A quantification of the economic value of flexible capacity

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

Research output: Contribution to journalArticlepeer-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 languageEnglish (US)
Pages (from-to)1421-1430
Number of pages10
JournalInternational Journal of Production Research
Volume32
Issue number6
DOIs
StatePublished - Jun 1994

All Science Journal Classification (ASJC) codes

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

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