Rigid and flexible automation for manufacturing systems: Characterizing economically-reasonable investments

As flexible manufacturing technology has become available across a broad range of applications, an increasingly large number of firms have confronted decisions about the adoption of flexible automation versus transfer lines versus some combination of these technologies. While the work of previous authors has provided some guidance to such decision making, the modular character of flexible capacity and the indivisible character of a transfer line have not been the basis, previously, for the development of formal decision rules. This paper makes use of a mixed-integer mathematical programming model to generate formal decision rules which, in turn, become an instrument for analyzing several fundamental hypotheses about the introduction of flexible and/or dedicated automation. The firm is assumed to have the objective of maximizing its present value and must account for the interaction of its markets with technological opportunities, present and anticipated.