To start, you'll need to enter the following ten inputs. As you enter the inputs the results will be automatically calculated in the outputs next to the chart and the Interpolation table which sums the elements of "Hidden Cost".

1. Asset Value = value of asset. Book value should be used for existing assets. Serves as basis for all profit, revenue and cost estimates.
   
   
2. Asset Life = expected life of asset. Used to calculate annual capital cost of excess capacity.
   
   
3. Direct Cost Fraction = direct avoidable costs/revenue. The elements of total cost that are not expended in the event unplanned downtime/total revenue, usually only direct materials or energy costs.
   
   
4. Asset Availability = the percentage of time the asset is available for productive work when needed.
   
   
5. Return on Productive Assets = net profit/net physical plant and equipment. Used to estimate profit potential of asset based on corporate average return on asset values.
   
   
6. Net Margin = net profit/net sales. Used to estimate revenue potential of asset based on corporate average return on sales.
   
   
7. Tax Rate = total income taxes/net sales. Used to insure all calculations are made on an after-tax basis.
   
   
8. Discount Rate = corporate cost of capital/hurdle rate. Used to estimate capital cost of excess capacity.
   
   
9. Maintenance/Capital Cost Ratio = total asset maintenance costs/asset capital costs. Used to determine maintenance costs of excess capacity-typically use rule of thumb ratio of 1.0.
   
   
10. Recovery Costs/Annual Maintenance Costs = total annual excess cost to return to normal operations after unplanned downtime/total asset maintenance costs. Used to calculate recovery costs based on total annual asset maintenance costs-judgment estimate.

Calculator Outputs

Once you have entered in these inputs you will get the following set of customized outputs indicating your own Hidden Cost of Downtime.

1. Asset Revenue Potential = Asset Profit Potential/Return on Sales.
   
   
2. Asset Profit Potential = Asset Value/Return on Productive Assets.
   
   
3. Asset Capital Cost/Year = Annualized capital cost of asset based on asset value, asset life and discount rate. Utilize equal payment series discount formula:
   
   Annual Cost = Asset Value x (Discount Rate)/(1-(1+Discount Rate)^-(Asset Life)).
   
   
4. Asset Maintenance Cost/Year = Asset Capital Cost x Maintenance/Capital Cost Ratio.
   
   
5. Annual Recovery Costs = Asset Maintenance Cost/year x Recovery Costs/Annual Maintenance Cost Ratio.
   
   
6. Excess Capacity Fraction = Fraction of excess capacity available for recovery from unplanned downtime up to 100% excess capacity. Used only to interpolate cost of lost revenue and cost of excess capacity between completely capacity constrained and full excess capacity.

Interpolation Table

Actual Excess Capacity Percent = percentage of excess capacity available. Used to estimate capital cost and maintenance cost of excess capacity for ranges between completely capacity constrained and full excess capacity.

Cost of Lost Revenue = cost if revenue is lost as a result of unplanned downtime. Equal to the revenue loss, less avoided direct cost adjusted for after tax impact. Calculation is:

Total Cost of Downtime = Sum of cost elements: Cost of Lost Revenue, Excess Capacity Costs, Maintenance Costs of Excess Capacity, and Recovery Costs interpolated based on Excess Capacity Fraction