Economic evaluation of investments in new production technologies

Abstract Economic evaluation of important investments in advanced manufacturing technologies asks for sophisticated tools. A typical characteristic of the investments is that they be placed in a complex, dynamic and stochastic context. As a result, traditional evaluation approaches which lead to deterministic outcomes, are insufficient. For the decision maker it is important to get a clear insight into the tradeoffs between: money (cashflows), time (pay-back) and risk (measure of uncertainty) of an investment in technology-product-market combinations. The Industrial Economics Department of Erasmus University in Rotterdam has had positive results with Monto Carlo simulation.