THE ECONOMICS OF CAPACITY AND MARKETING MEASURES IN A SIMPLE MANUFACTURING ENVIRONMENT

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Abstract

As manufacturing firms push to achieve shorter lead times and higher levels of customer service, the basic capability of underlying manufacturing processes must be reexamined. The capacity and operational variability of a process dictate a certain set of realistic performance goals. In this paper, we examine this fundamental relationship from an economic perspective using two levels of analysis. At the aggregate level, we model the manufacturing process as a single server queue and compare the traditional roles of marketing and manufacturing in setting performance and process design parameters. Insights gained at this level are incorporated into the analysis of a realistic multiserver, multistation manufacturing line. We develop an interaction decision tool to guide the selection of process and performance parameters in this more complex environment.

Original languageEnglish (US)
Pages (from-to)78-99
Number of pages22
JournalProduction and Operations Management
Volume3
Issue number2
DOIs
StatePublished - Jun 1994

Keywords

  • CAPACITY ANALYSIS
  • CUSTOMER SERVICE
  • LEADTIME
  • MARKETING‐MANUFACTURING INTERFACE

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