Process for calculating the economic value created by a business activity

A computer-readable storage medium having a set of instructions stored therein, which when executed by the computer causes the computer to perform a method for calculating an economic value created by a manufacturing process for manufacturing products produced in a plurality of production units 1, 2, . . . , m, . . . , n−1, and n,

• the production units respectively consuming ingredient materials Y1, Y2, . . . , Ym, . . . , Yn−1, Yn, and respectively producing products X1, X2, . . . , Xm . . . , Xn−1, Xn,
• wherein a product Xm produced in a production unit m can flow as an ingredient material Ym+1 to a subsequent production unit m+1, or can flow as an ingredient material Y1, Y2, Ym−1 to one or more previous production units 1, 2, . . . , m−1,
• said method comprising the steps of:
• a) calculating an aggregate cost of manufacture of each product by:
• i) collecting cost data from diverse sources into a relational database, the cost data collected by the steps of:
• 1) collecting utility and ingredient materials cost for each product;
• 2) assembling cost data for each production unit;
• 3) assembling productivity, composition and packaging data for each product;
• 4) collecting manufacturing volume by product for each production unit;
• 5) establishing a production mix and an ingredients list for each production unit by apportioning the product Xm produced by each production unit m as ingredient materials Y to each of the other previous production units 1, 2, . . . , m−1 and a subsequent production unit m+1;
• b) establishing a predetermined threshold for the difference between a previous cost of an ingredient material Y and the aggregate cost of manufacture of a product X that is used as an ingredient material Y;
• c) if a cost change occurs that affects the aggregate cost of manufacture of the product X, then comparing the cost of ingredient materials Y of the ingredients list for all production units to the aggregate cost of manufacture of each product X that is used as an ingredient material Y to determine each affected ingredient material Y;
• d) using the production mix for each production unit m, recalculating the aggregate cost of manufacture of each product Xm;
• e) for each affected ingredient material Y that is used by a production unit to manufacture a product X, calculating a difference between the previous cost of the ingredient material Y and the aggregate cost of manufacture of the product X that is used as an ingredient material Y, the fixed cost and the variable cost being calculated independently of each other;
• f) if the difference between the previous cost of the ingredient material Y and the recalculated aggregate cost of manufacture of the product X exceeds the predetermined threshold, then replacing the previous ingredient cost with the recalculated aggregate cost of manufacture of the product X;
• g) recalculating aggregate costs of manufacture for all affected products;
• h) if the difference between the previous cost of the ingredient material Y and the recalculated aggregate cost of manufacture of the product X exceeds the predetermined threshold, then repeating steps f) and g) until the difference is less than or equal to the predetermined threshold;
• i) selecting at least one parameter, the at least one parameter comprising a customer, a sales region, a product grade or a market segment;
• j) calculating a sales volume and a net price related to the at least one parameter;
• k) using results of steps g) and j), calculating a manufacturing contribution related to the at least one parameter;
• l) using results of step k), calculating an after tax operating income related to the at least one parameter;
• and
• m) using the results of steps a) through l), calculating an economic value for the at least one parameter, thereby determining the economic value created by the manufacturing process.