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ECONOMIC ANALYSIS OF COTTON TEXTILE
FINISHING PROCESSES
by
STEVE GLENN TEAL, B.S.
A THESIS
IN
AGRICULTURAL AND APPLIED ECONOMICS
Submitted to the Graduate Faculty of Texas Tech University in
Partial Fulfillment of the Requirements for
the Degree of
MASTER OF SCIENCE
/ ^ Approved
^^ Accepted
December, 1997
r j ^ ACKNOWLEDGMENTS
'/ T^/
^ ^ ' I would like to express my sincere appreciation to my graduate advisor and
chairman of my thesis committee. Dr. R. Terry Ervin. He has not only been a great
help to me on this project and in my graduate studies, but he has also been a fiiend. I
would also like to thank the other members of my thesis committee. Dr. R.D. Mehta
and Dr. Phil Johnson. Dr. Mehta was the driving force behind all the technical aspects
of textile chemistry contained in this study and his help is greatly appreciated. Dr.
Johnson was invaluable in determining the conceptual part of this study and also had
many great constructive ideas to help make this thesis what it is today. I would also
like to thank Mark Morton, Don Compton, and George Herron for their assistance.
This study could not have been done without their help.
Finally, I would like to thank my family for all their love and support
throughout my life. I would like to thank my mother, Ruth Teal, for her love and
understanding. She has always believed in me, which has helped me to achieve my
goals. I would like to thank my brother, Richard Teal, for being my hero while
growing up and my fiiend today. I will always look up to him, and not just because
he's taller than me. I would also like to thank Jody Davis for being there through the
good times and the bad. And finally, I would like to dedicate this to the memory of
my father, James Teal. A greater man never walked this earth.
-/
u
TABLE OF CONTENTS
ACKNOWLEDGMENTS ii
LIST OF TABLES v
LIST OF FIGURES vii
CHAPTER
I. INTRODUCTION 1 General Problem 1 Chitosan 7
Chitosan Pretreatment 8 Chitosan Aftertreatment 8
Cellulase Enzymes 9 Specific Problem 9 Objectives 10
II. REVIEW OF LITERATURE 12 Neps 12 Textile Processors 15 New Technologies 16 Cellulase Enzymes 18 Chitosan 19
III. CONCEPTUAL FRAMEWORK 23 Microeconomic Framework 23 Industry 34
IV. METHODS AND PROCEDURES 36 Benefit/Cost Analysis 36 Representative Mill 39
V. RESULTS 46 Chitosan Pretreatment 46
Treatment Process 46 Treatment Costs 47 Treatment Benefits 50
Chitosan Aftertreatment 53 Treatment Process 54
m
Treatment Costs 55 Treatment Benefits 59
Cellulase Enzymes 60 Treatment Process 60 Pretreatment Costs 62 Pretreatment Benefits 65 Aftertreatment Costs 67 Aftertreatment Benefits 67 Summary 70
VI. DISCUSSION 73 Sensitivity Analysis 74
Chitosan Pretreatments 76 Chitosan Aftertreatments 85 Cellulase Enzyme Pretreatment 93 Cellulase Enzyme Aftertreatments 99 Summary 105 Intangibles 107
VII. CONCLUSION 112 Further Research 115
REFERENCES 117
IV
LIST OF TABLES
1. Costs for Various Textile Processes 41
2. Input Costs for Chitosan Pretreatments 48
3. Costs Associated with Chitosan Aftertreatments 58
4. Costs Associated with Cellulase Enzyme Pretreatments 66
5. Costs Associated with Cellulase Enzyme Aftertreatments 69
6. Benefits, Costs, and Net Revenues from Adoption 71
7. Net Revenues When Cost of Chitosan and Sodium Sulfate Decrease and the Cost of Dye Increases 76
8. Net Revenues When the Costs of Labor, Variable Overhead, and Fixed Overhead are reduced For Varying Fabric Rejection Rates 78
9. Net Revenues With Increasing Costs of Chitosan and Increasing Value of Rejected Fabric 80
10. Net Revenues With Decreasing Costs of Chitosan Pretreatments and Increasing Values of Rejected Fabrics 81
11. Net Revenues With Decreasing Costs of the Chitosan Pretreatments and Increasing Cost of Dyes 82
12. Net Revenues With Increasing Costs of Labor and Variable Overhead
for Chitosan Pretreatments 83
13. Costs Associated with Chitosan Aftertreatments 86
14. Net Revenues With Increasing Costs of Labor and Variable Overhead for Chitosan Aftertreatments 87
15. Net Revenues With Increasing Costs of Labor, Variable Overhead. and Fixed Overhead, With Increasing costs of Chitosan, Sodium Sulfate, and Non-ionic Wetting Agent for Chitosan Aftertreatments . 88
16. Net Revenues for Chitosan Aftertreatments With Decreasing Costs of Chitosan and Increasing Value of Rejected Fabric 90
17. Net Revenues for Chitosan Aftertreatments with Increasing Costs of Chitosan and Decreasing Value of Rejected Fabric 91
18. Net Revenues With Increasing Costs and Decreasing Revenues for Chitosan Aftertreatments 93
19. Net Revenues When the Costs of Labor, Variable Overhead, and Fixed Overhead are reduced by 50% For Different Fabric Rejection Rates 95
20. Net Revenues With Increasing Costs of Enzyme, Buffer, and Acetic Acid with Increasing Value of Rejected Fabric 96
21. Net Revenues With Decreasing Costs of Cellulase Enzyme Pretreatments With Increasing Values of Rejected Fabrics 98
22. Net Revenues With Increasing Costs of Labor and Variable Overhead for Cellulase Enzyme Pretreatments 99
23. Net Revenues With Increasing Costs of Labor and Variable Overhead for Cellulase Enzyme Aftertreatments 101
24. Net Revenues With Increasing Costs of Labor, Variable Overhead, and Fixed Overhead, With Increasing costs of the Enzyme, Buffer, and Acetic Acid for Cellulase Enzyme Aftertreatments 102
25. Net Revenues for Cellulase Enzyme Aftertreatments With Decreasing Costs of the Enzyme and Increasing Value of Rejected Fabric . . . . 104
26. Net Revenues With Increasing Costs and Decreasing Revenues for Enzyme Aftertreatments 105
27. Intangibles Not Included in Analysis for Each Treatment 107
VI
LIST OF FIGURES
1. Texas Counties in the Southem High Plains 3
2. Production Function for Technology Adoption 25
3. Production Possibilities Curve for Accepted and Rejected Fabric 27
4. Production Possibilities Points for Joint Products with Technology Held Constant 28
5. Production Possibilities Points for Joint Products with Changing Technology 30
6. Production Possibilities Points with Isorevenue 33
vu
CHAPTER I
INTRODUCTION
General Problem
U.S. farmers produced about 20 percent of the world's cotton in 1995,
down from about 31 percent in 1960. Cotton's share of the world textile fiber
market during that same time dropped from nearly 70 percent to approximately
50 percent. Total harvested cotton acreage in the U.S. decreased by about 33
percent during the same period, while production dropped by less than 6
percent because of the increase in farming intensity which resulted in expanded
yields per acre (United States Department of Agriculture, National Agricultural
Statistics Service, 1996).
Given the large U.S. share of world cotton production, U.S. production
utilized a relatively small geographical area compared to other major cotton
producers of the world. Cotton grows best in a temperate to hot climate. This
climate restriction limits the region in which cotton may be grown to
approximately 47 degrees north latitude to 30 degrees south latitude. This
confines the cotton producing region of the U.S. to the land area ranging from
central California to southem South Carolina, and south to the southem tip of
Texas. In all, 17 states in the U.S. produce cotton. The major cotton
producing areas in the U.S. are Texas, Califomia, the Mississippi River Valley,
and southem Arizona. Texas leads the country in cotton production with
approximately 27 percent of the nation's production. In 1993, Texans produced
5,095,000 bales of cotton with 52 percent grown in the Southem High Plains
(USDA, Economic Research Service, 1996). The Southem High Plains of
Texas (SHPT) consists of the counties of Andrews, Bailey, Cochran, Crosby,
Dawson, Gaines, Glasscock, Hockley, Howard, Lamb, Lubbock, Lynn, Martin,
Midland, Terry, and Yoakum (see Figure 1).
Cotton is the most widely used natural textile fiber in the world,
accounting for about 40 percent of total world fiber production (USDA, ERS,
1996). Cotton is used in apparel, household, and industrial products. It
accounts for about 38 percent of all fibers used in apparel, 18 percent of the
fiber used in home fumishings, and about 12 percent of the fibers used in
industrial products.
The natural cotton fiber consists of a collection of attributes, desirable
and imdesirable, which are reflected in the quality of the finished textile
product. It is the presence of the desirable attributes and the absence of the
undesirable ones which determine the value of a given lot of fiber. The value
given to each collection of attributes is a reflection of the value the market
places on the final product which requires these attributes. The transfer of
value from the final product to the fiber market requires that the desirable set of
Soutkent High Plains
Counties of Texas
Figure 1. Texas Counties in the Southern High Plains
attributes be represented in a single set of qualitative measurements or fiber
grades.
Most textile mills use the official United States Department of
Agriculture cotton quality classifications, which measure three factors: grade,
staple, and micronaire. The grade is determined by color, trash content, and
preparation (smoothness) of the sample. Staple is the average length of
individual fibers. Micronaire is a measure of fiber fineness and maturity.
Other properties considered important are known as the cotton's character.
These are: strength, length uniformity, elongation, stickiness, nep count, and
moisture content (Starbird et al., 1987).
The class into which cotton is placed reflects the price producers receive
for their cotton. Cotton prices in the United States are determined in the world
market. That is to say that the price received for cotton is dependent on global
cotton supply and demand forces.
The world cotton price is established for what is referred to as a "base
grade" cotton. Base grade cotton is defined as Strict Low Middling (41) at 1
and 1/16 inches staple length. Cotton deviating from this standard base grade
will be priced at a premium for those lots grading higher, or discoimt for those
lots grading lower than the base. The Commodity Credit Corporation (CCC)
provides a schedule of discoimts and premiums which influences the value of
cotton for the different qualities. Before the Federal Agricultural Improvement
and Reform (FAIR) Act of 1996, the price received by producers was
influenced by the loan price and the target price. The government set both a
loan rate and a target price, and the producer received a direct payment equal to
the difference between the loan rate or the market price (whichever is higher)
and the target price.
The average base loan rate in Lubbock, Texas for the 1995 cotton
season was 51.80 cents per pound. According to the Daily Price Estimation
System developed within the Department of Agricultural and Applied
Economics at Texas Tech University, middling (31) grade cotton brought an
average of 45 points (0.45 cents) per pound more than Strict Low Middling
(43) cotton, while the Low Middling (51) grade experienced an average
discount of 370 points (3.7 cents) less than the base grade. Strict Low
Middling Light Spotted (42) cotton averaged 3.25 cents per pound less than
Strict Low Middling (43) cotton, while Strict Low Middling Spotted cotton was
10.15 cents less (CCC). There are two USDA Cotton Classing Offices within
the SHPT (Lamesa and Lubbock). The average micronaire for the 1993 cotton
crop classed in Lamesa was 4.2, while in Lubbock the average micronaire was
4.1. This is compared to the average micronaire for the United States as a
whole of 4.4 (USDA, AMS, 1994). The SHPT tends to produce lower than
average quality cotton with regard to the micronaire, such that SHPT producers
regularly receive a price discoimt for their crop.
Cotton produced in the SHPT has a reputation for a low micronaire
which is caused by short growing seasons, cool night temperatures and early
freezes which may prevent cotton from maturing properly. The cotton in this
region generally has a low micronaire and a high percentage of small knots or
fiber entanglements knovm as neps. Neps are a primary cause of fabric
rejection at the mill because they keep the fabric from accepting the dye
uniformly. Rejection of the fabric at this stage is a problem because many of
the costs accmed from production through processing have been invested by
the time the fabric is ready for the dyeing process. Because the neps are
difficult to remove from the yam or fabric, most processors would need to
adopt a treatment to allow the neppie fabric to receive the dye.
Textile mills have available to them treatments which eliminate the
problem of neps not receiving dyes. These treatments come in many forms,
from pretreatments to aftertreatments, using a variety of different products.
Textile manufacturers must choose between the many treatments available
based on how well it works, cost effectiveness, how easily it is incorporated
into their current processes, and whether the new treatment requires equipment
which they do not own at the time.
One treatment which may be used to cover neps uses submercerization
strength sodium hydroxide. Sodium hydroxide is used in many wet processes
in the textile industry. W^en using submercerization, the surface fibers of the
nep swell in order to allow the dye to penetrate the nep while retaining overall
fiber compactness (Cheek, Wilcock, and Hsu, 1987). This process improves
nep coverage by up to 86 percent.
Another treatment used for the coverage of neps involves the use of a
cationic polymer pretreatment by the pad/dry process (Mehta, Salame, and
Combs, 1990). This treatment is effective in covering neps after dyeing with
direct, reactive and acid dyes. However, because these treatments are based on
the pad/dry method, the fabric must be dried after scouring and/or bleaching
prior to the chemical application. An altemative to the pad/dry treatment is the
exhaust process. This altemative process eliminates drying and could be easily
incorporated into the fabric preparation sequence currently being used by most
textile mills (Mehta and Combs, 1990). One treatment which uses the exhaust
method involves the use of a derivative of chitin.
Chitosan
Chitin is the second most plentiful, naturally occurring polymer, after
cellulose, in the world. It is foimd in the exoskeletons of arthropods (i.e.
shrimp and crabs). Chitosan, a derivative of chitin, is prepared by partial
deacetylation of the chitin. Chitin and chitosan are used by man in a nimiber of
ways. Uses range from health and beauty aids to water purification,
biomedical applications, agriculture, biotechnology, nutrition, and treatments in
the finishing process of textile fibers. Chitosan may be used to aid in the
coverage of neps in cotton fabric. Two uses toward this objective involve a
pretreatment or altematively, an aftertreatment process.
Chitosan Pretreatment
The fiber containing neps is pretreated with a mixture of chitosan and
salt (hereafter referred to as the chitosan pretreatment). Chitosan pretreatments
increase the dying ability of direct dyes and are also effective in eliminating
differences in color between dyed immature and mature cotton fibers (Rippon,
1984). The binding of the chitosan with the cellulose already present in the
cotton fiber increases the fiber's dyeing ability and reduces problems resulting
from immature or entangled fibers that will not accept dyes. This treatment
reduces the impact of the quality problem realized by most SHPT producers
when selling their cotton. Chitosan may also be used for the coverage of neps
after the fabric has been dyed.
Chitosan Aftertreatment
Pretreatment requires that all of the yam used for the production of
lightweight fabrics destined for use in apparel be treated. The chitosan
aftertreatment may be used as a "salvage operation" after the fabric has been
dyed to improve the dye acceptability of the fabric when the presence of neps
8
could lead to rejection. The aftertreatment is often used on fabric rejected due
to the presence of neps to bring the quality of the fabric up to contract
specifications. However other products are also used for the coverage of neps.
One of these processes used for the coverage of neps relies upon a naturally
occurring chemical reaction.
Cellulase Enzymes
Cellulase enzymes are used in the scouring, desizing, bleaching, and
finishing phases of the textile manufacturing process. The enzymes are used to
reduce fabric fuzziness, soften fabric, remove color for special effects, and for
the removal of neps (Blanchard and Graves, 1995). The cellulase enzyme
causes a chemical reaction with the cellulose on the surface of cotton fibers.
