Economic justification for incremental implementation of advanced manufacturing systems

The strategic decision to integrate Advanced Manufacturing Systems (AMS) within a traditional production system has become an attractive and sometimes necessary alternative in many industrial settings. The purpose of this paper is to develop a model that focuses on this particular decision-making problem. Simplifications and approximations introduced at the operational level permit two key issues to be addressed: (1) where should AMS be implemented; and (2) when should this implementation occur. The model is shown to have good structure for a simplified analysis, thus making it particularly useful in instances where only rough estimates of costs are available and extensive ‘what if’ type analyses are therefore required.