, depending upon region, fuel type, or other factors, are not required entries in this version of the model. Since this number of entries varies by region, the remainder of this document refers to the "6" items just as if each was still a required entry and each of these 6 items is listed in the file creation section of this bulletin. The bulletin notes, however, those items that are no longer required entries and, if feasible, discusses the reason for omission of these items from this version of the model. opy File Data management menu option 1 allows the user to copy the contents of one data file to another. Op- 2

6 tion 1 prompts the user to enter the name of the source file and to select, from a menu, the file name extension.gin or.use. When a valid source file name is entered, GINMODEL prompts the user to enter the name of the destination file. The destination file does not require entry of a file name extension because the extension USE is automatically appended. If both names are valid, GINMODEL opens each file and copies the contents of the source file into the destination file or else program control returns to the data management menu without creating a destination file. The copy option is useful when making repetitive runs of GINMODEL. Rather than creating a new file (see option 4) for each condition simulated, the copy option may be used to copy the data used in the previous simulation into a new file of a different name. This new file is then edited (see option 2) to change only selected items. This method saves considerable time in that only a small quantity of data must be changed. It also lessens the chance of data entry error in the new file. The copy option also allows the user to keep a copy of the data file used for each simulation. For example, initial data for a model may be established and stored in a file named GINA.USE. After simulating the gin defined in GINA.USE the user wishes to model the impact of a 2% increase in cost of drying equipment. The copy option is used to copy GINA.USE to a file named GINB.USE. GINB.USE is then edited to reflect the increased cost of the drying system. The new file (GINB.USE) is then used to calculate a new set of ginning cost estimates, which may be compared to the results from the previous model using GINA.USE. This successive naming convention may be used as many times as necessary (i.e. GINA.USE, GINB.USE, GIN.USE,... GINZZ.USE) to model a potential ginning facility. Using only one file and changing the data in that file for each condition simulated rather than using a successive naming convention effectively destroys the data from each previous simulation and creates problems should it become necessary to repeat any of the previously simulated conditions. The successive naming procedure is strongly recommended. Edit File Data management menu option 2 prompts the user to enter the name of a valid data file. When a valid file name is entered, GINMODEL reads the file and displays the description of each of the 6 items common to each gin along with the current value for that item. The user may enter a new value or keep the displayed value. If a new value is desired, the user types the new value and presses the RETURN key. Displayed data are retained by pressing the RETURN key without entering a new value. Once the values for these 6 common items are edited, GINMODEL displays the number of capital assets currently specified in the file and offers the user the opportunity to change the number of capital assets in the model. If the user wishes to change the number of capital assets, the number of total assets desired is entered and GINMODEL displays each of the capital asset descriptions currently stored in the file and prompts the user to enter a new title or press RETURN to keep the displayed title. If the number of capital assets is increased, the user is prompted to change or keep the existing descriptions and to enter the new capital asset descriptions. Once this procedure is complete, the user has the opportunity to replace the existing values for each capital asset data item and to enter new values for these items for newly entered capital assets. The number of capital assets may be decreased by entering the number of total assets desired. GINMODEL then lists each of the current capital assets through this new number. The user may change any of the current capital asset descriptions by entering the new description and pressing the RETURN key or may keep any displayed description by pressing RETURN without entering a description. Any existing capital assets beyond the new number entered remain in the file but are not available to GINMODEL. They may be restored to the model by changing the number of capital asset categories to the original value. The user may exit the edit file option and return to the data management menu from any INPUT statement by typing three asterisks (***) and pressing the RETURN key. However, no newly entered data are written to the file. The entry of three asterisks is used throughout GINMODEL to return to the control menu. Also, the user may advance from any point in the common data edit option to the capital asset edit section by entering the letter "F" in either upper or lower case. After reaching the capital asset edit section, the user may advance to the succeeding capital asset by typing the letter "F" at any input statement. The edit option has separate sections for the 6 common data items and for capital asset items; therefore, it may be necessary to repeat the "F" entry several times to exit the program. To illustrate, an entry of "F" in the 6 common data items section advances the editor to the capital assets item section. Entering an "F" is then necessary to move to the next capital asset (bypassing the six related data item entries) and must be repeated once for each capital asset to return to the data management menu. The user may then enter three consecutive asterisks to return directly to the data management menu; however, no newly entered data are written to the file. Using the "F" option to 3