The weak, extending fibers (e.g., those fibers which have ends protmding from
the fabric providing an appearance of fuzziness) are then detached using
mechanical agitation. The fibers must then be cleaned from the fabric. This
process could be used as either a pre- or after-treatment on fabrics which
contain neps.
Specific Problem
Both of these products (i.e., chitosan and cellulase enzymes) are
biodegradable when used and distributed into the environment in a dispersed
fashion such that these treatments represent environmentally sound practices.
The primary problem caused by neppiness can be overcome with the
introduction of these treatments for both cotton yams and fabrics. Although
these treatments require no additional machinery, they do require additional
costs for chemicals, associated labor and time in the production process.
However, most processors are slow to adopt new and unknown
practices. These nep treatments are fairly new such that mill managers are not
fully aware of their advantages and their potential impact on profitability.
Processors should be made aware of the potential economic benefits and costs
of these treatments. Therefore, an economic analysis of all four of the nep
treatments would appear to be a necessary step to establish the cost
effectiveness of these treatments which in tum could lead to the adoption of
one of the treatments as a standard process.
Objectives
The general objective of this study was to conduct an economic
assessment of the use of chitosan pretreatments and aftertreatments and
cellulase enzyme pretreatments and aftertreatments for cotton yams and
fabrics. Issues such as decreased rejection of fabric at the mill, and reduction
in the amount of dye which must be used were considered. The specific
objective was to determine whether it was cost effective for textile processors
10
to adopt any of these treatments as a standard practice. A comparison of those
treatments shown to be cost effective was conducted to determine the most
appropriate process for a specific scenario.
This research report consists of seven chapters. The second chapter
consists of a review of the relevant literature pertaining to: neps, chitosan,
textile processes, enzymes, and adoption of new technologies in the textile
industry. The third chapter presents the conceptual issues which are
considered in the research. Chapter IV consists of the development and
presentation of the methods which will be used in the study. Chapter V
presents the results of the benefit cost analysis of each of the four treatments
considered. Chapter VI presents a sensitivity analysis for each of the processes
which estimates at what level each process will become cost effective. The
final chapter contains conclusions and recommendations on future research in
this area.
11
CHAPTER n
REVIEW OF LITERATURE
The Literature Review is divided into five broad categories: neps,
textile processes, adoption of new technologies in the textile industry, cellulase
enzymes, and chitosan. The first consideration in this chapter focuses on
identifying the causes of neps. The different uses for chitosan and cellulase
enzymes are examined as well as the literature on the various processes used
for the coverage of neps while dyeing cotton. This chapter also reviews the
literature on the processes currently used in the textile mills as well as the
process or steps utilized by these mills in adopting new and unknown
processes.
Neps
While cotton immaturity is a major cause of neps, several other factors
also contribute to the problem. Neps may be caused by improper cleaning of
the fibers during ginning. Seed coats may be caught in the fibers during
ginning, causing another type of nep. Neps also may develop in the harvesting
phase of production and in yam manufacturing phases of production.
Anthony, Baker, and Hughs (1986) report that most neps develop during
lint cleaning in the ginning process. The authors contend that while neps can
12
form at any stage of the ginning operation, lint cleaning produces the most
neps. These authors report on the difficulty of cleaning cotton without
lowering fiber quality and that fiber damage in ginning will vary according to
the initial strength, fineness, and length of the cotton fiber. The presence of
neps is a component of reduced quality.
Mangialardi (1985) reviewed several studies reporting on the cause of
neps. Mangialardi reports that neps can be caused in mill processing if fibers
get out of control and become entangled. Other causes include: (a) the use of
saw ginning rather than roller ginning, (b) inappropriate saw speed and spacing
in the ginning process, and/or (C) defoliation of cotton before harvesting.
There are so many factors involved in establishing a grade for a sample
of cotton, it is difficult to specify the contribution to the overall economic
problem caused by neps. It is generally knovm that neps contribute to reduced
fiber strength, lower product appearance, and product waste which leads to a
lower price received by processors (Starbird et al., 1987). Producers will
receive a lower price for cotton which contains those characteristics which
increase the probability of neps even if the neps are caused by the processing
operation at gins and textile mills.
Several research studies have reported on methods of preventing neps.
While it is not known how to eliminate all neps, research has focused on those
13
methods or techniques which will eliminate a large portion of the neps through
better breeding and processing practices.
Mangialardi et al. (1987) considered the length of the cotton grovs^
period as a possible contributor to the development of neps. These authors
report that cotton harvested early in the season will produce yam and fabric
containing fewer neps than cotton harvested late in the season. The reduction
of neps in this study was attributed to the use of those varieties of cotton which
mature faster and are often harvested earlier in the season. They suggested that
cotton breeders should develop varieties that can fully mature before harvest to
reduce the development of neps.
A study by Anthony, Meredith, and Williford (1988) focused on the
effects of cotton variety, harvesting, and giiming practices on the incidence of
neps. The authors concluded that cotton should be harvested with as little
weathering as possible and that no more than one lint cleaning operation should
be used at the gin to minimize nep development. The authors indicated that
while some neps can be prevented, factors such as weather and climate cannot
be controlled.
Nelson (1949) found that when potash is applied to the soil, the number
of neps is reduced. The study reported that the application of 30 pounds of
potash during the season will lead to a small reduction in the number of neps,
but that it also leads to small decreases in yam strength. Given that neps are
14
difficult to prevent, many textile processors try to overcome the problems
created by neps in the ginning and/or milling process.
Textile Processors
Starbird et al. (1987) reported the existence of a number of cotton
quality factors which affect textile quality in the mill process. Cotton color
affects the efficiency of the dyeing and bleaching processes which must be
adjusted to maintain quality standards. Trash in the cotton leads to processing
waste, machinery contamination, product appearance, and cotton dust levels.
The preparation affects the quality of the yam and product appearance. It also
contributes to processing waste. Staple length affects fabric strength and could
contribute to nep formation during processing. Nep formation can also be
affected by the fineness (micronaire) and maturity of the cotton fiber.
Textile mills transform the cotton fiber into yam and then into fabric.
Cotton arriving at the mill is blended with cotton from other bales to ensure a
more uniform processing performance. Cotton is then cleaned and spim into
yam which in tum is either woven or knitted into fabric which then moves to
the finishing process. The finishing steps include bleaching, dyeing and
Sanforizing to prevent subsequent shrinking. Many yams are dyed before
being woven into fabric while in other cases the fabric itself is dyed. After
finishing, the fabric is shipped to manufacturers who make apparel, home
15
fiimishings, or industrial products. Several new technologies have been
introduced into the textile industry in the last decade.
New Technologies
Helmut Deussen (1987) examined many of the new technologies
introduced in the textile industry over the previous few decades. One such
improved technological process which has been widely accepted is that of rotor
spinning. This process is popular because of yield gains in productivity, as
well as an improvement in the quality and processability of the yam. Other
new and improved technologies which are used in the finishing process include
the use of sodium hydroxide, cellulase enzymes, or chitosan which improves
nep coverage and results in improved textile quality.
Although there are many new processes available to textile mills, there
is generally a reluctance in adoption because of the uncertainty as to results
and costs involved. If a new technology is to be adopted it must be cost
effective. Several researchers have developed models to predict the adoption
of new technologies. Shah, Zilberman, and Chakravorty (1995) developed a
model to forecast the rate of adoption of new technology in the case of
groimdwater extraction. This study extends the exhaustible resource economic
model developed by Harold Hotelling by adding a technology difftision
process. The resulting model considered the effect of heterogeneous producers
16
and the discrete choices associated with technological change, and reported
that groundwater depletion should result in increased adoption of modem
technology over time. It is also reported that the rate of adoption of the new
technology was too slow and resource depletion is too fast to achieve an
optimum level of depletion. This model determined that the use of a water tax
or subsidy could conceivably improve the rate of adoption.
Saha, Love, and Schwart (1994) examine a model of technology
adoption with output uncertainty. Their model focused on the rate of adoption
of bovine somatotropin (bST) in the dairy industry. The authors state that
while the model is used with bST, it is applicable to any technology on which
there is incomplete information. The bST model departs from existing models
by focusing on the implications of incomplete information in the adoption
process. The authors contend that producers' choices are affected by the extent
of their exposure to information about the new technology. Neither of these
studies (i.e., Saha, Love, and Schwart, 1994; and Shah, Zilberman, and
Chakravorty, 1995) deal directly with the adoption of new technology in the
textile industry; however, they can be adapted for any technology adoption
solution. The studies conclude that most producers/processors would adopt
new technologies given that the new process is cost efficient and that they are
trained in its use such that they are comfortable with the new process. One
17
new technology available to textile mills involves the use of cellulase enzymes
for the removal of neps.
Cellulase Enzvmes
The use of enzymes for the treatment of cotton is reported by Blanchard
and Graves (1995), and Ankeny (1996). Blanchard and Graves (1995) report
that cellulase enzymes may be used for the coverage of neps, as well as
bleaching, scouring, desizing, and the creation of specialty items. The desizing
process involves the hydrolysis and removal of starch size from yams by
amylase enzymes after the yams are woven into fabric. The specialty items
include stone washed fabrics, as well as polished fabrics. These fabrics were
treated with cellulase enzymes to promote hydrolysis at the surface of the
cellulosic material, then dyed with either direct blue 80, or a combination of
direct red 81 and direct green 26. The fabrics then were either boiled in water
for 30 seconds or washed in a consumer type washing machine to remove
imfixed dye. The authors report that fabric improvement was recognized to be
in the reduced surface fuzziness of the enzyme treated samples after washing.
Thus, the use of enzymes is useful for improving the appearance of dyed cotton
fabric.
Ankeny (1996) used a solution of 2 grams per liter enzyme solution to
remove irmnature cotton fibers from the surface of the fabric. As the level of
18
the enzyme was increased to 6 grams per liter, the amoimt of immature fiber on
the surface of the fabric was reduced. The author also reported that the fabrics
prepared by the standard bleach procedure displayed more immature cotton on
the fabric surface after enzyme treatment compared to fabrics prepared by
alternate methods. The altemate methods included a high temperature
bleaching process, a sodium hydroxide scour and a sodium hydroxide
bleaching process. The use of the high temperature bleaching method resulted
in the greatest loss of fabric weight. Another process used for the coverage of
neps includes the use of chitosan.
Chitosan
Stmszczyk et al. (1993) reported upon the many uses of chitosan.
Chitosan is used in waste water treatment, agriculture, the chemical industry,
biotechnology, cosmetics, medicine, and the textile industry. The properties of
chitosan which allow it to be used in such a wide range of applications include
bioactivity, biodegradability, biocompatibility, non-toxicity, good adhesion,
and good fiber and film forming ability. The authors reported that because
chitosan is a fiber-forming material, fibers made from chitosan are used in the
manufacturing of special medical products like wound-protecting and healing
dressings, as carriers for active dmgs, for surgical threads and for artificial
limbs. It is also useful to the textile industry.
19
Several studies have focused on using chitosan treatments for the
coverage of neps. Rippon (1984) examined the use of chitosan with a pad/dry
method as well as an exhaust method. The author stated that in addition to
improving the overall dye exhaustion, chitosan pretreatment increases the nep
coverage and color yield of the dyed fabric. The greatest effect on the
coverage of neps was obtained with a level of chitosan greater than 0.1 percent
on the weight of the fabric (o.w.f.). The author reported that the reason for the
improved coverage of neps is that chitosan is absorbed by the immature cotton
fibers.
Mehta and Combs (1990) focused on chitosan treatments using the
exhaust method. In both studies reported upon by Mehta and Combs (1990)
and Rippon (1984), the chitosan treatment improved the dyeability of the
fabric. Although the pad/dry method is effective in providing improved nep
coverage, the exhaust method accomplished the same objective while
eliminating the costly drying cycle. Mehta and Combs (1990) concluded that
the use of chitosan by the exhaust process resulted in the coverage of neps
when dyeing with direct and reactant fixable Indosol dyes. The chitosan
pretreatment increased the color yield of the reactive dyed fabric, but was not
as effective in nep coverage as the other dyes. The use of chitosan as a
pretreatment also had a greater effect on the color yield on fabrics of low
20
micronaire cotton compared to those of high micronaire cotton, especially
when using reactive dyes.
A study using chitosan as a pretreatment was conducted by Combs and
Chikkodi (1996). The authors stated that, for the dyes used in this study
(Reactive Yellow 168, Reactive Red 235, Reactive blue 235, and Reactive
Black 5), the chitosan pretreatment had a significant effect on color properties,
a noticeable change in nep coverage, and an improved fabric appearance. The
authors concluded that it was possible to simultaneously improve color fastness
properties and cover immature fibers.
Mehta and Combs (1996), focused on the use of chitosan in an
aftertreatment as a solution to the problem of neps after the fabric has been
processed and dyed. Although the treatment is similar to the pretreatment,
more chitosan is used in order to cover neps. The authors reported that the
coverage of neps was improved with either an exhaust process or a pad-batch
method. After several trials, the optimal amount of chitosan to use in this
aftertreatment was determined to be 0.6 percent o.w.f for the exhaust method,
and 0.8 percent o.w.f. for the pad-batch process.
The literature reviewed covers a variety of subjects related to the
research topic. Reviewed literature include causes of neps and ways to prevent
or reduce their impact, uses of chitosan and cellulase enzymes, textile
treatments, textile processes and adoption of new technologies. Although there
21
have been studies dealing with the use of chitosan and cellulase enzymes for
nep coverage, there has not been an economic evaluation of the adoption of
these processes in the textile milling industry.
The theoretical economic framework for the operations of the textile
mill are presented in the next chapter. It is important to understand the
underlying economic theories on which the behavior of a textile mill is based.
22
CHAPTER III
CONCEPTUAL FRAMEWORK
The relevant microeconomic framework for the production of yams and
fabrics within a textile mill are presented in this chapter. Expected changes in
the model parameters from the introduction of a new treatment are then
incorporated into the basic model. Finally the chapter includes a short
discussion on the market stmcture of the textile industry.
Microeconomic Framework
Textile manufacturers generally sell their final product (fabrics) via
contracts with buyers who then have the fabric processed into apparel,
household or industrial products before the final product is sold to the
consumer. The fabric produced by the mill must, depending on contract
specifications, meet a specified quality standard required by the buyer. As a
general mle, contract specifications may allow a certain minimal level of
defects. Mill-mn fabrics are inspected to determine whether any given lot
meets contract specifications or altematively must be rejected and sold in some
secondary market. Textile mills generally have some small percentage of their
fabrics which do not meet contract quality standards and therefore must be
rejected. Conceptually then the mill's production function consists of both an
23
accepted fabric and a rejected fabric component. Improvements in mill
technology should, assuming a constant fiber quality, result over time in an
increase in the amount of acceptable fabric and decrease in rejected fabric.
This would imply a production function where total output remains constant
while the ratio of accepted to rejected fabric increases. An illustration of this
type of production function is presented in Figure 2. Total output of both
accepted and rejected fabrics is represented on the vertical axis. Technology,
the input represented on the horizontal axis is represented with the level of
technical sophistication increasing from left to right. All other inputs are held
constant. Curve Y^ represents total output, consisting of both accepted and
rejected fabrics. Curve Y^^ represents the ratio of accepted to rejected fabric.
The amount of accepted fabric increases and the amount of rejected fabric
decreases as the level of technology is increased. The total amount of fabric
produced, Yj, does not change. This framework is representative of the
technologies evaluated in this study, maintaining a constant level of total
output, while the ratio of accepted to rejected fabrics increases.
