The capacity planning problem in make-to-order enterprises |
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Authors: | Chin-Sheng Chen Siddharth Mestry Purushothaman Damodaran Chao Wang |
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Institution: | aDepartment of Industrial and Systems Engineering, Northern Illinois University, DeKalb, IL 60115, United States;bDepartment of Industrial and Systems Engineering, Florida International University, Miami, FL 33174, United States |
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Abstract: | This paper addresses the short-term capacity planning problem in a make-to-order (MTO) operation environment. A mathematical model is presented to aid an operations manager in an MTO environment to select a set of potential customer orders to maximize the operational profit such that all the selected orders are fulfilled by their deadline. With a given capacity limit on each source for each resource type, solving this model leads to an optimal capacity plan as required for the selected orders over a given (finite) planning horizon. The proposed model considers regular time, overtime, and outsourcing as the sources for each resource type. By applying this model to a small MTO operation, this paper demonstrates a contrast between maximal capacity utilization and optimal operational profit. |
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Keywords: | Capacity planning Make-to-order Product mix Production planning Operations management |
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