Focused factories: a Bayesian framework for estimating non-product related investment

Wang G., Chinnam R. B. , DOĞAN I. , Jia Y., Houston M., OCKERS J.

INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH, vol.53, no.13, pp.3917-3933, 2015 (Journal Indexed in SCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 53 Issue: 13
  • Publication Date: 2015
  • Doi Number: 10.1080/00207543.2014.975373
  • Page Numbers: pp.3917-3933


Focused factories are one of the new manufacturing trends for automotive suppliers. A key requirement for these suppliers is the ability to accurately estimate both product and non-product related investment in these facilities to quote profitable business. We propose a systematic Bayesian framework to estimate non-product related investment in focused factories. Our approach incorporates uncertainty in the activity-based costing method and applies Monte Carlo simulation process to generate distributions of investment for the cost centres, and for the different project phases in setting up a facility. A Bayesian-updating procedure is introduced to improve parameter estimations as new information becomes available with experience in setting up these facilities. Our approach is deployed at a leading global automotive tier-one supplier, Visteon Corporation. The efficacy of the Visteon-focused factory cost model is validated using subject matter experts as well as by comparing the model results with estimates from the typical current process.