Issues in Economic Justification for Flexible Manufacturing Systems and Some Guidelines for Managers

Abstract

Information technology has enabled substantial automation of manufacturing functions by way of computer integrated manufacturing and flexible manufacturing systems. These systems offer many benefits but also require substantial long term capital investment. Traditional cost accounting and capital budgeting techniques fail to fully justify installation of these systems. A substantial quantity of literature in this field is reviewed to come up with the existing state of affairs in manufacturing automation and economic justification of flexible manufacturing systems. Economic justification of flexible manufacturing systems on broader basis than provided by traditional methods appears to be not only desirable but also imperative for manufacturing firms going in for them. Based on literature review, some guidelines have been culled for managers to enable them to invest in these systems on a more rational basis and with more confidence. A bibliography of articles and research papers provides further references and readings to practitioners in this area.