Inventory issues in incremental FMS implementation

In recent years, numerous studies have demonstrated convincingly that impressive benefits can be obtained by the adoption of flexible manufacturing systems (FMSs). To obtain the benefits of an FMS requires the development of a completely integrated system. However, FMS implementations are frequently done incrementally through the introduction of subsystems such as flexible machining centers into an existing conventional system. The purpose of this research is to investigate some of the operational issues associated with the introduction of a CNC (computer numerically controlled) machine tool into a conventional system. The primary objective of the present study is to explore the relative effects on inventory holding cost of installing a single CNC at different locations within three different system configurations. Additionally, the study examines the sensitivity of these impacts to changes in (1) System utilization; (2) the ratios of setup times to run times in the conventional work centers; and (3) the rates of increase in holding costs for parts as they move through the system. Results indicated that, in general, introduction of a CNC into an otherwise conventional system reduces inventory holding cost for the system as a whole. However, the degree of this reduction varies depending on the position of the CNC in the system. In some cases the reduction in inventory holding cost is substantial, while in other cases it is relatively small.