An economic decision model for selective assembly

In case of assemblies requiring a close fit, strict tolerances must be specified resulting in high manufacturing costs. In such cases, selective assembly may be adopted as a cheaper alternative to traditional interchangeable parts assembly. In selective assembly wider tolerances can be specified, thus reducing processing cost, and manufactured parts are sorted into groups by dimensions so that only parts from matching groups are assembled. The choice between selective and traditional assembly, however, requires comparing the cost of the two options, but literature is lacking as far as selective assembly cost models are concerned. In this paper a managerial economic model is developed to quickly compare cost of traditional and selective assembly in order to identify the lower cost option. The model includes machining and materials cost, including scrapped parts, as well as gauging/sorting cost and work in process holding cost. A sensitivity analysis as well as a numerical case study exemplifies model application also showing trade-offs between the relevant parameters.