A model for choosing the most profitable investment in a production station: A case study

University essay from Linnéuniversitetet/Institutionen för maskinteknik (MT); Linnéuniversitetet/Institutionen för maskinteknik (MT)

Abstract: Decisions has in recent years become more challenging, today the environment is changing in an exponentially increasing pace. This is not the only challenge with modern decision making, there are also: multiple criteria, intangibles, risk/uncertainty, long term implications, interdisciplinary input, pooled decision making, value judgment and unintended consequences. The purpose of the study is to create a model that provides a structured way of comparing and evaluate different alternatives for a decision making process, regarding profitability in a production station. The developed decision support model has its roots in the Plan-Do-Check-Act (PDCA) improvement cycle, where the planning phase has been modified. The planning phase of the model consists of seven steps that identify the process and perform a cost-break-down structure of the cost related to the process. This enables weights to be created and compared to each other and finally against other investment alternatives. This facilitates a structured approach, which minimizes some of the risks that can be involved in decision making and is further decreased by discovering uncertainties. The decision making model have been tested on two different production processes in a manufacturing company that is considering improvement investments.

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