RM Company is looking to change its numerically controlled machines into a flexible manufacturing system. The transition will handle about 30% of RM Company’s work. There will be additional costs for startup process. The new system is likely to reduce the inventory, floor space, production time and number of labors required. The annual labor savings is a huge sum on the implementation of the new process. The company’s return on investment states that it should be at least over 15% for a new process to be implemented and the payback period should be less than 5 years. To determine: The case of a conservative manager to maintain the status quo until there are more obvious returns.

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Chapter 7, Problem 2CS

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RM Company is looking to change its numerically controlled machines into a flexible manufacturing system. The transition will handle about 30% of RM Company’s work. There will be additional costs for startup process. The new system is likely to reduce the inventory, floor space, production time and number of labors required.

The annual labor savings is a huge sum on the implementation of the new process. The company’s return on investment states that it should be at least over 15% for a new process to be implemented and the payback period should be less than 5 years.

To determine: The case of a conservative manager to maintain the status quo until there are more obvious returns.

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