Abstract
The introduction of changeable production systems increases the adaptability of factories in an uncertain environment. This paper analyzes the valuation of the economic efficiency of such systems using the real options theory. The developed approach proposes a structured valuation process for selecting options related to production engineering and factory planning. Based on a classification of possible modifications of a production system, options profiles are derived. Considering the existing uncertainty of a company’s environment these profiles may be utilized to identify real options which ought to be included when valuating a technical production system design.
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig1_HTML.gif)
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig2_HTML.gif)
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig3_HTML.gif)
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig4_HTML.gif)
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig5_HTML.gif)
![](http://media.springernature.com/m312/springer-static/image/art%3A10.1007%2Fs11740-008-0133-1/MediaObjects/11740_2008_133_Fig6_HTML.gif)
Similar content being viewed by others
References
Kinkel S (2005) Anforderungen an die Fertigungstechnik von morgen. PI-Mitteilung No. 37, Fraunhofer Institute for Systems and Innovation Research, Karlsruhe
Nottbeck B (2004) Fabrik der Zukunft—Eine Herausforderung für den Standort Deutschland. In: Lindemann U (ed) Marktnahe Produktion individualisierter Produkte. Utz, Munich
Dove R (2001) Agile production: design principles for highly adaptable systems. In: Zandin KB (ed) Maynard’s industrial engineering handbook, 5th edn. McGraw-Hill, New York
Nyhuis P, Heinen T, Reinhart G et al (2008) Wandlungsfähige Produktionssysteme. wt Werkstattstechnik 98(1–2):85–91
Zaeh MF, Mueller N, Rimpau C (2005) A holistic framework for enhancing the changeability of production systems. In: Zaeh MF et al (eds) CARV 2005. Utz, Munich
Zaeh MF, Moeller N, Vogl W (2005) Symbiosis of changeable and virtual production. In: Zaeh MF et al (eds) CARV 2005. Utz, Munich
Wiendahl H-P, Heger CL (2003) Justifying changeability—a methodical approach to achieving cost effectiveness. CIRP 2nd International Conference on Reconfigurable Manufacturing, Ann Arbor, MI, USA, August 2003
ElMaraghy HA (2006) Flexible and reconfigurable manufacturing systems paradigms. Int J Flexible Manuf Syst 17(4):261–276
Zaeh MF, Moeller N, Sudhoff W (2005) A framework for the valuation of changeable manufacturing systems. CIRP 3rd International Conference on Reconfigurable Manufacturing Systems, Ann Arbor, MI, USA, May 2005
Wiendahl H-P, ElMaraghy HA, Zäh MF et al (2007) Changeable manufacturing: classification, design, operation. Ann CIRP 56(2):783–809
(1998) Visionary manufacturing challenges for 2020. National Academy Press, Washington DC
Dreher C (ed) (2005) Manufacturing visions policy summary and recommendations. ManVis Report No. 6, Fraunhofer Institute for System and Innovation Research, Karlsruhe
Schuh G, Wemhöner N, Friedrich C (2005) Lifecycle oriented evaluation of automotive body shop flexibility. In: Zaeh MF et al (eds) CARV 2005. Utz, Munich
Shi D, Daniels RL (2003) A survey of manufacturing flexibility: Implications for e-business flexibility. IBM Syst J 42(3):414–427
Hill T, Chambers S (1991) Flexibility—a manufacturing conundrum. Int J Oper Prod Manag 11(2):5–13
Koren Y, Heisel U, Jovane F et al (1999) Reconfigurable manufacturing systems. Ann CIRP 48(2):527–540
Milberg J, Dürrschmidt S (2002) Planning methodology for changeable logistics systems. Prod Eng 9(1):63–68
Nyhuis P, Kolakowski M, Heger CL (2006) Evaluation of factory transformability—a systematic approach. Prod Eng 13(1):147–152
