Technical Management Notes

While there is little doubt that advanced manufacturing technologies (AMT) radically change the nature of firms that adopt it, the difficulty of quantifying this change and attaching a monetary figure to it makes financial justification difficult. The majority of the researchers in the field subscribe to the idea of using a pattern of feasibility assessments and cost / benefit analyses to justify the conversion to AMT. But there are many difficulties in modeling the behavior of the proposed system and evaluating its costs and benefits, especially those of a strategic and long-term nature. This paper introduces the design of a decision support system (DSS) which helps the strategic planner in evaluating the effect of AMT on the performance of an organization and determining the parameters which affect the costs and benefits of such a system. The proposed DSS involves analysis and quantification of costs and benefits through the use of interacting accounting, simulation, and optimization modules. It enables the decision maker to perform sensitivity analyses by allowing consideration of various scenarios and different levels of various inputs. In this DSS, the decision maker is able to combine either traditional accounting techniques or activity-based costing With simulation and optimization in order to arrive at a decision as to the level of investment to make in an AMT system.