The textile mill is in effect producing joint products, acceptable and
rejected fabrics, from the same combination of inputs. The relative level of
output of these two products can be illustrated using a production possibilities
curve. A production possibilities curve is defined as the locus of those output
combinations that can be obtained from a given quantity of inputs (Beattie and
24
5
Increased Technology >
Figure 2. Production Function for Technology Adopti on
25 26
Taylor, 1985). Figure 3 illustrates the production possibilities curve for the
production of both accepted and rejected fabrics. The quantity of accepted
fabric (YJ is represented on the vertical axis and the quantity of rejected fabric
(YR) on the horizontal axis. The production possibilities curve specified
between points A and B represents those combinations of the two products the
firm can produce with a given level of input. The greatest amount of
acceptable fabric the mill can produce is represented by point A, while the
greatest amount of rejected fabric is represented by point B.
This example represents a situation wherein the two products are
competitive. The production possibilities curve is linear because there is a
fixed one-to-one tradeoff between the two products. In other words, if the
textile mill produces 5 additional pounds of acceptable fabric, then the amount
of rejected fabric must decrease by 5 poimds. This situation is appropriate for
a textile mill producing a joint product, i.e., acceptable and rejected fabrics.
Joint products are defined as those products which result from the same
production process (Doll and Orazem, 1984). An example of joint products
with fixed proportions would be the production of fabric within a mill setting.
If the proportions are fixed, the production possibilities curves reduce to a
single point for each level of output as shovm in Figure 4. In Figure 4, there
are two products, Y^ and YR. If the two products are produced in fixed
proportions, the producer cannot shift to a higher production possibilities curve
26
Figure 3. Production Possibilities Curve for Accepted Fabrics (YA) and Rejected Fabrics (YR) .
27
B
Figure 4. Production Possibilities Points for Joint Products as More Cotton is Processed, Holding the Level of Technology Constant.
28
without producing more of both products. Thus, as Y^ is increased, YR is also
increased such that the point of production moves from point A to point B. As
the production of each product increases, the production possibilities curve for
each level of output shifts to a higher point on the graph. For example,
assuming constant technology, if the amount of cotton processed by the textile
mill increases, both the amount of acceptable and the amount of rejected fabric
will increase. Assume the textile mill processes 20,000 pounds of cotton per
year. The textile mill will be producing at point A, which corresponds to a
specific amount of both acceptable and rejected fabric. If the textile mill
increases its production to 40,000 pounds of cotton lint per year, the mill
would increase its production to point B. At point B, there is more acceptable
fabric as well as more rejected fabric. In this instance, it is assumed that only
the amount of cotton is increased, ceteris paribus. If, however, the amount of
cotton processed is held constant while the level of technology increases
affecting the proportions of acceptable and rejected fabric, then the production
possibilities curves would continue to be represented as points. These points,
however, would move in a different direction. Figure 5 illustrates a production
possibilities map for a textile mill when only the level of technology is changed
to allow for more acceptable and less rejected fabrics. Assuming the textile
mill is producing at point A, the adoption of a new technology which increases
the amoimt of acceptable fabric and reduces the amount of rejected fabric
29
^ j j
B
Figure 5. Production Possibilities Points for Joint Products as the Level of Technology Changes, Holding the Amount of Cotton Processed Constant.
30 S£
would move the production mix to point B. As each new technology is
adopted, the combination of products would continue shifting until the textile
mill produced only acceptable fabric. A line connecting the various points
w ith each axis yields a 45 degree angle. This example assumes that both the
quality and quantity of cotton processed are held constant. Mill revenues can
be expected to increase as the level of technology rises and the amount of
fabric rejected is reduced.
The total revenue (TR) of a firm is determined by the value of its
products which are a function of the quantity of marketable output and its
price. The total revenue for a textile mill producing both acceptable and
rejected fabrics is determined by the following equation:
TR=P,A^P,R, (3.1)
where P^ is the price the mill receives for its acceptable fabric, A is the amoimt
of acceptable fabric the mill sells, PR, is the price the mill receives for its
rejected fabric, and R is the amount of rejected fabric that the mill sells. The
total revenue the mill receives from the two products can be shovm graphically
using an isorevenue line. This line passes through all combinations of the two
products that result in the same amount of total revenue. Equation 3.1 can be
solved for either A or R to arrive at the equation for the isorevenue line.
Equation 3.1, when solved for A, the quantity of acceptable fabric measured on
31
the horizontal axis of Figure 5, can be expressed as:
TR R R. (3 .2 )
Representative examples of equation 3.2 are depicted in the isorevenue lines of
Figure 6. The first component of Equation 3.2 (TR/PJ represents the point at
which the isorevenue line intersects the vertical axis. The ratio (-PR/PA)
represents the slope of the isorevenue line. The negative sign indicates that the
line will be negatively sloped. As total revenue increases, the isorevenue line
will shift up and to the right. In Figure 6, the amount of rejected fabric is
measured on the horizontal axis and the amount of acceptable fabric is
measured on the vertical axis. The first isorevenue line, IR,, is set at a 45
degree angle. This implies that the slope is equal to-1 . For this to happen, the
price received for rejected fabric, PR, must be equal to the price received for
acceptable fabric, P^. As can be seen on IR, of Figure 6, the adoption of new
technology, moving from point A to point B, would not result in increased
revenues. Thus, it can be assumed that the only reason a textile mill would
adopt the new technology would be if the new technology effectively reduced
costs. Given that the addition of any one of the treatments considered in this
study would not reduce costs, then the textile mill should be indifferent as to
which technology to use if PA=PR.
32
D
IR3
IR,
YR
Figure 6. Production Possibilities Points With Isorevenue Lines Corresponding to Different Prices for Rejected and Acceptable Fabrics.
33
If the price of rejected fabric, PR, is greater than the price received for
acceptable fabric, P^, the slope of the isorevenue line would have an absolute
value greater than 1, with a negative slope, and be similar to that illustrated by
IR2. As discussed previously, total revenue decreases as the isorevenue line
shifts down and to the left. Given that PA<PR, if the textile mill were to adopt a
new technology which shifts the production from point A to point B, total
revenue would decrease. Additionally, with PR greater than P^ the textile mill
would try to produce as much rejected cotton as possible to increase total
revenue.
The third isorevenue line, IR3, has a slope with an absolute value of less
than one, and is negative. This implies that the price of acceptable fabric, P A'
is greater than the price of rejected fabric, PR, which is the situation facing
textile mills. In this case, adopting the new technology, or moving from point
A to point B, would increase total revenue. Thus, the textile mill would adopt
the new technology as long as the cost of adoption is less than the amount
gained in total revenue (i.e., the treatment is cost effective).
Industry
The textile mill is assumed to be operating in a monopolistically
competitive industry. That is, there are many firms with a differentiated
product so that each firm has some control over the price it charges for its
34
product. In the textile industry, the product differentiation comes from
contractual agreements between the mill and the buyer. Some textile mills
offer special benefits or service to certain buyers which could lead to a
differentiated product. Most textile mills sell their final product to contracted
buyers. Because these contracts tend to cover a certain period of time, the
price agreed upon between the mill and the buyer tend to stay the same.
Because prices are rigid, the price each firm receives for their finished fabric
will not normally change if the quantity of acceptable fabric is increased.
The fabric treatment processes discussed in this paper are expected to
reduce marginal costs in those textile mills which adopt one of these processes.
The mill will reject a certain portion of their fabric because of the presence of
neps. This rejected fabric is sold on a secondary market for a discounted price.
If the mill adopts one of these processes, it is assumed that the mill will receive
the premium price agreed upon with the buyer instead of the discounted price
offered on the secondary market.
The focus of the next chapter will be on the methods and procedures
used to perform an economic analysis of the feasibility of adopting new
processes in the textile mill setting. A benefit-cost analysis using the
representative textile mill costs is also presented.
35
CHAPTER IV
METHODS AND PROCEDURES
It is important to develop an understanding of the methods and
procedures that will be used to accomplish the objectives of this study. The
cost effectiveness of each treatment was determined by conducting a benefit
cost analysis using benefits and costs derived from an actual mill setting. The
benefits considered were the value of the reduction in the use of dyes and
reduction in the rate of fabric rejection. Costs such as production expenses and
additional labor required to initiate and maintain the treatments are considered.
This chapter discusses the theoretical basis of the benefit-cost analysis.
Benefit/Cost Analysis
Economics is the study of the allocation of scarce resources among
competing uses. Welfare economics is that branch of economics that focuses
on the question of how a society can allocate those scarce resources so as to
maximize social welfare. Benefit-cost analysis represents applied welfare
economics; that is, it involves the application of the principles of welfare
economics to specific and actual activities, programs, or projects.
Benefit-cost analysis is an important decision-making aid used to
generate the information necessary to determine whether a given activity is
36
desirable or whether it constitutes a waste of productive resources. In general,
benefit-cost analysis is a tool used to develop reliable information on the
desirable and undesirable effects of particular programs.
The process of benefit-cost analysis can be broken down into four
primary stages: identification, classification, quantification, and presentation.
The identification stage involves identifying all effects of a program or project.
This stage provides the analyst with a check list of all the items that should be
taken into consideration. The second stage deals with classifying these items
into either benefits or costs. The third stage involves quantifying, or giving
these items an actual numerical value. The final stage of a benefit-cost analysis
is presentation of the relevant information in a reasonably straight-forward
manner (Anderson and Settle, 1977).
The benefits of a project are the value of the goods and services
provided by that project. The efficiency costs, or opportunity costs, of a
project represent the value of the goods and services forgone as a result of the
project. This means that neither the benefits nor the costs have to be actual
money payments. A benefit could be a perceived convenience over an
altemative project. One type of study, which could be considered a cost-
effectiveness analysis, is a special form of cost-benefit analysis, which takes
37
into account the difficulty in identifying and presenting project benefits in
terms of dollars (Sassone and Schaffer, 1978).
Benefit-cost analysis uses a decision criterion identified as the Potential
Pareto Superiority criterion. This criterion labels a project as superior if those
who gain from the project could compensate those who lose so that no one
would be worse off with the project.
There are two basic approaches to conducting a benefit cost analysis:
the general equilibrium approach, and the partial equilibrium approach
(Anderson and Settle, 1977). The general equilibrium approach involves the
identification and measurement of all gains and losses caused by a project.
Because there is a reallocation of resources to implement the project, there are
some individuals who will gain and some who will lose. The benefits include
the maximum amount that all people who gain from the project would be
willing to pay for the advantages offered by the project. The costs include the
minimum amount that the people who lose from the project would accept as
compensation in order to keep them at the same level of welfare prior to the
project.
The partial equilibrium approach measures benefits as the total
willingness to pay by all individuals for the direct outputs of the project. The
costs are measured by the total amount individuals would be willing to pay for
38
the goods and services that are used for the project if the resources were used
in their next highest valued altemative use.
The differences between the two approaches are subtle, but the partial
equilibrium approach focuses on the direct effects of the project while the
general equilibrium approach considers all effects whether directly or
indirectly related to the project. The two approaches often yield the same
results, but the general equilibrium approach involves less work and is less
subject to misinterpretation.
The cost effectiveness of the processes discussed in this study is unique
in that there are no wirmers or losers. If the process is adopted, the textile mill
receives the premium price for their output instead of the discounted price.
Thus, the textile mill would only adopt these treatments if it is cost effective.
Representative Mill
Each of the four treatments considered in this study is an altemative
technique that may be used to minimize the problems associated with neps.
Cost-effectiveness was determined for each altemative treatment by whether
the benefits of each treatment outweighed costs. If benefits do outweigh costs
for a treatment, it is recommended that the treatment be adopted.
The cost of the product used for the coverage of neps, additional water,
additional labor, additional energy, and the opportunity cost of mill time
39
required for the treatments represent the increased cost of each treatment. The
benefits considered include: the value of the reduction in dye use, and the value
of decreased rejection of fabrics due to nep content. Benefits and costs in this
study were determined from an examination of the financial records of an
actual mill. Data obtained from the representative textile mill was
subsequently submitted to George R. Herron, Vice President of Cotton
Procurement for Dan River Inc. in Danville, Virginia to determine reliability of
data. Mr. Herron confirmed that the representative mill's costs were
representative and otherwise appropriate.
Estimation of the cost effectiveness of adoption of the four treatments
was accomplished through a benefit/cost analysis of the treatments in the
representative mill setting. Estimated cost values from the dyeing process of a
representative mill are shown in Table 1. The representative mill was assumed
to be a medium sized textile mill, which uses between 18,000 and 22,000 bales
of cotton per year to produce apparel and furniture upholstery. According to
Ed Foster at the Intemational Center For Textile Research in Lubbock, Texas,
a small textile mill would consume under 12,000 bales of cotton per year and a
large textile mill would use more than 30,000 bales of cotton per year. It was
assumed that approximately 80 percent of this cotton would be used to produce
40
Table 1. Costs for various textile processes in a representative mill ($/lb of yam).
Process
Bleach
Black'
Red'*
Labor
0.03220
0.17100
0.15690
VarOH'
0.06920
0.36710
0.33670
Fbced Otf
0.03440
0.18260
0.16750
Dyes
0.00000
0.48960
0.09790
Chemicals
0.01410
0.16460
0.09010
Total Cost
0.14990
1.37490
0.84910
' Var OH (i.e., variable overhead) represents costs of variable inputs such as electricity, water, and others not described elsewhere. ^ Fbced OH (i.e., fixed overhead) represents costs of fixed inputs as weU as time required for the process. ' Scoured, not bleached. "* Bleached, not scoured.
41
light weight fabrics for apparel with the remainder allocated to fabrics for the
household and industrial product industries.
Textile mills often spin cotton into yam, weave the yam into fabric, and
dye the fabric only to find that it is unsuitable for use in the final product
because of the presence of neps. It was assumed that the representative mill
experienced a rejection rate of 3.5 percent of the fabric. It was further assumed
that 10 percent of the fabric (0.35 percent of the light fabric produced) was
rejected due to the presence of neps. A reduction in the rate of fabric rejection
due to the presence of neps would be a benefit of this treatment. It is assumed
that textile mills generally will not purchase a lower quality cotton merely
because these treatments would allow for the coverage of neps with dye. The
purchase of a lower quality cotton would lead to a lower quality finished
product (Foster, 1996).
The cost-effectiveness of a treatment is determined by whether benefits
outweigh costs. The major benefits examined in this study were the reduction
in the amount of dye required and the decrease in the amount of fabric rejected
due to the presence of neps. The reduction in the quantity of dye used depends
on the depth of color preferred, which in tum affects the quantity of dye used.
It was assumed that each of the treatments considered reduces dye
requirements by ten percent.
42
Recall that it was assumed that the representative mill experienced a
rejection rate of 3.5 percent of its fabric and that ten percent of this was due to
the presence of neps resulting in the rejection of approximately 0.35 percent of
the light weight fabric due to the presence of neps. Therefore, the use of any
of the four treatments was assumed to allow the textile mill to sell the formerly
rejected neppie fabric to the original buyer. Thus, the representative mill
would no longer reject the 0.35 percent of fabric that would be rejected due to
the presence of neps. The value of this 0.35 percent of the fabric that is no
longer rejected represents the primary benefit of the use of any of the
considered treatments.
