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#41
08-09-2012, 09:09 PM
 komorgan Member Non-Actuary Join Date: Mar 2012 Posts: 112

Quote:
 Originally Posted by IIRC What do you mean by " I don't think these costs would change all that much in just one quarter." I was looking at 18 quarters (2 shifts) of the actual. And I also limited my Actual to 18 quarters... hope this makes sense. I'm shooting from memory. Starting over right now.
Okay, so when Can-Do set the initial values (one for 1-shift quarters, the other for 2-shift quarters) for the energy cost, I assumed it looked at its energy costs from recent experience (maybe from the immediately preceding quarter, let's just call it Quarter 0), and used that to estimate the cost in Quarter 1 (i.e. the first quarter of the 20-year projection period). Unless something really crazy happens in the energy market, I wouldn't see why there'd be a whole lot of change in the cost from Quarter 0 to Quarter 1.

Does that make more sense?
#42
08-09-2012, 10:54 PM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

Quote:
 Originally Posted by KevinR How did you determine the new inflation rate? I tried matching the other costs cash flows by quarter (using the actual gold/ton and number of shifts, i.e my gold/ton and number of shift columns aren't driven by formulas anymore but rather I simply pasted the given values into them). I couldn't get them to match at all no matter what inflation I used. I mean, even the first quarter other costs already had a big difference and the first quarter has got nothing to do with inflation. so in the end all I changed were the exchange rate and the labor cost formula for two shifts. Due to the very small data sample, I couldn't determine the the labor cost formula for 1 shift, and so my stop gap measure for the one-shift labor cost was simply to multiply the two-shift cost by 0.5 (this gives a pretty close approximation of the actual labor costs).
Thank God at least one person understand what I am talking about.
The first Q non-labour cost (from the new data) is \$4,313,504, which consists energy, delivery and maint cost. But the energy cost itself is 4,500,000 for 2 shifts, which is more than the total non-labour cost!!!!!

Also for the following years, you can't just simply divide the current Q by the previous Q to get the inflation. Each Q has 40*(1-decay) in the non-labour cost, which is also changing. So, dividing the current/previous Q cost will not give us the inflation.
#43
08-09-2012, 11:04 PM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

Now I get it...Energy cost for two shifts can easly be calculated. For all the other costs (delivery & equipment main) are fixed. My energy cost for two shifts is \$4,196,504. Did anyone get the same thing?
#44
08-09-2012, 11:15 PM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

Then based on the new Energy cost for two shifts, I was able to calculate the Total non-labour cost without inflation. Then compared it with (total cost-labour) and the ratio of the two was the inflation. However, the inflation is different for every Q. Which, means stochastic modeling for inflation.

Now I just need to figure out how to do the samething for one shift!
#45
08-10-2012, 01:47 AM
 IIRC Member Join Date: Apr 2009 Posts: 397

For 1 shift I just did whatever I did to 2 shifts proportionately...i.e. labor a up X% shift 1 and 2, labor b down Y% 1 and 2
#46
08-10-2012, 08:56 AM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

Quote:
 Originally Posted by IIRC For 1 shift I just did whatever I did to 2 shifts proportionately...i.e. labor a up X% shift 1 and 2, labor b down Y% 1 and 2
I don't understand what you exaxclty mean! There is not enough data for shift 1, and I am tempted not to propose any changes.
#47
08-10-2012, 09:03 AM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

Quote:
 Originally Posted by IIRC For 1 shift I just did whatever I did to 2 shifts proportionately...i.e. labor a up X% shift 1 and 2, labor b down Y% 1 and 2
I don't understand what you exaxclty mean! There is not enough data for shift 1, and I am tempted not to propose any changes.
#48
08-10-2012, 11:10 AM
 lucas_m Member SOA Join Date: Nov 2006 Studying for FSA modules Favorite beer: Alexander Keiths Posts: 256

Quote:
 Originally Posted by irana I don't understand what you exaxclty mean! There is not enough data for shift 1, and I am tempted not to propose any changes.
Either recommandation is fine as long as you justify it.
#49
08-10-2012, 11:38 AM
 irana Member SOA Join Date: Jan 2010 Location: Canada Studying for Exam C & FAP 7 College: Honour bachelor Posts: 109

How do I calculate the Std. deviation for the gold yield....I have 0.96 as the mean.
#50
08-10-2012, 11:50 AM
 komorgan Member Non-Actuary Join Date: Mar 2012 Posts: 112

Quote:
 Originally Posted by irana Now I get it...Energy cost for two shifts can easly be calculated. For all the other costs (delivery & equipment main) are fixed. My energy cost for two shifts is \$4,196,504. Did anyone get the same thing?
Why do you say that these two costs are "fixed"? In the instructions, it says that maintenaince costs are asssumed to be \$100,000 for the first quarter.

Also, while it is true that dividing the current quarter non-labor costs by the previous quarter will not give you the exact inflation rate, I think you'll find that it's a good approximation because delivery costs take up such a small portion of the total non-labor cost.

For example, let's suppose that in the first quarter, the delivery and maintainence costs are as expected (\$1.0/once and \$100,000, respectively). So the delivery cost would be \$16,000 (\$1.0/oz * 40 oz/ton * 400 tons). But the total non-labor costs for the quarter is > \$4.3 million! Also, as you progress through the quarters, the portion that makes up delivery cost will continue to diminish because the gold yield itself keeps diminishing.

I'm not saying your method is wrong, but I think you might be making this harder than it has to be. Just my opinion.

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