Understanding the Benefits of Capacity Pooling

Consider a company with two independent locations, each of which serve orders for its own geographic territory. Each location receives, on average, about 4.375 orders per hour at each center, and each location has the capacity to process 5 orders per hour. There is some extra capacity to 

as long as the pooled order stream can be served by any location, at the same rate, lead time is deo-eased by about 50% with the same capacity. This is the benefit of pooling capacity in a supply chain. But how did the same capacity, deployed differently, have such a significant impact on performanc e Notic e that in a pooled capacity system, any available unit of capacity can be used to satisfy a waiting order. This flexibility to use a larger pool of capacity at any time prevents queues, improving the performance of the supply chain. 

5 Is Splitting Capacity Appropriate The Impact of Order-Related Service Characteristics 

The earlier section showed that pooling capacity can benefit the supply chain. But there are cases where splitting capacity may improve the system. To illustrate this issue, consider a supply chain where orders have different service requirements. When such orders share a location, a setup time or change-over time is introduced in order for the location to acxommodate the requirements of disparate customers. 

As an example, consider a supply chain with 16 machines that process orders placed by customers. Customer orders form a common queue and 

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