The representative mill was assumed to process 6,912,000 pounds of
cotton per year for use in apparels (i.e., 18,000 bales * 480 pounds per bale *
80 percent). Thus, with a 3.5 percent fabric rejection, it was assumed that the
mill rejects 241,920 pounds of fabric per year. It was further assumed that ten
percent of the rejected fabric was rejected due to the presence of neps (i.e.,
24,192 pounds). The considered treatments are assumed to prevent the
rejection of this fabric.
Costs considered in the adoption of these treatments in a textile mill
were: the cost of the primary input used for the coverage of neps (i.e., chitosan
or cellulase enzymes), cost of additional chemicals (sodium sulfate and non-
43
ionic wetting agent), costs of additional labor, and additional overhead
expenses, both variable (water, electricity, opportunity costs) and fixed.
The cost of adopting these treatments can be expressed in the following
form:
TCj = CX, + CRC + VOH + FOH + CAL,
where TC is the total cost of the specified treattnent "I", CX, is the cost of the
primary mput used for the coverage of neps, CRC is the costs of the required
chemicals used in the process, VOH is the increase in variable overhead, FOH
is the increase in fixed overhead, and CAL is the increase in cost of labor.
The total benefits for each treatment are expressed in the following
form:
TBj = VDD, + VDR,,
where TB is the value of the total benefits received from the adoption of
treatment "I", VDD is the value of the decrease in the amount of dye used, and
VDR is the value of the decrease in fabric rejection. The economic efficiency
of adopting the treatments is determined by whether TB is greater than TC,, or
if net retums (NR,) are greater than zero, where NR, = TB, - TC,.
Additional equipment is not required for any of the treatments
considered. Furthermore, because costs and benefits of the treatments are both
incurred currently, they need not be discounted over time. The results of the
44
benefit-cost analysis for each of the four treatments considered are presented in
the next chapter.
45
CHAPTER V
RESULTS
The previous chapter presented the cost values from a representative
textile mill. These values will be used in conjunction with product prices for
each of the treatments within this study. These treatments have several cost
components: product costs, chemical costs, labor costs, variable overhead
costs, and fixed overhead costs. Each treatment process requires a certain
amount of time to complete. The value of the time required for each process is
contained within the variable overhead costs. The values presented by the
representative mill will be used as a guideline for the benefit cost analysis. The
benefit cost analysis will be used to compare the costs of each process to their
respective benefits to determine cost effectiveness.
Chitosan Pretreatment
Treatment Process
The use of chitosan as a pretreatment for the coverage of neps is
reported by Mehta and Combs (1990). The cotton fabrics are immersed in an
aqueous bath containing 0.1 percent (0.001) nonionic wetting agent and treated
for 5 minutes. The required amount of chitosan is added to the bath and the
treatment continued for 10 minutes at room temperature. The temperature is
46
then raised to 60 degrees C and 10 percent sodium sulfate (o.w.f) is added
over a ten minute period. The fabrics are then treated at that temperature for
another 30 minutes. The fabrics are then rinsed thoroughly and dyed with
direct or reactive dyes.
Treatment Costs
Table 2 presents the various costs associated with the chitosan
pretreatment. Chitosan prices depend on the quantity purchased. Venson, Inc.
sells and provided prices for chitosan. If less than 50 pounds is purchased, the
price of the chitosan is $15 per pound. This price decreases to $10 per pound
when the amount purchased is between 50 and 499 pounds. The price is
further reduced to $8.50 per pound and $8 per pound when the amount
purchased is between 500 and 2000 pounds and over 2000 pounds,
respectively. Pricing is available at a lower cost per pound when contracting to
annually purchase larger quantities over a multi-year period.
Given that the amount of cotton processed in the representative mill is
assumed to be 18,000 bales per year (bale weight is 480 pounds). This
represents 8,640,000 pounds of cotton lint processed annually. Given that the
amount of chitosan used is 0.4 percent (0.004) on the weight of the cotton, and
assuming that the representative mill uses 80 percent of that cotton to produce
light weight fabrics, the expected amount of chitosan needed annually is
47
Table 2. Input Costs for Chitosan Pretreatments.
Chitosan
Sodium Sulfate
Non-ionic Wetting Agent
Labor
Variable Overhead Costs
Fixed Overhead Costs
Total Cost of Process
Cost/lb
$8.00
$0.22
$0.89
Amount Used
0.4% o.w.y.*
10%o.w.y.*
0.1% o.w.y.*
Cost/lb of cotton
$0.0320
$0.0220
$0.00089
$0.0107
$0.0231
$0.0114
$0.10009
On weight of yam.
48
27,648 pounds (e.g., 18,000 bales * 480 pounds per bale * 0.8 * 0.004). Thus,
the representative mill qualifies to enter into a contract with the chitosan
supplier to receive a price lower than $8 per pound. Because this lower price
is not known, the cost effectiveness of the treatment is initially determined
using a cost of $8 per pound for chitosan. However, this cost is later reduced
for further analysis.
The chemical costs for the chitosan pretreatment are determined by the
amount of chitosan used, the price of chitosan and the prices of associated
chemicals. The amount of non-ionic wetting agent used is 0.1 percent (0.001)
on the weight of the yam, and the amount of sodium sulfate (Glauber salt) used
is 10 percent on the weight of the yam. The price of sodium sulfate is $0.22
per pound, and the price of the non-ionic wetting agent is $0.89 per pound.
The time required for the chitosan pretreatment is assumed to be
represented in the fixed overhead costs. Water and electricity used in this
process are represented in the variable overhead costs. The bleach process
previously presented takes an average of 90 minutes to complete. Because the
chitosan treatment takes approximately 40 minutes, it is assumed that one
chitosan treatment will require approximately forty-four percent of the labor
costs, and forty-four percent of the variable and fixed overhead costs specified
for the bleach process. This would give a conservative estimate of the labor
and overhead costs. The bleach process is conducted at approximately 90
49
degrees centigrade, while the chitosan pretreatment would only be conducted at
60 degrees. Therefore, the costs used in this study are perhaps higher than the
costs a textile mill could expect to have. However, these costs are decreased in
the sensitivity analysis to ensure that the exact costs would be evaluated. Thus,
given the data contained in Table 2, the estimated cost of the chitosan treatment
is approximately $0.10 per pound of yam.
Treatment Benefits
As stated previously, one of the benefits recognized from the use of
these treatments is the reduction of the amount of dye used. For direct and
reactive dyes, the chitosan pretreatment can reduce the amount of dye required
by approximately ten percent. Depending on the type of dye used, this
reduction could be either higher or lower. The reduction in the amount of dye
used is based on the K/S value which measures the color value, or strength of
the dye (Mehta and Combs, 1990). The average cost of direct dyes is
approximately $7 per pound, and reactive dyes cost an average of $17 per
pound (Mehta, 1996). The amount of dye used depends on the desired depth
of color. For a moderate shade of any color, the general amount of dye used is
approximately 2 percent of the weight of the yam. Thus, two pounds of dye
are used to dye 100 pounds of cotton yam.
50
/ '
The average amount of dye requfred to dye one pound of cotton a
moderate shade of any color is 0.02 pounds. Assuming the use of a direct dye,
the use of the considered treatments will decrease the required amount of dye
by ten percent. Therefore, the amount of direct dye required to dye one pound
of yam after these treatments, is 0.018 pounds. Thus, the benefit in decreased
use of direct dye resulting from the adoption of the chitosan pretreatment is 1.4
cents per pound of cotton (e.g., $7/lb * (0.02-0.018)).
The amount of reactive dye is assumed to be the same as direct dyes.
Chitosan pretreatments will also decrease the required amount of dye by ten
percent. Thus, the amount of dye used would be 0.018 pounds to dye one
pound of cotton. However, because reactive dyes are more expensive, the
benefits received from the decreased use of reactive dye is 3.4 cents per pound
(e.g., $17/lb* (0.02-0.018)).
Another benefit received from adopting the chitosan pretreatment is the
decrease in the rejection of fabric due to the problem of neps. The
representative mill is assumed to process 6,912,000 pounds of cotton per year
for use in apparels (i.e., 18,000 bales * 480 pounds per bale * 80 percent). It
is assumed that the representative mill is producing yam as a blended product
of numerous qualities of raw cotton lint. This yam is assumed to be
homogeneous. Therefore, the mill is assumed to treat all yam used in apparels
with the chitosan pretreatment in order to achieve the 10 percent reduction in
51
/ \
the 3.5 percent fabric rejection. Thus, with a 3.5 percent fabric rejection, it is
assumed that the mill rejects 241,920 pounds of fabric per year. It is fiirther
assumed that ten percent of the total rejected fabric is rejected due to the
presence of neps (i.e., 24,192 pounds are nep-rejected). The considered
treatment is assumed to be able to prevent the rejection of this 10 percent of the
3.5 percent rejected fabric. The mill is assumed to measure the cost of this
rejection in terms of linear yards of fabric. The representative mill receives an
average of $3.25 for each linear yard of finished fabric. Rejected fabric is sold
in a secondary market for an average of $1.25 per linear yard. Therefore, the
loss due to rejection is $2.00 per linear yard of fabric rejected. Assuming a
light weight yam of 5 ounces per square yard of fabric, and a 60 inch fabric
width, one linear yard of fabric contains 0.52 pounds of cotton. The 24,192
pounds of rejected fabric represents 46,523 yards of fabric. This fabric has a
loss due to the presence of neps of $2.00 per yard. Therefore, the loss in value
of the nep-rejected fabric is $93,046. Thus, given this value of the use of the
chitosan pretreatment, the value of the benefit of cotton undergoing the
chitosan pretreatment is $0.0135 per pound of cotton (i.e., $93,046/6,912,000
pounds of cotton). Therefore, the adoption of the chitosan pretreatment will
yield a 1.35 cent benefit per pound of cotton due to the reduction of rejected
fabric.
52
y ^ WF^'^/' I I I II III i|H|l i l i lHBIMt ia iBWI I IIIIHII II il I t\t^J'jt^r c-f.t.'L. .
The cost for adopting chitosan pretreatments is approximately 10 cents
per pound of cotton. The combined benefits received from reduced fabric
rejection and when using direct dyes are 2.75 cents per pound (i.e., $0.0140 +
$0.0135), and 4.75 cents per pound (i.e., $0.0340 + $0.0135) when using
reactive dyes. Giving a net revenue of-7.25 cents per pound of cotton treated
using direct dyes and -5.25 cents per pound of cotton treated using reactive
dyes. Thus, the benefits of the chitosan pretreatment does not outweigh the
costs of implementing this process in the representative textile mill.
Chitosan Aftertreatment
The previous analysis was based on using chitosan as a pretreatment.
Because neps cannot be identified by the naked eye until after the fabric or
yam is dyed, the pretreatment requires that all cotton used in lightweight
fabrics for apparels be treated. To prevent all fabric from being treated, an
aftertreatment chitosan process is considered. This treatment is used to salvage
fabric which has already been dyed and rejected due to the presence of neps.
A textile mill contracts with the purchasing client for a certain amount
of fabric with a certain amount of allowable defects. Given that the chitosan
aftertreatment (Mehta and Combs, 1996) covers 90 percent of the neps, it is
assumed that this level of neps would allow the fabric to meet most
specifications set by purchasing firms, assuming neps are the only defect
53
z: uuuuuuauinH
present in the fabric. Therefore, textile mills would be allowed to salvage the
cost of the rejected fabric, and receive the premium price negotiated in the
contract.
Treatment Process
The aftertreatment can be used by either an exhaust or a pad-batch
process. If the exhaust method is used, the fabric is treated for 5 minutes with
a 0.1 percent (0.001) non-ionic wetting agent. The aftertreatment requires
more chitosan (0.6 percent o.w.f) because of the interaction with the dyed
fabric. The chitosan is slowly added to the bath and this treatment is continued
for 10 minutes at room temperature. The temperature is then raised to 60
degrees centigrade and 10 percent sodium sulfate (o.w.f) is added to the bath
over a ten minute period. The fabric is treated at that temperature for another
30 minutes. The fabric is then rinsed and dyed with 0.1-0.3 percent dye
(o.w.f).
If the pad-batch process is used, the bath is set with 10 grams of
chitosan per liter of solution and 0.5 grams of non-ionic wetting agent per liter
of solution. The dyed fabric is padded at 80 percent pickup, where 80 percent
of the solution is used, rolled and covered with polyethylene. After batching
for 4 hours at room temperature, the fabric is rinsed and redyed with 0.1-0.2
54
r
percent of the dye (o.w.f). Both color strength and coverage of neps are
increased using either method.
Treatment Costs
Because this process is an aftertreatment, all costs incurred before the
treatment takes place are sunk costs. Sunk costs are those costs which cannot
be recovered once they have been paid. In this case, sunk costs include the
cost of all processes from scouring and bleaching through the dyeing process,
as well as all associated chemical, labor, variable, and fixed overhead costs.
These sunk costs are not included in the costs specified for the cost of the
aftertreatment.
Like the pretreatment, the cost effectiveness of the aftertreatment is
determined using the cost values of a representative mill. The treatment itself
takes approximately one hour to complete before the fabric is redyed. To
determine the price that the textile mill would pay for the chitosan, the amount
of chitosan which would be used per year must be determined. The
representative textile mill processes 18,000 bales per year, or 8,640,000 pounds
of cotton lint (at 480 pound bales). The mill uses 80 percent of this cotton to
produce light weight fabrics. The aftertreatinent is used only on light weight
fabrics destined for apparel because neps are generally not a problem in heavier
weight fabrics used in fumittire upholsteries. The amount of chitosan used for
the exhaust process is 0.6 percent on the weight of the fabric. Therefore the
55
r
amount of chitosan needed annually is 1,452 pounds (e.g., 18,000 bales * 480
pound bales * 0.8 * 0.035 * 0.006).
The chemical costs of the chitosan aftertreatment are assumed to be
sunilar to that presented for the pretreatment. The amount of sodium sulfate
used is 10 percent on the weight of the fabric and is sold for $0.22 per pound.
The amount of non-ionic wetting agent used is 0.1 percent and the cost of the
wetting agent is assumed to be $0.89 per pound. The cost of additional dye
will be presented later.
Costs presented by the representative mill are examined to determine the
costs of labor, water, electricity, and time it takes to complete the process. The
chitosan aftertreatment takes approximately one hour to complete. The bleach
process presented takes approximately 90 minutes; therefore, the costs of
running the dye machines for the aftertreatment are assumed to be two-thirds of
the cost of mnning the bleach process. In the case of the representative textile
mill, the costs of the aftertreatment would be: $0.02157 per pound of fabric for
labor, $0.046364 per pound of fabric for variable overhead, and $0.023048 per
pound of fabric for fixed overhead. The aftertreatment also requires that the
fabric be redyed.
The costs presented by the representative textile mill include costs for
both a black and a red dye treatment. The black dye process includes scouring,
but not bleaching, while the red dye process includes bleaching, but not
56
scouring. Actually, the red dye process is bleached with what is known as a
one step bleach, which includes both scouring and bleaching in the same
process. Once the chitosan aftertreatment has been completed, it is necessary
to redye the fabric. In order to determine the cost-effectiveness of the
aftertreatment, the red dye process, which is less expensive, was used and the
black dye process will be considered in the sensitivity analysis conducted in
Chapter 6. The cost of the red dye treatment is $0.84910 per pound of fabric.
