Draft CWASHER6.WPD July 8, 1997 

## Clothes

/ U.S. Department of Energy Office of Codes and Standards 1000 Independence Ave., SW · Washington, DC Date: July

### a, 1997Clothes Washer Rulemaking Framework Introduction • . . . •• . . . . . . •• . . • . . . •• . . . . . . . . . . ••• . . . . •• . . . • . . . . . . • . • . • . . • . •• . • . • . • 1 1.0 Preliminary Market and Technology Assessment •....•......•...•...........•.... 1 1.1 Market Assessment
..............................·.............. ; . . . . . . . 1 1.2 Technology Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Preliminary Baseline Shipments Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.0 Screening Analysis
. . . . • . . . . . . . . . . . • . . . . . . . . • . . . . . . • . . . . . . . . . . . . . . . . . . . . . . • . . 4 2.1 Product Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2 Baseline Units·
..............**~·** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3 Design Options
..........·...........·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.0 Engineering Analysis •...•..·. • . . . • . . . . . . . . • . . . •• . . . . . . . . •• . • . . . . . . . . . . .. . •• . . •• 6 : 4.0 Manufacturing Costs
. . . . . • . . • . • . . . . . . . • . . • . . . . • . . . • . . . •• . . . . • . . . • . . . •• . . . . . . • 7 4.1 Characterizing Uncertainty
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.2 Variability in Costs between Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.3 Costing Approach/ Engineering Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.4 Proprietary Design
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.0 Life-Cycle Cost and Payback Analysis
......................................... 10 6.0 Prices
. • . . . ••• . . ••• . . . •• . •• . • . •••••••••••••••• . . ••• . • . . ••••• . •• . . •• . . . • . . • . 13 6.1 Retail Prices: Life-Cycle Cost Analysis
. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 6.2 Manufacturer Prices: Industry Cashflow
................................, . . 13 7.0 Shipments •••••.•••.•••••••.•••••••.••••••••••••••••.••••••••..••...•..'••.•• 14 8.0 Preliminary National Benefits Analysis ••...•.••.•••••••.••••••••.•••..•..••.••• 14 8.1 Inputs to Forecasts
............. , ... . 1• ••••••••• • • • • • • • • • • • • • • • • • • • • • • • • • 14 8.2 Calculation of Energy Savings
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 8.3 Consumer Net PresentValue and Payback
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 15 8.4 Employment Impacts
.................................... : . . . . . . . . . . . . . 15 9.0 Revised Pre-ANOPR Analysis
.............................................'. : . 16 10.0 Consumer Impacts •.••.••· ••••••••.•••••••••••..••..•..••••.•••.•••. : •• ... •• . 16 10.1 Consumer Sub-group Analysis
......................................... 16

10.1.1 Variations in Energy, Water and.Sewer Prices
.......................... 16 10.1.2 Variations in Energy Use
.......... ·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 10.1.3 First Cost Increase
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 10.2 Consumer Participation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 11.0 Industry Cash Flow • . • ..• . . ••• . ••• . ••• . •• . •• . . •• . . ••• . ••• . •••• . ••• . . • . . . • . • . 17 12.0 Manufacturersub-group analysis ........•.•...•..••..••.•..•. u ••••••••••••• 18 12.1 Manufacturer Sub-groups
............................................... 18 12.2 Competitive Impacts Assessment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 12.3 Cumulative Regulatory Burden
......................................... 19 13.0 Utility Impacts .•••••.•••••.....•..•••·• ••••••• . . •• . ••••••••• . . •• . . • . . ••• . . . . 19 DRAFT CWASHER6.WPD July 8, 199714.0 Environmental Analysis •.....•....••••••..•.....•••......•..•.••••.•...••••. 19 Appendices A. Base Case Shipments Forecasts: Data Request A-1 B. Refinement of Design Options ••• . . . . . . . . . •••• . ••• . . ••• . . . . ••• . . . . . . . •• . •• . . . B-1 8.1 Design options DOE and Stakeholders generally agree should be · considered in further·analysis
. : ....... , . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 8.2 Design options DOE and Stakeholders generally agree should be eliminated from further analysis
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 B.3 Design options requiring additional discussion
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2 8.4 Design options to consider for further analysis
.................................B-3 C. Data Requests for Manufacturer Costs
. . . . ••••••• . •. • . •• . . . •••••••••••••••• . . . . C-1 _C.1 Design-Option Approach
..............................- ................... C-1 C.2 Efficiency-Level Approach
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-5 C.3 Uncertainty and Variability in Manufacturer Costs
......................... · . . . . . C-9 D. Financial Inputs for GRIM · .•••.•••••••.**~.** ••. •• . •••••••••• . ••••• . . ••••••••• . •• . •• D-1

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DRAFT CWASHER6.WPD July 8, 1997. ii 

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## Clothes Wash_erRulemaking- F_ramework Introduction This document describes the analytical framework for appliance**stand~ds** rulemaking. The emphasis'is on describing the major components ofthe methodology and identifying . the rel11tionships among the various sections. A diagram'ofthe analytical framework is shown in Figure 1.**Currently~** the Advisory Conunittee on**Applianc~** Energy Efficiency Standards is considering cross-cutting issues which may affect the analysis anticipated in · upcoming rulemakings. The Department plans to consider any recommendation from the Advisory Committee to the greatest extent possible in the ongoing rulemakings. ·

This docilment also describes the application ofthe analytical frameworkto·the clothes·· washer rule: Following a generic description ofeach component ofa typical rulemaking, a commentbox has been added to discuss elements ofthe·cJothes washer rule. Clothes washers specific comments include summaries ofpast events, status reports ofcurrent analysis, discussion ofkey issues, theDepartment ofEnergy's (DOE) perspectives on these issues, and requests for additional stakeholder input.· As described in this document, manufacturers are asked to provide additional performance and costing_information to improve the engineering analysis. T_he new information·Will describe iμanufacturer specific costs ofachieving predetermined efficiency levels. This ' format has the benefit ofbeing'entirely compatible .with data requirements for . manufacturer impact analysis. Additionally, DOE.seeks costing information on Whirlpool proprietary designs. In keeping with the Department's**policies~** provisions will be made to maintain the confidentiality ofall submitted information. The Department expects to collect-new data utilizing the efficiency level approach adapted to report cost data disaggregated into GRIM cost categories, in · cooperation with the Association ofHome Appliance Manufacturers (AHAM). The Department will supplementthis new**data-~th** the existing data preViously provided by the clothes washer industry (based onthe design option approach) to perform consumer life-cycle cost analysis, select trial standards levels, and calculate preliminary national benefits ofthese levels. Ifmanufacturers want to update any ofthe data collected**previo~sly** under the design option approach, they should provide**thi~** data to AHAM. These analyses will complete the analytical steps that precede the Advance Notice of · Proposed Rule (ANOPR). The Department believes that additional data gathering before the ANOPR will improve the current analysis, identify potential**proble~** areas and .**acc~lerate** post-ANOPR manufacturer and economic analyses. ·

Draft CWASHER6.WPD July 8, 1997 1Approaches
Industry Revi""' Quantitative Analysis Qualitative Analysis-Interviews

Design-Option Approach Cost MOdeling Approach

·Efficiency-Level Approach

Markel Suivey Approach Expert Forecasts I. I. I. I. I: I. I. Figure 1: ·Clothes Washers Rulemaking Framework Key-Inputs 1 • Identify Firms/ Products Historical Information Market/ Firm Segmentation

Existing Technoiogy Options Ptolotype Designs

I Elliciency/Perfonhance

..,, ·:> ·i!!**:~**

### :~ " •••••• • .............. 1 •••••• I EnergyM/ater rates 1 Maintenance/Service Costs Analysis Preliminary Market

& Technology Characterization

'8
. e . :i: 1: ell Engineering Analysis
Life-cycle Cost Analysis 

# • I I· I Key-Outputs

• Preliminary Basecase • Shipment Forec:aS1

• Average Payback with Uncertainty

.1 • Average Life-cycle with Uncertainty 1. I I · r--iL-.
___ •Base Case

_______ ,....

___ I
....

· • Other

ExpertForecast& Models-REM, REEPS etc. • Housing demand • Historical &hiprnems • Product saturalicn • Voluntary initiatives ANOPR

lnteiviews GRIM Ana

NOPR FINAL RULE I · . .. .. . . .. efficiencies I I· I I· I

. I.

I. I. I; I;

' I' • 

# ,,, I: : Retail Prices I

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...... i
.. "
. 

# • Preliminary National Benefit Analysis


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# •

: .. L..,

## _R_e_vised_Ana_Pre-AN_lyse_s_o_P_R_~-- ...... Fuel Type Demographics I Consumer Sub-group Analysis

. . Manufae1Urer Prices 1

. : '·· ..... -c:···· ............., ...

# ·C3 r ..**:."~.~**...... 'C:"
..........:...**-~** ..**-~- ~~~~**  •**~·** 

## ..**_.8a~c~**

## ........

# :----c 

# 1..-----------**~** Standard Level Cases 1 • Efficiency Distribution 1

for all Cases

Cost (C). Price (P). Quantity (Q), Financial (F) ,_ Manufacturer Impacts I .1 I I

I

. I

I I I , •Payback • Energy savings • Net PiesentValues

• Payback Distribution • L' le Distribution
Industry Cash-flowwith Uncertainly 

# -

•Empm,ment Impacts •.COpocly Imp- • Camp- Imp- •Cllnula!Mt lhtp- · Sub-group Cash-flows

Emission rates •· ...**..----------r-:::---:----:--:-.,_--~...;..Pe=a~k~-Oe;:;:.;ma;;;;::nd~R~ed:;.::;:;u=cli~·o~ns:;.,.** Environmental Uti · Revenue Losses Uti load factors
. Utility Impacts Analysis Emissions 

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# • Revise.Analysis
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### 1.0 Prelimin.ary Market and Technology Assessment

. . 1.1 Market Asse.ssment . . . Prior to initiating a detailed impact analysis, the Department will develop information on the.present arid past industry structure and market characteristics ofthe product(s) concerned. This activity will consist ofboth quantitative and qualitative efforts to assess the ·industry and prodμcts based on publicly available information..Issues to be addressed

. . include the following: manufacturer market share and characteristics; trends in the number offirms; the financial situation ofmanufacturers; existing· non-regulatory efficiency improvement initiatives; and trends in product characteristics and retail markets. The information collected will serve a·s resource material to be used throughout the rulemaking. For instance, historical product shipments and prices will be used to help predict :(Uture prices and shipments. Market**struct~re** data will be particularly useful to conducting the comP;etitive impacts analysis. . I The Department has initiated a market assessment ofthe clothes.washer industry. Once / completed, collected infollllation will be distributed for comnient. 

