Safety analysis for manufacturing investment alternatives of multiple products

Shuhei Inada, Hiroki Nagamachi, Kei Sakata

Research output: Contribution to journalArticle

Abstract

This paper deals with a problem of evaluating the profitability and safety of manufacturing investment alternatives under uncertainties. A method for comparing the economic superiority of alternatives is discussed under the assumption that sales price and sales volume (i.e., production volume) of each product and initial investment cost, variable cost and annual fixed cost of each investment alternatives are given as uncertain factors. In this research area, the single-item problem, that is, the problem in which several manufacturing alternatives are given to produce one product has been already discussed. The analysis chart for identifying the profitability and safety of alternatives has been developed. In order to extend the model to the multi-item problem, the paper first clarifies the property for changing the analysis chart, which is presented in the previous research, to another one ensuring that analysis can be conducted in the same manner. The paper then proposes an analyzing method and analysis chart for the multi-item problem using the acquired property. The analysis chart proposed in this research can visually show which alternative is safer against the uncertain fluctuation of each parameter (sales price, sales volume, variable cost and annual fixed cost). On this basis, the paper presents a method for analyzing the risk of alternatives against the parameter fluctuations in the multi-item problem while introducing the concept of safety. The proposed method can assist decision-making when selecting a manufacturing investment project from several proposals.

Original languageEnglish
Pages (from-to)53-62
Number of pages10
JournalJournal of Japan Industrial Management Association
Volume64
Issue number1
Publication statusPublished - 2013 Jan 1

    Fingerprint

Keywords

  • Break even ratio
  • Manufacturing investment alternative
  • Safety analysis

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Applied Mathematics

Cite this