It is assumed that this process uses approximately 2 percent dye on the weight
of the fabric. However, when using the aftertreatment, the fabric requires
approximately 0.2 percent (o.w.f) of the same dye. Therefore, the cost for the
red dye process will be the same as the values presented by the representative
mill, except for the dye cost, which will be 10 percent of the dye cost of the
original process. Thus, the dye cost for the second dye process would be
$0.00979 instead of $0.09790. With the costs of labor, variable and fixed
overhead, and chemical costs, the redye process would cost approximately
$0.76 (i.e. 0.1569 + 0.33670 + 0.1675 + 0.00979 + 0.0901).
The total cost for the chitosan aftertreatment is the sum of the cost for
labor, variable overhead, fixed overhead, dye, and chemicals for both the
aftertreatment and the second dye process. Table 3 contains each of these
costs. As can be seen in Table 3, the total cost of treating the fabric with
chitosan, then redyeing the fabric would cost approximately $0.92 per pound of
57
^ ^ 'oac-CFTcniJirf
Table 3. Costs Associated with Chitosan Aftertreatments.
Chitosan
Sodium Sulfate
Non-ionic Wetting Agent
Labor
Variable Overhead Costs
Fixed Overhead Costs
Redye Process
Total Cost of Process
Cost/lb
$8.00
$0.22
$0.89
Amoimt Used
0.6% o.w.f
10% o.w.f
0.1% o.w.f
Cost/lb of fabric
$0,048
$0.0220
$0.00089
$0.02157
$0.046364
$0.023048
$0.76099
$0.922862
58
/ ^
fabric. This value will be compared to the total benefits received from using
the chitosan aftertreatment once that value has been developed in the next
section.
Treatment Benefits
As stated previously, the benefits received by using the aftertreatment
are specified in the difference between the contracted fabric price and the
secondary market price. The average premium price received for the finished
product is $3.25 per linear yard of fabric. The rejected fabric is sold on the
secondary market for $1.25 per linear yard of fabric. The difference in price
between the two grades of fabric is $2.00 per linear yard. Assuming the
chitosan aftertreatment covers 90 percent of all neps, and assuming this meets
the specs set forth in the contract with the buyer, all fabric rejected because of
the presence of neps can be sold for the premium price. Therefore, rather than
receive the $1.25 per linear yard of rejected fabric, the textile mill will receive
the $3.25 per linear yard of recovered fabric after the treatment. To compare
this benefit with the treatment costs, the $2.00 difference must be converted
from linear yards of fabric to pounds of cotton.
As mentioned previously, it is assumed that the textile mill will use this
treatment only on those light weight fabrics used for apparel. Assuming a light
weight yam of 5 ounces per square yard of fabric, and a 60 inch fabric width,
59
c
one linear yard of fabric contains 0.52 pounds of cotton. Therefore, the $2.00
is divided by 0.52 pounds resulting in the value of the benefits received from
using the chitosan aftertreatment is $3,846 per pound of cotton treated. This
represents the value of the benefits if only that fabric rejected due to neps is
treated. If there are other defects in the fabric which contains neps, it could
still be rejected, thereby reducing these benefits.
Subtracting the treatment costs from the benefits results in a positive net
revenue of $2.923138 per pound of cotton. Given the above assumptions, the
use of chitosan aftertreatments in the representative mill is cost effective.
Cellulase Enzymes
The primary cause of neps is immature cotton fibers. The problem of
immature cotton comes about when the secondary cell wall of the fiber does
not become thick enough due primarily to short growing seasons. Immature
cotton does have a cell wall, but the cotton has not matured enough to provide
sufficient cell wall thickness. Cotton containing virtually no cell wall thickness
is referred to as "dead" cotton. "Dead" fibers will not respond to either
mercerization or submercerizing treatments because these fibers do not have
enough cell wall to accept the swelling agent. Thus, the removal of both
immature and "dead" cotton fibers is the best way to deal with this problem.
Removal of immature and "dead" fibers can be accomplished using cellulase
60
\ ' cmL.tr.ioi'j f H^uhMoaa^^z-c'viiAiv-*) t\ f
enzymes. Cellulase enzymes may be used as either a pretreatment or an
aftertreatment. Both treatments use identical procedures.
Treatment Process
The process used by Ankeny (1996) for the use of cellulase enzymes in
cotton preparation includes setting the bath at 27 degrees C with the fabric
present, and adding a buffer which keeps the pH stable. This mixture is
allowed to circulate for five minutes, then the pH is measured and adjusted to
between 4.5 and 5 (4.8 is considered optimum) with acetic acid. The
temperature is then raised to 58 degrees C and the pH is again measured and
adjusted to 4.8. The cellulase enzyme is then added and the solution is
circulated for 30 minutes with high agitation. The liquid is then extracted, the
bath is filled with hot water and heated to 83 degrees C followed with 10
minutes of circulation. The bath is then drained and the fabric rinsed with cold
water. The final step involves a mechanical treatment such as a tumble dry to
remove surface fibers.
The hot water is needed quickly after the chemical reaction between the
enzymes and the cotton. The enzymes are neutralized by the hot water before
the enzymes can further react with all fibers in the fabric. By neutralizing the
enzymes (with either hot water or alkali), fabric strength is maintained. If the
61
\
enzymes are not neutralized quickly enough, the fibers in the entire fabric will
be damaged and the fabric will lose strength.
The use of cellulase enzymes to remove neps and "dead" cotton requires
a mechanical treatment. In the above process, the tumble dry component
removes all surface fibers which have been damaged by the enzymes. If the
fabric is not tumble dried, an altemative mechanical treatment must be used to
remove the surface fibers. This can be done in a continuous range with a
mechanical arm which mbs against the fabric, removing fibers. To conduct an
analysis of this treatment which can be used with the exhaust process, it is
assumed that the mechanical action provided by the scouring process within a
keir is sufficient to remove the surface fibers when combined with the knitting
and weaving of the yam into fabric.
Pretreatment Costs
The price of the liquid enzyme Cellusoft L® ranges between $3 and $4
per pound, with the lower price being for shipments of 500 pounds or more of
the product (Brian Condon, personal communication. Novo Nordisk,
Frankinton, NC, May 23, 1997). The amount of enzyme used is 1 gram per
liter of solution. If the process takes place within a keir, the amount of solution
needed would be 1514 liters for one treatment which treats approximately 363
pounds of fiber. The amount of enzyme needed would be approximately 1514
62
r \
grams, or 3.34 pounds (453.592 grams per pound). Thus, the amount of
enzyme needed for the treatment of 1 pound of cotton is 0.0092 pounds (i.e.
(3.34 pounds of enzyme) / (363 pounds of fiber)) costing approximately 2.8 to
3.8 cents per pound of fabric.
The representative mill processes approximately 6,912,000 pounds of
cotton per year for apparel use. To use the pretreatment, all cotton designated
for use in apparels must be treated. Thus, the amount of cellulase enzymes
used in a year would be approximately 63,590 pounds of enzyme (i.e., 0.0092
* 6,912,000). This amount is sufficient to receive the discounted price. With
the $3 per pound price, the enzyme cost of treating one pound of cotton would
be $0.0276 (i.e., 0.0092 * $3).
The treatment process calls for the use of a buffer to stabilize the pH of
the solution as the treatment is taking place. A buffer called Tanatex or Buffer-
In 5 is often used in the enzyme process developed for stone washing blue
jeans. The product is measured on a grams per liter basis and costs
approximately $0.50 per pound (Dean J. Bender, personal communication,
Sybron Chemicals, Inc., Birmingham, NJ, May 30, 1997). The amount used in
the enzyme treatment is approximately 6 grams per liter of solution. As
previously stated, the amount of solution used for one treatment within a keir is
1514 liters. Thus, the amount of buffer used for one treatment is 9084 grams
(i.e., 1514 liters * 6 grams/liter), or 20.027 pounds of the buffer (i.e., 9084
63
< ' \
grams / 453.592 grams per pound). Given that one treatment within the keir
contains approximately 363 pounds of fiber, the amount of buffer used per
pound of cotton is approximately 0.0552 pounds. Thus, at $0.50 per pound of
product, the cost of buffer per pound of cotton treated is approximately
$0.0276.
Acetic acid is used to bring the pH of the solution to an optimum point
of 4.8 during the enzyme treatment. The amount of acetic acid used in the
treatment is assumed to be 15 milliliters per 100 liters of solution. This amount
will be changed to determine different levels of cost effectiveness in the
sensitivity analysis. The cost of the acetic acid is $0.50 per pound. This leads
to a cost of acetic acid per pound of cotton treated of $0.000014598.
Labor, and variable and fixed overhead costs for the previous treatments
(i.e., chitosan pre- and after- treatments) were determined using the bleach
formula provided by the representative textile mill. Because the cellulase
enzyme treatment requires a scouring process to remove the surface fibers, the
treatment costs are determined using the cost values provided by the
representative mill for the black color which includes a scouring process. As
discussed previously, a scouring process includes either a mbbing or abrasive
action which is assumed to be sufficient enough to remove the surface fibers
after the chemical reaction between the enzyme and the cotton fibers has taken
place. While the scouring process by itself will not remove all surface fibers,
64
the use of the scouring treatment, along with the knitting and weaving
processes, will remove a sufficient amount of the fibers. The amount of time
required to conduct the enzyme treatment is approximately 10 minutes for the
preparation of the solution, 30 minutes of high agitation for the chemical
reaction to take place, 10 minutes of hot water to kill the enzyme, and 14
minutes of rinsing in cold water to remove any residual. Therefore the enzyme
treatment requires approximately 64 minutes to complete and a typical scouring
process takes approximately 40 minutes to complete. Therefore, the costs for
labor and variable and fixed overhead costs for the enzyme treatment is
approximately 142 percent of the costs for the scouring process provided by the
representative textile mill. These costs for labor and variable and fixed
overhead costs were presented in the previous chapter. Treatment costs for the
cellulase enzyme treatments are presented in Table 4. As can be seen in Table
4, the cost per pound of cotton using the cellulase enzyme pretreatment is
approximately $1.08. The cost for this process is high because of the amount
of labor, and fixed and variable overhead required.
Pretreatment Benefits
Unlike the previous treatments, the use of cellulase enzymes causes a
decrease in the K/S value of the treated fabric. Although this decrease is not
sufficient to require the use of more dye, the treatment benefit of using less
65
c
Table 4. Costs per Pound of Cotton Treated for Cellulase Enzyme Pretreatments.
Input
Cellusoft L®
Buffer-In 5
Acetic Acid
Labor
VAROH
FIXOH
TOTAL
$/unit
3/lb
0.50/ lb
0.50/lb
Amount Used
0.0092 lbs
0.0565 lbs
0.000029195 lbs
Total Cost
$0.0276
$0.02825
$0.000014598
$0.24282
$0.521282
$0.259292
$1.079259
66
r \
dye with the previous treatments is not realized when treating the fabric with
cellulase enzymes. Thus, the only quantifiable benefit realized from the use of
cellulase enzymes is the decreased rejection of fabric due to the presence of
neps.
The value of the benefit of decreased rejection received from using the
cellulase enzyme pretreatment is the same as that received from the use of the
chitosan pretreatment. That is, the benefits received for the decrease in the
rejection of fabric is $0.0135. Therefore, the net revenue for adopting this
pretreatment is approximately $-1.07.
Aftertreatment Costs
The treatment process for both the pre- and after-treatments are the
same. However, the amount of cotton involved in each treatment is not the
same. Using a pretreatment, all cotton used in apparel must be treated, but
with the aftertreatment, the only fabrics treated are those which have been
rejected due to the presence of neps. The amount of fabric rejected by the
representative mill due to the presence of neps is approximately 24,192
pounds. Thus, the amount of enzyme needed for the aftertreatment would be
approximately 222.5664 pounds per year (i.e., 0.0092 * 24,192). This amount
of enzyme is not enough to qualify for the discounted price. Therefore the
price per pound of cellulase enzymes is assumed to be $4 per pound. The
67
^
remaining costs are assumed to be those presented in Table 5. As can be seen
in Table 5, the cost of adopting the cellulase enzyme aftertreatment is
approximately $1.09.
Aftertreatment Benefits
The benefits received from using the cellulase enzyme aftertreatment are
the same as the benefits received from using the chitosan aftertreatment. As
stated previously, the benefits received from using the cellulase enzyme
aftertreatment are the difference between the premium price and the salvage
price of the rejected fabric. The average premium price received for the
finished product is $3.25 per linear yard of fabric. The rejected fabric is sold
on the secondary market for $1.25 cents per linear yard of fabric. The
difference is $2.00 per linear yard of rejected fabric. Assuming the treatment
removes enough neps to meet the specifications set up by the contracted buyer,
all fabric rejected because of the presence of neps can be sold for the premium
price. Therefore, instead of receiving the $1.25 per linear yard of fabric, the
textile mill will receive the $3.25 per linear yard of fabric. To compare this
benefit with the treatment costs, the $2.00 difference must be converted from
linear yards of fabric to pounds of cotton.
As mentioned previously, it is assumed that the textile mill will use this
treatment only on those light weight fabrics used for apparel. Assuming a light
68
/ . ~ ~ \
Table 5. Costs per Pound of Cotton Treated for Cellulase Enzyme Aftertreatments.
Input
Cellusoft L®
Buffer-In 5
Acetic Acid
Labor
VAROH
FIXOH
TOTAL
$/unit
4/lb
0.50/ lb
0.50/lb
Amount Used
0.0092 lbs
0.0565 lbs
0.000029195 lbs
Total Cost
$0.0368
$0.02825
$0.000014598
$0.24282
$0.521282
$0.259292
$1.08849
69
weight yam of 5 ounces per square yard of fabric, and a 60 inch fabric width,
one linear yard of fabric contains 0.52 pounds of cotton. Therefore, the $2.00
is divided by 0.52 pounds resulting in the value of the benefits received from
using the cellulase enzymes as a salvage operation as $3,846 per pound of
cotton treated. Subtracting the cost of $1.09 from the value of the benefits
results in a net return of $2,756 per pound of cotton treated.
Summary
As can be seen in the preceding results, each of the pretreatments were
not cost effective for the representative mill, while both aftertreatments were
cost effective. The chitosan pretreatment had a net revenue of $-0.0725, and
the cellulase enzyme pretreatment had a net revenue of $-1,067. The chitosan
aftertreatment had a net revenue of $2.96812, and the cellulase enzyme
aftertreatment had a net revenue of $2,756.
Table 6 presents the benefits, costs, and net revenues for each of the
treatments considered. As can be seen in Table 6, each of the pretreatments are
not cost effective and each aftertreatment is cost effective.
The next chapter will provide a sensitivity analysis of each process
considered. Also discussed are certain intangibles of each process which
cannot be given a dollar value, but should be considered to determine the
appropriate process to adopt.
70
f \
Table 6. Benefits, Costs, and Net Revenues ($/lb of cotton treated) From Adoption of Each Treatment.
Treatment
Chitosan Pretreatment
Chitosan Aftertreatment
Enzyme Pretreatment
Enzyme Aftertreatment
Costs
$0.10009
$0.922862
$1.079259
$1.08849
Benefits
$0.0275
$3,846
$0.0135
$3,846
Net Revenue
$-0.07259
$2.92314
$-1.06576
$2.7575
71
/
CHAPTER VI
DISCUSSION
The results of a benefit cost analysis conducted on two pretreatments
and two aftertreatments were presented in the previous chapter. Using a
pretreatment of either chitosan or cellulase enzymes was not determined to be
cost effective. The level of technology in a large percentage of textile mills
does not allow for managers to determine whether a fabric will contain neps
before the yam is woven into fabric and the fabric is dyed. If it were possible
to make this determination, the pretreatment, which is less expensive per pound
of cotton treated than the aftertreatment using both chitosan and cellulase
enzymes, could be used on only those yams which would lead to neps in the
final product. At the present time, most tests used to determine whether raw
cotton will contain neps is a chemical or dye test developed on a laboratory
scale. Given that there is no cost effective way to determine which yams
contain high levels of neps, the pretreatment must be used on all yams used in
the development of apparel.