7 exit the edit section will, however, write new data to the file. An additional aid in editing the 6 common data items is the option to move forward or backward through the sixty common items by entering the letter "F" or "f" plus the number of the item to be edited. For example, F22, entered without any spaces, causes the editor to move to item number 22. This option is limited to numbers in the range 1-6 (F1-F6) and can be used as often as necessary to properly edit the file. If a number outside this range, or characters other than the letter "F" and the digits -9, are entered, the program returns to the data item being edited at the time of the erroneous entry. Print File Data management menu option 3 prints the contents of a data file. When a valid file name is entered, GINMODEL reads the file and prints each value along with a one-line description of that item. The user has the option to send output to the screen or to produce a printed copy of the data. reate File Data management menu option 4 allows the user to create a totally new data file. When option 4 is selected, the user is prompted to enter the name of the new file. The program automatically appends the file name extension.use to the file name and displays the complete file name for verification. When the file name is verified, GINMODEL displays prompts for each of the 6 common data items required by GINMODEL. Otherwise, control returns to the data management menu. The description of each of the 6 items is displayed along with a zero () value. At each prompt, the user enters the desired value and presses the RETURN key. If is a valid entry, the RETURN key may be pressed without entering a value. Although modifications to the program eliminated the requirement to enter many of the data entered in the original model, the name and brief description of each of the 6 items are provided for information purposes. (1) Gin location (region 1 = Texas, 2 = South, 3 = West). Regions of the United States considered in the model include West Texas, the Southern States, and the Western States, respectively. The appropriate region is selected by entering the corresponding region number. (2) Manufacturer's rated gin capacity (bales/hour). Maximum manufacturer's rated ginning capacity in bales ginned per hour. (3) Ginning efficiency (% of rated capacity; enter as a whole number, 85% = 85, eta). Ginning efficiency is the percentage of the rated capacity at which the gin is expected to operate under normal operating conditions. (All values expressed as percentages are entered as whole numbers and converted to decimal equivalents in the program, i.e. 85.5% is entered as 85.5 and converted to.855 in the program.) (4) Horsepower required (peak monthly demand divided by.746). Entry omitted, calculated within the program using data supplied in item 5. (5) Horsepower available (total connected horsepower). Actual horsepower of engine connected to ginning facility. (6) Interest rate on capital assets (enter as a whole number, 1% = 1, eta). Weighted average interest rate for all capital assets, computed by dividing the total interest paid by the total amount upon which the interest was paid. (7) Interest rate on working capital (enter as a whole number, 1% = 1, eta). Weighted average interest rate for all working or operating capital. Working capital is assumed to be used for a 3-month period each year. Because the time period for which money is borrowed is fixed at 3 months, any variation in this time period must be reflected by adjusting the average interest rate entered in the model. For example, money borrowed for 4 months at 1% interest should have the interest rate adjusted to 13.33% to compensate for the extra month. (8) Insurance coverage on capital assets (enter as a whole number, 9% = 9, eta). Percentage of all capital assets that are insured (excluding land). (9) Total insurance premium paid on capital assets (including liability). Total annual insurance premiums paid. (1) Insurance rate for seed cotton ($/bale). ost of seed cotton insurance in dollars per bale. (11) Total taxes paid on capital assets. Total annual property taxes paid. (12) Number of seasonal office employees. Total gin office personnel employed on a seasonal basis. This number may be zero. (13) Hourly wage of seasonal office employees (do not include fringe benefits). Average hourly wage for all seasonal office employees. (14) Number of seasonal ginners. Total ginners employed on a seasonal basis. This number may be zero. 4

8 (15) Hourly wage of seasonal ginners (do not include fringe benefits). Average hourly wage for all ginners employed on a seasonal basis. (16) Number of seasonal assistant ginners. Entry omitted, combined with item 2. (17) Hourly wage of seasonal assistant ginners (do not include fringe benefits). Entry omitted, combined with item 2. (18) Number of head press operators. Entry omitted, combined with item 2. (19) Hourly wage of head press operators (do not include fringe benefits). Entry omitted, combined with item 2. (2) Number of other seasonal gin employees (i.a, yard crew, assistant press personne4 eta). Total other seasonal employees. This number may be zero. This variable may also be used when building the model to reflect the yard crew associated with module building and transportation or other similar activities. (21) Hourly wage of other seasonal gin employees (do not include fringe benefits). Average hourly wage of all seasonal employees in item 2. (22) Fringe benefits for seasonal gin employees (FIA, workmen's comp, eta; % of wages 2% = 2, eta). Fringe benefits expressed as a percentage of total wages for seasonal gin employees. (23) Fringe benefits for seasonal office employees (PIA, workmen's comp, eta; % of wages, 1% = 1, eta). Fringe benefits expressed