Justification of a medical oxygen production start-up

Ihor Pistunov, Mykhailo Demydenko


Introduction. The increase in demand for medical oxygen is causing the interest of entrepreneurs in investing in the development of this field of activity. There is a sufficient number of factories producing technical oxygen in Ukraine.

Goal. Determine the list of necessary equipment for the production of medical oxygen and justify the possibility of creating a startup.

Method (methodology). The efficiency of the start-up was determined by the method of calculating the net profit brought to the beginning. For this purpose, such data as: inflation and the market value of one cylinder with medical oxygen were forecast three years ahead by month using the method of exponential smoothing. Forecasting was carried out using Excel spreadsheets in the FORECAST.ETS function. The forecast showed a significant decrease in the price of medical oxygen with relatively little fluctuation in inflation. The cost of capital was assumed to be 28.2% per annum. The risk premium is determined by the method of expert assessments. The sum of the cost of capital, inflation and risk premium made up the discount rate.

The Repair and Mechanical Plant (hereinafter – RMZ) was taken as the base enterprise, which is part of the Eastern Mining and Processing Plant, subordinate to the Ministry of Energy of Ukraine, based on which further calculations were made.

Medical institutions of the cities of Zhovti Voda and Pyatikhatka, Dnipropetrovsk region, and the city of Oleksandria and the village of Petrove, Kirovohrad region, were considered as consumers.

The start-up's calculation horizon was determined according to the warranty period of the equipment that will produce medical oxygen, and was three years.

Calculation of net reduced profit was performed using Excel spreadsheets.

The results. In general, the NPV amounted to UAH 183,303.2, which is 2.956503 times more than the spent funds. The estimated payback period is about 14 months.

Scope of application of the results: The conducted research showed that there is a technical and financial possibility to quickly meet the needs of Ukraine in medical oxygen by equipping factories producing technical oxygen with equipment that will convert this oxygen into medical oxygen.

Conclusions. An investment project in the form of a startup can be implemented with relatively small amounts and bring profit. The principle of finding the net profit brought to the beginning of the project is effective in conditions where the products are already in demand on the market and have a relatively stable price. A further direction of research should be to determine the limits of application of the NPV calculation in conditions where products or services are new or have significant novelty. The second direction should be the use of the Box-Jenkins forecasting method, with the determination of the lower and upper bounds of the forecast based on the given value of the confidence probability.


demand forecasting; startup; medical oxygen; discount rate; payback period; calculation horizon

Full Text:



Eastern Mining and Processing Plant. Retrieved from: http://vostgok.com.ua/ [in Ukrainian].

Pistunov, I. M., and Pistunova, K. I. (2007). Optimal solutions in investment planning: a guide. Donetsk: NGU. [in Ukrainian].

Minfin (2022). Retrieved from: https://index.minfin.com.ua/ua/economy/index/inflation.

Prysenko, G. V., and Ravikovich, E. I. (2005). Forecasting socio-economic processes. Kyiv: KNEU. [in Ukrainian].

Demidenko, M. (2018). Method of selection of ERP systems using multicriterial optimization models. Naukovyi Visnyk NHU, 5, 132–137.

State procurement online. Retrieved from: https://www.dzo.com.ua/tenders/plans?filter%5Bobject2%5D=title_and&filter%5Bsearch2%5D=%D0%BA%D0%B8%D1%81%D0%B5%D0%BD%D1%8C+%D0%BC%D0%B5%D0%B4%D0%B8%D1%87%D0%BD%D0%B8%D0%B9&filter%5Bobject%5D=cpv&filter%5Bsearch%5D=&filter%5Bplan_budget_amount%5D%5Bstart%5D=&filter%5Bplan_budget_amount%5D%5Bend%5D=&filter%5Bdate%5D%5Bstart%5D=&filter%5Bdate%5D%5Bend%5D=&filter%5Bmoneyget_id%5D=&filter%5Border%5D=pubDate_desc&formname=filter [in Ukrainian].

Pistunov, I. M., and Pistunov, M. I. (2015). Definition and management of financial and economic risks: manual. National mountain Univ. Retrieved from: http://pistunovi.narod.ru/PU3UK_IIiCTYHOB.pdf (Date of access 07/15/2022) [in Ukrainian].

DOI: http://dx.doi.org/10.35774/econa2022.03.086

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM


  • There are currently no refbacks.

Copyright (c) 2022

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.


Articles are distributed under Creative Commons Attribution  International 4.0 (CC-BY-NC 4.0) 

Science Works Journal "Ekonomichnyy analiz"

ISSN 1993-0259 (Print)  ISSN 2219-4649 (Online) DOI: 10.35774/econa

© West Ukrainian National University

© «Ekonomichnyy analiz», 2007-2023