### ·Are there elements notmentionedaboye which shouldbe incorporatedinto this document? · ·
1.2 Technology Assessment . Information relative to existing technology options and prototype designs will be used as input to a screening analysis. Inconsultation with interested parties, the Department will develop a list ofdesigrl options for consideration.**Jrut~ally,** the candidate design options · will encompass all those.technologies considered to betechnologically feasible:

The**Depart~ent** considers this activity completed. In October 1996, the Department issued the "Draft Report on Design Options for Clothes Washers." This report was reviewed with stakeholders at a workshop on November 15, 1996. At that time, Whiripool asked the Department to include its new clothes washer design options into future DOE analysis. These design options will be considered in future analyses.

1.3 Preliminary Baseline Shipments Forecast The D.eparttnent intends to develop a base case forecast ofproduct shipments in absence ofnew standards. This forecast will require an assessment ofthe impacts ofpast and existing non-regulatory efforts by manufacturers,.utilities and other interested parties. Draft. CWASHER6.WPD July 8, 1997 3DOE will seek information on the actual impacts ofsuch initiatives to date, but will also consider information presented regarding the possible impacts that any existing initiatives might have in the future. Such information could include a demonstration ofthe steps manufacturers, distribution channels, utilities or others will take to realize such voluntary efficiency improvements. The baseline shipments forecast will be used as input to three subsequent analyses: the National Benefits Analysis (Section 8.0); the Consumer Life-Cycle Analysis (Section 5.0); and the Consumer Sub-Group Analysis (Section 10.0). To perform the National Benefits Analysis, a forecast ofshipment weighted product efficiency improvements ofnew products sold is needed to the year 2030. To assess the average impact on the affected consumer population and the distribution ofthese impacts on consumer sub-groups, a forecast ofproduct shipments by efficiency level is needed for the year a new standard would come into effect.

The Department will begin to prepare a strawman baseline shipment forecast for cl<?thes washers. This forecast will include a distribution ofshipments by efficiency level. Historical .product shipments and discussions with parties involved in market-based initiatives for increasing the sales ofhigh efficiency models will guide the shipments forecast. Appendix A contains a**s~ple '~Base**  Case Forecast PataRequest" which could be used to solicit shipment fQrecasts. · What ex/sting market-basedinitiatives shouldDOEconsider? ·Whatotherapproaches couldbe used to establish the base-case shipmentforecast? What information sources showpastshipmentdata byefficiency level? Please comment on the sample data request inAppendixA? The Department has prepared a strawman baseline shipment forecast for clothes washers for stakeholder review at the workshop.**2~0** 

### ScreeningAnalysis . The screening analysis consists ofthree tasks: selecting product classes;.selecting baseline units; and reviewing and selecting design options for further analysis. 2.1 Product Classes Product types are separated into classes based on the type ofenergy used, and capacity or performance-related features that provide utilitytothe consumer and affect efficiency. Different energy-efficiency standards will apply to different product classes. Ingenera.I, ·classes are defined using information obtained in discussions with appliance manufacturers, trade associations; and other interested parties. Draft CWASHER6.WPO July 8, 1997 4 \. ' 

# ...' ,.?: In**t~e** "Draft Report ofDesign Options for Clothes Washers," the Department·proposed reducing the number ofclothes washer product classes from five to two. Numerous comments were received on the Department's consideration ofvertical-and horizontal axis washers as design strategies instead ofseparate product classes. The Department· · understands the critical consumer utility issues that have·been raised in a few comment. However, based on current evidence, the ·Department believes there is no basis for maintaining separate classes for horizontal and vertical c;lothes washers.

. ' . First, based on·the available information DOE believes vertical-axis clothes washers can achieve the same,efficiency as horizontal-axis clothes washers.. Second, recent and nearterin product offerings,**~d** working**prototype~** ofhorizontal and vertical axis clothes washers demonstrate large energy savings while maintaining important product features such as: ease ofloading and unloading, mid-cycle addition and removal ofclothing, length ofcycle times and.tub capacity. Because utility features do not appear to affect efficiency,**~hey** do not warrant

# aseparate class. Due to the lack ofinformation and relatively low energy consumption ofthe compact· · Class ofclothes washers (<1.6ft3), the Department does not anticipate their consideration in this rulemaking. The current minimum efficiency requirement for the compact class would remain unchanged. · · ',• Because the vertical axis com.pact clothes washer market and the manufacturing base for_these products have changed since the current standards were developed, Whirlpool commented that the compact vertical axis product class should be**re~ised** to reflect the changed market conditions from the current definition of 1.6 ft3 to. include all vertical axis clothes washers <2.0 ft3. ·
2.2**Baselin~** Units . Defining a baseline unit.is the starting point for analyzing design options for improving · energy efficiency. For each product class, the baseline unit generally represents a model With the maximum allowable energy use specified by the National Energy Conservation · Act (NAECA), as amended. Other·than effieiency, features incorporated in the baseline

unitare**represen~ative** ofthe "low-end" unit within the class.

Draft CWASHER6.WPD ..luly 8,**199~** 5In the "Draft Report on the Preliminary Engineering Analysis for Clothes Washers," (Draft Engineering Analysis) the baseline unit represents a typical model with an Energy Factor (EF) of 1.198 ft3 /kWh. Expressed in terms ofthe efficiency descriptor ofthe future test procedure, the baseline clothes washer has a Modified Energy Factor (MEF) of.885 ft3 /kWh.. The baseline energy use of 1296 kWh/yr is based on the shipmentweighted average ofmajor American tp.anufacturers' models. The current weighted average efficiency ofnew clothes washers is EF=l.23 as described in the AHAM fact book. The Department believes this corresponds to an MEF value of0.923. 

### Are these values sound? 

## If not, why not? AHAM indicates that the baseline MEFlevel is not known. They say it will take at least two weeks from receipt ofthe**fi~al** test procedure for the manufacturers to begin to calculate**th~** baseline MEF. This data will need to be gathered and· reviewed by 

### AHAM priorto giving the manufacturers the percentagelevels from which they can calculate the improvements in MEF. 2.3 Design Options Following the development ofan initial list ofdesign options during the technology assessment, the Department, in consultation with interested**partie~,** will review each design option to determine ifit is practicable to manufacture, install and service; would adversely impact product utility 

### otproduct availability; or would have adverse impacts on health and safety. Design options not eliminated in the screeningprocess will be considered furthedn the engineering analysis.

On October 15, 1996, :the Department issued the "Draft Report on Design Options for Clothes Washers." This report identified product categories and narrowed the range of design options being considered for the development oftechnically feasible designs. A screening workshop was held on**Nove~ber** 15, 1996, to discuss the report**~d** to receive peer review comments. · Inresponse to the report and the workshop, the Department received numerous. comments on considering, eliininating or adding design options: In adpitiop., three peer reviewers provided input on the selection ofdesign options for further study. Taking into consideration these inputs, the Department has identified**desi~** options it believes should be considered for further analysis. These design options, and a summary ofthe comments received, are presented in Appendix B,**'~Refinement** ofDesign Options." ·

Draft CWASHER6.WPD July 8, 1997 6 

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### 3.0 Engineering Analysis The purpose ofthe engineering analysis is to estimate the energy savings potential ofthe individu81 or combinati_ons ofdesign options not eliminated in the previous screening . analysis. The Department, in consultation with stakeholders, will use the most appropriate means available to determine energy consumption, including an overall system approach or engineering m·odeling. Ranges and uncertainties in_performance will be established. The energy savings**mea~ures** developed in the engineering analysis will be combined with end- . user costs in the life-cycle cost analysis. · · · The engineering analysis involves adding individual or combinations ofdesign options to the baseline unit describedin Section 2.2. A cost-efficiency relationship Will.be developed to show**~he** manufacturer cost ofachieving increased efficiency. The efficiency levels corresponding to various design option**combination~** will be determined from manufacturer data submittals and from DOE engineering**calculation~.** Cost estimates will. be obtained from detailed incremental cost data disaggregated into labor, purchased parts and materjal, shipping/packaging and investment. .

.· The use ofa component-based engineering analysis, Le. reverse 'engineering,**p~ovides** useful information including the identification ofpotential technological.paths ·manufacturers could use to achieve increased product energy efficiency. ·1t also allows the use ofengineering models to simulate the energy consumption ofdifferent design configurations under various use profiles and. applications. The Department recognizes that the n>:anufacturer cost information derived in a component-based analysis does not reflect**~e** variability in design strategies and cost structures that can exist between manufacturers. Therefore, the Depcu:tment plans to derive-additional manufacturing cost estimates, using other approaches developed in consultation with interested parties. These additional estimates could, for example, be based on alternative assumptions as to the elements ofmanufacturing cost. These costs . will be used both for the engineering analysis and the manufacturer impact analysis. Section 4.0 contains a more**detail~d** discussion ofapproaches to estimating manufacturing costs.