as a percentage of total wages for seasonal office employees. (24) Number of salaried ginners. Total salaried ginners employed by gin. This value may be zero. (25) Ginner 'base salary (a salary must be entered if a number was entered in item 24). Total salary for all salaried ginners. This value may be zero. (26) Rate ($1/zr) to adjust ginner's fixed salary (if overtime pay is necessary). Entry omitted. (27) Number of other salaried employees. Total salaried employees other than ginners. This number may be zero. (28) Other employees' base salary. Total salary for all other salaried employees. This value may be zero. (29) Gin manager's base compensation (salary, FIA, insurance; vehicle; eta). Gin manager's annual base cost to gin, including salary, insurance, payroll, taxes, housing, auto allowance, etc. Enter total cost if more than one gin manager is employed. (3) Number of bales on which gin manager's salary is based. Number of bales on which gin manager's salary is based when bales ginned in excess of this amount require a variable salary adjustment. This number may be zero. (31) Gin managers bonus for bales above base number of bales previously specified ($/bale). ost, in dollars per bale, to compensate the gin manager for bales ginned in excess of the base number specified in the salary contract. A zero indicates that there is no salary adjustment. (32) Office manager's base compensation (salary, FIA, insurance; vehicle; eta). Office manager's annual base cost to gin including salary, insurance, payroll taxes, housing, auto allowance, etc. If more than one office manager is employed, enter total dollars for all office managers. (33) Number of bales on which office manager's salary is based. Entry omitted. (34) Office manager's bonus above base number of bales previously specified ($/bale). Entry omitted. (35) Superintendent's base compensation (salary, FIA, insurance; vehicle; eta). Superintendent's annual base cost to gin including salary, insurance, payroll taxes, housing, auto allowance, etc. Enter total cost if more than one superintendent is employed. (36) Number of bales on which gin superintendent's salary is based. Number of bales upon which gin superintendent's salary is based when bales ginned in excess of this amount require a variable salary adjustment. This number may be zero. (37) Superintendent's bonus above base number of bales previously specified ($/bale). ost, in dollars per bale, to compensate the gin superintendent for bales ginned in excess of the base number specified in the salary contract. A zero indicates that there is no salary adjustment. (38) Rate ($/hr) to adjust other employee's salary if overtime pay is necessary. Base hourly rate to adjust fixed salaries of all other salaried personnel (other than salaried ginners) to compensate for additional hours worked during the ginning season (the variable portion). A zero indicates that the salaries are fixed with no adjustment. The salary adjustment is equal to the total number of overtime hours for which the seasonal crew is paid times 1.5 times the adjustment rate. If the seasonal crew does not work overtime, there is no salary adjustment for salaried employees. Fringe benefit rates are not applied to this overtime adjustment. The user may assume that the 5

9 base salary cost includes benefits adequate to cover maximum social security and workman's compensation contributions. If this assumption is not valid, the adjustment rate entered at this point may be increased by a percentage equal to the normal fringe benefits package and/or the percentage of any additional variable costs. It should be noted that, if this latter method is used, the cost is reflected in salary or wage categories rather than in fringe benefit, costs. (39) Dryer fuel (1 = natural gas, 2 = butane, 3 = propane). Natural gas, butane, or propane may be selected as dryer fuel by entering the digit 1, 2 or 3, respectively. (See Appendix for detailed discussion of dryer fuel calculations and assumptions). (4) Dryer fuel consumption rate (appropriate units! bale). Dryer fuel consumption rate in appropriate fuel units per bale. Propane and butane consumption is specified in gallons per bale while natural gas consumption is specified in thousands of cubic feet per bale. (41) Fuel rates ($/gal for butaneipropane, minimum monthly charge for natural gas). Prices in dollars per gallon for butane and propane or the minimum monthly rate for natural gas. Items (below) are used only if natural gas is selected as the dryer fuel. (42) Natural gas price; first rate block (5/thousand cubic feet). Price in dollars per thousand cubic feet for the first block of the rate schedule. (See Appendix for discussion of dryer fuel rates and appropriate use of rate blocks). (43) Natural gas price, second rate block ($/thousand cubic feet). Price in dollars per thousand cubic feet for the second rate block. (44) Natural gas price, third rate block, ($/thousand cubic feet). Price in dollars per thousand cubic feet for the third rate block. (45) Natural gas price, fourth rate block ($/thousand cubic feet). Price in dollars per thousand cubic feet for the fourth rate block. (46) Minimum demand charge for electricity (5/month). Monthly demand charge for electric service. For the West, this value is the price in dollars per kilowatt hour for the first block of the electric rate schedule; in the South it is the minimum demand charge rate for connected horsepower; and, in Texas, it is the minimum demand charge rate for demand horsepower. (See Appendix D for a discussion of calculations and assumptions regarding electrical energy). (47) Electricity price (s/kwh, first rate block) Price in dollars per kilowatt hour for the first block of the rate schedule. (48) Electricity price (5/kWh, second rate block). Price in dollars per kilowatt hour for the second rate block. (49) Electricity price ($/kwh, third rate block). Price in dollars per kilowatt