Capacity allocation

The decision theory is valid for variable costs but does not consider the problem of capacity allocation. In many contexts, screening capacity is a sunk cost, and there is a need to consider the straw that broke the camel s back, the first compound that exceeds capacity. There is no need to ration resources that are not scarce and have trivial variable costs relative to the potential value that their use can create. This reasoning leads naturally back to use of easily understood, intuitive flow and capacity visualizations for the relevant simulations. 

One option to deal with the situation is to neglect setup times and setup carryover. This results in a situation, in which the available capacity is overestimated. On the other hand, if setup times are modeled, but setup carry-overs are not in the scope of the model formulation, the available capacity would be underestimated. Both results are not satisfactory in the first situation plans will result which are too optimistic and not feasible, whereas in the second situation in which capacity estimation is too conservative, resources will be underutilized. Consequently, only a model formulation which takes setup times and setup carry-overs into account captures the characteristics of the real world adequately and provides a realistic capacity allocation. 

Mallik S, Harker PT (2004) Coordinating supply chains with competition Capacity allocation in semiconductor manufacturing. European Journal of Operational Research 159 (2) 330-347... 

Several new processes have also been developed in order to facilitate capacity allocation and booking. The booking of capacity is applicable at the different entry and exit zones as defined by the Tariff Regulation. The booking is thus booking for entry capacity, process capacity and exit capacity. 

The criterion is relevant in a short-run perspective and the criterion may be quite useful for measuring the efficiency of potential auction principles as well as capacity allocation and booking rules in general. 

The capacity allocation mechanism is straightforward when capacity is not scarce. Capacity is then offered on the first come, first served principle. Tariffs are fixed and independent of demand and access is nondiscriminatory. 

If capacity is still scarce after this first round of allocation amongst owners, capacity is allocated by the Capacity Allocation Key (CAK). CAK is not intended to allocate capacity according to willingness to pay 53. However, the possibility of releasing the assigned capacity to the secondary market will have an effect. The price for released capacity will constitute the shipper s opportunity cost and capacity may be reallocated according to willingness to pay. 

Apparently, it is not fully clear how the capacity allocation mechanism will work and partly based on some hearing round submissions the authorities have decided, with effect by January 1st 2008, to reconsider the owner s preferential rights (twice their owner share) and the effect of this provision will be especially monitored.55... 

However, the Capacity Allocation Key (CAK) allocates capacity to a number of participants (owners). Hence, supply in the secondary market will be more atomistic than in the usual textbook monopoly situation. As actors may make different judgments, capacity may be released and thus initiate the secondary market. It is however, too early to tell how well this secondary market will function. 

APS systems also differ in how they approach the generation of plems and schedules. In some systems, planning is done periodically in batch mode, with integrated plans being developed for a set of products and workcenters. On the other hand, others are focused on transaction processing, where a plan is constructed and capacity allocated incrementally as orders arrive. 

Wong, W.K., 2003. A fuzzy capacity-allocation model for computerised fabriccutting systems. International Journal of Advanced Manufacturing Technology, 21(9), 699-711. 

De Kok, Ton G. (2000). Capacity allocation and outsourcing in a process industry . International journal of production economics, 68, 229-239. 

The fundamental tradeoff in lead time quotation is between quoting short lead times and attaining them. In case of multiple customer classes with different capacity requirements or margins, this tradeoff also includes capacity allocation decisions. In particular, one needs to decide whether to allocate future capacity to a low-margin order now, or whether to reserve capacity for potential future arrivals of high-margin orders. 

Cachon, G.R and M.A. Lariviere, Capacity Allocation Using Past Sales When To Tum-and-Eam, Management Science, 45, 5 (1999(a)), 685-703. 

Deshpande, V. and L.B. Schwarz, Optimal Capacity Allocation In Decentralized Supply Chains, Working Paper, Krannert School, Purdue University, 2002. 

Production planning and manufacturing. These problems address creation of products and services in response to customer demand. It includes such supply chain management concerns as master production planning, capacity allocation, scheduling, maintenance of manufacturing facilities, and manufacturing quality. 

Separation of capacity allocation and physical route assignment for VPs/VCs that would reduce required spare capacity (e.g., the capacity of protection VPs/VCs can be zero in normal conditions)... 

Chung-Chi H, Cheng-Han W (2008) Capacity allocation ordering, and pricing decisions in a supply chain with demand and supply chain uncertainties. Eur J Oper Res 184 667-684 Coley DA, Howard M, Winter M (2009) Local food, food miles and caibon emissions A comparison of farm shop and mass distribution approaches. Food Policy 34(2) 150-155 Dabbene F, Gay P, Tortia C (2014) Traceability issues in food supply chain management A review. Biosyst Eng 120 65-80... 

If the customer moves forward with the order by paying for it, all the inventory and capacity allocations become firm, triggering the production and delivery process for the laptop computer. From this example we can see a movement of the three resources in a supply chain materials, money, and information. 

To complicate things a little, we must also acknowledge that drivers can - at least for a short time - increase their overall processing capacity. An increase in speed, therefore, constitutes an increase in stress but if drivers can adjust to it by recruiting additional capacities allocated to non-driving tasks - such as putting down the cell phone when the traffic demands increase -then it may not involve an increase in strain. 

Preemptive Goal Programming Solution Supplier Capacity Allocation... 

Use optimization for facility location and capacity allocation decisions. 

In this chapter, we start with the broad supply chain design discussed in Chapter 4 and focus on the fundamental questions of facility location, capacity allocation, and market allocation when designing a supply chain network. We identify and discuss the various factors that influence the facility location, capacity, and market allocation decisions. We then establish a framework and discuss various solution methodologies for network design decisions in a supply chain. 

Capacity allocation How much capacity should be allocated to each facility ... 

Capacity allocation can be altered more easily than location, but capacity decisions do tend to stay in place for several years. Allocating too much capacity to a location results in poor utilization and, as a result, higher costs. Allocating too little capacity results in poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility. 

Logistics and facility costs incurred within a supply chain change as the number of facilities, their location, and capacity allocation change. Companies must consider inventory, transportation, and facility costs when designing their supply chain networks. 

The objective of Phase IV is to select, from among the potential sites, a precise location and capacity allocation for each facility. The network is designed to maximize total profits, taking into account the expected margin and demand in each market, various logistics and facility costs, and the taxes and tariffs at each location. 

In the next section, we discuss methodologies for making facility location and capacity allocation decisions during Phases II through IV. 

The problem of selecting the optimal location and capacity allocation is very similar to the regional configuration problem we have already studied in Phase II. The only difference is that instead of using costs and duties that apply over a region, we now use location-specific costs and duties. The supply chain team thus decides to use the capacitated plant location model discussed earher to solve the problem in Phase IV. 

Use optimization for facility location and capacity allocation decisions. Gravity location models identify a location that minimizes inbound and outbound transportation costs. They are simple to implement but do not account for other important costs. Network optimization models can include contribution margins, taxes, tariffs, production, transportation, and inventory costs and are used to maximize profitability. These models are useful when locating facilities, allocating capacity to facilities, and allocating markets to facilities. 

Partial results from the application of the procedure described above to the department store data are shown in Table 13-5. A more detailed version of Table 13-5 is contained in the worksheet Capacity allocation. 

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