ABSTRACT
Let’s consider a hypothetical project to manufacture a new plastic. The R&D department reckon that it will take a year to develop the synthesis route in the laboratory and carry out pilot scale trials to make sure that the manufacturing process will work, and that that will cost about £2m. Engineering have talked to contractors and estimate that the cost of constructing a full scale manufacturing plant will be about £18m over two years – £12m in the first year and £6m in the second. The Marketing department are optimistic about the new product and reckon that they will be able to sell £2m worth in the first year, double this
in the second year and then sell £6m a year for the next four years. After this, competitive products will come onto the market so sales will probably fall to nothing over the next four years.
