Work Faster, Work in Parallel, or Work Overtime? An Assessment of Short-Term Capacity Adjustments by Simulation

Abstract

Many firms use short-term capacity adjustments to deal with demand changes over time, and a broad literature assesses when and where to adjust capacity. This study highlights that this may be dependent on the type of capacity flexibility used to actually realize the adjustment. By comparing for the first-time capacity adjustments by speeding up processing rates, working in parallel, or using overtime, significant differences in the operational performance are identified, with the latter resulting in the best percentage tardy performance. This provides important insights for the interpretation of the existing literature, guides the future literature, and helps managers to make better decisions.