A mill management, economic model was developed and implemented in an
electronic spreadsheet. The model consists of five major components or
steps: operating characteristics, manufacturing, annual performance,
financial planning, and long-term analysis. A 428 t/day (7,000 cwt/day
) hard red winter wheat flour mill was modeled and the impact of the f
ollowing variables tested: (1) energy costs, (2) straight flour extrac
tion, (3) hourly wages, (4) bulk flour sale price, and (5) wheat trans
portation cost. Sensitivity analysis for these variables with the mode
l indicates that: (1) a reduction of 5.0% in energy costs would reduce
variable costs by $0.176/t ($0.008/cwt), (2) a reduction of 1% in flo
ur extraction from 75% would require an increase in millfeeds price of
$3.80/t ($3.40/s.ton) in order to maintain the net income obtained wi
th 75% flour extraction, and (3) an increase in the hourly wages of $0
.22/h for 31 employees would increase the flour production cost by $0.
309/t ($0.014/cwt). Linear relationships were explored between the int
ernal rate of return (IRR) and the variation in flour sale price, and
between the IRR and reduction in wheat transportation cost.