The economic value of flexible automation

Hutchinson, George K.; Holland, John R.

doi:10.1016/s0278-6125(82)80031-9

Cited by 82 publications

(17 citation statements)

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“…A literature review shows extensive discussions regarding flexibility and continuity of production processes. Under the term flexible automation (e.g., [51][52][53][54][55][56][57]) a relatively equal orientation towards both process characteristics finds preference. The specific setting of the production organization is essential for an either (more) flexible or continuous production flow.…”

Section: Classical and Modern Organizational Forms Of Component Manufmentioning

confidence: 99%

Theoretical Foundations of Efficiently Organizing Production Processes: Using the Example of Combining Organizational Forms of Component Manufacture and Internal Transport

Schroeder

Nebl

Mainzinger

2014

Journal of Industrial Engineering

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This paper examines the problem of efficient production processes organization down to subprocesses levels. Subtasks of production within subprocesses necessitate a specific set of requirements for production organization. Through particular features and their respective characteristics, these requirements are further systemized and described as process types. The main manufacturing process "component manufacture" and its connected production support service "internal transport" have been chosen as examples to show relevant organizational principles and forms. From this baseline and together with a decision algorithm, selected organizational options and a combination thereof shall lead to theoretically optimized solutions which meet all predefined requirements. A multilevel organizational alignment model lays out interdependencies of combined process type-oriented organizational forms. Methods of comparative organizational profile analysis in support of reengineering approaches are systemized and further developed towards resulting organizational adaptations.

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Section: Classical and Modern Organizational Forms Of Component Manufmentioning

confidence: 99%

Theoretical Foundations of Efficiently Organizing Production Processes: Using the Example of Combining Organizational Forms of Component Manufacture and Internal Transport

Schroeder

Nebl

Mainzinger

2014

Journal of Industrial Engineering

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“…Porteus (1985), Karmarkar andKekre (1987), Vander Veen andJordan (1989), and Keller and Noori (1988) studied interactions among technology investments, inventories, and setup reductions. Another major stream of research examined flexibility and how it affects profitability; see for example, Hutchinson and Holland (1982), Fine and Li (1988), Graves (1988), and Fine and Freund (1990). Finally, several papers have considered the option structure of investments; see for example, Monahan and Smunt (1989) and Andreou (1990).…”

Section: Literature Review On the Economic Evaluation Of Investments mentioning

confidence: 99%

The effect of financing decisions on the choice of manufacturing technologies

Lederer¹,

Singhal

1994

Int J Flex Manuf Syst

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Abstract. This paper demonstrates the importance of jointly considering financing and technology choices when making manufacturing investments. We show that considerable value can be added to investments through financing decisions, and that the gains due to financing are sensitive to technology choice. A model of financing and technology choice is presented that considers differences in cost structure and product flexibility, and applies it to an example involving flexible manufacturing systems (FMSs). Three main results emerge. First, optimal financing decisions are different for different technologies and the choice of technology can change when financing and technology decisions are made simultaneously. Second, if one technology's fixed and variable costs are lower or its initial investment higher than another technology's the former has higher value added due to financing. Since empirical data shows that FMS and conventional technologies have this pattern, ignoring the benefits of debt financing leads to undervaluation of new technology. Third, product flexibility can add considerable value through its effect on financing decisions because product flexibility reduces variability of cash flows. A major conclusion is that financing and technology choice are long-term strategic decisions that should be made jointly. Firms that make these decisions separately, not considering the effect of one on the other, may make suboptimal technology decisions.

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“…Thus, each of these models might be particularly suited to a different class of manufacturing industries having features described in the model. Origins of the analytical modelling approaches to justify investments in flexible manufacturing systems lie in the work of Hutchinson and Holland (1982). They have studied the tradeoff between the benefits of modularity and convertibility of the flexible technology against the indivisibility ("lumpiness") of less expensive dedicated systems as the basis for selecting the optimal mix of rigid and flexible automation.…”

Section: The Problem and Previous Workmentioning

confidence: 99%

“…For example, Fine and Freund (1990) use the FMS's ability to cope with mix changes; Canlkins and Fine (1990) use the FMS's ability to smooth production when product demands have complementary seasonality; and Hutchinson and Holland (1982) use the FMS's modularity and convertibility to justify FMS adoption. Such an approach no doubt limits the scope of the study; yet it results in a tractable model of the investment problem that can be used to gain useful insights.…”

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confidence: 99%

Models for first-pass FMS investment analysis

Gupta

Buzacott

1993

Int J Flex Manuf Syst

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Abstract. Consider a finn that could choose either an inexpensive product-specific (dedicated) facility or a costly flexible facility, or a combination of the two, in order to satisfy demand for two product groups. Flexible technology offers benefits of scale and scope economies. However, it may have added operational costs due to the need to have excess capacity (to permit changeovers) and to maintain cycle stocks. As a consequence, the economic viability of flexible technology is significantly affected by the choice of the operating doctrine. This article presents firstpass decision models to help the finn choose the optimum sizes of facilities and the degree of flexibility for the flexible facility such that the contingent operational costs are simultaneously optimized. Two variations of the problem are considered. Whereas, the first applies to a situation in which the demand rates are constant and predictable, the second considers random demands. In each case, this study provides a formulation of the problem, structural results, and the sensitivity of the results to cost parameters. These resttlts have modest data and computational requirements, making them suitable for first-cut attempts at narrowing available choices.

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The economic value of flexible automation

Cited by 82 publications

References 0 publications

Theoretical Foundations of Efficiently Organizing Production Processes: Using the Example of Combining Organizational Forms of Component Manufacture and Internal Transport

Theoretical Foundations of Efficiently Organizing Production Processes: Using the Example of Combining Organizational Forms of Component Manufacture and Internal Transport

The effect of financing decisions on the choice of manufacturing technologies

Models for first-pass FMS investment analysis

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