A chance-constraints linear programming model on the economic evaluation of flexible manufacturing systems

The implementation of flexible manufacturing systems (FMSs) normally entails a large initial investment under a long-term, uncertain environment. Many effects of installing a FMS will be due to improvement in throughput efficiency, quality, flexibility and the opportunity costs. However, most economic evaluations of FMSs assume the problem is deterministic, such that they fail to model accurately and capture the nature of FMSs. This paper uses stochastic variables to capture the, nature of a FMS under given resource limitations and leads to a multistage chance-constraints linear programming (LP) formulation. Finally, in order to incorporate the uncertainty of capital investment, the interest rate as a function of time is considered over the whole planning horizon and the decision model is extended under continuous and variable discounting.