hour for the third rate block. (5) Electricity price (s/kwh, fourth rate block). Entry omitted. (51) Annual operating hours. Number of hours the gin is expected to operate during a season. This value may be estimated by dividing the expected number of bales by the average ginning rate per hour. Most research efforts are based upon 96 processing hours per season; however, this number may vary substantially [1. (See Appendix E for a complete discussion of factors affecting processing and nonprocessing hours of operation). (52) Minimum fixed seasonal crew hours. Estimated minimum number of hours for which crew will be paid during a normal ginning season. A suggested value is 25% of the number of operating hours entered. (All values suggested in the text are for assistance in initial-set-up of the model only. Individual users must revise these values to meet specific needs). (53) Percent reduction in non-processing hours (% per 1% decrease in processing hours; 8% = 8, eta). Entry omitted. A constant coefficient of 8% is used in this version of GINMODEL. (54) Percent reduction in seasonal crew overtime hours (% per 1% decrease in volume; 8% = 8, eta). Entry omitted. Aconstant coefficient of 8% is used in this version of GINMODEL. (55) Expected nonprocessing hours for the season. Total number of non-processing hours for which a gin crew is to be paid when ginning at 1% efficiency. A base value in the range of 12-15% of total processing hours at 1% percent efficiency is suggested. For example, assuming a gin will operate 96 hours annually at 1% efficiency (see item 51), the base value entered for processing hours reduction would range from approximately 18 to 136 hours. It is from this number that the constant eight percent decrease (see item 53) in total number of seasonal gin crew nonprocessing hours for each 1% decrease in processing hours is calculated and subtracted. (See rows 21 and 22 of** SI-MATRIX ", Appendix F, for these values).

10 (56) Expected overtime hours for the season. Total number of processing and non-processing overtime hours for which a seasonal gin crew is expected to be paid when the gin is operating at 1% efficiency. A base value in the range of 2-25% percent of the total processing hours at 1% efficiency is suggested. Using an assumed 96 processing hours as a base, the value entered at this point would range from approximately 18 to 225 hours. It is this value from which the constant 8% reduction in total overtime crew hours (see item 54) for each 1% decrease in processing hours is calculated and subtracted. (See rows 24, 25, and 26 of " * * SI-MATRIX **", Appendix F, for these values). (57) Miscellaneous fixed costs (total dollars). Total annual miscellaneous fixed cost of gin operation. (58) Miscellaneous variable costs ($/bale). Miscellaneous variable expenses expressed as dollars per bale ginned. (59) Variable cost of repairs ($/bale). Variable gin repair costs expressed as dollars per bale ginned. (6) Bagging and ties ($/bale). ost of bagging and ties in dollars per bale. While entering data for these 6 items, errors may be corrected at any time prior to pressing the RETURN key by using the backspace key to erase the erroneous entry and retyping. After the RETURN key is pressed, the data file editor must be used to correct data errors (see data management option 2). After the 6 items are entered, the user is prompted to enter the number of capital assets (limited to 15) desired for the current simulation. apital assets include items such as land, buildings and equipment. GINMODEL next prompts the user to enter the description of each capital asset. Once all capital asset descriptions are entered, they are displayed for verification. If the asset titles are verified, GIN- MODEL continues, otherwise GINMODEL returns to the prompt to enter the number of capital assets desired and the entry procedure for capital asset descriptions is repeated. After the names of the capital assets are entered and verified, GINMODEL prompts the user to enter values for the various data items associated with each capital asset. GINMODEL displays the description of the capital asset and the name of the related asset data item and prompts the user to enter the value for that item. These asset data items include: Asset type code ost Salvage value (%) Years life Hours to wear out Fixed rate of repairs (%) The asset type code, a number from 1 to 3, is used to indicate that the asset: 1) will not, under normal conditions, depreciate in value (i.e. land); 2) will depreciate as the result of age rather than as the result of use (i.e. buildings); or, 3) will depreciate as the result of normal use rather than from age alone (i.e. equipment or machinery), respectively. Type 1 assets must be entered in the data file before any Type 2 or Type 3 assets are entered. OST is the total cost of the capital asset to the gin. SALVAGE VALUE is the estimated residual value at the end of a specified life span of the asset and is entered as a percentage of initial asset cost from to 1. One hundred (1) indicates no depreciation (land) and zero () indicates the asset is fully depreciated due to age or normal wear-out. Type 2 assets (buildings, etc.) are depreciated over a set number of years and Type 3 assets (machinery, etc.) are depreciated over a number of operational hours. ANNUAL REPAIR EXPENSE is expressed as a percent of initial investment for asset Types 2 and 3. After these data are entered, GINMODEL opens a file, writes these data to that file, and returns to the data management menu. The user may move about in the file creation option in the same manner as described for the edit option on pages 3 and 4. ontrol Menu Data management menu option 5 returns program control to the control menu. The GINMODEL Program GINMODEL displays the following menu from which one of the two options may be chosen by entering the appropriate number. These options are discussed in the following section. GINMODEL 1 - GINMODEL 2 - ontrol Menu Option 1 selects the GINMODEL program and prompts the user to set the printer to assure that all printed output begins at the top of each page. The user may wish to experiment to determine the placement of a specific printer for the desired top margin. After setting the printer, the user may press any key to restart GINMODEL. ii

