Company ABC's Process Decision Traditional numerically controlled machines may be replaced with a more flexible manufacturing system in the future (FMS). Its CNC machines have been working in a low-volume, high-variety mode. Ten percent of the machines are being used at any given time. The machine tool distributors and consultancy businesses are interested in assembling the machines into an FMS. In their estimation, nearly a third of Company ABC's work can be handled by $3 million in machinery and transfer machines. Additionally, there will be fees associated with the process of transition and startup. Although the company has not yet integrated all of its components into a single group technology system, it believes that 30% of its products are FMS-ready. A "family" could easily fit this 30% of the population. The number of machines should be reduced as a result of increased utilization. For the company to go from 15 to 4 machines and 3 to 3 employees, it must do so. In the same way, there will be a decrease in floor space of approximately 6,000 square feet from the current 20,000 square feet. This family of parts can now be processed in 1 or 2 days rather than 7 to 10 as previously required, leading to an increase in order throughput. One-time savings of $750,000 from inventory reduction are expected, as are annual labor savings of $300,000 or more. Despite the optimistic outlook, an evaluation of the project's return on investment revealed an annual return of 10% to 15%. As a rule, the corporation expects projects to return at least 15% and have payback times of less than five years.