Alternative Methods of Evaluating Capital Investments in Logistics

Abstract

Evaluating capital investments for additions or modifications to warehouses, for replacement of equipment or for entirely new facilities is a complex activity which involves numerous financial, competitive and other considerations. The financial aspect of capital investments is addressed and it is shown how ten different investment criteria can be brought to bear on the capital investment issue. The ten investment criteria consist of five primary criteria and five secondary criteria. The primary criteria are payback period in years, non‐discounted rate of return on investment, internal rate of return, Baldwin rate of return, and benefit cost ratio. All ten criteria are described and suggestions are made when each criterion is appropriate.

Citation

Pegels, C.C. (1991), "Alternative Methods of Evaluating Capital Investments in Logistics", International Journal of Physical Distribution & Logistics Management, Vol. 21 No. 2, pp. 19-25. https://doi.org/10.1108/09600039110141537