11 The next screen prompts the user to enter a description of the gin that is currently being simulated. This description provides an identification label that is printed on the cover page of the report and is limited to a maximum of 6 characters. If an identification label is not desired the user must press the RETURN key without entering a description. An example of the identification label is: WESTERN US, 24 BPH, NEW DRYER SYSTEM, FILE = 'GINA.USE' After the identification label is entered, GIN- MODEL prompts the user to enter the name of the file used for the current simulation. GINMODEL displays the file name for verification. If the file name is verified, GJNMODEL continues by opening the file, reading the contents, and calculating and printing the reports shown in Appendix E If the file name is not verified, control returns to the GINMODEL menu. After the cover sheet, the summary page, and the capital asset data are printed, GINMODEL pauses for additional input to adjust print character size for printers using 8½-inch wide paper. GINMODEL was designed to print reports in standard print size on 15-inch wide paper. However, if the printer only uses 81h-inch wide paper, the print size must be reduced to 17 characters per inch. Printers for which print size cannot be adjusted cannot be used with 81h-inch paper. Printers with manually adjustable print sizes must be set prior to starting GIN- MODEL. Printers that support software adjustable print size require additional entries to reduce print size. The first entry for software adjustable printer is a Y response to the prompt to select the width (printers that are not software adjustable require a N response to this prompt). Additional entries for software adjustable printers include one or two 2-digit numbers (depending upon the printer) to reduce print size and verification of these numbers. These print size reduction code numbers may be found in the printer user's manual or they may be obtained from the printer by typing an asterisk (*) in response to the prompt t9 enter the first number. If the user types an asterisk, the computer automatically sends a number of codes to the printer and the effect of each code or set of codes is demonstrated in printed output. After printing the effect of the various codes, GIN- MODEL returns to the prompt to enter the codes. When this prompt appears, the user must enter the numbers required to reduce print size to 17 characters per inch. In the event that only one number is required by the printer, the digit must be entered as the second value. After the second entry, the printer will begin printing the reports in reduced print size. ontrol Menu Upon completion of the report, GINMODEL automatically ejects the paper and returns to the menu. Summary GINMODEL is the result of an effort to convert the original ginning cost model from a mainframe computer to an easy-to-use program for microcomputers. This effort produced a program that permits the user to interactively enter data for a specific ginning situation into a file and to use those data to calculate cotton ginning costs for various plant capacities and levels of ginning efficiency. GINMODEL allows the user to simulate a cotton ginning facility using a base set of physical and economic data. Those data are then modified as required and a new simulation is made to determine the impact of proposed change(s) on the plant's financial condition. This capability allows the user to quickly and easily answer "what if' questions in order to make a decision regarding installation of a new ginning plant or modification of an existing ginning plant. GINMODEL, when used judiciously, may be expected to provide reasonable estimates of cotton ginning costs over a wide range of ginning conditions. The authors feel that the original model was an excellent tool and that the program discussed in this bulletin only enhances the capabilities of that tool. However, the authors have no control over the manner in which GINMODEL is used for decision-making. For this reason, it is stressed again that careful and reasonable use of the model with information that is accurate and properly reflects the specific ginning situation. Under no condition should this work be relied upon without careful consideration by persons knowledgeable of the individual ginning facility and ginning costs and conditions in the local area. References [1] Shaw, Dale L An Economic-Engineering Simulation of otton Ginning osts, Texas Tech University, Lubbock, TX IBM-P/XT System Owner's Manual, opyright, IBM, Boca Raton, FL (or comparable manual for IBM-compatible microcomputers). 8

12 Appendices

13 Appendix A Set-up and Start-up Instruction for GINMODEL This Appendix discusses set-up and start-up procedures for the GINMODEL system. It assumes that the user is knowledgeable of routine computer operating procedures and refers those who are not to the system user's manual [21 for assistance with problems of an operational nature. GINMODEL requires an MS-DOS compatible microcomputer with 512K or greater memory capacity and one disk drive. A computer system with a fixed disk drive is preferred. GINMODEL is distributed on a formatted diskette without an operating system. Prior to use, the GIN- MODEL system should be transferred to the media appropriate to the user's system. This transfer may be accomplished by following the instructions for systems using flexible diskettes or systems using fixed disk drives. The original GINMODEL program diskette may then be used as a backup