An application of a unified capacity planning system

Abstract

PurposeThis paper aims to present a unified approach for effective capacity management, with the flexibility to position the organization across differing market‐orientations, anywhere from produce‐to‐stock to purchase‐and‐produce‐to‐order.Design/methodology/approachThe unified planning system combines capacity management with the external market through the customer order decoupling point (CODP). The approach starts by determining the CODP, using commonality and effect‐cause‐effect analysis. The resulting CODP information is then used to determine the optimal master production schedule (medium‐term), as well as the detailed schedule (short‐term) at the bottleneck resource, using mathematical programming; to support decisions across different planning horizons in an integrated fashion.FindingsThis unified approach was applied to an electronics manufacturing company in the Netherlands. The unified capacity planning system not only reduces the number of capacity problems to be solved by production planners, but also more importantly enhances the organization's capabilities to respond faster and more focused to market changes.Research limitations/implicationsFurther studies may test the robustness of this planning approach with additional empirical evidence.Practical implicationsThe structured unified approach provides a comprehensive solution to a complex capacity management problem, in competitive environments where organizations have to be able to respond to dynamically changing market conditions, given the process choices within which they are operating.Originality/valueProvides a unified approach for effective capacity management.