The optimal mix of flexible and dedicated manufacturing capacities: hedging against demand uncertainty

Article Abstract:

Comapnies with uncertain demands for several products must decide the quantitiy of inexpensive dedicated capacity as well asexpensive flexible capacity to be acquired. Research shows that the investment decision is based on optimal levels for each capacity type when initial capacities are lower than the levels that would be optimal in absence of initial capacities. However, optimal additions to others would depend on its value through non-linear and intuitive means should some initial capacity be too high.

Supply and demand, Industrial capacity

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An analysis of the diffusion of flexible manufacturing systems

Article Abstract:

Flexible manufacturing systems (FMSs) account for a a very small portion of the manufacturing technologies used by manufacturers despite their numerous advantages. This can be attributed to the FMS manufacturers' failure to take into account several dimensions of new product management that will encourage the diffusion of innovations. These dimensions include product complexity, observability, trialability and compatibility.

Diffusion of innovations

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An options view of investments in expansion-flexible manufacturing systems

Article Abstract:

The application of options theory to the valuation of expansion-flexible manufacturing systems (FMS) is explored. The problem, which is encountered in the evaluation of FMS investment plans, is characterized by a model for exchanging risky assets which addresses the weaknesses of the net present value method. An illustrative example of two-period investments is also discussed to show the advantages of the approach.

Research, Evaluation, Options (Finance), Capital investments

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