diskette. Flexible Diskette Systems (1) Power-up using an appropriate system diskette. (2) Perform necessary PATH commands (PATH is a locally established command see system user's guide for additional information). (3) Insert the source diskette containing GINMODEL into drive B. Machines with only one diskette drive require diskettes to be exchanged during this step Refer to computer operator's manual [2]. (4) Move the GINMODEL system from drive B to the system diskette in drive A by typing OPY B:** and pressing RETURN. After the files are transferred, remove the source diskette from drive B and store as a backup copy. GIN- MODEL, now on the system diskette in drive A, may be started by completing the following instructions: (1) Power-up the system using the GINMODEL diskette (created above) in drive A. (2) Perform necessary PATH commands. (3) With the A> cursor visible, type GINMODEL and press RETURN. (4) Follow GINMODEL instructions as they appear on the screen. Fixed Disk Systems Users of fixed disk systems should transfer the GIN- MODEL system to a subdirectory on the fixed disk for ease of use and greater access and data transfer speed. The following instructions detail this transfer procedure. (1) Power-up using the fixed disk system. (2) Perform necessary PATH commands (PATH is a locally established command see system user's guide for additional information). (3) With the > prompt visible, create a subdirectory for GIN- MODEL on drive by typing MD \ GINMODEL and pressing RETURN. (4) Move control to the GINMODEL subdirectory by typing D \ GINMODEL and pressing RETURN. (5) Insert the source diskette containing GINMODEL in drive A. (6) Move GINMODEL from drive A to drive by typing OPY A:*.* and pressing RETURN to transfer the programs from the source diskette to the fixed disk. After the files are transferred, remove the source diskette from drive A and store as a backup copy. GIN- MODEL, now on the fixed disk, may be started by completing the following instructions. (1) Power-up system using the operating system on the fixed disk drive (Drive ). (2) Perform necessary PATH commands. (3) With the > cursor visible, type D \ GINMODEL and press RETURN to move control to the GINMODEL subdirectory. (4) With the > cursor visible, type GINMODEL and press RETURN. (5) Follow GINMODEL instructions as they appear on the screen. When the transfer procedure for either system given above is complete, the Show Directory (DIR) command for the GINMODEL diskette directory or fixed disk subdirectory should contain the following six files. As the program is used additional data files will be added to this directory or subdirectory. GINMODEL.EXE TEXAS.GIN WEST.GN GINBILD.EXE SOUTH.GIN BRUN2.EXE 1

14 Appendix B GINMODEL Data File Structure The GINMODEL file structure consists of byte records, which are FIELDed to accommodate both the 6 numeric data items common to all ginning situations as well as a maximum of 15 alphanumeric capital asset descriptions and the six numeric data items associated with each capital asset. GINMODEL limits file names to a maximum of eight alphanumeric characters plus a file name extension of.gin or USE (MS-DOS path and drive designators are allowed as part of the file name and are not counted as part of the eight-character file name). These additional characters must comply with MD-DOS file naming conventions [21). When valid file names are entered the file (FF$) is OPENed and records 1-25 are fielded as: xxxx OPEN "R",1,FF$,24 (xxxx = line number) xxxx FOR I=1T6 xxxx FIELD 1, (I-i) - 4 AS DU$, 4 AS F1$ xxxx NEXT I This format allows single precision storage of 6 numeric values common to all gins in records 1-1 and single precision storage of six numeric data items associated with each capital asset (up to a maximum of 15) in records Records 26-4 are FIELDed as: xxxx FIELD 1, 24 AS F1$ and provide storage space for a 24 character description for each the possible 15 capital assets allowed in the model. Record number 41 is a parameter record and is FIELDed as: xxxx FIELD 1, 4 AS F1$, 2 AS LAB$ where the four-byte numeric field stores the number of capital assets in the model and LAB$ is an unused 2-character field. 11

15 Appendix Dryer Fuel Rates* GINMODEL uses a separate routine to calculate dryer fuel costs for a specific geographic region and each routine uses a different fuel rate schedule. When propane or butane is used as dryer fuel, the cost is entered on a per gallon basis and the cost is computed directly from the number of bales processed times the gallons used per bale and presents little problem to the user. Natural gas provides a different situation in that the rate schedule for natural gas varies by region and requires use of rate schedules with up to four different rate blocks. The program uses the region number to select the appropriate rate blocks for data entry. hanges in rate structure over time have the potential to create problems unless the user is extremely attentive when establishing the model. One additional comment relating to the model is that the total number of bales ginned is assumed to be distributed into monthly quantities equal to 2.