Flexibility Quantification : Measure By Type Vs. Holistic Measure

988 WordsJul 8, 20164 Pages
2.3.2 Flexibility quantification: measure by type vs. holistic measure Flexibility measurement: measure by type 1. Volume flexibility Descriptive measure of volume flexibility can be the lower and upper bound of capacity for range dimension and time/cost of capacity adjustment for response perspective. But economic metrics are most commonly used in literature, since many researchers define volume flexibility as the ability to profitably produce at different levels. Stigler(1939) considered a plant to be flexible if it has a relatively flat average cost curve. Falkner (1986) suggest the stability of manufacturing costs over widely varying levels of total production volume to be the measure of volume flexibility. Sethi and Sethi (1990) developed volume flexibility metric to be the curvature of the average cost curve. There’re also metrics that consider the interaction with demand market. Marschak and Nelson (1962) argued the value of volume flexibility increases as the variation in market price increases and as the ability to predict market price before making an output decision increases. Gerwin (1987) measures it by the ratio of average volume fluctuations over a given period of time to the production capacity limit. 2. Mix flexibility There exists a lot of measures on mix flexibility range, the number of product types a system can produce. (Ettlie 1988, Jaikumar 1986), the size of the universe of products the system is capable of producing (e.g. Chatterjee et

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