A sensitivity analysis will be conducted on each of the processes
considered to determine whether changing certain costs will improve cost
effectiveness. Another purpose for the sensitivity analysis is to determine how
72
/ \
sensitive the results are to the data used. Additional changes are made to
determine if the treatment would be cost effective in a different time frame.
Sensitivity Analysis
Many aspects of a benefit cost analysis are not fixed. Many times a
benefit cost analysis is based on benefits or costs which will take place in the
future and the values used in the analysis are estimated. This could lead to a
certain degree of error in the final results of the analysis. To gauge the degree
of error in these estimates, a sensitivity analysis is used. There are three basic
types of sensitivity analysis: subjective estimates, selective sensitivity analysis,
and general sensitivity analysis (Sassone and Schaffer, 1978).
A subjective estimate is a subjective way of determining the error of
estimates in a benefit cost analysis. This can be done using past experience,
intuition, or "gut feelings." For example, an analyst might say that this value is
subject to an error of plus or minus 10 percent. This provides the analyst a
range in which the tme value may be, while still allowing the study to result in
a fixed answer. A subjective error may or may not be adequate, depending on
the analyst's skills. An advantage of subjective estimates is that they can
account for changes in the values not considered in the original analysis.
Disadvantages include the fact that decision makers may place less confidence
m this estimate and the analyst may have difficulty defendmg his/her position.
73
c
A selective sensitivity analysis is an objective way to estimate the error
of a value. This is done by determining any components in the analysis which
may be subject to error or may change in the near future. Once these
components are determined, the value is changed and the benefits and costs are
recalculated to determine how the outcome has changed. Advantages of this
approach include the objectiveness and the relative ease of calculation. One
disadvantage is that only a few of the components may be changed at a time in
order for it to remain objective.
The final type of sensitivity analysis is a general sensitivity analysis.
This approach includes the formulation of a probability distribution of the
outcomes. The decision maker can look at a probability distribution and see
the chances of breaking even, losing money, or making money from adoption
of the project. This approach takes into account all possible outcomes when a
single component of the analysis changes. Because of this, the general
sensitivity analysis is time consuming and difficult.
The approach used in this research is the selective sensitivity analysis
because there are certain values which could not be determined with 100
percent accuracy. These values will be changed to consider various techniques
used in different textile mills, different amounts of product used, and different
prices for these products. The total costs and benefits received from adoption
74
/
of a process will also be changed to determine the effects on the cost
effectiveness of the process.
Chitosan Pretreatments
In the sensitivity analysis for chitosan pretreatments, costs will be
allowed to decrease and benefits will increase to test the results for the
sensitivity of the data values. Tables 7 through 12 present the net revenues
associated with adoption of chitosan pretreatments when the values of primary
benefits and costs are individually varied. The price paid for chitosan could
eventually change if there were wide spread adoption of this process. This
sensitivity analysis takes this into consideration. Also, adoption of the chitosan
pretreatment would allow the textile mill to use a smaller amount of dye to
achieve the same color value. Thus, the benefit received from the decreased
use of dyes would be higher for a higher priced dye. The net revenue values in
Table 7 result from allowing the costs of both chitosan and sodium sulfate to
decrease in 10 percent intervals, while the cost of dyes are increased from $7
per pound, the cost of direct dyes, to $17 per pound, the cost of reactive dyes.
After decreasing costs (i.e., the combined cost of chitosan and sodium sulfate is
decreased by as much as 50 percent) and increasing benefits (i.e., the cost of
dye is increased by 143 percent) the treatment still does not appear to be
economically feasible.
75
^
Table 7. Net Revenues When Cost of Chitosan and Sodium Sulfate Decrease by 10% and the Cost of Dye Increases.
Cost
of
Dye
($/lb)
7
8
9
10
11
12
13
14
15
16
17
Reduction in (
Base*
-0.07253
-0.07053
-0.06853
-0.06653
-0.06453
-0.06253
-0.06053
-0.05853
-0.05653
-0.05453
-0.05253
10%
-0.06713
-0.06513
-0.06313
-0.06113
-0.05913
-0.05713
-0.05513
-0.05313
-0.05113
-0.04913
;0.04713
3ost of Chitosan and Sodium Sulfate
20%
-0.06173
-0.05973
-0.05773
-0.05573
-0.05373
-0.05173
-0.04973
-0.04773
-0.04573
-0.04373
-0.04173
30%
-0.05633
-0.05433
-0.05233
-0.05033
-0.04833
-0.04633
-0.04433
-0.04233
-0.04033
-0.03833
-0.03633
40%
-0.05093
-0.04893
-0.04693
-0.04493
-0.04293
-0.04093
-0.03893
-0.03693
-0.03493
-0.03293
-0.03093
50%
-0.04553
-0.04353
-0.04153
-0.03953
-0.03753
-0.03553
-0.03353
-0.03153
-0.02953
-0.02753
-0.02553
*The base price of chitosan is $8/lb., base price of sodium sulfate is $0.22/lb.
76
^
Different textile mills may have different costs associated with labor,
variable overhead, and fixed overhead. The next scenario will decrease these
costs in order to determine whether the process will become cost effective.
The representative mill in this study rejects 3.5 percent of the overall fabric,
with 10 percent of this due to the presence of neps. The adoption of the
chitosan pretreatment would allow this 10 percent to be accepted. Thus, if
there were a larger amount of fabric rejected due to the presence of neps, the
benefit from the reduction of this fabric would increase. Table 8 presents the
net revenues when the costs of labor, variable overhead, and fixed overhead are
all decreased in 10 percent intervals, while the assumed reduction in rejection
of fabric is increased from 10 percent to 15 percent. Again the process does
not become cost effective.
As discussed previously, if the chitosan pretreatment were adopted by a
large portion of the textile industry, the price of chitosan could change. The
next scenario takes into account a reduction in the price of chitosan. Also,
recall that the representative textile mill sold its rejected fabric on a secondary
market for a price which would be $2 less than if it were sold to the primary
buyer. If the price received on the secondary market were $2.50 per linear
yard, the benefit received from the adoption of the chitosan pretreatment would
increase.
77
c ^
Table 8. Net Revenues When the Costs of Labor, Variable Overhead, and Fixed Overhead Are Reduced by 10% For Varying Fabric Rejection Rates.
Fabric
Rejection
Rate
(Percent)
Reduction in Costs of Labor, Variable Overhead, and Fked Overhead
10
11
12
13
14
15
Base*
-0.07253
-0.07118
-0.06984
-0.06849
-0.06714
-0.06580
10%
-0.06802
-0.06667
-0.06533
-0.06398
-0.06263
-0.06129
20%
-0.06351
-0.06216
-0.06082
-0.05947
-0.05812
-0.05678
30%
-0.05900
-0.05765
-0.05631
-0.05496
-0.05361
-0.05227
40%
-0.05449
-0.05314
-0.05180
-0.05045
-0.04910
-0.04776
50%
-0.04998
-0.04863
-0.04729
-0.04594
-0.04459
-0.04325
*Base costs of labor, variable, and fixed overhead are $0.0107, $0.0231, and $0.0114, respectively.
78
/
The net revenue values in Table 9 are estimated as a result of decreasing the
cost of chitosan from the current $8.00 per pound to $4.00 per pound while
increasing the value of rejected fabric from $2 per linear yard to $3.25 per
linear yard. The process is not cost effective in this scenario.
The previous scenarios involved the decrease in certain costs within the
chitosan pretreatment. The process does not become cost effective in any of
the scenarios, so the cost of the entire process will be decreased in the
following scenarios. The benefit that is changed here is the same as the
previous scenario in which the difference in prices of the accepted and rejected
fabric is increased. Table 10 provides net revenues when the cost of the entire
chitosan treatment is decreased, while the value of the rejected fabric increases.
The pretreatment does not become cost effective.
The final scenario in which costs are decreased and benefits increase
involves a decrease in the cost of the chitosan pretreatment and the cost of dye
is increased to increase the benefit received from less dye used. Table 11 lists
the net revenues when the cost of the chitosan treatment is varied, while the
cost of the dye is increased. Again the process is not cost effective.
To show the effects of inflation over time. Table 12 was constmcted to
present the net revenues from adopting chitosan pretreatments when both the
cost of labor and the cost of variable overhead are increased. It is
79
/ \
Table 9. Net Revenues With ] Rejected Fabric.
Price
Of
Chitosan
($/lb)
1
8.00
7.50
7.00
6.50
6.00
5.50
5.00
4.50
4.00
2.00
-0.07253
-0.07053
-0.06853
-0.06653
-0.06453
-0.06253
-0.06053
-0.05853
-0.05653
[ncreasing Costs of Chitosan and Increasing Value of
Value of Rejected Fabric ($/linear yard)
2.25
-0.07085
-0.06885
-0.06685
-0.06485
-0.06285
-0.06085
-0.05885
-0.05685
-0.05485
2.50
-0.06916
-0.06716
-0.06516
-0.06316
-0.06116
-0.05916
-0.05716
-0.05516
-0.05316
2.75
-0.06748
-0.06548
-0.06348
-0.06148
-0.05948
-0.05748
-0.05548
-0.05348
-0.05148
3.00
-0.06580
-0.06380
-0.06180
-0.05980
-0.05780
-0.05580
-0.05380
-0.05180
-0.04980
3.25
-0.06412
-0.06211
-0.06012
-0.05812
-0.05612
-0.05412
-0.05212
-0.05011
-0.04811
80
Table 10. Net Revenues With Decreasing Costs of Chitosan Pretreatments and Increasing Values of Rejected Fabrics.
Value
of
Rejected
Fabric
($/lm. Yd)
Cost of Chitosan Pretreatments ($/lb of cotton treated)
2.00
2.25
2.5
2.75
3.00
3.25
0.10
-0.0726
-0.0709
-0.0692
-0.0675
-0.0658
-0.0641
0.09
0.06254
-0.0609
-0.0592
-0.0575
-0.0558
-0.0541
0.08
-0.0525
-0.0509
-0.0492
-0.0475
-0.0458
-0.0441
0.07
-0.0425
-0.0409
-0.0392
-0.0375
-0.0358
-0.0341
0.06
-0.0325
-0.0309
-0.0292
-0.0275
-0.0258
-0.0241
0.05
-0.0225
-0.0209
-0.0192
-0.0175
-0.0158
-0.0141
81
Table 11. Net Revenues With Decreasing Costs of the Chitosan Pretreatments and Increasing Cost of Dyes.
Cost
of
Dye
($/lb)
Cost of Chitosan Pretreatment ($/lb of cotton treated)
7
8
9
10
11
12
13
14
15
16
17
0.10
-0.0725
-0.0705
-0.0685
-0.0665
-0.0645
-0.0625
-0.0605
-0.0585
-0.0565
-0.0545
-0.0525
0.09
-0.0625
-0.0605
-0.0585
-0.0565
-0.0545
-0.0525
-0.0505
-0.0485
-0.0465
-0.0445
-0.0425
0.08
-0.0525
-0.0505
-0.0485
-0.0465
-0.0445
-0.0425
-0.0405
-0.0385
-0.0365
-0.0345
-0.0325
0.07
-0.0425
-0.0405
-0.0385
-0.0365
-0.0345
-0.0325
-0.0305
-0.0285
-0.0265
-0.0245
-0.0225
0.06
-0.0325
-0.0305
-0.0285
-0.0265
-0.0245
-0.0225
-0.0205
-0.0185
-0.0165
-0.0145
-0.0125
0.05
-0.0225
-0.0205
-0.0185
-0.0165
-0.0145
-0.0125
-0.0105
-0.0085
-0.0065
-0.0045
-0.0025
82
Table 12. Net Revenues With Increasing Costs of Labor and Variable Overhead for Chitosan Pretreatments.
Increased
Value
Of
Labor
Base*
5%
10%
15%
20%
25%
30%
Increased Value of Variable Overhead
Base*
-0.0725
-0.0731
-0.0737
-0.0742
-0.0738
-0.0753
-0.0758
5%
-0.0738
-0.0743
-0.0748
-0.0754
-0.0759
-0.0764
-0.0770
10%
-0.0749
-0.0754
-0.0760
-0.0765
-0.0770
-0.0776
-0.0781
15%
-0.0761
-0.0766
-0.0771
-0.0777
-0.0782
-0.0787
-0.0793
20%
-0.0772
-0.0778
-0.0783
-0.0788
-0.0794
-0.0799
-0.0804
*Base value of Labor is $0.0107/lb of cotton, and base value of Variable Overhead is $0.0231.
83
^ \
assumed that the cost of labor and the cost of variable overhead both increase
in a similar fashion as the rate of inflation. Thus, as inflation increases, so do
the costs of labor and variable overhead. As can be seen in Table 12, the net
revenues from adoption of chitosan pretreatments become more negative as the
inflation rate increases.
Thus, chitosan pretreatments are not shown to be cost effective in any
scenario considered. The primary reason for this is that all cotton used for the
production of apparel is treated whether or not neps are present. As discussed
previously, if a cost effective technology existed that would allow only those
yams which include nep causing characteristics to be treated, the benefits
would be greater. Therefore, given the current economy and technologies,
chitosan pretreatments are not found to be cost effective.
Chitosan Aftertreatments
Because the chitosan aftertreatments were determined to be cost
effective, the sensitivity analysis considers decreased benefits and/or increased
costs to determine at what level the treatments would become too expensive to
adopt. It also includes those changes which could affect the cost effectiveness
over time, or costs which might not be the same for other textile mills. Tables
13 through 17 present the net revenues when certain aspects of the chitosan
aftertreatments are changed.
84
c ^ . .^ . II H I II I I III I I I I I I ! • M I I I M H I I • I I I
The costs presented for the chitosan aftertreatment in the benefit cost
analysis included the use of the red dye process presented by the representative
textile mill for redyeing. The red dye process which is less expensive than the
black dye process is also presented. The values presented in Table 13 present
the costs and benefits associated with the chitosan aftertreatments if the black
dye process presented by the representative mill is used for the redye process
rather than the red dye process. The difference between the two processes are
that the black dye process uses a scouring treatment and the red dye process
uses only a bleaching process. As can be seen in Table 13, the net revenues
from the chitosan aftertreatments when using the more expensive black dye
process for redyeing the fabric would still be approximately $2.75. Therefore,
it would still be cost effective.
To show the effects of inflation on the cost effectiveness of the chitosan
aftertreatments, values for labor and variable overhead are increased in Table
14. The values of labor are increased by up to 30 percent, and the values of
variable overhead are increased by up to 20 percent. As can be seen, chitosan
aftertreatments would still be cost effective in the fiiture if the rate of inflation
increases by the considered amounts.
Given an increase in inflation, the prices of some of the inputs used in
the chitosan aftertreatment may increase. Table 15 presents the net revenues
when the values of labor, variable overhead, and fixed overhead are increased
85
/ • ii • i i—^»a»pmi i» i i i I
Table 13*. Costs Associated with Chitosan Aftertreatments.
