A strategic investment model for phased implementation of flexible manufacturing systems

This paper describes a set of strategic, tactical, and operational models that can be used to analyze the phased implementation of flexible technology in a manufacturing system. The strategic model represents capital investment decisions, the tactical model represents aggregate production decisions, and the operational model represents the functional form of the production costs. Learning effects and other nonlinearities (such as setup costs, economies of scale, and congestion effects) can be quantified in the models. An efficient solution procedure (using dynamic programming and minimum cost network flow optimization) is described. The efficiency of the solution method permits a host of ‘what-if’ scenarios to be examined by the decision maker.