Planning Capacity Utilization in an Assemble‐to‐Order Environment

Abstract

One strategic design parameter in capacity management is the setting of a planned level of capacity utilization at which the manufacturing operation will operate long term. Seeks to examine systematically the implications of varying levels of capacity utilization within an assemble‐to‐order firm through experiments with a simulation model. Four performance measures and a total weekly cost measure are analysed under nine capacity utilization levels, two demand patterns, and 11 ratios of the costs of idle capacity to the costs of late orders. The prescribed capacity utilization level is a function of the firm′s competitive goals, demand pattern, and cost structures.

The differential impact of product complexity, inventory level, and configuration capacity on unit and order fill rate performance

“…Several studies have examined the problems posed by capacity constraints. For example, Marucheck and McClelland (1992) examine implications of varying levels of capacity utilization in an assemble to order (ATO) environment. They argue that since configuration capacity level is not always able to respond to demand changes, a firm's resource level becomes an operational constraint with respect to capacity allocation.…”

The Impact of Demand Uncertainty and Configuration Capacity on Customer Service Performance in a Configure‐to‐order Environment

“…The results suggest that configuration capacity strategy significantly impacts performance in a CTO environment. Past studies posit that planned capacity utilization level is a function of several factors, including demand uncertainty (Marucheck and McClelland 1992). Consistent with this, CTO firms should plan their configuration capacity and utilization based on demand patterns.…”

“…Demand variability reflects the degree of variation from the average daily demand while demand skew refers to end-of-quarter or seasonal demand spike. Although capacity utilization and demand uncertainty have been addressed in previous literature (Bradley and Arntzen 1999;Marucheck and McClelland 1992), there is no study that examines the simultaneous impact and interaction of demand variability, demand skew and configuration capacity in a CTO environment. Most studies examining CTO and ATO systems tend to focus more on the effect of capacity and demand on component inventory levels (Akcay and Xu 2004;Cheng et al 2002;Swaminathan and Tayur 1998).…”

Order Quantity Distributions in Make-to-Order Manufacturing: At What Level of Aggregation Do They Respect Standard Assumptions?

“…These characteristics include volume per planning period (demand rate -often disaggregated to several time horizons and described as a distribution of stochastic variables), accumulation of demand over the planning period, the number of orders per product per planning period and the standard order quantities for each product. The characteristics of the make-to-order manufacturing are depicted by Hendry and Kingsman [9] and Marucheck and McClelland [10]:…”