Title |
Capacity Planning Model With Technological Improvement Using Heuristics |
Author |
Muhammad A. Obeidat, Ph.D, Professor |
Contact Information |
Management Department
Southern Polytechnic State University
Marietta , GA 30060 , USA , mobeidat@spsu.edu |
Key Words |
capacity planning model, capacity updates, technological improvement heuristics |
Abstract |
A large number of American manufacturing firms have excess capacity buildup that is far from minimizing total average cost. As a result, excess capacity drives total cost to be higher and ultimately higher prices which make competition a war that is hard to win. Determining the proper capacity size and timing of capacity expansion and contraction is one of the critical decisions for an organization to be competitive and profitable. A general model was developed to determine the capacity size buildup and timing over the planning horizon. Hypothetical results indicated that each element of the model has an effect on the capacity buildup. However, all elements have a unique effect on capacity buildup and timing. The level of demand, which is determined by the shape of the product life cycle, and the rate of technological improvement are two major determinants of capacity buildup and timing over the planning horizon. The higher the level of demand the larger the capacity size and vice-versa. In addition, the higher the rate of technology improvement, the slower the capacity buildup over the planning horizon regardless of the other elements of the model. |
Full-text |
Contact: Dr.Obeidat at mobeidat@spsu.edu or lsun@spsu.edu |
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