A quantification of the economic value of flexible capacity

K. Laengle; P. M. Griffin; S. O. Griffin

doi:10.1080/00207549408957008

A quantification of the economic value of flexible capacity

K. Laengle, P. M. Griffin, S. O. Griffin

Marcus Department of Industrial and Manufacturing Engineering

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

Traditional methods for the economic justification of new manufacturing technologies fail to include benefitssuch as better quality, greater flexibility and reduced work-in-progress. In this paper we develop a technique to quantify the economic value of long-term flexibility in capacity through the use of dynamic programming. Wedefine the economic value of flexibility as the difference in the net present value of profits that a flexible systemachievesover a lessflexible system.Twoexamplesare presented.

Original language	English (US)
Pages (from-to)	1421-1430
Number of pages	10
Journal	International Journal of Production Research
Volume	32
Issue number	6
DOIs	https://doi.org/10.1080/00207549408957008
State	Published - Jun 1994

All Science Journal Classification (ASJC) codes

Strategy and Management
Management Science and Operations Research
Industrial and Manufacturing Engineering

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10.1080/00207549408957008

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A quantification of the economic value of flexible capacity

Abstract

All Science Journal Classification (ASJC) codes

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