Draft CWASHER6.WPD July 8, 1997 7On October 15, 1996, the Department issued the Draft Engineering Analysis. The Department previously had received extensive data from the Association ofHome Appliance Manufacturers (AHAM) and issued the document to the public for informational purposes. At the November 15, 1996, workshop the Department received ' comments from the public and had peer reviewers present their findings. The draft report raised important issues, most of**whi~h** the Department is addre'ssing in this document. 1'. OLD DATA: At Jeast two manufacturers have requested DOE to accept new data in replacement ofthe data originally supplied. New cost and performance information is now available owing to recent experience in manufacturing efficient designs. . 2. UNCERTAINTY: Participants at the November 1996 workshop commented that uncertainty about the cost ofmanufacturing each design option combination was not described. 3. · VARIABfLITY: Current data did not allow for cost variations between firms needed for the manufacturer inipact analysis. 4. APPROACH: Several comments suggested that DOE request manufacturer specific cost-efficiency curves to improve the engineering analysis. 5. PROTOTYPES: Another i111portant issue**in~olved** the announcement by Whirlpool ofvarious prototypes including vertical-axis technology that meets horizontal-axis clothes washers efficiency level. The Department has committed to

. I consider these prototypes in future analyses.


### 4.0 Manufacturing Costs In addition to being used in conjunction with the Engineering Analysis, manufacturing. . costs are needed for the manufacturer impact.analysis and are used as one means of determining**ret~** prices. The manufacturing costs used for the industry cash flow analysis are the "average" costs ofachieving a specified efficiency level

- within a range of uncertainty. Forthe manufacturer sub-group.analysis, only those costs·representative of the subject sub-group are used.

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Draft CWASHER6.WPD July 8, 1997 8 

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### Th~**Dep~ment** believes that the existing

### ~ata set, as currently reported, cannot be used for manufacturer impact analyses because it was submitted as average manufacturing cost" and does not reflect variability among manufacturers. The Department intends to collect new cost information from manufacturers. The data collection period is scheduled to occur during the months ofJuly.and August, 1997. DOE prefers that individu'al ·manufacturer data sets be submitted to a third party contractor for statistical treatment

and subsequent analysis. · Is the data collection timeframe acceptable? Can individualmanufacturerssubmit

. . 

### -. data? AHAM is working out the details to allow Whirlpool Corporation to report its data to AHAM·to be compiled, de-identified and averaged to produce one data submission for**th~** .manufacturen. The AHAM members propose to gather data from the memben within the organization and to compile it based on the DOE data collection form. The data collection process will begin 5 business days after receipt by each ·orthe manufacturen ofthe baseline MEF data point. Once that has occurred and the above points ·worked out, the manufacturen will need·a minimum of8_weeks to gatherthe data.and return this to AHAM. Following**that~** AHAM will need approximately 4 weeks to compile the data and prepare it for release to DOE•

.This should total approximately 16 weeks from receipt ofthe test procedures. ·
4.l Characterizing Uncertainty . Consistent with the process rule, DOE will place

## a: range around the average manufacturing cost ofachieving various efficiency levels. This range ofcost will be**~sed** both in the industry cashflow analysis and in one approach to generating retail prices for the consumer life-cycle cost analysis.



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Draft CWASHER6.WPD July 8, 1997
. 9Inthe manufacturing cost information previously supplied by manufacturers, a confidence level·was provided to characterize the probability ofachieving the cost reported. Building on this framework, ·DOE is proposing a modification to future data collection instruments so that the cost estimates reported will be bound by a range. For example, manufacturers would be asked to provide their best point estimate and a range.describing the lowest and highest values they consider likely. Appendix C describes in greater detail two sample data requests, the statistical treatment" which would result ofthe information provided, and possible reporting methods. The Department plans to meet with interested parties to discuss the appropriate use ofdata and the range ofuncertainty. 

### Are there alternative approaches to characterizing uncertainty in average manufacturing costs? TheDepartment has prepared a spreadsheet model using·a commercially available uncertainty software package to demonstrate hpw manufacturing costs will.be combined and reported. ' ·
4.2 Variability in Costs between Manufacturers . The Department is committed to assessing the differential impacts ofstandards on different manufacturers. The detailed sub-group analysis will entail calculating cashflows separately for each class ofmanufacturer defined.. Ifappropriate, GRIM analysis will be perfomied for each 

### firm.

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Draft CWASHER6.WPO July 8, 1997 10 \ 

## ·.The clothes washer manufacturing costs previously submitted to DOE demonstrated large variability. This variability ·was expressed _using the standard deviation in data submittals. DOE will not be using standard deviation figures to conduct its subgroup analysis since these may mask serious cost impacts, particularly to smaller firms. The Department prefers receiving disaggregated cost da:ta from all manufacturers. The company specific cost informatio_n will be used to perform 

### GRIM analysis for each mariufacturer or manufacturer subgroup. 

### TheDepartment is open to suggestions regarding the mechanics of generating sub-group specific GRIManalysis_which willstill allow for manufacturer confidentiality andappropriflte stakeholder review. Whirlpool has proposed a basic methodology ofoutput aggregation in combination with individual company submission. • Each industry member would develop their own inputs to the GRIM models over a range ofMEF levels.proposed by the DOE. . • The GRIM models \YOUld be run by industry members to generate a range of individual company outputs. • , The outputs ofthe individual companies could then be aggregated**t~** determine industry impact.
_ · • .· Individual companies would not be r:equired to submit"detailed input assumptions, but only changes in revenues, shipments, profit after tax, and cashflow; capital investment and design and marketing spending could als·o be**provided~** . • A third party could do the aggregation**an~** then conduct a reality check by

.comparing the aggregate output to currently available industry data. 

### Please comment on thisproposedmethodoiofn!. ·

. 4.3 Costing Approach/Engineering Analysis .

Three methodologies can be used to generate manufacturing costs. These methods include: the DESIGN-O:PTION APPROACH, reporting the'.incremental costs ofadding design options to abaseline model; the EFFICIENCY-LEVEL APPROACH, reporting . relative costs ofachieving energy efficiency improvements; and the COSTASSESSMENT APPROACH which requires a "bottoms-up" manufacturing cost assessment based on a detailed bill ofmaterials. This assessment would be.performed by a third-party contractor. The Department will select public input on which ofthose approaches should be used during a rulemaking.

.Draft CWASHER6.WPD July 8, 1997_ 11 ·_/.I The Draft Engineering Analysis used industry cost data based on the DESIGN-OPTION APPROACH. The Department believes. that this data is not sufficient to perform a manufacturing impact an8.lysis due to variations between the design paths manufacturers will use. · ' I The Department would like to supplement the existing data with new data generated by the EFFICIENCY-LEVEL approach, adapted to report cost data disaggregated into GRIM cost categories. Amore detail explanation ofthis approach appears in Appendix C. 

# . . Shoulda new manufacturerdata submittal be conductedusing the EFFICIENCY
- LEVEL approach? · DOE expects manufacturer:s to submit new data based on the efficiency-level approach which will be used with the**exi~ting** analysis to supp•ement the·new data submittal.
4.4 Proprietary Design ·The Department 

### will consider 

### in its analysis all design options that are commercially available orpresent in a working prototype, including proprietary designs. Proprietary designs will be fully considered in the Department's engineering and economic analyses.

Whirlpool has provided theDepartment with patents and demonstrated working prototypes ofnew proprietary designs. ,DOE intends to consider these designs in future analyses. This entails developing cost and performance information to be used 

### in the engineering analysis and later, in the manufacturer impact analysis. DOE request that each manufacturer estimate its cost.ofproducing the design features desC'.ribed in the prototypes. This inf<?rmation will provide input to the competitive impacts assessment and other economic anajyses. . What are the.pros andcons of this approach? Are·there alternative approaches? The Department will perform an independent cost efficiency assessment. Before publishing a rule based on this technology, the Department will require additional information.


### 5.0 Life-Cycle Cost and PaybackAnalysis Draft CWASHER6.WPD July 8, 1997 12-------- ---- )
The effect ofstandards on individual.consumers includes a change in operating expense (usually decreased) and a change in purchase price (usually increased).· The net effect is

. analyzed by calculating the life-cycle cost using the engineering performance data for

energy consumption and equipment reta_\l pnces which can be derived in a number. ofways

-(see Sectio.n 6.0). Inputs to the LCC calculation include the installed c_onsumer cost

(purchase price plus installation cost), operating expenses (energy, water, sewer, and maintenance costs), lifetime ofthe appliance and a·discount rate. ·1n the ANOPR stage, the consumer life-cycle analysis will be conducted using typical values for appliance price and life, 'fuel costs, energy usage and discount rates. Design

- · options which have payback periods that e?Cceed the average life ofthe product or which cause life-cycle cost increases will not be considered further. The·detailed impact ·. calculation,-conducted after the ANOPR, will have a comprehensive assessment of impacts on subgroups ofconsumers as described in Section 10.0. Inthe ANOPR stage,' uncertainty analysis will be conducted on several ofthe typical

- . values described. During the post-ANOPR consumer analysis (Section 10.0), the Department will evaluate additional parameters includmg: variations in regional energy, water, and sewer prices, variations in energy use and variations

## ·41 installation costs. Based on the results ofthe life-cycle cost ancilysis, DOE will select candidate standard levels for analysis. The range of**candidat~-** standard levels will typically include: (a) the

- most energy efficient combination ofdesign options or most energy efficient level; (b) the combination ofdesign options or efficiency-level with the lowest life-cycle cost; and (c) a combinatiqn ofdesign· options or efficiency _level with a payback period ofnot more than three years. Additionally, candidate standard levels that incorporate noteworthy technologies orfill in large gaps between efficiency levels ofother candidate standards levels may be selected.



