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Economic feasibility analysis of flexible material handling systems: A case study in the apparel industry

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  • Dai, James B.
  • Lee, Neville K.S.

Abstract

Flexible material handling systems (MHS) have been widely used to enhance productivity involved with product proliferation, and thus far, only fixed-track MHSs such as Eton systems in the apparel industry are commonly used. This paper explores the economic feasibility of a flexible MHS using free-ranging automated guided vehicles (AGV) with a local positioning system (LPS) for the apparel industry. A component-based and modified activity-based costing methodology is proposed to estimate the additional cost of adopting flexible MHSs, and then the internal rate of return (IIR) and payback periods are applied to evaluate the project economic performance. Results show that adopting flexible MHSs has a promising IIR which is larger than 30%.

Suggested Citation

  • Dai, James B. & Lee, Neville K.S., 2012. "Economic feasibility analysis of flexible material handling systems: A case study in the apparel industry," International Journal of Production Economics, Elsevier, vol. 136(1), pages 28-36.
    • Handle: RePEc:eee:proeco:v:136:y:2012:i:1:p:28-36
    DOI: 10.1016/j.ijpe.2011.09.006
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    References listed on IDEAS

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    1. Devise, Olivier & Pierreval, Henri, 2000. "Indicators for measuring performances of morphology and material handling systems in flexible manufacturing systems," International Journal of Production Economics, Elsevier, vol. 64(1-3), pages 209-218, March.
    2. Lashkari, R. S. & Boparai, R. & Paulo, J., 2004. "Towards an integrated model of operation allocation and material handling selection in cellular manufacturing systems," International Journal of Production Economics, Elsevier, vol. 87(2), pages 115-139, January.
    3. Sujono, Sienny & Lashkari, R.S., 2007. "A multi-objective model of operation allocation and material handling system selection in FMS design," International Journal of Production Economics, Elsevier, vol. 105(1), pages 116-133, January.
    4. Kahraman, Cengiz & Tolga, Ethem & Ulukan, Ziya, 2000. "Justification of manufacturing technologies using fuzzy benefit/cost ratio analysis," International Journal of Production Economics, Elsevier, vol. 66(1), pages 45-52, June.
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    Cited by:

    1. Jain, Vineet & Raj, Tilak, 2016. "Modeling and analysis of FMS performance variables by ISM, SEM and GTMA approach," International Journal of Production Economics, Elsevier, vol. 171(P1), pages 84-96.
    2. Sandhya Dixit & Tilak Raj, 2018. "A Hybrid MADM Approach for the Evaluation of Different Material Handling Issues in Flexible Manufacturing Systems," Administrative Sciences, MDPI, vol. 8(4), pages 1-19, November.
    3. Ilias Vlachos & Rodrigo Martinez Pascazzi & Miltiadis Ntotis & Konstantina Spanaki & Stella Despoudi & Panagiotis Repoussis, 2022. "Smart and flexible manufacturing systems using Autonomous Guided Vehicles (AGVs) and the Internet of Things (IoT)," Post-Print hal-03825237, HAL.

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