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The tool portfolio of a plant refers to the makeup, in quantity and type, of processing machines in the plant. It is determined by taking into consideration the future trends of process and machine technologies and the forecasts of product evolution and product demands. Portfolio planning is also a multicriteria decision-making task involving tradeoffs among, investment cost, throughput, cycle time, and risk. Tool portfolio planning is a complex task that has strong bearing on manufacturing efficiency. In the first part of this paper, a multicriteria economic decision model is presented for optimal configuration. of the portfolio and to determine the optimal factory loading. The second and third parts of the paper contain applications of the model. If plants are closely located or have a twin-plant design, portfolio planning at multiple plants can be integrated to enhance the overall effectiveness of portfolios. In the second part, a novel methodology for arbitrating capacity backup between plants is described. Because the economic model is constructed upon a valuation of both cycle time and throughput, it is a suitable method for the evaluation of cycle time reduction projects. The application procedure is outlined in the third part.