[Psychology] Mechanical Assemblies Phần 10 docx

502 18 ECONOMIC ANALYSIS OF ASSEMBLY SYSTEMS

77-

T7~

T9—

-26—

-28—

"SCSI

•35-

•38"

A | B | C | D | E | F

fEAR

/EAR

Nb 1 PHEStNT VALUE CASH FLOW ANALYSIS

YEARS ECONOMIC LIFE

EXPENSE FORECAST

RATIO

100.00%

INCOME

($400)

$100

$181

$198

$150

$83

SALVAGE VALUE

N YEAR 4

3ROSS INCOME

slET INCOME

; $713

$313

TAX RATE

34.00%

DEPRECIATION

$38

$65

$47

$33

$183

DEPRECIABLE

66.67%

G | H

SALVAGE VALUE % OF COST AT END OF ECONOMIC LIFE

INCOME FORECAST

SAVINGS

$100

$181

$198

$150

TOTAL INVESTMENT

DEPRECIABLE INVESTMENT

INTERNAL RATE OF RETURN

PRO FORMA CASH FLOW

TAXES

($45)

$21

$39

$51

$40

$152

$106

CREDITS

DEPRECIATION

14.29%

24.49%

17.49%

12.49%

8.92%

4.46%

$400

$267

18.41%

GOAL SEEK

ON CELL G38 = 0

NET

($355)

$79

$142

$147

$110

$83

$561

$206

TAX RATE

34.00%

CREDIT

SUM OF UNUSED YRS

DEPR= 31 .22%

USED FOR SALVAGE VALUI

OF REMAINING DEPRECIABLE INVESTMEN

RESULT OF

DISC NET

($355)

$67

$101

$88

$56

$42

$355

($0)

TAX CREDIT IN YR 0 ON

UNDEPRECIATED INVESTMEN

FIGURE 18-11. Spreadsheet for Performing Net Present Value Calculation. This sheet is set up to find the IRoR that yields

zero net present value. It does so using the Goal Seek feature, seeking the rate of return in cell F21 that drives the discounted

return in cell G38 to zero.

TABLE 18-3. Explanation of Terms in Pro-Forma Cash Flow in Figure 18-11

Term

Ratio

Depreciable

Savings

Depreciation (difference

between A and B)

Tax rate

Net income NI (difference

between A and B)

Disc net

Gross income

Net income

How much of the investment occurs in year 0

What fraction of the investment is depreciated over several years; the rest is taken as an expense in year 0.

The ratio of total cost to depreciable cost is called p. Undepreciable expenses include engineering and

installation of the system. They generate a tax credit in year 0.

The difference between (revenues minus costs) of alternatives A and B during each time period

The amount of the depreciable part of the investment that is deducted each year. The pattern is mandated by

U.S. tax laws. If the horizon of the investment is less than the eight years shown, the investment is assumed

to have a salvage value equal to the sum of the unused depreciation.

This is approximately 34% by U.S. tax law. Taxes are paid on income (savings) less depreciation.

NI, = (1 — T,)St

+ T,Dt

, where S, = savings, D, = depreciation, rt

— tax rate in period t

Net income discounted to year 0 using the IRoR shown in cell F21

Sum of rows 28-32

Sum of rows 27-32

Meaning

(a)

(b)

-5-

•11

-re14

-T6-

T7~

IF"

'&)

Year

Years Econo

C | D | E

Net Present Value Cash Flow Analysis

mic Life

ExpenseForecast

Ratio

100.00%

Tax Rate

34.00%

Depreciable

25.00%

Salvage Value % Of Cost At E1

IncomeForecast

Savings

$400

$600

$800

$1,000

$1 ,000

$1,000

$1,500

$1 .son

$1r500

$1.500

$1 ,500

$1.500

$1,750

$2,100

$2,400

$3,000

Total In vestment

Depreciablelnvestment

Depreciation

14.29%

24.49%

17.49%

12.49%

8.92%

4.46%

($10,500)

($2,625)

