Equipment Replacement Analysis from Manual Line to Automatic Line in Palletizing Activities: A Case Study

Abstract

A decision situation often encountered by a company is whether an existing asset should be retired from use, continued in service, or replaced with new technology to improve productivity and competitiveness. The purpose of this paper is to present an equipment replacement analysis, an electronic components company. This study aims to analyze three proposed robots to automate the production line as a challenger versus an old manual production line as a defender in palletizing activities. We offered both Market and Technical analysis as well as investment analysis for evaluating an automatic line. Data are analyzed, and four methods are considered for determining project feasibility, namely NPV, IRR, Payback Period, and CBA. According to the data analysis, it is found that Borunte’s robot is the best alternative compare with the others. The proposed framework of equipment analysis seems to be helpful to the company to solve equipment replacement studies.