Investments in Computer Integrated Manufacturing Technology - Essay Example

Investments in Computer Integrated Manufacturing Technology Investments in Computer-Integrated Manufacturing Technology There are many different major technical issues that have led to the misapplication of the DCF analysis and as well benefits that were related to investments in CIM technology, and in order to come to a better understanding on this we must discuss not only the major and most presently discussed issues, but as well the other key and related factors that are often not discussed even remotely the same amount. As well, we must critically evaluate that of the use of Analytical Hierarchy Process (AHP) and Fuzzy Set Theory (FST) in regards to making a proper evaluation of the investments that are present in CIM technology. In order to come to a proper and informed understanding, we truly must examine and thoroughly discuss several matters in particular, and this means that the following questions should be properly addressed: 1. What are the Benefits of CIM 2. Why Might DCF Methods not Take These Benefits Into Consideration When Evaluating CIM Investments 3. What are the Major Technical Issues That Have led to the Misapplication of the DCF Analysis and Benefits Related to Investments in CIM Technology 4. What is the use of Analytical Hierarchy Process in Regards to the Evaluation of Investments in CIM Technology By thoroughly realizing and examining these questions that need to be addressed, then we will be able to come to a much more informed and understanding viewpoint on this subject matter at hand, and as well we will be able to thus come up with new and innovative strategies in regards to what methods and means should be taken in order to put a more positive spin on this matter overall. This is what will be dissertated in the following. What are the Benefits of CIM There are truly many different benefits when we speak of the term CIM (computer-integrated manufacturing) issues, and what CIM really is needs to be properly understood before any further measures can be taken in this regards. In all actuality, CIM is "a manufacturing philosophy in which the functions for the organization, from product definition to the disposition of the final product, are achieved using computer, communication, and information technologies" (Wikipedia, 2007). There are basically three different components that are considered and known as being essential in regards to the implementation of flexible design and manufacturing in this regards, and this includes that of the following three components: the means for data storage, retrieval, manipulation and presentation; the mechanisms by which to sense state and modify substance; and lastly, the methodologies by which to unite them. The CIM phase is the phase which is "used to describe the complete automation of a manufacturing plant, with all processes functioning under computer control and digital information tying them together" (Rockford Consulting Group, 1999). Basically then the CIM phase is without a doubt one of the most crucial, and there are quite obviously many different benefits that are gained from CIM overall. Why Might DCF Methods not Take These Benefits Into Consideration When Evaluating CIM Investments There are actually again quite a few answers when it comes to the reasoning as to why DCF methods may not take the benefits that are concluded as being from CIM processes into consideration when they are evaluating CIM investments; first we must understand what the DCF really is, in order to understand better. The DCF (discounted cash flow) is a means in this regards which uses certain methods of analysis which have both in the past and recently come under certain criticism. It really began in the 1980s when the use of these DCF methods began coming under this criticism, and in particular they were found to be especially deficient when they were being used to evaluate investments in CIM technologies, as many critics claimed and pressed to argue the fact that these DCF methods of analysis were biased against certain - and in fact most - investments in CIM technology because the analysis was not able to consider that of the full range of benefits that were provided by CIM technology. This is the main and most primary reason as to why DCF methods are most likely to not take the benefits of CIM methods into consideration when evaluating CIM investments, is because they are considered as being too deficient overall to be able to do so. What are the Major Technical Issues That Have led to the Misapplication of the DCF Analysis and Benefits Related to Investments in CIM Technology There are certain technical issues that are considered to have led to the misapplication of the DCD analysis and thus the benefits that are related to investments in CIM technology overall, and the most major technical problem in regards to this is the fact that the DCF methods of analysis are simply not capable and not accurate enough to be able to process the CIM technology properly, thus not allowing all of the appropriate benefits to be seen. As well, there are certain examples that can be used in order to show why and how DCF valuation may be difficult to do, and using specified firms in particular that would include: "A private firm, where the owner is planning to sell the firm; a biotechnology firm, with no current products or sales, but with several promising product patents in the pipeline; a cyclical firm, during a recession; a troubled firm, which has made significant losses and is not expected to get out of trouble for a few years; a firm which is in the process of restructuring, where it is selling some of its assets and changing its financial mix; and a firm which owns a lot of valuable land that is currently unutilized. This just goes to show that there are many different situations where the DCF form of valuation would be unbeneficial and thus unjustified and so therefore there really needs to be either a different or better form of valuation used for the most part, or the problems that are evident in regards to the DCF form need to be promptly and properly taken care of. What is the use of Analytical Hierarchy Process in Regards to the Evaluation of Investments in CIM Technology In regards to the use of analytical hierarchy process (AHP) in regards to the evaluation of investments in CIM technology, again in order to be able to see the use of this in regards to the evaluation of CIM technology investments then we must first understand what AHP is all about; it is "a mathematical decision making technique that allows consideration of both qualitative and quantitative aspects of decisions. It reduces complex decisions to a series of one-on-one comparisons, then synthesizes the results" (Keyes, 1995). Its use in regards to CIM issues is to be able to help people with the making of decisions in regards to their everyday lives, and this includes family, personal, and business matters. As well it facilitates the rational evolution of the following pros and cons: "qualitative and quantitative decision analysis, simple evaluation and representation of solutions through Hierarchial Model, logic arguments and clearing emotions, checking quality of your decision, little need of time for your team, and high acceptance" (Davis & Botkin, 1994). Overall from this we can see that there are many different issues that need to be taken quite seriously into consideration in regards to the discussion of this subject matter, as well we have been able to make note of the deficiencies and lacking in certain areas of the issues that were previously discussed. However from this we can also conclude the fact that there are certain strategies that could be used and certain solutions that could be used in order to solve the problems that are evident here; if the technical issues in regards to the DCF methods of analysis were to be properly readjusted, then the DCF method of analysis would be able to accurately and rightfully take into account the benefits that are created by the CIM process overall, and thus there would really be no need to consider there being a deficiency to the DCF method of analysis at all. If this strategy and others were put properly and promptly into place, then overall there would be a less problematic and more positive and useful process system here overall, and thus this is what needs to be done. References Business. (2007). Valuation Methods. Retrieved February 2, 2007, from http://www.business- valuation-software.com/valuation_methods.php Davis, S. & Botkin, J. (1994). 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