The economics of air conditioning for precision manufacturing: a simulation model

Abstract

Extreme temperature and humidity are major causes of errors in industrial precision and in dimensional measurement. In addition, hot and/or humid workplaces have adverse effects on humans which include reduced work time due to more frequent and longer breaks, reduced production rates, and increased error rates. Managers considering investments in air conditioning their manufacturing facilities must weigh many uncertain benefits against more certain costs. In this paper, we identify the benefits resulting from air conditioning manufacturing facilities and develop a Monte Carlo computer simulation model to evaluate investments in air conditioning. The model uses projected incremental cash flows to compute net present value and internal rate of return. Simulation is used to take into account the uncertainty associated with projecting the benefits of air conditioning, deal with possible correlation among some benefits of air conditioning, and sensitize decision makers to the range of possible outcomes. The proposed model is programmed into user‐friendly menu‐driven software which is tested on actual cases and is illustrated in this paper.

Citation

Khouja, M., Shelnutt, J.W. and Wilmot, M. (1998), "The economics of air conditioning for precision manufacturing: a simulation model", Integrated Manufacturing Systems, Vol. 9 No. 3, pp. 182-192. https://doi.org/10.1108/09576069810210475