Extending Cost‐VolumeBreakeven Analysis toInclude Flexibility

Recently many manufacturers have emphasized the enhancement of customer service through increased manufacturing flexibility. Sophisticated models exist for the justification of modern automation technologies which could have an impact on manufacturing flexibility, but practitioners are more likely to utilize a simple tool such as cost‐volume break even analysis. Indeed, much of the difficulty that managers have in justifying modern automation technologies may be due to the shortsightedness of cost‐volume break even analysis. In this paper, we introduce an equally simple justification tool, cost‐volume‐flexibility break even analysis, and explain its use and the benefits accompanying its use.