A Study to Cope with the Demand Variation by Flexibility and Reconstruction of the Manufacturing System

Abstract

This paper deals with the problem to decide how much flexibility should be given to the manufacturing system, when and how replacement in the facilities should be carried out to cope with the demand variation over the service life of the system. To make these decisions, the evaluation items, such as the cost for equipments, the operating cost, the cost for replacements and revenues, are considered as a cash-flow over the planning horizon. A method based on the optimality principle in dynamic programming is proposed for deciding the optimum reconstruction plan in which the net present worth of the cash-flow is adopted as the criterion for optimality. A numerical example is given to demonstrate the advantage of our method for reconstructing the system compared with the usual method in which the flexibility of the system is only considered to cope with the demand variation.