Chitosan
Sodium Sulfate
Non-ionic Wetting Agent
Labor
Variable Overhead Costs
Fixed Overhead Costs
Redye Process
Total Cost of Process
Total Benefits
Net Revenue
Cost/lb
$8.00
$0.22
$0.89
Amount Used
0.6% o.w.f
10% o.w.f
0.1% o.w.f
Cost/lb of fabric
$0,048
$0.0220
$0.00089
$0.02157
$0.046364
$0.023048
$0.93426
$1.096132
$3,846
$2.749868
* Table 3 was amended by changing the value for the redye process to be consistent with the black dye process presented by the representative textile mill rather than the red dye process, and adding total benefits and the net revenue from adoption of the treatment.
86
m -Titfmmmmsn:
Table 14. Net Revenues With Increasing Costs of Labor and Variable Overhead for Chitosan Aftertreatments.
Increased
Value
Of
Labor
Base*
5%
10%
15%
20%
25%
30%
Increased Value of Variable Overhead Costs
Base*
2.92314
2.92206
2.92098
2.91990
2.91882
2.91775
2.91667
5%
2.92153
2.91974
2.91867
2.91758
2.91651
2.91543
2.91435
10%
2.91850
2.91742
2.91635
2.91527
2.91419
2.91311
2.91203
15%
2.91618
2.91511
2.91403
2.91295
2.91187
2.91079
2.90907
20%
2.91387
2.91279
2.91171
2.91063
2.90955
2.90847
2.90739
*Base value of Labor is $0.02157/lb of cotton, and base value of Variable Overhead is $0.046364.
87
/ I m i l H l W • Mil IMMI—WM Ml I ' i Jm^.JUiUMW F ^ W ^
Table 15. Net Revenues With Increasing Costs of Labor, Variable Overhead, and Fked Overhead, With Increasing costs of Chitosan, Sodium Sulfate, and Non-ionic Wetting Agent for Chitosan Aftertreatments.
Increased
Value
Of
Inputs
Increased Value of Labor and Overhead Costs
Base*
50%
100%
150%
200%
B£ise*
2.92314
2.88769
2.85225
2.81680
2.78136
50%
2.87765
2.84220
2.80676
2.77131
2.73587
100%
2.83216
2.79671
2.76127
2.72582
2.69038
150%
2.77514
2.73970
2.70425
2.66881
2.63336
200%
2.74117
2.70573
2.67028
2.63484
2.59939
*Base value of Labor is $0.02157, base value of Variable Overhead is $0.046364, base value of fixed overhead is $0.023048, and base price of chitosan is $8.00, base price of sodium sulfate is $0.22, and base price of non-ionic wetting agent is $0.89.
88
/ •H i l l IIMIIimMli|iiWllllllilllllllllllMW|i|l|iii I I B ^ — l i l l H i BULIUB^ ^ t*.»ta.^'e*J'>^-w^Bwmuu..i j
by up to 200 percent while the cost of chitosan, sodium sulfate, and the non-
ionic wetting agent are also increased by up to 200 percent. Those textile mills
that do not produce large amounts of fabric could use Table 15 to determine if
it would be cost effective to adopt the chitosan aftertreatment if they did not
buy enough chitosan to qualify for the price discount. The treatment is cost
effective.
With the adoption of the chitosan aftertreatment, the price of chitosan
could change. This scenario considers a decrease in the price of chitosan.
Also in this scenario is an increase in the value of the rejected fabric. As can
be seen in Table 16, if the price of chitosan were decreased and the value of the
rejected fabric were increased, the net revenues would continue to increase,
making the adoption of the aftertreatment more attractive.
With the supply of the major component of the chitosan aftertreatment
depending on the life cycle of cmstacean, the price of chitosan could change
depending on the amount of shrimp and crabs available. If the amount of
cmstacean available for harvest decreases, the price of chitosan could increase.
This particular case is examined in the following scenario along with a
decreasing value of the rejected fabric in order to determine the cost
effectiveness level of the aftertreatment. The net revenues in Table 17 are a
result of increasing the price of chitosan from $8 per pound to $12 per pound
89
Table 16. Net Revenues for Chitosan and Increasing Valu
Price
Of
Chitosan
($/lb)
8.00
7.50
7.00
6.50
6.00
5.50
5.00
4.50
4.00
V
2.00
2.92314
2.92614
2.92914
2.93214
2.93514
2.93814
2.94114
2.94414
2.94714
Chitosan A le of Rejed
alue of Rej
2.25
3.40406
3.40706
3.41006
3.41306
3.41606
3.41906
3.42206
3.42506
3.42806
iftertreatments With Decreasing Costs of ted Fabric.
ected Fabric ($/linear yard)
2.50
3.88483
3.88783
3.89083
3.89383
3.89683
3.89983
3.90283
3.90583
3.90883
2.75
4.36560
4.36860
4.37160
4.37460
4.37760
4.38060
4.38360
4.38660
4.38960
3.00
4.84637
4.84937
4.85237
4.85537
4.85837
4.86137
4.86437
4.86737
4.87007
3.25
5.32714
5.33014
5.33314
5.33614
5.33914
5.34214
5.34514
5.34814
5.35114
90
Table 17. Net Revenues for Chitosan Aftertreatments with Increasing Costs of Chitosan and Decreasing Value of Rejected Fabric.
Price of Chitosan ($/lb)
Value of Rejected Fabric
8.00
8.50
9.00
9.50
10.00
10.50
11.00
11.50
12.00
2.00
2.92329
2.92029
2.91729
2.91429
2.91129
2.90829
2.90529
2.90229
2.89929
1.75
2.44252
2.43952
2.43652
2.43352
2.43052
2.42752
2.42452
2.42152
2.41852
1.50
1.96175
1.95875
1.95575
1.95275
1.94975
1.94675
1.94375
1.94075
1.93775
1.25
1.48098
1.47798
1.47498
1.47198
1.46898
1.46598
1.46298
1.45998
1.45698
1.00
1.00022
0.99722
0.99422
0.99122
0.98822
0.98522
0.98222
0.97922
0.97622
^
91
and decreasing the value of the rejected fabric by up to 50 percent. The
process is cost effective in this scenario.
The chitosan aftertreatment appears to be cost effective given a wide
range of changes within the process. The final scenario will determine if the
treatment would be cost effective with large changes in both the costs and the
revenues received from adoption of the process. Table 18 presents the net
revenues when all costs are increased by as much as 50 percent and all benefits
are decreased by as much as 40 percent. As can be seen in Table 18, chitosan
aftertreatments remain cost effective in this scenario.
As can be seen with this sensitivity analysis, chitosan aftertreatments are
cost effective for the representative textile mill and could possibly be cost
effective for any textile mill willing to adopt the process.
Cellulase Enzyme Pretreatment
The cellulase enzyme pretreatment was not determined to be cost
effective for the representative textile mill. Again, this is due, in large part, to
the fact that all cotton destined for use in apparels must be treated. Another
factor in the cost effectiveness of the cellulase enzyme pretreatment is the fact
that the K/S value is actually decreased with the use of this treatment.
However, there is only one benefit considered in this treatment: the decrease
in the amount of fabric rejected due to the presence of neps. Therefore, there
92
\
Table 18. Net Revenues With Increasing Costs and Decreasing Revenues for Chitosan Aftertreatments.
Increased
Total
Costs
Decreased Revenues (Benefits)
Base*
10%
20%
30%
40%
50%
Base*
2.92314
2.83085
2.73857
2.64628
2.55400
2.46107
10%
2.53854
2.44625
2.35397
2.26168
2.16939
2.07711
20%
2.15394
2.06165
1.96937
1.87708
1.78479
1.69251
30%
1.76934
1.67705
1.58477
1.49308
1.40019
1.30791
40%
1.38474
1.29245
1.20017
1.10788
1.01559
0.92331
*Base revenues are $3,846 and base costs are $0.922862.
93
are limited variables which can be altered for the purpose of conducting the
sensitivity analysis.
To determine the cost effectiveness of the enzyme pretreatment in a
textile mill other than the representative mill in this study, the costs of labor
variable overhead, and fixed overhead are decreased in this scenario. Also
changed is the percentage of fabric rejected due to the presence of neps is
increased. Table 19 presents the net revenues from adopting the cellulase
enzyme pretreatment when the costs of labor, variable overhead, and fixed
overhead are reduced by up to 50 percent and the amount of fabric rejected due
to the presence of neps is increased from 10 percent to 15 percent. The
enzyme pretreatment continues to not be cost effective.
With the adoption of the enzyme pretreatment, prices of some of the
products could decrease. Also, some textile mills could receive a different
price for their rejected fabric than the representative textile mill. Therefore, the
value of this rejected fabric is increased in the following scenario. The net
revenues presented in Table 20 are a result of decreasing the prices of all inputs
(enzyme, buffer, and acetic acid) and increasing the value of the rejected fabric
from $2 per linear yard to $3.25 per linear yard. Again, all net revenues are
negative, thereby confirming that the cellulase enzyme pretreatment is not cost
effective.
94
/
Table 19 . Net Revenues When the Costs of Labor, Variable Overhead, and Fked Overhead are reduced by 50% For Different Fabric Rejection Rates.
Fabric
Rejection
Rate
(Percent)
Reduction in Costs of Labor, Variable Overhead, and Fked Overhead
10
11
12
13
14
15
Base*
-1.06576
-1.06445
-1.06310
-1.06176
-1.06041
-1.05907
10%
-0.96342
-0.96211
-0.96077
-0.95942
-0.95807
-0.95673
20%
-0.86108
-0.85977
-0.85843
-0.85708
-0.85573
-0.85439
30%
-0.75874
-0.75743
-0.75609
-0.75474
-0.75339
-0.75205
40%
-0.65640
-0.65509
-0.65375
-0.65240
-0.65105
-0.64971
50%
-0.55406
-0.55275
-0.55141
-0.55006
-0.54872
-0.54737
*Base costs of labor, variable, and fixed overhead are $0.24282, $0.521282, and $0.0259292, respectively.
95
Table 20. Net Revenues With Increasing Costs of Enzyme, Buffer, and Acetic Acid with Increasing Value of Rejected Fabric.
Decreased
Price
Of
Inputs
($/lb)
Value of Rejected Fabric ($/linear yard)
Base*
10%
20%
30%
40%
50%
2.00
-1.06576
-1.06017
-1.05459
-1.04900
-1.04341
-1.03783
2.25
-1.06411
-1.05853
-1.05294
-1.04736
-1.04177
-1.03618
2.50
-1.06243
-1.05685
-1.05126
-1.04567
-1.04009
-1.03450
2.75
-1.06075
-1.05516
-1.04958
-1.04399
-1.03840
-1.03282
3.00
-1.05907
-1.05348
-1.04789
-1.04231
-1.03672
-1.03113
3.25
-1.05738
-1.05180
-1.04621
-1.04062
-1.03504
-1.02945
*Base price of enzyme is $3/lb, base price of buffer is $0.50/lb, base price of acetic acid is $0.50.
and
96
^
If the total cost of the enzyme pretreatment was decreased, the treatment
could become cost effective. Also in this scenario is changing the value of the
rejected fabric. Table 21 presents the net revenues when the total costs of the
pound of cotton treated to $0.85 per pound of cotton treated, while the value of
the rejected fabric is increased from $2 per linear yard to $3.25 per linear yard.
All net revenues in this scenario are negative. This means that the process
would not be cost effective.
If the enzyme pretreatment were adopted now, it is possible that the
costs of labor and variable overhead would increase due to the fact that these
costs are assumed to increase in an inflationary economy. The net revenues in
Table 22 are the result of increasing the cost of labor and variable overhead.
This scenario is considered to determine the effects of inflation over time. As
can be seen in Table 22, the net revenue becomes more negative as each
variable is increased.
The information provided in the preceding tables indicate that the
cellulase enzyme pretreatment is not cost effective for the representative textile
mill. The treatment is not expected to be cost effective given the current
technologies.
97
/ \
Table 21. Net Revenues With Decreasing Costs of Cellulase Enzyme Pretreatments
Value
of
Rejected
Fabric
($/lin. Yd)
2.00
2.25
2.50
2.75
3.00
3.25
Cost of Enzyme Pretreatments ($/lb of cotton treated)
1.07926
-1.06576
-1.06411
-1.06243
-1.06075
-1.05907
-1.05738
1.05
-1.03650
-1.03486
-1.03317
-1.03149
-1.02981
-1.02813
1.00
-0.98650
-0.98486
-0.98317
-0.98149
-0.97981
-0.97813
0.95
-0.93650
-0.93486
-0.93317
-0.93149
-0.92981
-0.92813
0.90
-0.88650
-0.88486
-0.88317
-0.88149
-0.87981
-0.87813
0.85
-0.83650
-0.83486
-0.83317
-0.83149
-0.82981
-0.82813
/
98
Table 22. Net Revenues With Increasing Costs of Labor and Variable Overhead for Cellulase Enzyme Pretreatments.
Increased
Cost
Of
Labor
Base*
5%
10%
15%
20%
25%
30%
Increased Cost of Variable Overhead
Base*
-1.06576
-1.07790
-1.09004
-1.10218
-1.11432
-1.12636
-1.13860
5%
-1.09182
-1.10396
-1.11610
-1.12825
-1.14039
-1.15253
-1.16467
10%
-1.11789
-1.13003
-1.14217
-1.15431
-1.16645
-1.17859
-1.19073
15%
-1.14395
-1.15609
-1.16823
-1.18037
-1.19251
-1.20466
-1.21680
20%
-1.17001
-1.18216
-1.19430
-1.20644
-1.21858
-1.23072
-1.2486
*Base value of Labor is $0.24282/lb of cotton, and base value of Variable Overhead is $0.521282.
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Cellulase Enzyme Aftertreatments
Like the chitosan aftertreatments, the cellulase enzyme aftertreatment
was determined to be cost effective because only those fabrics which have been
rejected are treated. The sensitivity analysis for this process will focus on
changes in different aspects of the process which could change the level of cost
effectiveness.
Again, to determine the effects of inflation over time on the cost
effectiveness of the cellulase enzyme aftertreatment, the value of labor and
variable overhead are increased and the resulting net revenues are reported in
Table 23. As can be seen in this table, the enzyme aftertreatment would still be
cost effective if the cost of labor increased by 30 percent and variable overhead
costs increased by 20 percent.
Given an increase in inflation, the prices of the inputs would increase, as
well as labor, variable overhead and fixed overhead costs. Table 24 presents
the net revenues when all input costs are increased by as much as 200 percent
and the costs of labor, variable overhead, and fixed overhead are also increased
by 200 percent. The cellulase enzyme aftertreatment continues to be cost
effective.
Again, assuming the wide spread adoption of the enzyme aftertreatment,
the price of the enzyme could change. This scenario considers a decrease in
the price of the enzyme. Also increased in this scenario is the value of the
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Table 23. Net Revenues With Increasing Costs of Labor and Variable Overhead for Cellulase Enzyme Aftertreatments.
Increased
Value
Of
Labor
Base*
5%
10%
15%
20%
25%
30%
Increased Value of Variable Overhead Costs
Base*
2.75754
2.74540
2.73326
2.72112
2.70898
2.69684
2.68470
5%
2.73148
2.71934
2.70720
2.69505
2.68291
2.67078
2.65863
10%
2.70541
2.69327
2.68113
2.66899
2.65645
2.64471
2.63257
15%
2.67935
2.66821
2.65507
2.64293
2.63079
2.61864
2.60650
20%
2.65329
2.64114
2.62900
2.61686
2.60472
2.59258
2.58044
*Base value of Labor is $0.24282/lb of cotton, and base value of Variable Overhead is $0.521282.