### ,.

Draft CWA.SHER6.WPD July 8, 1997 13 / ·

### For clothes washers it 

### will be necessary to determine input values for several variables. The following discusses each ofthe other variables in turn. Retail Prices: The determination ofprices for clothes washers is described in Section 6.0. ·Annual Energy Use: The**Dr~** 

### Engineering Analysis used a calculation based on the Department's future test procedure for clothes washers (JI 

### T.P). Average usage is assumed to be 392 wash cycles per year. Average energy use per cycle is based on manufacturer data submittals. Annual Water Use: The Draft Engineering Analysis used a calculation based on the future DOE test procedure. Average usage is assumed to be 392 wash cycles per year. The average water use per cycle is based on manufacturer data submittals. Energy Prices: The life-cycle cost analysis will use high and low projections ofnational average electricity and gas pricesto residential customers for the year 2003. The present Energy InformationAdministration (EIA) Annual Energy Outlook will be used as the default source ofprojectfons for this uncertainty**~nalysis.** 

### The Appliance Standards Advisory Committee (Advisory Committee) is currently investigating alternative methods ·offorecasting future energy prices for recommendation to the Department. Water and Sewer Rates: The Draft Engineering Analysis used 2.84 $/kgal based on comments provided by ·Seattle Water1

. 

### The Seattle Water national analysis ofwater and

.sewer rates was conducted using current rates. The Departmentseeksdata aruicomments from stakeholders regardingappropriate values for water andsewer rates in 2003. ' 

### -Lifetime: For the purposes ofthe life-cycle analysis, ·a life-time of 14 years will 

### be used. , Discount Rate: Discount rates of 2%, 6% and 15% net. ofinflation shall be considered. WaterHeaterFuel Type: For clothes washers much ofthe operating expense comes from externally heated water. The watet heating energy required and its cost, depend upon the fuel type and efficiency ofthe water heater. Therefore, two fuel scenario.s, gas and . electric, for water heating.will.be considered in the life-cycle analysis. DryerFuel Type:. Since the future test procedure considers the energy needed to fully dry clothes in a dryer after a final washer spin .cycle, dryer fuel type is important in determining clothes washer operating costs. Various scenarios for electric and gas.dryers will 

### be considered in the LCC analysis. Maintenance. Service. and Installation Costs: The Department will**~onsider** 

### expected ·changes to maintenance, service and installation costs for clothes washers, ifapplicable.

.Currently, the Department does not know ofany measurable changes to any ofthese costs

associated with different design options. . Detergent Costs: The**Dep~ment**

### is aware that several parties believe**t~at** 

### low water use clothes washers may reduce detergent requirements. Detergent manufacturers believe that detergent requirements are based primarily on clothing soil levels and not water use. From comments received, detergent manufacturers expect to offer new formulations for low water use clothes washers in the near future. The Department does not plan to consider detergent savings in its analysis but, ifrelevant, will reconsider its position should more information becqrrie available. '

Comment number 29 on Docket EE·RM-94-403. Draft CWASHER6.WPD July 8, 1997 14 . 

# 'The Department is

### prepari~g a

### spre~d sheet inodel for_ calculating LCC ·· considering uncertafoty and ranges in inputvariables. This niodel shall be presented at the workshop. 

### 6.0 Prices How manufacturing costs and assoCiated**m~gins,** associated with standards, are passedthrough from manufacturers to consumers has an impact on botp consumers and · manufacturers. Consumer and manufacturer economics are linked and**invers~ly** related. For this reason, retail prices used for the life-cycle cost analysis need to be reconciled with '. manufacturer prices. 6.1 Retail Prices: Life-Cycle Cost Analysis At the pre-ANOPR stage, a**co~sumer** life-cycle cost curve, based on average retail prices, is used to perform an initial selection ofpotential standards levels. Retail prices are**neede~** for abase case, absent new standards, and for all efficiency levels to be considered. Several approaches have been described to obtain these retail prices. Potential approaches include: 1) conducting a survey ofexisting prices'on the market; 2} surveying manufacturers and other market experts to predict consumerwillingness to pay higher prices; 3) applying various mark-ups over variable manufacturing costs. · ··.The Department believes that there is value in using various assumptions about cost passthrough· that will be reflected in price forecast approaches. The output·ofthis analysis will be a.table describing**~etail** prices for each possible efficiency level which assumes that each . level.represents a newminimum efficiency standard. Consistent with the**proc~ss** rule, and building on the,estimates generated by the various approaches, new retail prices would be. described within a range ofuncertainty.

The Department intends to use atl the approaches described above to generate estimates offuture prices and conductuncertainty analysis ofthe.range generated. The market assessment document described in Section 1.1 will include any market pricing information currently available. The manufacturing cost data forms in Appendix Cinclude a request . for the estimated increase in retail price resulting from the standard. Mark-up approaches to price determination will·be conducted by the**Departm~nt** and. submitted for review,. Is theproposed pr()(:ess for generating retailpricessound? Would interested parties.be willingtoprovide estimates of thefutureprices?· A presentation on estimatin2 future prices will be mde at the workshop.



### . . 6.2 ManufacturerPrices: Industry Cashflow Draft CWASHER6.WPD July 8, 1**~97** 15I' ·------

DOE will use an average distributor mark-up to relate the retail prices generated for the life-cycle cost anaiysis and manufacturer prices required to conduct the industry cashflow analysis. Distributor mark-ups are reported in the market assessment document from Section 1.1. The same relative nμ1ge ofuncertainty generated for retail prices will be used ' for manufacturer prices since the mark-up is assumed constant.



### Are there alternate approaches? Wouldmanufacturers be willing toprovide estimates of. future manufacturerprices? A presentation on estimating future orices will be mde at the workshop. 

### 7.0**Sh~pments**

- As described in Section 1.3, the Department intends to develop abase case forecast of product shipments in the absence ofnew standards. This initial forecast will incorporate the impacts ofpast and eX:isting**non~regulatory** efforts by manufacturers, utilities and others. · For all candidate standards levels, shipment forecasts are required in orderto calculate the ·national benefits ofstandards (**en~rgy** savings, water savings, and consumer life..-cycle . costs) and to calculate the future cashflows ofmanufacturers. DOE propo·ses to use three approaches to conduct these forecasts including: I) an approach to derive shipments based on the key market drivers for the particular product; 2) larger models to consider additional variables (i.e. retirement functions, price elasticities, etc.), and, 3) applying the expertjudgment of rulemaking participants, and observing histotical trends, .new forecasts will be generated. ·Because models cannotadequately simulate short-term effects, DOE will place considerable weight on_expert forecasts for short term shipments estimates. Shipment forecasts previously-developed will be combined through scenario analysis and a range of uncertainty will be carried forward into both national benefits and cashflow analysis.



### Are there alternate aiproaches to forecasting shipments? ·Howwillmanufacturers provide shipment forecastsfor various efficiency levels? ·

. ' 

# . 8.0 Preliminary National Bene_fits Analysis In Section 6.0, the life-cycle cost and energy savings for**i~dividual** consumers is Draft cwAsHER6.WPD July

## ·a. 1997 '•

' 16 

### ..**~** ,;**~**

# ..

- ' 

### estimated. In this section, a preliminary assessment ofthe aggregate impacts at the national level is conducted.**Mea~ures** 

### ofimpact ·to be reported include the average · consumer payback, the net present vaiue oftotal consumer life-cycle costs, national energy and water savings and national employment . I 8.1 Inputs tc:» Forecasts 

### Analyzing impacts ofFederal energy-efficiency standards requires a comparison_of projected U.S. residential energy consumption with and without standards. The caseswithout standards**a~e** 

### referred to as pase case projections. The forecasts contain projections ofunit energy consumption ofnew appliances, annual appliance shipments and the price ofpurchased appliances. The derivations ofthe base case forecast are described in Section 1.3 and standards case forecasts are discussed in Section 7.0.**Approach~s** 

### to determiriing retail prices _are described in-Section 6.0. The base-case shipments forecast developed under Section 1.3 will incorporate the likely effects ofmarket forces and ofany non-regulatory initiatives. 8.2 Calculation ofEnergy Savings 

### The Department intends to calculate national energy consumption for each year beginning with the expected effective date ofthe standards. Aggregate energy consumption Will be calculated for the base case and.each candidate standards level. This calculation may be done by one or more alternative approaches, including: I) 

### the use of_a simple spreadsheet; · 2).the use ofdetailed end-use energy models· such as the Lawrence Berkeley National

Laboratory's Residential' Energy Model (REM) 

### oi the Energy Information Administration's_National Energy Modeling System (NEMS); and 3) by multiplying shipment forecasts by unit energy savings.

For the clothes-washer rulemaking, the Department plaris to use the REM and**simpl~** 

### spreadsheet m9dels. 

### Doyou agree with the use of these tools? The Department will present an exai.Ople-ofenergy savings forecasting results using a simple spreadsheet to show bow the growth in efficiency can be accounted for over time. ' \ 8.3 Consumer Net Present Value and Payback 

### The national-net present value ofthe candidate standards levels is calculated as the difference in LCC, base case minus standards case. The calculation is performed as in Section 5.0, except thata·

### shipment weighted LCC is calculated using the shipmentand energy efficiency distribution**forecast~** 

### from Section 7.0.
D'raft CWASHER6.WPD July 8, 1997 178.4 Employment Impacts Two impacts on employment are possible from standards, direct impacts and indirect impacts. Direct employment impacts would result ifstandards lead to a change in the number ofemployees at manufacturing plants and related supply and service firms. These direct impacts are estimated in the manufacturer sub-group analysis described in Section 12.0. Indirect impacts may result from both expenditures shifting amorig goods · (substitution effect), and income changing, which will lead to a change in overall expenditure levels (income effect). The Department is.currently seeking input on

.·appropriate methods to estimate indirect employment effects ofstandards.·



### Areyou

### aware of any

### methods ormodels which can be usedto assess indirect employmentimpacts?


### 9.0 Revised Pre-ANOPRAnalysis Based on consideration ofthe comments received for the ANOPR. any necessa.rY changes to the pre-ANOPR analysis orthe candidate standards levels will be made. Ifmajor changes are required at this·stage,**inter~sted** parties will be given an.opportunityto review · the reVised analysis'. ·



### 10.0 ConsumerImpacts. 10.1 Consumer Sub-group A_nalysis . The Department .will evaluate·variations in regional energy prices, variations in energy use and variations in installation costs that might affect the net present value ofa standard to consumer sub-populations. To the extent possible, DOE will obtain estimates ofthe · variability in each input variable and consider this variability in its c.alculation ofconsumer

impacts. The variability in each input variable and likely sources ofinformation will be .discussed with stakeholders. .