Internal Rate Of Return \ 11.33%

(Goal Seek

bnCellG71=0

G H

nd Of Economic Life

Tax Rate

50.00%

Credit

Tax Credit In YrO On

Undepreciated

Investment

b'2

69 i

Year

a ross Income

Met Income

Income

($3,500)

-3500

-2500

-1000

$400

$600

$800

$1 ,000

$1,500

$1 ,500

$1,500

$1 ,500

$1 ,750

$2,100

$2,400

$3,000

$34,250

$23,750

Pro Forma Cash Flow

Depreciation

($375)

($643)

($459)

($328)

($234)

($117)

($2,624)

Taxes

($3,937.50)

($1,562.44)

($928.57)

($270.44)

$363.93

$417.08

$517.08

$458.54

$500.00

$750.00

$875.00

$1 ,050.00

$1 ,200.00

$1,200.00

$1 ,500.00

$1,500.00

$14.937

$1 1 ,000

Credits

Net Income

$438

($1,938)

($1,571)

($730)

$36

$183

$283

$341

$500

$750

$875

$1 ,050

$1 ,200

$1,200

$1 ,500

$12,313

$12,750

Disc Net

$438

($1 ,740)

($1 ,268)

($529)

$23

$107

$283

$133

$145

$190

$171

$154

$207

$186

$167

$150

$135

$121

$127

$137

$123

$110

$113

$102

$114

$103

Sum Of Undisc Net Inc

$438

($1 ,500)

($3,071)

($3,801^

($3,765)

($3,582)

($3,299)

($3,016)

($2,675)

($2,175)

($1 ,675)

($1,175)

($425)

$325

$1 ,075

$1 ,825

$2,575

$3,325

$4,200

$5,250

$6,300

$7,350

$8,550

$9,750

$11,250

$12,750

$438

($1,303)

($2,571)

($3,099)

($3,076)

($2,969)

($2,686)

($2,553)

($2,408)

($2,218)

($2,047)

($1 ,893)

($1,686)

($1 ,500)

($1,333)

($1,184)

($1 ,049)

($928)

($801)

($664)

($542)

($431)

($318)

($217)

($103)

FIGURE 18-12. Example Net Present Value Calculation for a Large Passenger Aircraft, (a) Net present value cash flow

analysis, (b) Pro-forma cash flow.

503

504 18 ECONOMIC ANALYSIS OF ASSEMBLY SYSTEMS

FIGURE 18-13. NPV for Large Passenger Aircraft. NPV is positive for interest rates less than 11.33%, not a very attractive

investment on economic grounds alone.

18.G.7. Remarks

The pattern of cash flows shown in Figure 18-4, in which

there is one large negative flow at the beginning followed by numerous smaller positive and negative flows

thereafter, is typical in the kinds of problems studied

here. This kind of cash flow pattern gives rise to the

pattern of PV versus discount rate behavior shown in

Figure 18-13. The methods of comparing investments

discussed above are valid when the pattern of PV versus discount rate looks like this but may give the wrong

answer if it does not.

The NPV method has its critics and there are many

ways to interpret the results. Note that the goal of a company is to make money, not to earn a particular rate of

interest. Suppose the company has $100 million to invest

and has two choices: to invest $90 million for an IRoR of

15% or to invest $15 million for an IRoR of 20%. One investment earns a higher rate of return but the other makes

much more money. Thus the results of the calculations

must be judged carefully and a decision rule should not

be followed blindly.

Another criticism of the NPV method is that it favors

short term results and tends not to select projects that will

mature over a longer period. While this is true, there are

other reasons why a short term view is often taken, even

if they are not always good reasons. Capital costs money,

and that cost is certain. Profits are in the future and they

are uncertain. Discounting is the main way to compensate

for the differences in uncertainty.

Another way to take uncertainty into account is to imagine different scenarios for future cash flows. Perhaps one

can assign a most likely value, a most optimistic value,

and a most pessimistic value. Then it is possible to calculate the mean and standard deviation of the IRoR and PV.

Investments with a larger mean and smaller standard deviation might be more attractive. In practice, the mean and

standard deviation of returns are usually correlated, and

one will not find the lowest standard deviation together

with the highest mean.