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Table 24. Net Revenues With Increasing Costs of Labor, Variable Overhead, and Fked Overhead, With Increasing costs of the Enzyme, Buffer, and Acetic Acid for Cellulase Enzyme Aftertreatments.
Increased
Value
Of
Inputs
Base*
50%
100%
150%
200%
Increased Value of Labor and Overhead Costs
Base*
2.75754
2.72501
2.69248
2.66000
2.62741
50%
2.24584
2.21331
2.18078
2.14825
2.11572
100%
1.73415
1.70162
1.66901
1.63655
1.60402
150%
1.22245
1.18992
1.15739
1.12485
1.09232
200%
0.71075
0.67822
0.64569
0.61316
0.58062
*Base value of Labor is $0.24282, base value of Variable Overhead is $0.521282, base value of fixed overhead is $0.023048, and base price of the enzyme is $4/lb, base price of the buffer is $0.50, and base price of acetic acid is $0.50.
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rejected fabric. The net revenues presented in Table 25 result from decreasing
the cost of the enzyme and increasing the value of the rejected fabric. As can
be seen in Table 25, net revenues increase in this scenario.
To determine whether the enzyme aftertreatment would be cost effective
in other textile mills, the costs are increased and the benefits are decreased in
the following scenario. Table 26 presents the net revenues when all costs are
increased by as much as 50 percent and all benefits are decreased by as much
as 40 percent. As can be seen in Table 26, the cellulase enzyme
aftertreatments continue to be cost effective after the costs are increased and
the revenues are decreased. As can be seen with this series of sensitivity
analyses, the cellulase enzyme aftertreatments are cost effective for the
representative textile mill.
Summary
A series of sensitivity analyses has been conducted on each process.
Each pretreatment (chitosan and cellulase enzyme) was not found to be cost
effective in any scenario considered. Each aftertreatment (chitosan and
cellulase enzyme) was found to be cost effective in every scenario.
Pretreatments are not cost effective with the technology used in textile mills at
this time and unless new technology is developed, the pretreatments considered
in this study will not be cost effective. The aftertreatments considered in this
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Table 25. Net Revenues for Cellulase Enzyme Aftertreatments With Decreasing Costs of the Enzyme and Increasing Value of Rejected Fabric.
Price
Of
Enzyme
($/lb)
Value of Rejected Fabric ($/linear
4.00
3.75
3.50
3.25
3.00
2.75
2.5
2.25
2.00
2.00
2.75754
2.75984
2.76214
2.76444
2.76674
2.76904
2.77134
2.77664
2.77594
2.25
3.23846
3.24076
3.24306
3.24536
3.24766
3.24996
3.25226
3.25456
3.25686
2.50
3.71923
3.72153
3.72383
3.72613
3.72843
3.73073
3.73303
3.73533
3.73763
2.75
4.20000
4.20230
4.20460
4.20690
4.20920
4.21150
4.21380
4.21610
4.21840
yard)
3.00
4.68077
4.68307
4.68537
4.68767
4.68997
4.69227
4.69457
4.69687
4.69917
3.25
5.16154
5.16384
5.16614
5.16844
5.17074
5.17304
5.17534
5.17764
5.17994
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r' Eni.i<^^H«M*WMmPS3S7U«ULM
Table 26. Net Revenues With Increasing Costs and Decreasing Revenues for Enzyme Aftertreatments.
Increased
Total
Costs
Decreased Revenues (Benefits)
BEISC*
10%
20%
30%
40%
50%
Base*
2.75754
2.64866
2.53981
2.43096
2.32211
2.21327
10%
2.37291
2.26406
2.15521
2.04636
1.93751
1.82867
20%
1.98831
1.87946
1.77061
1.66176
1.55291
1.44406
30%
1.60371
1.49486
1.38601
1.27716
1.16831
1.05947
40%
1.21911
1.11026
1.00141
0.89256
0.78371
0.67487
*Base revenues are $3,846 and base costs are $1.08849.
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sttidy are cost effective and should be considered when dealing with the
presence of neps. However, each process has advantages and disadvantages
which should be examined.
Intangibles
As discussed previously, each of the processes considered in this study
have advantages and disadvantages which could not be given a quantifiable
value. These intangibles should be considered before a decision is made as to
which of the processes to adopt. Table 27 presents a reference to the
advantages and disadvantages for each of the processes considered.
The chitosan pretreatment improves the color value of the entire yam or
fabric which is treated. Not only is the nep covered when using this process,
but the entire surface of the fabric will have better color strength when using
direct dyes. Another advantage of the chitosan pretreatment is that the process
improves the dyeability of low micronaire cotton. In fact, low micronaire
cotton will have a better color yield than higher micronaire cotton after both
have been treated and dyed with reactive dyes.
Some disadvantages involved with the chitosan pretreatment include the
fact that the process works better with direct and Indosol dyes than it does with
reactive dyes. Textile mills which use primarily reactive dyes will not
recognize as great an improvement than those mills which use a large amount
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Table 27. Intangibles Not Included in Analysis for Each Treatment.
Product
Chitosan Pretreatment
Chitosan Aftertreatment
Cellulase Enzyme Pretreatment
Cellulase Enzyme Aftertreatment
Costs and Benefits
Costs $0.10/lb
Benefits $0.0275/lb
Costs $0.92/lb
Benefits $3.846/lb
Costs $1.08/lb
Benefits $0.0135
Costs $1.09/lb
Benefits $3,846
Characteristics
Advantages: Color value for entire fabric (not just neps) is improved. Works well with direct dyes. Gives higher color yield on fabrics of low micronaire cotton than on those of high micronaire cotton, especially when using reactive dyes. Disadvantages: It is not as effective in covering neps when used with reactive dyes. All yams arid fabrics must be treated.
Advantages: The aftertreatment has the same advantages as the pretreatment. Another benefit is that it can be as a salvage operation. Disadvantages: It is not as efiective in covering neps when used with reactive dyes. Costs are sunk which have already been incurred before treatment.
Advantages: Neps are removed from the fabric. The chemical reaction caused by the enzymes softens the fabric as well as removes the appearance of "ftizziness" on the overall fabric. Can be used for the removal of "dead" cotton. Disadvantages: Color values (K/S) for fabric are lower than fabric dyed without the treatment. All yams and fabrics must be treated. Fabric strength is decreased.
Advantages: Same as the pretreatment. Also can be used as a salvage operation. Disadvantages: Color values for entire fabric are lower than fabric dyed without the treatment. Fabric strength is decreased.
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of direct dyes. Another disadvantage of the chitosan pretreatment is the fact
that all yams and fabrics which will be used in apparel must be treated to
receive the benefit of a decreased amount of fabric rejected due to the presence
of neps. As discussed previously, if there were a technology which could
predict or recognize the presence of neps in the final product, the chitosan
pretreatment could be used as a salvage operation. However, with the level of
technology in textile mills today, all yams and fabrics must be treated.
The chitosan aftertreatment can be used as a salvage operation. Only those
fabrics which have been rejected are treated. This is a major advantage of both
aftertreatments considered in this study. The chitosan aftertreatment also has
the same advantages as the chitosan pretreatment (i.e., color strength on entire
fabric increased, works well with direct dyes, and low micronaire cotton
receives higher color yields than high micronaire cotton).
The aftertreatment of chitosan is not as effective in covering neps while
using reactive dyes than it is when using direct dyes. Another disadvantage is
the fact that all costs are sunk which have already been incurred before the
treatment. That is, the fabric has already been bleached, and/or scoured, and
dyed before the chitosan aftertreatment can be used. The cost of these
processes cannot be retumed. Therefore, the treatment is designed to allow the
textile mill to receive the premium price for the fabric rather than the lower
price received from the secondary market.
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/ ^ II ' I • •fT.— r j ^ J .
The cellulase enzyme pretreatment actually removes the nep from the
surface of the fabric. The chemical reaction between the enzyme and the
cellulose contained in the cotton fiber actually breaks down those fibers
protmding from the fabric, allowing those fibers to be removed. This chemical
reaction actually softens the fabric as well as removes the appearance of
"fiizziness" on the overall fabric. This type of enzyme is used in the laundry
detergent Cheer® with Color Guard^^. This product is sold commercially and
is designed to be used when washing laundry to keep the color of clothes
intact. Another advantage of the cellulase enzyme pretreatment is that "dead"
cotton is removed from the surface of the fabric.
One major disadvantage of the enzyme pretreatment is that the strength
of the fabric is decreased after the treatment is used. Other disadvantages
include the fact that all yams and fabric used in apparel must be treated. This
is a disadvantage of all the pretreatments considered in this study. Another
disadvantage is that the K/S value for the entire fabric is lower than those
fabrics dyed without using the enzyme pretreatment.
The cellulase enzyme aftertreatment has the advantage of treating only
those fabrics rejected due to the presence of neps. This aftertreatment removes
"dead" cotton, neps and "fiizziness," and also softens the overall fabric. The
fabric strength is also decreased from the use of the enzyme aftertreatment.
109
f^
Another intangible that should be considered for each of these
treatments is the fact that both chitosan and cellulase enzymes are
environmentally sound. Each of the products are biodegradable and are not
harmfiil to the environment when retumed in a dispersed fashion.
The intangibles presented in this section should be considered along
with the cost effectiveness of each process before a choice is made between
them. Each process has several advantages and disadvantages when
considering adoption. A discussion of which process is recommended and
those factors which lead to this decision are presented in the next chapter.
Also contained in the next chapter are ideas on which direction fiirther research
should follow.
110
I I I I I I i ini i i imiipp^mn i i — n ^ — — i > i n im
CHAPTER VII
CONCLUSION
Because of the relatively short growing season, cotton produced on the
SHPT often has trouble maturing properly resulting in a low micronaire. This
immaturity is a result of cool night temperatures and early freezes. The
immature cotton fibers tend to become entangled with other fibers in either the
ginning or yam processing stages. These entanglements, known as neps, do
not accept dye and appear as white "specs" in the fmal dyed fabric. Neps are a
problem in the textile industry because they cause the fabric to be rejected.
There are several treatments used for the coverage of neps. Some of
these treatments include the use of a cationic polymer solution,
submercerization and mercerization strength sodium hydroxide solutions,
chitosan and cellulase enzymes. Because the cationic polymer solution and the
sodium hydroxide solutions must be used in the pad/dry process, they are not
considered in this study. The cost values obtained for this study are based on
the exhaust process. Cost values for the pad/batch method of dyeing could not
be obtained within the time constraints of this study.
The representative textile mill considered in this study is considered a
medium sized textile mill that processes between 18,000 and 22,000 bales of
cotton aimually. Eighty percent of this cotton is used in the production of light
111
/
weight fabrics which are used to produce apparel. The remaining 20 percent is
used in upholstery and industrial products.
The representative mill rejects an average of 3.5 percent of their finished
fabric in a given year. Of this, 10 percent (i.e., 0.35 percent) is rejected due to
the presence of neps. If the textile mill processes 18,000 bales per year, and
bale weight is 480 pounds, and 80 percent is used in the production of apparels
then this results in the use of 6,912,000 pounds of cotton for apparel. With a
rejection rate of 0.35 percent, the representative mill rejects approximately
24,192 pounds of cotton per year.
The mill sells its finished product to contracted buyers for an average of
$3.25 per linear yard, while it sells the rejected fabric on a secondary market
for an average of $1.25 per linear yard. Thus, the value of the rejected fabric
to the textile mill is $2.00 per linear yard. Using a general guideline, each
linear yard of fabric contains approximately 0.52 pounds of cotton. This
results in an annual loss of approximately $93,046 due to rejection of neppie
fabric (i.e., 24,192 pounds of cotton rejected/0.52 pounds per linear yard *
$2.00 per linear yard). Because of this impact to the textile industry, several
processes have been developed to lesson the effects of neps.
Several processes were considered in this study. Two pretreatments
(chitosan and cellulase enzymes) and two aftertreatments (chitosan and
cellulase enzymes) were considered. A benefit cost analysis was conducted on
112
/ \
each process to determine whether it would be cost effective for the
representative textile mill to adopt these processes. Benefits considered
include decreased use of dye and decreased rejection of fabric due to the
presence of neps. Costs considered in this research included the cost of each
product (i.e., chitosan and enzymes), the cost of additional chemicals used in
the process, and increased costs of labor, variable overhead, and fixed
overhead. Using benefit and cost values from the representative mill, it was
determined that each of the pretreatments were not cost effective while both
aftertreatments were cost effective.
The chitosan pretreatment had total benefits of $0.0275 per pound of
cotton treated while the cost of the process was approximately $0.10 per pound
of cotton treated. This results in a net revenue from adoption of the
pretreatment of $-0.0725 per pound. The chitosan aftertreatment had total
benefits of $3.85 per pound of cotton treated and a total cost of approximately
$0.92 per pound of cotton treated. This resulted in a net revenue of
approximately $2.93 per pound. The cellulase enzyme pretreatment had
benefits and costs of $0,0135 and $1.08, respectively. This resulted in a net
revenue of $-1.0665. The enzyme aftertreatment had total benefits of $3,846
and total costs of approximately $1.09 which resulted in a net revenue from
adoption of approximately $2.76 per pound of cotton treated.
113
^
Because generally neps cannot be identified until the fabric has been
dyed, all cotton destined for use in apparel had to be treated with the
pretreatment in order to receive the benefit from reduction in rejected fabric.
The aftertreatment is used only on those fabrics which have afready been
rejected. If the technology existed that would allow mill managers to predict
the presence of neps in the final product, the pretreatment could be used only
on that cotton, thereby increasing its total benefits. This does not guarantee
that the pretreatments considered in this study would be cost effective;
however, the net revenues from adoption of one of the pretreatments would be
higher than those presented in this study.
A series of sensitivity analyses was conducted on each of the processes
considered in this study. From these sensitivity analyses, it was determined
that the pretreatments would not be cost effective in any scenario considered
and the aftertreatments would be cost effective in every scenario. That is, the
pretreatments are not likely to be cost effective for any textile mill at this time
and each aftertreatment would be cost effective for most textile mills now and
in the fiiture.
Further Research
The textile industry would benefit from further research in this area.
With technology continuing to be developed, new processes are being made
114
r
available. For textile mills to make an accurate decision on which process to
adopt, fiirther research should be conducted to determine the most cost
effective process available. A benefit-cost analysis should be conducted on
many treatments which would require specialized equipment to determine
whether the adoption of the process would be cost effective in the long run. A
benefit-cost analysis should also be conducted on the cationic polymer solution
and the sodium hydroxide solutions. The paxil^atch process may be less
expensive for mills to adopt; therefore, these processes may be cost effective
for textile mills to adopt at this time.
Another topic which should be studied would include the other reasons
for fabric rejection at the mill level. It was stated within this study that only 10
percent of the fabric rejected at the mill was due to the presence of neps. Other
defects in the final product should be examined to determine if there are
solutions to these problems. These solutions should also be examined to
determine whether they would be cost effective for the textile mill to adopt.
Another topic to be considered is the lack of technology in most textile
mills to predict the presence of neps. There have been studies on dye and
chemical tests which could predict the presence of neps in the finished product,
but these studies were conducted on a laboratory scale. These tests should be
examined to determine their effectiveness in a large scale operation. There are
computerized mechanisms which could be used to determine the presence of
115
t^
neps before the fabric is dyed. The cost effectiveness of this technology should
be examined as well.
116
i j - .
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