A classification scheme for traditional and non-traditional approaches to the economic justification of advanced automated manufacturing systems

ABSTRACT The introduction of microprocessors and computer controlled production tools into industry has given a new perspective to manufacturing processes both in the U.S. and abroad. Computer Aided Design, Computer Aided Manufacturing, Group Technology, and Computer Integrated Manufacturing, which is now called Computer Integrated Enterprise, are considered by many as viable tools which can reduce direct and indirect manufacturing costs, improve product quality and increase the variety of products offered. Although these technologies are considered to be highly beneficial, only a few companies in the U.S. have attempted to implement them. Shortcomings of traditional economic justification of capital expenditure methods have been often cited as one of the major barriers to adoption of advanced manufacturing technologies. This paper presents a classification model to categorize both traditional and non-traditional economic analysis methods for capital investment justification and presents numerical examples for some of these methods.