18.H. CHAPTER SUMMARY

This chapter and the two before it comprise a way of looking at assembly (or other manufacturing) systems in a

combined economic-technical way. This process begins

with the requirement to produce a product or family of

products at a certain rate for a certain period of time using

some mix of resources. Investments and ongoing costs are

involved. A simplified diagram of this process appears in

Figure 18-14. It shows that product design (including design simplification), assembly sequence, alternate assembly technologies, and macro- and microeconomic factors

all must be considered.

18.J. FURTHER READING 505

FIGURE 18-14. Logic Diagram for the Creation of Economically-Technically Effective

Systems. Most of the factors discussed in

earlier chapters are involved in this diagram.

"General economic conditions" affect many

blocks in the chart, so this block is not linked

by arrows to other blocks in the interest of

simplicity.

18.1. PROBLEMS AND THOUGHT QUESTIONS

1. Prove that the payback period method of annualizing fixed

costs is equivalent to the annual recovery method with r = 0.

Note that this cannot be proven by substituting r = 0 in Equation (18-4). Instead, L'Hopital's Rule must be used.

2. In Figure 18-6 and Figure 18-8 the unit cost versus production

volume plot falls and then rises suddenly, then repeats this pattern

several times. However, in Figure 18-7 no such behavior can be

seen. Explain why the sudden rises happen in two of the figures

but not in the third.

3. Discuss the various terms in Equation (18-10). In particular,

discuss possible tradeoffs between robot speed, represented by T,

robot cost, represented by S$, and tool cost, represented by T$.

For example, a more costly robot could be afforded if some of the

cost were devoted to versatility that required fewer tools.

4. The NPV analysis of large passenger aircraft in Figure 18-13 utilizes a tax rate of 50%, appropriate for Europe. If

34% is used, appropriate for the United States, one finds that the

NPV is considerably smaller. Explain why this is so.

18.J. FURTHER READING

[Cooper and Kaplan] Cooper, R., and Kaplan, R. S., "Measure

Costs Right: Make the Right Decisions," Harvard Business

Review, September-October, pp. 96-103, 1988.

[Lynch] Lynch, P. M., "Economic-Technological Modeling and

Design Criteria for Programmable Assembly Machines,"

Ph.D. thesis, MIT Mechanical Engineering Department,

June 1976.

[Mishina] Mishina, K., "Beyond Flexibility: Toyota's Robust

Process-Flow Architecture," in Coping with Variety: Flexible

Productive Systems for Product Variety in the Auto Industry,

Lung, Y., Chanaron, J.-J., Fujimoto, T., and Raff, D., editors,

Aldershot, UK: Ashgate Publishing, Ltd., 1999.

[Nevins and Whitney] Nevins, J. L., and Whitney, D. E., Concurrent Design of Products and Processes, New York: McGrawHill, 1989.

[Peschard and Whitney] Peschard, G., and Whitney, D. E.,

"Cost and Efficiency Performance of Automobile Engine

Plants," available at http://web.mit.edu/ctpid/wwwAVhitney/

papers.html.

[Thuesen and Fabrycky] Thuesen, G. J., and Fabrycky, W J.,

Engineering Economy, Upper Saddle River, NJ: PrenticeHall, 2001.

This page has been reformatted by Knovel to provide easier navigation.

INDEX

Index Terms Links

Accommodation method 257

Activities in a simulation 447

Activity-based-costing 490

Activity cycle diagram 448

Acyclic graph 215

Additive processes 134

Adept Technology 478

Adhesive bonding 167

Adhesives 318 338 384 401

Adjustment 167 168 318 328

388 396 428

of an assembly 23

of a sewing machine 9

Airbus 365 461

Airbus A380 365 461 501

Airbus A380 wing

product architecture example 367

Aircraft assembly 213

Aircraft engines 400

Aircraft fuselage

DFC example 240

Aircraft product family example 365

Aircraft structures 70 105

Aircraft wing 344 346 349

Aircraft wing subassembly 251

Aladdin 351

American National Standards Institute 114

AND/OR tree 188 194

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