Safety analysis of manufacturing investment alternatives by using of the equality of the analysis charts

Shuhei Inada, Kei Sakata, Yuki Nagamachi

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In order to select the economical investment project among the several alternatives, considering the future uncertainties is critical as well as considering the profitability of the project under the estimated parameter value. This paper considers a method for analyzing the profitability and safety of manufacturing investment alternatives under uncertainties. In the paper, the single-period problem is first discussed under the assumption mat unit sales price, sales volume(=production volume), unit variable cost and annual fixed cost are given as uncertain factors. The analysis chart which is able to compare the profitability and safety of the alternatives is introduced. Moreover, the equality between the analysis charts, that is, the property for changing the analysis chart to anomer one which ensures to evaluate the alternatives in the same manner is clarified. The paper extends the model to the multi-period investment problem with the acquired equivalent property. As a result, an analysis chart for evaluating the alternatives, which are comprised of initial investment cost, variable cost and annual fixed cost over the planning horizon, is proposed.

Original languageEnglish
Pages (from-to)4737-4748
Number of pages12
JournalInformation (Japan)
Volume16
Issue number7 A
Publication statusPublished - 2013 Jul

Keywords

  • Break even ratio
  • Manufacturing investment alternatives
  • Safety analysis

ASJC Scopus subject areas

  • Information Systems

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