Situation in which extra capacity is available

If there is usually enough capacity available or if the extra costs for extra capacity are very small, then the situation will be much like the situation in Section 4.2. and we can use the heuristics described in that section. In most of the practical situations however, the capacity will be restricted and hiring extra labour forces will be expensive. Therefore we shall consider the same heuristics as in the previous subsection and adapt these heuristics to the possibility of using extra capacity. 

Extra capacity can be used to produce some extra orders of a certain product type. Due to the production of some extra orders the next set-up for the type can be delayed and in this way we can save on set-up costs. But the savings due to the production of some extra orders cannot be larger than one extra set-up, at costs s. If the cost for the extra capacity is z per unit of capacity, this implies that it will not be profitable to 

Due to the production of some extra orders we can also save on the penalty costs. This vtill be profitable for potential late orders, for which penalty costs have to be paid if the orders are not produced by the end of the period. For other orders however, production will only be profitable in the situation in which we are (almost) certain of capacity shortages. If we know that extra capacity will be necessary during the next periods, the extra capacity can be used immediately, but even then it will only be profitable if we can use the capacity for orders that have to be delivered in one of the periods during which capacity shortages occur. Keeping all this in mind, the heuristics 

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We assume a gating service discipline, implying that only those orders can be produced, that were ordered before the production period. In the situation in which extra capacity is available, this extra capacity will only be used for the production of goods that were ordered before the start of the production period. The demand is supposed to be stationary and independent of the schedule and of the delivery times that have been realised previously. Although it is not very essential for the production... 

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