Impact of Different Financial Evaluation Parameters for Reconfigurable Manufacturing System Investments

The need for frequently adapting manufacturing systems to dynamic market demand, short product lifecycles, technology evolution, and sustainability requirements is increasingly challenging manufacturing companies. To this end, Reconfigurable Manufacturing Systems (RMSs) are relevant, however, still far from their wide implementation in industry. In this regard, a main barrier to the introduction of reconfigurability is the justification of investments in developing and purchasing reconfigurable systems and equipment. Often such reconfigurable systems have high initial investments that provide returns in the mid/long-term, while at the same time being subject to and dependent on high uncertainty in product and market evolutions. Thus, uncertainty in different aspects of demand and the time-horizon of evaluations are main aspects in evaluating the financial benefits of reconfigurability. Therefore, this paper investigates how different choices of financial evaluation parameters affect the financial feasibility of reconfigurable manufacturing compared to more traditional manufacturing concepts. The findings of the paper provide valuable insights on how practitioners should proceed in adequately capturing the value of reconfigurability during investment decisions.