The financial evaluation of robotics installations

Abstract An increasingly important topic in capital equipment acquisition is the analysis of robots in the manufacturing environment. Due to the unique characteristics of robots, it is important to recognize all the costs and benefits of a robotic installation in evaluating the feasibility of including this new piece of equipment in the production process. What makes analyzing the proposed robotic acquisition different from the usual capital equipment purchase is dealing with the many secondary and tertiary benefits and costs afforded by robotic systems. The chief difficulty is estimating the costs and benefits due to the flexibility of the robot installation. There are three important and essential steps in the determination of the value of a robotics installation. Initially it is necessary to make an informed estimate of the total investment required to obtain and install the equipment. Secondly, the effect of the incremental investment on the operation of the firm both in terms of expenses and profitability must be carefully measured. And finally, the third step is an analysis of the value of the equipment in terms of the return provided in relation to the required investment.