Nofen D, Klussmann J, Loellmann F (2003) Transformability by modular facility structures. CIRP 2nd International Conference on Reconfigurable Manufacturing, CIRP, Ann Arbor, MI, August 2003
Schuh G, Harre J, Gottschalk S et al (2004) Design für Changeability (DFC). wt Werkstattstechnik 94(4):100–106
SAE M–110.2 (2. Ed.) (1999) Reliability and maintainability guideline for manufacturing machinery and equipment, Society of Automotive Engineers, Warrendale
AIR 1939 (1986) Aircraft engine life cycle costs. Society of Automotive Engineers, Warrendale
IEC 60300-3-3 (2005) Dependability management—part 3-3: application guide—life cycle costing. Beuth, Berlin
VDI 2884 (2005) Purchase, operating and maintenance of production equipment using life cycle costing (LCC). Beuth, Berlin
Fabrycky WJ, Blanchard BS (1991) Life-cycle cost and economic analysis. Prentice Hall, Englewood Cliffs
Friese M, Bihlmaier R, Bürkner S (2005) Planning of flexible production networks in the automotive industry. In: Zaeh MF et al (eds) CARV 2005. Utz, Munich
Bürkner S, Roscher J, Schmitt M et al (2005) Methods for flexibility evaluation in the automotive industry. In: Zaeh MF et al (eds) CARV 2005. Utz, Munich
Urbani A, Beccaris M (2005) Life cycle cost technique for investment evaluation: application to an automotive plant. CIRP 3rd International Conference on Reconfigurable Manufacturing, Ann Arbor, MI, May 2005
Trigeorgis L (1996) Real options–managerial flexibility and strategy in resource allocation. MIT Press, Cambridge
Copeland TE (2001) Antikarov V real options. Texere, New York
Baecker P, Hommel U (2004) 25 years real options approach to investment valuation: review and assessment. In: Dangl T et al (eds) Real options. Gabler, Wiesbaden
Abele E, Liebeck T, Wörn A (2006) Measuring flexibility in investment decisions for manufacturing systems. Ann CIRP 55(1):433–436
Amico M, Asl FM, Pasek Z et al (2006) Real options: an application to RMS investment evaluation. In: Dashchenko AI (ed) Reconfigurable manufacturing systems and transformable factories. Springer, Berlin
Benaroch M (2002) Managing information technology investment risk. J Manag Inf Syst 19(2):43–84
Bräutigam J, Esche C, Mehler-Bicher A (2003) Uncertainty as a key value driver of real options. 7th Annual Real Options Conference, Washington DC, July 2003
Adner R, Levinthal DA (2004) What is not a real option: considering boundaries for the application of real options to business strategy. Acad Manag Rev 1(29):74–85
Heger CL (2007) Bewertung der Wandlungsfähigkeit von Fabrikobjekten, Diss. Universität Hannover (2006), PZH, Garbsen
Triantis A, Borison A (2001) Real options: state of the practice. J Appl Corp Finance 14(2):8–24
de Neufville R (2001) Real options: dealing with uncertainty in systems planning and design, 5. International Conference on Technology, policy and innovation, Delft, NL, June 2001
Zaeh MF, Moeller N, Muessig B et al (2006) Life cycle oriented valuation of manufacturing flexibility, in Duflou JR et al (eds), 13th CIRP International Conference on Life Cycle Engineering, Katholieke Universiteit Leuven, Leuven, BE, 2006
Courtney H (2001) 20/20 foresight: crafting strategy in an uncertain world. Harvard Business School Press, Boston
Möller N (2008) Bestimmung der Wirtschaftlichkeit wandlungsfähiger Produktionssysteme. Diss. Technische Universität München, Utz, Munich
DIN EN 60812 (2006) Analysis techniques for system reliabilities—procedure for failure mode and effects analysis (FMEA), Beuth, Berlin
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Milberg, J., Möller, N. Valuation of changeable production systems. Prod. Eng. Res. Devel. 2, 417–424 (2008). https://doi.org/10.1007/s11740-008-0133-1
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11740-008-0133-1