Facility planning
1.Invest evaluation method
When planning an investment it is dangerous to depend solely on past experience and should be done logically Investment is done for various purposes such as R&D. pitching in new product into the mark,strengthening existing capacity. safety and hygiene measures as well as welfare system of the company. These investments cannot be evaluated by economic yardstick alone and include multifarious aspects. The payback period method,which is widely used in manufacturing industry.evaluates investment in terms of time period until initial investment can be recovered. This method does not take into consideration how Facility will be used after investment is recovered. The return on investment method computes the ratio of return on investment and can be used for evaluating multiple investment plans as well as split investments. Present value method computes present value of cash410w from investment over a longer period. Multiple investment evaluation method should be used based on the purpose of investment in order to make decision on the amount and timing of investment.
Related tearms: Payback period method. Return on investment method. Present value method,present n value method,Internal rate of return.
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