I am planning to use an instrument that gives a 4-20 mA analog output. I am not sure whether to use a SMPS based power source (which is cheaper) or a regulated power source for the DC power supply? Any ideas?
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For best measurement accuracy you want to use a linear regulator as the last step to power your sensor.
So to get from line voltage to a usable level (say 26V or something) you'd use a switchmode power supply because of the efficiency. After that you place a linear regulator which handles the dropping to a clean 24V.
You should also protect against all thinkable errors and EMI problems. So you make sure that an external short will not damage any of your components (current limiting). As some operator will be handling all the wires and stuff, you place some protection against ESD at the out/input. For real heavy duty you might even need protection against lightning strikes.
Another thing in industrial environments that your device might be used in explosive environments, which puts a whole new level of requirements on your circuit. This is getting much to broad to answer all the "industry standard".
What you are trying to do reads more like a small job which doesn't require all the heavy duty industry stuff and probably not sub 0.5% accuracy. 4-20 mA sensors are usually built to withstand quite a lot EMI, so powering them with some cheap switchmode wall-plug adapter actually works reasonably well (at least those we build do).
The problem with switchmode power supplies is the voltage ripple, which prevents the current control stage from regulating to a clean current value as it is likely slower (in the order of a few kHz) than the switching frequency of the power supply (could be anywhere between a few kHz up to a few MHz).
Or you just buy an industrial power supply for 4...20 mA sensors. But actually no one sells you just that, typically they come with some circuit to measure the current already (that's what the industry wants), either in a PLC or a standalone device.
Either will do. If you use a switching supply, make sure to put some capacitance on the supply pin of your instrument, to get rid of leftover switching noise from the supply. You'll want both a largish electrolytic (tantalum for choice) and a smaller (~0.1 uF) ceramic to handle all frequencies. A small resistor in series will also be a good idea. Depending on the details of your instrument, filtering may already be incorporated, but a little more never hurts.