Automation Project Evaluation And Financial Payback

Labor cost goes higher and higher this few years in China.As the labor cost went up,many companies felt the pressure of cost.A lot of companies start to explore production automation,so that they can reduce the labor by auto machine.But automation itself cost so much,it is not an easy work to decide if the production line could do automation update,or what level it can be done.For one company,how we can evaluate the earnings of automation? We should know it first,so we can decide if we can do the automation,and how many money we can use for it.After we clear the source of automation earning,as the Investment decision theory,we decide to use IRR and NPV to evaluate the automation project.This dissertation used Case Analysis Method,and we chose one of cookie product line as the case.In this case,we compared the automation level and labor number between the line of developed country,and interviewed senior project engineers to get all process automation project design.We discussed with the local and abroad suppliers to get the cost of all the plans.We interviewed the guys of marketing and operation department to get the production yield forecast and labor cost.So we can get the all predicated cost and return.After that,we made the permutation and combination of all project plan,and got 35 project groups.Then we calculated the IRR and NPV of all the 35 groups.As the investment strategy of the company right now,we decided chose the project of automatic boxing.From the dissertation we find that packing automation could be the first step for a biscuit line.And local machine can provide a higher IRR.So local automatic packing machine is the first choose.This dissertation provided a method to choose automation design not only for K cosmetic company,but also for the companies who want to do production automation update.