An optimal replacement policy on the plastic injection moulding machinesin Sonca

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An optimal replacement policy on the plastic injection moulding machinesin Sonca

 

Author: Ng, Kit-kai
Title: An optimal replacement policy on the plastic injection moulding machinesin Sonca
Degree: M.Sc.
Year: 1999
Subject: Replacement of industrial equipment -- Case studies
Injection molding of plastics -- Case studies
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Dept. of Management
Pages: v, 173 leaves : ill. ; 31 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1457503
URI: http://theses.lib.polyu.edu.hk/handle/200/2563
Abstract: In this research project, an optimal machine replacement policy for a local manufacturing company was developed. The machine concerned is the Plastic Injection Moulding machine which is used to mould the plastic resin as raw material into desire-shaped products by using plastic mould. Sonca Products Limited (the Company) owns more than a hundred sets of such machines in its manufacturing plant in the People's Republic of China (PRC). Each year, the Company would spend a sum of money in replacing those broken, old or inefficient machines. The problem here is that the existing machine replacement policy in the Company is rather subjective as the machine selection criteria for replacement are based on past experiences only. Therefore, it is believed that the existing replacement policy would not be the optimal one and there should be an optimal replacement policy for the Company such that the costs associated with machine replacement would be minimized. With some literature reviews, it was found that the most appropriate replacement model to be employed in the replacement policy is the Economic Life Model. The model is based on the sum of the average annual capital costs and the average annual machine running costs, with the adjustments from other cost factors such as tax allowances and discount cash flow. The resulting replacement policy would be such that machines with age greater than the economic life should be replaced. The replacement policy was developed according to the situations and practices exercised by the Company. Data was collected which included new machine purchase prices, old machine resale values, machine maintenance records and so on. Data analysis was conducted using some statistical tools such as Pearson correlation analysis and linear regression analysis. It was found that the machine operating costs, e.g. power consumption, are in fact irrelevant to replacement decision and therefore were excluded in the replacement policy. Relationships between the cost elements and the machine age were found using linear regression analysis. As a result, the optimal replacement policy was developed. In order to make the optimal replacement policy workable, the existing replacement procedure was reviewed and necessary changes were proposed. Sensitivity analysis was also conducted to the developed replacement policy. It was found that the replacement policy is relatively more sensitive to the changes in the discount rate and the shape of the total maintenance costs curve. Trial test was conducted using some past replacement records. It was found that there would be cost saving if the optimal replacement policy was used. However, due to the time limitation, the optimal replacement policy could not be tried in actual situation. Nevertheless, the machines to be replaced in the coming few years based on current information were proposed. Furthermore, through the project, factors affecting the replacement decision and their importance were studied. By using these results, the Company can re-allocate its valuable resources to those important factors and thus make the replacement process more effective and efficient.

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