Capacity Selection, Expansion and Reduction

An alternative to the assumption of continuous capacity is to model capacity discretely. Lee (1991, p. 169) and Haug (1985, p. 92) propose models which select for each potential site the plant to be constructed from a set of possible plant types with pre-defined capacities. Mazzola and Neebe (1999, p. 286) also use this approach and Sankaran and Raghavan (1997, 

31 As Luss (1982, p. 935) points out, capacity planning in multi-facility networks is closely related to network design problems. 

The combinations of size classes and automation levels (cf. Fig. 18 for an example) describe the set of plants from which the model can choose when setting up new plants. As shown in the example not all theoretical combinations of capacity classes and degrees of automation might be feasible and additional, location-specific restrictions might apply. For expansions of existing plants the choice is restricted to adding production lines that fit into the production environment already in place. 

Another element of personnel capacity can also affect production network optimization. Each capacity modification and product transfer project requires the expertise of the process development or technical engineering staff. Consequently, the capacity available with these departments can restrict the number of projects that may be pursued in any given time period. Grunow et al. (2006, pp. 6-8) integrate a restriction into their model to incorporate this aspect. While the basic model proposed in this work does not contain such a restriction, it could be easily extended accordingly. 

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