%, 1%, 47%, and 41% of the total number of bales ginned. These average percentages of harvest progress are programmed into the model and cannot be changed by the user. These fixed percentages, in any year, may cause the estimated fuel costs and electrical costs of a gin to vary from actual costs by the relative amount from which the actual harvest percentages vary by month. This should pose no problem to the decision making process since any planning is based on a "normal" seasonal pattern. West Texas The West Texas rate schedule uses a fixed monthly demand charge for natural gas plus three rate blocks. Each rate block contains a fixed number of cubic feet and each block has a different price per thousand cubic feet of natural gas. The user MUST enter the fixed monthly demand charge and the cost per thousand cubic feet for each of the three rate blocks. In the event that the number of rate blocks on the rate schedule currently in use is not three the user must interpret that rate schedule in such manner as to * Because GINMODEL is a direct conversion of an older model changes, over time, in fuel and electrical rates and rate structures offer more potential for error than other required data entries. The user should read this appendix carefully and be prepared to experiment with current fuel rates to develop an accurate fuel cost estimate develop estimated rates for each of the three rate blocks required by the model. After the estimated price has been interpreted and entered, the model may be executed and the estimated dryer fuel costs compared to actual (or reasonable estimates) data. If these comparisons indicate that the interpreted data do not represent accurate estimates of the fuel cost then the prices for one or more of the rate blocks, or the monthly demand charge, must be adjusted to more accurately estimate actual fuel costs. South The South is the only region that uses four natural gas rate blocks. The user MUST enter the fixed monthly demand charge and the cost per thousand cubic feet for each of the four rate blocks. In the event that the number of rate blocks on the rate schedule currently in use is less than four, the user must interpret that rate schedule in such manner as to develop estimated rates for each of the four rate blocks required by the model. After estimated prices have been interpreted and entered, the model may be executed and the estimated dryer fuel costs compared to actual data. If these comparisons indicate that the interpreted data do not represent accurate estimates of the fuel cost then the prices for one or more of the rate blocks, or the monthly demand charge, must be adjusted to more accurately estimate actual fuel costs. West The western region uses only the fixed monthly minimum charge and one rate block. The user MUST enter the fixed monthly demand charge and the cost per thousand cubic feet for the single rate block used by the model. In the event that the number of rate blocks on the rate schedule currently in use is greater than one, the user must interpret that rate schedule in such manner as to develop an estimated rate for the single rate block required by the model. After this single value has been determined and entered, the model may be executed and the estimated dryer fuel costs compared to reasonably expected values. If these comparisons indicate that the estimated rate does not present an accurate estimate of fuel costs then the block rate or the monthly minimum charge must be adjusted to more accurately reflect actual costs. 12

16 Appendix D Electrical Rates* GINMODEL contains three routines for calculating electrical energy cost. Each routine is related to a specific geographic region and uses a different rate schedule and procedure to calculate electrical energy cost. The rate structure used in the model has the potential to create problems if the rate structure from which current prices are obtained contains a different number of rate blocks. Such errors may be avoided by carefully following the instructions provided for each region. West Texas The West Texas model uses a rate schedule with a fixed monthly demand charge for electricity plus three rate blocks in which the quantity of kilowatt hours varies and for which the cost per kilowatt hour normally decreases as each additional rate block enters the model. The user MUST enter the fixed monthly demand charge and the cost per kilowatt hour for each of the three rate blocks. In the event that the number of rate blocks on the rate schedule currently in use is not three, the user must interpret that rate schedule to develop estimated rates for each of the three rate blocks required by the model. After these values have been interpreted, the model may be executed and the estimated electricity cost compared to actual data. If these comparisons indicate that the interpreted data do not represent accurate estimates of electricity costs then any of the three values for the rate blocks, or the monthly demand charge, must be adjusted to more accurately estimate the actual electricity cost. South The model's electrical energy rate schedule for southern gins contains three rate blocks. The user * Because GINMODEL is a direct conversion of an older model, changes, over time, in fuel and electrical rates and rate structures offer more potential for error than other required data entries. The user should read this appendix carefully and be prepared to experiment with current electrical rates to develop an accurate electric cost estimate. MUST enter the fixed monthly demand charge and the cost per kilowatt hour for each of the three rate blocks. In the event that the number of rate blocks on the rate schedule currently in use is not three, the user must interpret that rate schedule to develop estimated rates for each of the three rate blocks required by the model. After these values have been interpreted, the model may be executed and the estimated electricity cost compared to actual data. If these comparisons indicate that the interpreted data do not represent accurate estimates of electricity cost, then one or more of the three values for the rate blocks, or the monthly demand charge, must be adjusted to more accurately estimate the actual electricity cost. West The western region uses electrical energy price schedules that contain three rate blocks. The user MUST enter the fixed monthly demand charge and the cost per kilowatt hour for each of the three rate blocks. The monthly demand charge for West Texas and southern gins is entered as a cost per kilowatt hour; however the monthly demand charge for western gins is entered as a total minimum charge. The minimum charge for western gins is a value equal to 3, times the cost per kilowatt hour for the first rate block. In the event that the number of rate blocks on the rate schedule currently in use is not three the user must interpret that rate schedule in such manner as to develop estimated rates for each of the three rate blocks required by the model. After these values have been interpreted, the model may be executed and the estimated electricity costs compared to actual data. If these comparisons indicate that the interpreted data do not represent accurate estimates of electricity cost then one or more of the three values for the rate blocks, or the monthly demand charge, must be adjusted to more accurately estimate the actual electricity cost. 13

