Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
A Bibliometric and Sentiment Analysis of CARV and MCPC Conferences in the 21st Century: Towards Sustainable Customization Read chapter Read first chapter

2022 | OriginalPaper | Chapter

A Real Options Approach for NPV Investment Evaluation of Changeable Manufacturing Systems

Authors : Fredrik Olsson, Alexander Werthén, Ann-Louise Andersen

Published in: Towards Sustainable Customization: Bridging Smart Products and Manufacturing Systems

Publisher: Springer International Publishing

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Dealing with uncertain market conditions is a growing challenge for manufacturers. Changeable manufacturing systems have been suggested as a means to overcome the challenges resulting from uncertain markets. However, for changeability to acquire wide acknowledgement and implementation within industry, a clear economic justification considering the higher initial investment of such a system is needed. This paper attempts to develop an investment model comprehending the benefits of changeability, while focusing on applicability in industry. The proposed model complements a traditional Net Present Value method by evaluating the added value for changeability at either system or machine level, using a combination of Real Options approach. The model is applied in an industrial case and demonstrates an added value for changeability in both a flexible and reconfigurable manufacturing system.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
previous chapter The Use of Principal Component Analysis for the Construction of a Reconfigurability Index
next chapter Methods and Models to Evaluate the Investment of Reconfigurable Manufacturing Systems: Literature Review and Research Directions
Literature
1.
Kampker, A., Burggräf, P., Wesch-Potente, C., Petersohn, G., Krunke, M.: Life cycle oriented evaluation of flexibility in investment decisions for automated assembly systems. CIRP J. Manuf. Sci. Technol. 6(4), 274–280 (2013)CrossRef
2.
Rocky Newman, W., Hanna, M., Jo Maffei, M.: Dealing with the uncertainties of manufacturing: flexibility, buffers and integration. Int. J. Oper. Prod. Manag. 13(1), 19–34 (1993)CrossRef
3.
ElMaraghy, H.: Flexible and reconfigurable manufacturing systems paradigms. Int. J. Flex. Manuf. Syst. 17(4), 261–276 (2006)CrossRef
4.
Koren, Y.: The rapid responsiveness of RMS. Int. J. Prod. Res. 51(23–24), 6817–6827 (2013)CrossRef
5.
Wiendahl, H.P., et al.: Changeable manufacturing - classification, design and operation. CIRP Ann. Manuf. Technol. 56(2), 783–809 (2007)CrossRef
6.
Kuzgunkaya, O., ElMaraghy, H.A.: Economic and strategic perspectives on investing in RMS and FMS. Int. J. Flex. Manuf. Syst. 19(3), 217–246 (2008)CrossRef
7.
Milberg, J., Möller, N.: Valuation of changeable production systems. Prod. Eng. 2(4), 417–424 (2008)CrossRef
8.
Siziba, S., Hall, J.: The evolution of the application of capital budgeting techniques in enterprises. Glob. Finan. J. 47, 100504 (2021)CrossRef
9.
Abele, E., Liebeck, T., Wörn, A.: Measuring flexibility in investment decisions for manufacturing systems. CIRP Ann. Manuf. Technol. 55(1), 433–436 (2006)CrossRef
10.
11.
Karsak, E.E., Özogul, C.O.: Valuation of expansion flexibility in flexible manufacturing system investments using sequential exchange options. Int. J. Syst. Sci. 36(5), 243–253 (2005)MathSciNetCrossRef
12.
Nembhard, H.B., Shi, L., Park, C.S.: Real option models for managing manufacturing system changes in the new economy. Eng. Econ. 45(3), 232–258 (2000)CrossRef
13.
Horn, A., Kjærland, F., Molnár, P., Steen, B.W.: The use of real option theory in Scandinavia’s largest companies. Int. Rev. Financ. Anal. 41, 74–81 (2015)CrossRef
14.
Myers, S.C.: Determinants of corporate borrowing. J. Financ. Econ. 5(2), 147–175 (1977)CrossRef
15.
Triantis, A.: Realizing the potential of real options: does theory meet practice? J. Appl. Corp. Financ. 17(2), 8–16 (2005)CrossRef
16.
Du, J., Jiao, Y.-Y., Jiao, J.: A real-option approach to flexibility planning in reconfigurable manufacturing systems. Int. J. Adv. Manuf. Technol. 28(11–12), 1202–1210 (2006)CrossRef
17.
Bengtsson, J.: Manufacturing flexibility and real options: a review. Int. J. Prod. Econ. 74(1–3), 213–224 (2001)CrossRef
18.
Amico, M., Pasek, Z.J., Asl, F.M., Perrone, G.: A new methodology to evaluate the real options of an investment using binomial trees and Monte Carlo simulation. Winter Simul. Conf. Proc. 1, 351–359 (2003)
19.
Jiao, Y.Y., Du, J., Jiao, J.: A financial model of flexible manufacturing systems planning under uncertainty: identification, valuation and applications of real options. Int. J. Prod. Res. 45(6), 1389–1404 (2007)CrossRef
20.
Agnes Cheng, C.S., Kite, D., Radtke, R.: The applicability and usage of NPV AND IRR capital budgeting techniques. Manag. Finan. 20(7), 10–36 (1994)
21.
Aravindan, P., Punniyamoorthy, M.: Justification of advanced manufacturing technologies (AMT). Int. J. Adv. Manuf. Technol. 19(2), 151–156 (2002)CrossRef
22.
Mitroff, I.I., Betz, F., Pondy, L.R., Sagasti, F.: On managing science in the systems age: two schemas for the study of science as a whole systems phenomenon. Interfaces (Providence) 4(3), 46–58 (1974)CrossRef
23.
Bertrand, J.W.M., Fransoo, J.C.: Operations management research methodologies using quantitative modeling. Int. J. Oper. Prod. Manag. 22(2), 241–264 (2002)CrossRef
Metadata
Title
A Real Options Approach for NPV Investment Evaluation of Changeable Manufacturing Systems
Authors
Fredrik Olsson
Alexander Werthén
Ann-Louise Andersen
Copyright Year
2022
Book
Towards Sustainable Customization: Bridging Smart Products and Manufacturing Systems

Print ISBN: 978-3-030-90699-3

Electronic ISBN: 978-3-030-90700-6

Copyright Year: 2022

DOI
https://doi.org/10.1007/978-3-030-90700-6_14

Premium Partners

    Image Credits