NEW TECHNOLOGY INVESTMENTS IN MULTISTAGE PRODUCTION SYSTEMS

Abstract

Abstract The introduction of new technologies in production and manufacturing (such as robotics, flexible manufacturing systems (FMS), and computer‐aided design and manufacturing (CAD/CAM)) frequently motivates capital investment decisions. Traditionally, the need for additional capacity has motivated the evaluation of investment decisions which were undertaken based on financial factors such as the net present value (NPV), internal rate of return, taxation, and depreciation. This research integrates investment decisions with operational decisions for the case of multistage production assembly systems. We show that for such systems investment decisions affect not only the financial structure but also production scheduling and material flow in the system.