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Analyzing Trade-Offs Between Machine Investment and Utilization

Author

Listed:
  • David J. Vander Veen

    (Operating Sciences Department, General Motors Research Laboratories, Warren, Michigan 48090-9055)

  • William C. Jordan

    (Operating Sciences Department, General Motors Research Laboratories, Warren, Michigan 48090-9055)

Abstract

Analyzing machine investment opportunities from a systems perspective requires an understanding of interdependencies between machine investment and utilization decisions. Machine investment decisions involve determining the number of machines to purchase and their types. Machine utilization decisions involve determining part allocations and production cycles. Interdependencies between these decisions result in trade-offs between investment and operating costs. This paper develops an analytical approach for studying machine investment opportunities in a broad systems context. It begins with a discussion of the interdependencies between investment and utilization decisions. The focus of this research and a review of existing literature related to machine investment decisions are then discussed. Next a mathematical model that quantifies these interdependencies is formulated. The paper ends with a simple example that demonstrates the usefulness of the model and highlights the importance of using a systems approach. The main contribution of this work is the simultaneous consideration of trade-offs between machine investment and utilization decisions.

Suggested Citation

  • David J. Vander Veen & William C. Jordan, 1989. "Analyzing Trade-Offs Between Machine Investment and Utilization," Management Science, INFORMS, vol. 35(10), pages 1215-1226, October.
    • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:10:p:1215-1226
    DOI: 10.1287/mnsc.35.10.1215
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    Citations

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    Cited by:

    1. Tsegay Tesfay Mezgebe & Hind Bril El Haouzi & Guillaume Demesure & Remi Pannequin & Andre Thomas, 2020. "Multi-agent systems negotiation to deal with dynamic scheduling in disturbed industrial context," Journal of Intelligent Manufacturing, Springer, vol. 31(6), pages 1367-1382, August.
    2. S. Rajagopalan, 1998. "Capacity Expansion and Equipment Replacement: A Unified Approach," Operations Research, INFORMS, vol. 46(6), pages 846-857, December.
    3. Fine, Charles H. & Pappu, Suguna., 1990. "Flexible manufacturing technology and product-market competition," Working papers 3135-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    4. Kadipasaoglu, Sukran N. & Xiang, Wenuang & Hurley, Simon F. & Khumawala, Basheer M., 2000. "A study on the effect of the extent and location of protective capacity in flow systems," International Journal of Production Economics, Elsevier, vol. 63(3), pages 217-228, January.

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