17 Appendix E Assumptions of the Model The assumptions regarding crew utilization are discussed in detail in the original bulletin [1]. This discussion is reproduced in its entirety to assist users who are more than casually interested in the assumptions upon which certain operational factors are based. Most gins hire their seasonal crew at least a few days before they expect to gin large volumes of cotton. rews are typically paid for 8 hour shifts both early and late in the season and for 12-hour shifts during the peak harvest. As seed cotton receipts exceed the capacity of a one-shift operation, a second shift is added provided labor is available. The second shift typically operates until receipts drop to or below one shift capacity and any backlog of cotton on trailers is processed. hanges in the wage and hour laws affecting the hours for which gins must pay overtime, the difficulty of obtaining night crews and the use of seed cotton storage may change this historic practice. This model divides the hours that a seasonal crew is on duty and paid into three categories; (1) processing hours are the actual hours processing cotton at the efficiency percentage of rated capacity specified; (2) variable nonprocessing hours are hours the crew is on duty and paid but not processing cotton due to such factors as short delays between trailers or modules, paid lunch breaks, minor breakdown, preventive maintenance, lubrication and/or other short delays; and (3) fixed non-processing hours are hours the crew is paid but not processing any cotton due to crew training, no seed cotton available, weather delay, major breakdown and/or chokeups. All of these values must be determined outside the model for the 1 percent utilization level and entered into the model. Fixed non-processing hours are considered fixed and stay the same for all levels of utilization. Processing hours vary directly with utilization rates; at a 5 percent utilization rate, processing hours are exactly one-half of the 1 percent processing hours. VariablO nonprocessing hours vary with utilization percentage but are assumed to decrease at a slower rate than processing hours. To accomplish this, a reduction percentage is read in to determine the rate at which variable nonprocessing hours are reduced for each 1 percent reduction from the 1 percent utilization level. For example, an 8 per- * The text in italic refers to two variable quantities in the original model. These quantities are fixed at 8% in the microcomputer version of the model. cent reduction rate would be equivalent to about one hour out of each 12-hour shift. *processing hours and variable nonprocessing hours equal total variable crew hours for each of the 1 utilization rates and are also used to determine operating hours for electrical energy consumption. Overtime hours for which the crew is paid at the 1 percent utilization level are determined outside the model structure. Based on a conventional season of 96 processing hours and the overtime exemption allowance in effect during 1976 and 1977 this results in about 28 crew overtime hours. The 48-hour 14-week exemption effective in January 1978 increased seasonal crew overtime to about 36 hours assuming continuation of two 12-hour shifts operating 6 days per week. An overtime reduction percentage is also entered to reduce overtime hours at less than 1 percent utilization similar to variable nonprocessing hours. A 2 percent reduction rate for each 1 percent reduction in utilization level results in no overtime hours at 5 percent or lower utilization. The overtime wage rates are assumed equal to 1.5 times the base hourly wage rate for each job category. To determine input data for processing hours, variable and fixed nonprocessing hours, overtime hours and reduction rates for variable non-processing and overtime hours requires a detailed examination of the assumptions regarding hours worked per day, days per week, weeks per season and so forth. The model does not differentiate between day and night shifts. The number of processing hours, variable and fixed non-processing hours and overtime hours are the total hours for all seasonal crews employed. For each of the five seasonal crew titles, the number of employees and hourly base wage rates are entered. ombined social security, workmen's compensation, and other fringe costs as a percent of the wage rate are entered for seasonal office employees and for seasonal gin employees. The seasonal gin employee rate is typically higher than the seasonal office rate; officer employees come under a different workmen's compensation classification. The number of seasonal workers employed depends on gin size, region, and technology level as well as management practices. rew size varies considerably from gin to gin even of the same capacity within a region. The general practice is to have a full crew on duty when the plant is operating. The GINMODEL program assumes a full crew at all utilization levels. Fractional numbers of crew members can be specified for any position. This is useful for operations that may have a salaried year around ginner but operates with a seasonal hourly ginner on the night shift. Also, it is not uncommon to have part-time employees, especially in the office crew. 14