TY - JOUR
T1 - Capacity planning with demand uncertainty
AU - Balachandran, Bala V.
AU - Balakrishnan, Ramji
AU - Sivaramakrishnan, K.
N1 - Funding Information:
Balakrishnan acknowledges a grant from the Ira McGladrey Institute of Accounting Research. Sivaramakrishnan acknowledges a KPMG Peat Marwick Faculty Fellowship. Comments from Philip Jones are gratefully acknowledged.
PY - 1997/9
Y1 - 1997/9
N2 - We examine how the ability to augment capacity on an as-needed basis affects capacity planning. If it is feasible and desirable to augment all resources on an as-needed basis, optimal capacity planning can be done separately for each resource. Optimality of this simple rule is lost if even one capacity resource imposes "hard" constraints. Simulations indicate that simplifying capacity planning to focus on an expected bottleneck resource dominates product- or resource-level capacity planning. when all resources impose hard constraints and the firm's product mix problem is significant.
AB - We examine how the ability to augment capacity on an as-needed basis affects capacity planning. If it is feasible and desirable to augment all resources on an as-needed basis, optimal capacity planning can be done separately for each resource. Optimality of this simple rule is lost if even one capacity resource imposes "hard" constraints. Simulations indicate that simplifying capacity planning to focus on an expected bottleneck resource dominates product- or resource-level capacity planning. when all resources impose hard constraints and the firm's product mix problem is significant.
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U2 - 10.1080/00137919708903189
DO - 10.1080/00137919708903189
M3 - Article
AN - SCOPUS:0009770738
VL - 43
SP - 49
EP - 72
JO - Engineering Economist
JF - Engineering Economist
SN - 0013-791X
IS - 1
ER -