.. · 10.1.1 Variations in Energy, Water and Sewer Prices . .

Energy, water and sewer prices vary regionally across the country. DOE proposes to perform sensitivity anaiyses considering the fraction ofconsumers facing a particular service price. The range·in values ofchange of**life~cycle** costs·f.or the distribution of households also will be calculated. The analysis will be structured to answer questions such as: How many households are better-offwith standards and by how much? How many households are not better offand by how much?
Draft CWASHER6.WPD July 8, 1997 18

# ,,, .. 

# •
• "' Areyou aware of data sources that the Department shouidconsider for this analysis? . .
10.1.2 Variations in Energy'Use . 

### Variations in energy use for aparticulaf-appliance can depend on factors such as: climate, type ofhousehold, people in household, etc. Annual eriergy use can be estimated·by a calculation based on an accepted test procedure or it can be measured directly inthe'field. The Department will perform sensitivity analyses to.consider how differences in energy use 

### will affect sub-groups of**cons~mers.** 

### ·

Currently the Department has data for average consumer usage. Areyou aware of anydata which reflect variations in consumer usage habits, e.g. change in the number of cycles,.on the use of hotwater, or use of the dryer?
10.1.3 Fint Cost Increases 

### The Department will be sensitive to first cost increases to avoid negative impacts to identifiable population groups such as low-income households. Additionally, the Department 

### will assess the likely**impa~s** 

### offirst cost increases on product sales· and fuel· switching: · ·

The Department is sensitive to the potentially high first cost increases for high efficiency clothes washers. · ·

. . 'What are thepotentialimpacts of a large first cost increase on consumers (affordability, ftnr.mcing, etc.). Canyousuggestmethods anddata the Department coulduse in . · conducting itsanalysis? .· ·
:i0.2 Consumer Participation 

### The Department will seek to inform and involve consumers and consumer representatives · in the process ofdeveloping standards. This will include notification ofconsumer

representatives during the rulemaking process and where appropriate, seeking direct consumer**input~**
Draft CWASHER6.WPD July 8, 1997 19 ·'

,ICurrently, the Department is conducting various market demonstration projects for market-pull high efficiency clothes washer programs. Results ofthese projects are expected to be available prior to the publication ofthe NOPR. In addition, the Advisory Committee is addressing this issue and may offer recommendations which the Department will consider.


### 11.0 Industry Cash Flow**Th~** Department intends to perform ari industry cashflow analysis. This analysis will use average manufacturing costs (with uncertainty)under Section 4.0, shipments forecasts as ·derived under Section 7.0 and pnce forecasts from Section 6.4. Financial information, ·also required as an input to GRIM, Will be developed based on publicly available data and

confidentially submitted manufacturer information.

For discussion purposes, the Department has prepared a.list ofdefault financial values to· be used 

### in the 

## GRIM**in~ustry** analysis. These were calculated by studying publicly · available financial statements ofclothes washer manufacturers and considering values used in the report titled "Financial Impact ofDOE Top Loading Hotizontal Axis Standards on U.S. Washing Machine Manufacturers: Report to Association·ofHome Appliance Manufacturers Horizontal Axis Task Force." Refer to Appendix D: Financial _Values for GRIM Analysis. · · · 

### Are the valuesproposedreasonable? What range of values.isappropriate? If 

### data is availableprif?Tto thepublication of theAJ{OPR, the**D~partment** may 

### pr9vide advance cash flow 

### analyses to interested.parties.


### 12.0 Manufacturer sub-group analysis 12.1 Manufacturer Sub-gr.oops The Department intend.s to conduct detailed interviews with as many clothes washer· manUracturers as is possible to gain insight into the potential impacts ofstandards. During t.hese interviews, DOE will solicit information_necessary to evaluate cashflows·andto assess competitive, employment and capacity impacts. Firm-specific cumulative burden will al$o be considered.

Draft CWASHER6.WPO July 8, 1997 20

### j

.!! •.fr Which m<mujacturers shouldbe actively solicited? Is there t;zny value ingrouping clotheswashermanufacturers into sub-groups orshouldindividual GRIManalysis be coruluctedfor each? More generally, whatwoulda wellexecutedsub-group analysis entail? · 

### For example, the Department's coptractor could develop GRIM analysis scenariosjointly . with individual manufacturers and report changes in financial performance without . disclosing manufacturer identities. Alternatively, manufacturers could submit complete GRIM siriiulations including input data. The Department's contractor would then

. . 

### aggregate them, as appropriate, and report changes in financial parameters.
12.2 Competitive Impacts Assessment 

### Legislation directs the Department to consider any lessening ofcompetition that is likely to result from standards. It further directs the Attorney General to gauge the·impacts, if 

### any, ofany lessening'ofcompetition. DOE will make a determined effort to gather and report firm-specific financial information and impact.s. The competitive analysis will focus on assessing the impacts to smaller, yet significant, manufacturers. · ·

The Department is consulting with the Department ofJustice on the clothes washer rule... ' 12.3 Cumulative Regulatory Burden 

### The Department will recognize and seek to mitigate th.e overlapping effects on manufacturers ofnew or revised DOE standards and otherregulatory actions affecting the · same products. . ' . . .

TheDepartment is currently preparing enhancements to the GRIM model to add cumulative regulatory burden calcufationcapabilities. . Areyou aware of 

### any regulations that wouldcause a cumulative burden with this rulemaking?


### 13.0 Utility Impacts The analysis ofutility impacts will include estimated marginal impacts on electric and gas Draft CWASHER6.WPD July 8, 1997 21utility costs and revenues. For electric utilities, the Department will calculate three primary measures ofutility impact: l) avoided energy and avoided reliability costs, 2) generation peak load and capacity reductions, 3) revenue losses. This analysis will be performed by the Appliance Standards Environmental and Utility Model (ASEUM). The Department seeks views <?n appropriate measures ofimpact and analytical methods te evaluate gas utility impacts:

-



### Consi<#!ring the use of gaswaterheaters and

### clothes dryers by consumers, how important is agas utility impact**~ses"sment?** 

### Doyou have any recommendations regardinghow agas utility impactanalysis shouldbe conducted? 

### 14.Q Environmental Analysis The standards' analysis tracks three types ofenergy-related emissions: sulfur oxides (SOx), nitrous oxides (NOx) and carbon dioxide (CO:z). The ASEUM model introduced in Sectiori 13.0, is used to perform the computations. The emissions ofthese pollutants are reported separately**~ut** no monetary values are assigned. .Outside the scope ofthe current analysis which will not be considered are other types ofenvironmental impacts, such as emissions ofparticulates, carbon mono,Pde, air toxins, and volatile organic compounds, generation ofsolid wastes, and water discharges associated with energy use.

Inregards to reduced water·use and waste water generation achieved through high efficiency·clothes washers, theDepartment plans to provide individual consumer and national reduction ofwater and waste waterresults. · · 

### Are.there any

### other factors the Departmentshouldconsider?. 

### If so, how?

Draft CWASHER6,WPD July 8, 1997... Appendix A Base case Shipment Forecast: Data Request The Department is developing abase case forecast ofproduCt shipments in the absence of new standards. This forecast will incorporate

# an asses_sment ofthe impacts ofpast and**exist~g** non-regulatory efforts by manufacturers, utilities, and other interested parties. To perform a the National Analysis, a**forec~st** ofshipmentweighted·efficiency ·.improvements ofnew products sold is needed to the year 2030. Please use Figure A. I to

enter your forecast ofchanges in the shipment weighted efficiency ofnew products sold. The.current shipment weighted efficiency ofclothes washers has an MEF value of0.923.-**~ ~40-+-~~~+-~~--+~~~-+-~~~-+-~~~t--~~-+~~~~**  

# .. E**~**oa.**]30-t-~~~+--,-~--+~~~-+-~-,-~-+-~~~t--~_,..-+~~~~**
.... C> c .!! Ja**ffi20-r-~~~+-~~--+~~~-+-~~~--~~~t--~~-+~-,-~~** -a .! --= l!' 

# .. 3:**c10-r-~_,.._,..+-~~--+~_,.._,..-+-~_,..~-+-~~_,..+--~~-+~~~~** tll e .& --= C/J**o--~-,--,-+--,-~--+~~~-+-~~~-+-_,.._,.._,..t--~~-+~~~~** 1995 2000 2005 . . 2010
- 2015 2020 2025 2030 Year Figure A.1: Shipment Weighted Efficiency of New Products Sold Please indicate what factors/considerations influenced your forecast.

Draft CWASHER6.WPD July 8, 1997 A-tAppendix A (continued) ·Base case. Shipment Forecast: Data Request 

### To assess the average economic impact ofstandards on the affected consumer population · and to calculate the distribution ofthis impact to different consumer**sub~groups,** 

### a forecast ofproduct shipments by efficiency level is needed forthe year the new standard would come into effect. Please use Figure A.2 to profile the expected sales distribution ofnew products by efficiency level for the year 2003. · 100

90 Ill .!!· 80 ftl Cll 

# - 70 u ::I '1:1 0 60
..... Q.. 3 50 GJ z 

# - 40 .o

CD a 30 ftl 

# - c GJ 20 u 

## ... GJ. a.. 10 0 0 10 .20 30 40 50 60 % Decrease in.Energy Consumption Per Unit Compared to Baseline
Figure A.2: Shipment Weighted Efficiency Distribution of New Product Sales in the Year 2003 

### Please indicate whatfactors/considerations**~uenced** 

### your forecast.

Draft CWASHER6.WPD July 8, 1997 A-2Appendix B Refinement of Design Options
. The

### DraftReport on Design Options for Clothes Washers was distributed prior to a DOE sponsored clotheswasher workshop·held on November 15, 1996. In the report,**po~ential** design options were separated into two categories: .1) tentatively eliminate from further analysis and 2) tentatively consider for further anatysis. In response to the report and workshop, the Department received numerous comments on considering, eliminating, or adding design options: In addition,**thre~.** peer reviewers J?rovided input on design options. 

