Manufacturing system design by considering multiple machine replacements under discounted costs

This article investigates the effect of equipment replacement on the design phase of multi-machine manufacturing systems, given a finite horizon and discounted costs. For the most part, the manufacturing system design literature has focused on the design issue, ignoring equipment replacement and its economic impact. The design phase generally consists of equipment selection, process routing, and layout decisions. The authors propose an explicit mathematical form for the operating costs of equipment and their salvage values based on their previous experience of life cycle costing projects. The design phase of cellular manufacturing systems, the so-called cell formation problem, is used. The problem is formulated as a non-linear mixed-integer programming model and solved using a proposed branch-and-bound algorithm. The algorithm employs a depth-first branching strategy in conjunction with a bounding procedure with a heuristic method. Selected numerical examples demonstrate the applicability of the model and verify the performance of the proposed algorithm. The results enable the best equipment mix and product process routes to be chosen based on the given horizon and economic factors; in addition, information is obtained about which equipment should be replaced and at what time point this replacement should occur.