Contingency theory of capacity planning: The link between process types and planning methods

Abstract

a b s t r a c tAlthough the reliability of production plans is crucial for the performance of manufacturing organizations, most practitioners use considerably simpler planning methods than what is recommended in the operations management literature. This article employs the contingency theory of organizations to explain the gap between the practice and the academic models of production planning. Arguments on the contingency effects of process complexity lead to a hypothesis that expects simple capacity planning methods to be most effective in certain production processes. A strong inference research setting is used to test the contingency hypothesis against a conventional hypothesis that expects the most sophisticated planning techniques to always be most effective. Multisource data from the machinery manufacturing industry support the contingency hypothesis and reject the universalistic hypothesis. The findings are explained using the concepts of task interdependence and bounded rationality. The results have several managerial implications, and they elaborate how classic concepts in organization theory can bring practically relevant insights to operations management research.

The applicability and impact of Enterprise Resource Planning (ERP) systems: Results from a mixed method study on Make-To-Order (MTO) companies

“…Jonsson & Mattsson (2003) agreed with this, but also suggested implementing a 'dispatching list' method, where advised priorities are given to the shop floor. On planning for the use of capacity at the dispatching level, Tenhiälä (2011) concluded that rough-cut methods -as featured in many ERP systems -can be used by companies utilising job-shop environments (i.e. MTO and ETO companies).…”

“…More recently, Tenhiälä (2011) investigated this fit in terms of capacity planning from a contingency-based view, yet few studies have explored the fit between a MTO production strategy and ERP functionality. The study by Deep et al (2008) provided a starting point but focused on one company only and on applicability -it therefore lacked generality and did not consider the impact of ERP.…”

Improving performance with sophisticated master production scheduling

“…Literature on the topic stresses the difficulty of conducting MPS in complex environments (Soares and Vieira, 2009;Tenhiälä, 2011) and that companies with mature processes achieve better performance than those with less mature processes (Heinrich and Simchi-Levi, 2005). In this study, we seek to understand the impact of sophisticated MPS methods by considering the effects of planning environment complexity and MPS maturity.…”

Aggregate planning for probabilistic demand with internal and external storage

“…The simplest ones contemplate simplified models of companies, only considering the main resources, usually implemented through electronic spreadsheets and simulation, whose equations permit evaluating the feasibility of a suggested plan, without result optimization. Tenhiälä (2011) suggests that companies underuse more sophisticated models that use linear programming and mixed linear programming techniques (the later considers binary variables used to represent resource consumption-and associated costs-when equipment is prepared in an intermittent production environment). Hierarchical models may also be used, with optimization in each detailing level of production and sales plans.…”