### In Sections B.l, B.2, and B.3 which follow, designoptions have been categorized**~y** the nature ofthe comments received. In Section B.4 a summary_ofthe design options to be considered in the further analysis is presented. ' · 8.1 Design options DOE and Stakeholders generally agree shou.ld be considered

. in further analysis -1. Improved·fill control . 2. ·Tighter tub tolerance (for vertical axis designs only)

.3. Thennostatically controlled mixing valves (TCMV} 4. Improved water extraction for RMC's of50% 5. Horizontal axis design2 6. Horizontal axis design with recirculation2 7. Automatic fill control 8. Increased motor efficiency 9. Direct drive motor _\ 8.2 · Design options DOE and Stakeholders generally agree should be eliminated from further analysis 1. Improved .water extraction for RMC's of30% 2. Suds saving · · 3. Reduced thennal mass

. 4. Electrolytic disassociatio.n ofwater

5. Ultrasonic washing 6. Bubble action 7. Ozonated laundering 8. Added insulation3

2 While some commenters believe those design options are valid, they indicated they should be**consider~** entirely separate product classes.··
3 'Die insulation design option was added to this category on the basis that it saves little orno energy. Draft CWASHER6.WPD July 8, 1997 B-1B.3 Design options requiring additional discussion 

### 1. .Jmproved Water &traction The Department received conflicting comments from various stakeholders. One group believed that the Department's preliminary decision to screen out 35% RMC was unfounded. They statedthat c4rrently available clothes washers are on the market that achieve approximately 36% RMC, and ifDOE does not consider 35%RMC then it should at least consider 36%R,MC. The opposing group of commenters believe that the 40% RMClevel should be eliminated due to potential wrinkling ofclothing and loss ofconsumer utility. In addition, commenters rec_ommended that the Department consider 45% RMC to reduce the increment in improvement from ·:4-0% to 50%RMC. The Department has concerns about potentially impacting consumer utility or overestimating potential energy savings.from improved RMC. Currently, the Department is implementing test procedure revisions which will discount the potential savings ofRMC improvements due to consumer's potential behavior given a choice ofimproved moisture extraction options. However, this reduction is

..not based on explicit data regarding consumerusage habits ofimproved RMC, rather it is based on stakeholders best assessment_of.future trends. Considering ·this, and the potential impact ofexcessive wrinkling ofclothes, the Department

believes that the lowest RMC level considered should be 40% RMC. The Department.realizes that the 40% RMC level may increase wrinkling of clothing, butthe Department's test procedure provides for consumer choice of RMC levels, thus eliminating consumer utility concerns. In addition, the Departmentbelieves the consideration ofthe 45% level ·should.be analyzed to reduce the ·gap between the 40% and 50% RMC levels. · 

### 2. WhirlpoolPrototype At the November 15, 1995, workshop, Whirlpool announced ithad four proprietary protot)rpes. These prototypes iricluded top-loading hprizontal-axis and vertical-axis clothes washers that achieve**effi~iencies** comparable to the horizontalaxis desigri .option considered in the Department's preliminary engineering analysis. The Department believes that Whirlpool's horizontal-axis prototypes are ·interesting and provide aqditional information regarding potential design strategies by various manufacturers.. :However, the department does not believe they need to be analyzed separately since other manufacturers have introduced innovative horizontal-axis clothes washers into the market place. Several_manufacturers commented that the.Whirlpool high efficiency vertical axis Draft CWASHER6.WPD July 8, 1997 B-2designs should be added as design options: Whirlpool agreed and provided patents on their high efficiency vertl.cal axis**d~signs.** Whirlpool commented that its . ,patented designs meet all criteria for further consideration as design options. Whirlpool further commented that its high efficiency vertical axis designs maintain . consumer utility in regards to capacity, ease ofloading, and performance. The achievable energy savings are reported by Whirlpool to be equivalent to current horizontal axis deigns. The Department believes that it should analyze the

, Whirlpool vertical-axis prototype, due to their ability to attain horizontal axis

efficiencies in a conventional vertical configuration: ·

I 3. AdvancedControls'/Sensors Comments received stated that this. option could or will affect product utility ifthe defirlition includes soil sensing. Preliminary.engineering analysis showed energy savings ofonly 0.4%. Based on the preliminary engineering analysis, this design option is**cl~arly** not cost effective. Based on these factors the Department.believes · that further analysis is not warranted'.· B.4 Design options to consider forfurther analysis Taking into consideration comments on theDraftReport on Design Options for Clothes Washers and the DOE November, 1996, Workshop on clothes washers; the Department -. · plans to consider the design options below for further analysis. · 1. Iffiproved fill control 2. Tighter tub tolerance (for vertical axis only)

. 3.**Thermost~ticatly** controlled·mixing valves

4. Improved water extraction (RMC = 50%) 5. Improved water extraction (RMC = 45%) 6. Improved water extraction (RMC= 40%) 7. Horizontal axis·design (tumble washer) 8. Horizontal axis design with recirculation 9. Automatic fill control

. 10. Increased motor**~fficiency**

11. Direct drive motor 12. whirlpool high**e~ciency** vertical axis ,design (or similar concepts) The Department recognizes

### t~at**c~mbinatioris** ofthe above design options may also be considered. Combinations have beeri analyzed in a preliminary engineering analysis. The
_ design option improved moisture control (RMC)can be combined with all ofthe other listed design options except for tighter tub tolerance. Similarly, auto-fill and . . thermostatically controlled**mi~g** valves (TCMV) can be eombiiled with other design Draft CWASHER6.WPD July 8, 1997 B-3·options. The energy savings ofthe RMC design option can be calculated directly, however, responses from manufacturers on combined design options could account for synergies between options and could effect the cost ofa combined design option. In other cases, the energy.savings ofa combination may not warrant further analysis when another design option is available that has greater savings for simiiar costs.

Draft CWASHER6.WPD July 8, 1997 B-4Appendix C • ft-a- ft--·----a**~** .. ...,. __ , ____ ....__ •• ___ •---- • uau1 nt="tut=:n "·•-ues1gn·upuon Approacn 0 

# .. ! Appliance Type: · Clothes Washer Appliance Class (anddpattd): Standard (1.6cu.n. orgreatercapadtJ) Variable Cosu Total

### ~ Costs oerUnit (a) Variable > en Material Labor Overhead· Costs (e) :t m (b) (c) (d) ($per Unit) lJ 

## "" DOE Anticipated Design Options 

## - [i] (2] (3) (4).**~** 

## .,, I Baseline 0 2 Imnroved fill control
- 3: 3**Tiaht~r** tub tolerance Cvert. axis onlvl . II> '< 4 Thermostaticallv controlled mlxin2 valves CTCMVI I\) <D S**lm~roved** water exuactiolilRMC

### = SO%) 

# - 6 lmnroved water extraction CRMC

### = 4S%) <D <D 

### i lmoroved water extraction CRMC

### = 40...l ....., 8 Horizontal axis desil?D (tumble washer) 9 Horizontal axis desil?D with recirculation . - 10 Automatic Fill Control l l Increase motoreffici,.,,,.,, 12 Directdrive motor 13 Whirlnnnl hillh efficiencv vertical uisdesitm

Comblnadons 14**~** RMC +Auto-fill+TCMV U 45% RMC +Auto-fill +TCMV --· 16**~** RMC +Auto-fill+TCMV 17 SO% RMC +lmnrnved Fill Conttol 18 4591> RMC +lmnrnved Fill Control '19**~** RMC +lmoroved Fill Control 20 H-axis +SO% RMC 21 H-axis + 45% RMC 22 H-illlis + 40% RMC 23 H-oxis +**~0%** RMC +TCMV 24 H-axis +45% RMC+ TCMV

. 2S H-axis +**~** RMC+ TCMV

26 H-axis w/recirc. +.SO.. RMC 27 H-uis w/recirc. + 4591> RMC , 28 H-axis w/recirc. +40% RMC Cost Uncertainty Range Variable Cosu

. (+/·percentage) (0 Maximum Minimum (SJ (6)

. •'

' Yeariy Production Volume (a)=-.
_ Conversion Costs (Fixed) Total Cost Uncertainty Range Totalcinimons ofdollm> Fixed FixedCosts

Capital Product (i) Costs (j) (+/- Del'Ctntage) (k) Costs(g),(h) Design Costs (millions) Maximum Minimum (7) (8) (9) (10) [II)

,
' '

/

·•

-· "'} 

# ..**~**

## .... <O <O 

# "" Data Request C.1-Deslgn-Optlon Approach (continued.:)
Energy Use Data (k) Hot Machine Total Energy Dryer

- Water(I) Energy (m) wlodryer Energy(n) lWhlcyc lWhlcyc lWhlcyc lWhlcyc DOE Anticipated Design Options (12) (13) (14) (IS) I Baseline 2 fmnroved fill control ,, 3 Tightertub tolerance tvert. axis onlvl · 4 Thennostaticallv controlled mlxintl valves ITCMVl S fmnmved water extraction tRMC=SO%l 6 fmoroved waterextraction <RMC =4S%) .. 1 lmoroved·waterextraction <RMC= 40%) 8 Horizontal axis desilm Crumble washer} 9 Horizontal axis desian with recirculation ' 10 Automatic Fill Control 11 Increase motorefficiencv 12 Direct drive motor 13 Whirlnnnl blah efficiencv**verti~** axis desian

Combinations 14 SO% RMC +Auto-fill+ TCMV IS 4S% RMC +Auto-mt+TCMV 16 40% RMC + Auto-fill +TCMV 17 SO% RMC + lmnmved Fill Control 18 4S% RMC +rmoroved Fill Control 19 40% RMC + lmoroved Fill C.ontrol

.. 20 A-axis +SO% RMC - 21 H-axis +4S% RMC 22 H-axis +40% RMC 23 H-axis +SO% RMC +TCMV 24 H-axis +45% RMC+ TCMV 25 H-axis +40% RMC+ TCMV 26 H-axis wlrecirc. +SO% RMC 27 H-axis wlrecirc. +4S% RMC

- 28 H-axis wlrecirc. +40% RMC · Uncenainty Range Water Use (1>) Total Energy Oothes MEF. Total Energy Water Water with dryer .Container (+I- ocrcentage) (o). Use Use kWh/eye cu.ft. cu.ftAWhkyclt Maximum Minimum gal/cu.ft. gal.lcycle

(16) (17] (18] (19] ·1201 (21) (22]Data Request C.i-Design-Option Approach (continued..) I
Energy Data Comments Estimated Source (q) Notes ' Increase in Retail Price' DOE Anticipated Design Options 

# . (23) (24) (25) I Baseline 2 lmoroved fill control 3 Tiirhtertub tolerancelvert. axis onM 4 Thermostaticallv controlled mixina valves ITCMVl r S lmmnved waterextraelion lRMC

### =**S~l** · 6 lmoroved waterextraelion tRMC

### = 4S'lL) 7 lmoroved waterextraetion fRMC

### = 4o'lLl

.. 8 Horizontal axis desi211 Ctumble washer) 9 Horizontal axis desi'"' with recirculation . 10 Automatic Fill Control '•.. 11 Increase motor efficiencv ' 12 Directdrive motor , 13 Whirlnool hieh efficiencv venical axis desian

Combinations 14 SO% RMC + Auto-fill+ TCMV IS 4S% RMC +Auto-fill+TCMV \ 16 40% RMC +Auto-fill+ TCMV

. 17 SO% RMC +lm...,.ved Fill Control 18 4S% RMC +lmnrnved Fill Control 19 40% RMC + lmnrnved Fill Control 

## . 20 H-axis + SO'lL RMC 21 H-axis +4S'lL RMC 22 H-axis + 40% RMC 23 H-axis +SO% RMC +TCMV 24 H-axis +4S% RMC+ TCMV 2S H-axis +40% RMC+ TCMV 

# . .. I 

### - .26 H-axis w/recirc. +SO% RMC · 27 H-11xis w/recirc. + 45% RMC 28 H-axis w/recirc. +40% RMCData Request. C1: Design-Option Approach Footnotes This data request is consistent with the historical DOE approach to gathering.cost and efficiency data. . · -_(a)

(b) © (d) (e) (f) (g)

_ (h)- (i) G) (k) (1) -, (m) (n) (o) (p) (q) Assumes a constant production volume at the level anticipated for the year the new standard comes into effect (2003). For production ofall models in product class. Material**cost~** include material and parts. Burdened labor rate includes dir_ect labor and fringe-benefits costs. Overhead includes factory overhead excluding depreciation. ·Includes both fixed and variable components. 'Total ofcolumns numbered [I] through [3].

Shows the range ofexpected variable costs expressed as maximum value (% over column [4]) and a minimum value(% below column [4]).· For purposes ofthis analysis assume a 5year regulatory 

### life (i.e., amortize this cost over 5 years). The Department-will perform sensitivity analysis on this variable as appropriate on the suggestion ofstakeholders. · Includes investment for such items as production machinery and plant upgrade and/or expansion and tooling. Product design conversion costs are the expensable costs for new product design. These may include product redesign costs and expensable factory conversion expenses. Also inciudes costs incurred for new product literature and catalogs, product**obsolescence~** and various related marketing expenses.
, Total ofcolumns numbered [7] & [8].'
-

Shows the range ofexpected variable**c~sts** expressed**a~** maximum value (% over column [9]) and a minimum value (% below columri [9]). · Includes only externally applied hot water. - Includes internal hot water. - This is atest procedure calculated value that is a function ofremaining moisture content (RMC).
- This value represents the range oftotal energy usage (as a percentage). Enter maximum value(% over column [16]) and minimum value(% over column [16]). Based on DOE test procedure, Appendix JI. ,source for Energy Use data: test**d~ta** (T), calculations (C), or estimation (E).. I



### . ' Draft CWASHER6.WPD July 8, 1997 C-4

### c iiJ ft.-&-"--·---& I' ft P.U!-1.:...-- ... - a _ ... __ 1 •------- - -•- ' uaLa nc"lut=::1L**"·~-c111c1ency•Leve1** Approacn 

# = ·Appliance Type: .Clothes Washer**~** ··Appliance Class (anticipated): >· Standard (L6cu. ft.or greater capacity) CJ) 

### ffi Yearly Production Volume (a)=----**~ ~**  

# ,, 0**.~** en Percent Improvement

. (b)

(I] Baseline 

## s · .

.10 

## ts 20 25 30 3S 

### 40 4S 

## so SS 60 6S Product Characterisics MEF Total Energy Clothes wldryer Container (c) cu.ft./lcWh/cyclt kWhlcyclt cu.ft. (2) (3) (4) 0.885 0.932 0.983 1.041 ' 1.106 1.180 1.264**~** 1.362 l.47S 1.609 1.770 l.967 2.213 2.S29 Enen?v Use (c) Water Use (c) ·Hot Machine Dryer Water Water Water(d) Energy (e) Energy· Use Use:. kWhlcyclt kWh/cyclt . kWh/cyclt gal.I eye gal./cuft. [SJ (6) (7). [8j (9) Energy Data

.Source (f) (10)Oat.a Request C.2-Efficiericy-Level Approach (continued..)

Variable Costs Total Cost Uncenainty Range Product Conversion Costs Total Cost Uncenainty Range Percent Cost Per Unit (a) Variable (+/- percentage) (k) Total (millions of$) Fixed '· ( +/- percentage) (p) Improvement Materials Labor Overhead Costs (j) Variable Costs Capital Product (n) Costs (o) Fixed Costs (g) (h) (i) ($per Unit) Maximum Minimum Costs (l)(m) Design Costs (millions) Maximum Minimum (11) (12) (13) (14) {15] [16] (17] (18) [19) (20] (21)' Baseline .. 5 10 '' .15 20 25 30 35 40 45 ' 50 55 60

- 65**"""··~**..**~',**
Data RequestC.2-Efficiency-Level Approach (continued..)
f



### - Design Options Estimate Percent Used to Achieve Comments . increase in '• Improvement Efficiency Level Retail Price

- (q) (22) . (23) {24)' Baseline

- 5 10' 15 

# ' 20 25 30 ' 35 .- 40 '. 45 

### -· 50 '
. 55 '.;, 60 65

-

·,'Data Request C2: Efficiency-Level Approach Footnotes 

### This approach consists ofletting the manufacturers supply cost and corresponding efficiency data using any**desi~** 

### options or design option combinations they choose.

. ' I (a) ·(b) © (d) (e) (f) (g) (h) .·(i) (j) (k) (1) 

### Assumes a constant production volume at the level anticipated for the year the new . standard comes into effect (2003). For production ofall models in product class. Based on.MEF (includes washer and dryer energy).,. Percent increase column could be replaced by a MEF column. Percent saving& 

### = 1 - (baseline MEF I 

### new MEF) Based onDOE test procedure, Appendix J1. 

### Includes only externally.applied hot water. Includes internal hot water. · Source for Energy Use data: test data (T), calculations (C), or estimatfon (E). 

### ··.Material costs include material and parts.

Burdened labor rate includes dμ-ect labor and fringe-benefits costs: Overhead includes factory overhead excluding depreciation. Includes both fixed

. and variable components. Total ofcolumns numbered [11] through [13]. Show the range ofexpected variable costs expressed as maximum value (% 

### over column [14)) and a minimum value(% below column [14)). ' For purposes ofthis analysis assume a 5year regulatory life (i.e., amortize this cost over 5

### years). The Department 

### Will perform sensitivity analysis on this variable as appropriate on the suggestion ofstakeholders. (m)

. (n) 

### Includes investment for such items as production machinery and plant upgrade and/or expansion and tooling. Product design·conversion costs are the expensable costs for _new product design. These may_include product redesign costs and expensable. factory·conversion expenses. Also includes costs uicilrred "for new product literature and catalogs, product obsolescence, and various related marketing expenses. (o) (p)

, (q) 

### Total ofcolllmns numbered [17] & 

### [18].

. Show the range ofexpected variable costs expressed as**maximu~** 

### value (% over

. column [19)) and a minimum value(% below column [19]).

List design options used to achieve tJ:ris efficiency: 1. Baseline 2. Improved fill control· 3. Tighter tub tolerance (vert. axis only) 4. Thermostatically controlled mixing valves (TCMV) 5. Improved water extraction (RMC = 

### 50%) 6. Jn:iproved water extraction (RMC 

### =45%) 7. Improved water extraction (RMC 

### =40%) 8. Horizontal axis design (tumble washer) 9. Horizontal axis design with recirculation 10. Automatic Fill Control Draft CWASHER6.WPD July 8, 1997 C-8

(.

### 1l. 

### Increase motor efficiency 12. Directdrive motor 13. Whirlpool high efficiency vertical axis design . 14. Other designs
C.3 Uncertainty and,Variability on Manufacturer Costs 

### The analysis will explicitly consider uncer,tainty (e.g., incomplete information about future costs) and variability (e.g., differences among manufacturers). This sectfon describes a proposed approach for collecting a:nd using.the data. The approach can be used for.any

.data collected (each component ofcost, or for the total incremental cost). Part ofthe · discussion with stakeholders should.include decisions about the level ofdetail at which uncertainty should be addressed. ·The examples presented here were developed using one ofseveral software products that are commercially available. ·Haw detailedshouldthe data be on uncertainty? 

### All ofthe data have some**unc~rtainty** 

### associated._ One approach would be to request . explicit estimates ofuncertainty associated with each number provided. ·However, where possible, the burden ofmaklng those estimates can be reduced, by instead estimating oilly the uncertainty associated with more aggregate numbers. For example, ratherthan esti.inating the uncertainty for-each oftile cost items in the desigfi option survey, only the uncertainty ii). .total variable cost and total fixed cost for each design option is needed to carry an analysis ofthe cost uncertainty through the manufacturer impact analysis and engineering analysis. In the design option approach, uncertainty could be characterized ,forthe efficiency or for the components: hot water energy; machine energy, dryer energy, · and clothes container (cu. ft.). 

### Variability in consumer usage among households, such as

loads per year, will be characterized separately (for the detailed consumer analysis), to ' deal with actual energy consumption as distinct from the test prpcedure.
Haw shoulduncertainty be characterized? 

### In order to account for the differences among manufacturers, each manufacturer will be asked**~o** 

### submit their own estimate ofcosts, including their estimate ofthe uncertainty" in their costs. Manufacturers will be asked to estimate the uncertainty in their costs by providing a minimutll, most likely, and**maxim~m** 

### value for the cost. These values will be interpreted as atriangular distribution, unless the manufacturer indicates**th~t** 

### a different distribution should be used. ·
' Constructing industry costs from individualmanufacturer costs. 

### Since the costs to 

### individual manufacturers will be treated as confidential, a range ofcosts to the 'industry 

### will be constructed, based upon the information from the individual manufacturers. The range ofcosts to the lndustry will be expressed as confidence Draft CWASHER6.WPD July 8, 1997 c.;g/ intervals, that is a range ofvalues with a specified probability.**Fo~r** steps are proposed for combining information from individual manufacturers to

. construct the range ofcosts for the industry. First, the data from each manufacturer provide a range ofcosts. Second, these estimates may be weighted. (See discussion · below**a~out** how to determine what weights to use, ifany.) Third, sampl,es are drawn at random overthe**fu~** range ofcost estimates, and a distribution ofcosts for the industry is constructed. Fourth, in order to protect confidentiality, the results are summarized as "trend results," revealing only the median ("nliddle") and the low and high values ·correspo11ding to specific.confidence intervals. 

### Weighting the individualinanuf acturer costs to obtain the industry costs. Forthe current mix ofproducts, the industry result can be built up from the individual manufacturer's costs by simply averaging the estimates (assuming equal weights), or alternatively, by weighting each manufacturer's costs by their market share. Ifno weights are specified, the range from each manufacturer is sampled as often as the range from any other manufacturer. Ifweights are applied, then a range with ahigher we!ght is sampled more frequently than a range with a lower weight. In the example, we present both the

. unweighted estimate ofinaustry easts, and an estimate using market shares as weights. Without advance knowledge offuture market shares, we propose to use current market shares to weight each manufacturer's. costs, in order to build up to the range ofindustry costs. Forthe future mix ofproducts, the market shares may change, (e.g., with the possibility that those manufacturers with the highest costs may lose market share). A sensitivity analysis can be conducted on.the weights, based upon possible shifts in market

# ·~· '
· Example: Suppose three manufacturers provide estimates ofan incremental

### cJ~t (either for

# a design option or for an efficiency level). Table I shows each manufacturer's.estimate ofthe minimum, likeliest, and maxitm,1m cost. Figure I shows the triangular distributions

. drawn from minimum, likeliest, and niaxiffium costs for three manufacturers,· ·. .

corresponding to Table 1. The areas under each distribution ·are the same, corresponding to I00% probability that the costs for each manufacturer fall within the range between the · minimum and maximum value specified by that manufacturer. (The areas can be adjusted to any other confidence level.) , , b Ta le 1. H h . I. typot etaca mcremen tal cos

### t f 

### t f es 1ma es rom three manuf ct a urers. Manufacturer ·Minimum Likeliest Maximum B $10 $15 $20 A $5 ! $20 $25

I ·• 

## c .$10 $20 $30 ManufacturerB estimates the cost to be between·$10 and $20, likeliest $15. Draft CWASHER6.WPD' July 8, 1997 C-10**~** .

Manufacturer A estimates the cost to be between $5 and·.$25, likeliest $20. Manufacturer C estimates the cost between $10 and $30, likeliest $20. The simple_average ofthe estimates of"likeliest" c9st is $18.J= ($15+20+20)/3. But this estimate fails to.account for the uncertainty. Figure 1 and Table 1 show that manufacturer A has**~** wider range from the minimum to the likely value ($15=$20-$5) than fyom the likely value to the maximum ($5=$25
..$20). Considering the_uncertainties as**tnan~lar ~istributions,**  and taking account ofthe**ran~e** and shape ofthe uncertainties, recalculating the mean value for IJ!anufacturer A from a · random sample gives a resul(of$16.7. The mean value is not the same as the "likeliest" value

# m any case where**th~** range ofestimates is not symmetric. The "likeliest" value (e.g., $20) is the value with the highest probability, while the mean.value (e.g., $16.7) is the more complete result ofrandom sampling over the range ofuncertainty. Calculations of.industry costs Will-use multiple values within the range provided by . manufacturers. Random :Sampling techniques (Monte Carlo orLatin Hypercube4) will be. used 

### tq select trial values within the ranges. provided. A sufficient number oftrials will be analyzed to represent the given range well. Figure 2 shows the unweighted 'average, calculated using 500 trials (Latin Hypercube), with a mean.industry value of$17.2. Theweighted values are**~btained** by assuming market shares of30% for manufacturer A, · 60% for manufacturer B, and 10% for manufacturer. C. Since Manufacturer B, with the

5 .

# --
- 10 FIGURE 1. UNCERTAINTYIN**MANUFACTU~** COSTS

15 20 25 $ 30 ,...._Company B • • Company A .

- ..- Conipany c

.· 4 Monte Carlci invo}ves random sampling. Latin Hypercube.is**inten~ed** to provide higher assurance than Monte Carlo that the full range· is sampled. Latin Hypercube divides the range into segments having equal probability arid assumes avalue for**e~ch** segment. . Draft CWASHER6.WPD July 8, 1997 ·c-11 \ 'largest market share, has estimated lower'costs than the other manufacttirers, the weighted costs are.lower than the unweighted costs. Figure 3 shows the weighted costs, with a mean value of$16.0. · · ·Even.more information is provided by a confidence interval. The confidence interval is the probability that the cost will occur within some range from low to high**v~ue** around the mean value. Table 2·shows the range ofvalues for the 10%, 25%, 50%, and 90% confidence intervals for the unweighted and weighted scenarios. · T bl 2' C fid . t



### a e 

# . on 1 ence m erva s and f f th . d range o costs or em ustry Confidence Interval Range ofCosts Range ofCosts (around mean) (unweighted) · (weighted) Mean $17.2 $16.0

10% $17.0-17.5 $15.7-16.2 25% .$16.5-$18.0 $15.5-16.6 50% $15.8-18.8 $14.7-17.l

. 90%. $13.7-20.6 $12.9-19.0

/

/

Draft CWASHER6.WPD July 8, 1997 C-12

## '



# . G: ' Forecast: UNWEIGHTED AVERAGE Summary: Display Range Is from l 0.0 to 30.0 Entire Range ls.from 11.9 to 22.9 After 500 Trials, the Std. Error ofthe Mean ls**O~**l Statistics: Trials Mean Median· Mode Standard Deviation Variance Skewness. Kurtosis ·Coeff. ofVariability

. Range Minimum

Range Maximum · Range Width · Mean Std. Error
.
I I \ 500 Trials .Ool& Forecast: UNWEIGHTED AVERAGE FrequencyChart**~-** 5CX). 17.2 17.3.

2.1 4.4 -0.04 2.51 0.12 11.9 22.9 11.0 0.09.·

OOutliera · 23
.035 • • • • • • • • • • • • • • • • • • • 17.25 

## ;' 11.S ' 

# -= " 5.75

### ~**~** 

## =·**~** .023 

# .,**~** 0 

## ... .012 CL. .ODO 10.0 15.0 . 20.0 25.0 ' .. 30.0

c::.13

. I Cell: E9

/Forecast: WEIGHTED A VERAGE**Su~mary:** . Display Range is from 10.0 to 30.0 Entire Range Is from l 0.8 to 20.2 

### Fiqure 3

After 500 Trials. the Std. Error ofthe Mean is 0.1 Statistics: Trials Mean ·Median

Mode· Standard Deviation

. Variance

Skewness Kurtosis· Coeff. ofVariability · Range Minimum Range Maximum Range Width · Mean Std. Error i Forecast: WEIGHTED AVERAGE ' 

## i 500 Trials Frequency Chart ., .054
.041

### ~ 

## :s 

# ., .027 . .a:::i 

### i ·C 

# .. .014 I a. I 

## ! .000 10.0 15.0 20.0 25.0

. ·c-14**~** 500 16.0 16.0

1.9 3.4 -0.07 2.57 0.12 10.8 20.2

9.4 0.08

OOutliera

20.25

### ~ 13.5 

## .g 

# " 8.75**~** .

. 30.0 '·
Ce.II: Hl 1

. '



## ..·**~~**

### ~4-·";**~'** \" . Appendix D Financial Inputs for GRIM Assumption Default Suggested Uncertainty
I Range Max. Min. TaxRate 40% Interest Rate 12% Working Capital .18% % Sales '. S,G&A % Sales 16% Depreciation· 3.25%


### - Capital -4.00% \ Variable Overhead (%) 60% Useful Life (years) 5 .. R&D 2%

.. In making a cash flow analysis, the GRIM model requires several·major assumptions, each ofwhich can·be modified. :Please provide your suggestions for these values..

Draft CWASHER6.WPD July 8, 1997 . D-1