Capacity Management in Reconfigurable Manufacturing Systems With Stochastic Market Demand

Abstract

An optimal solution, based on Markov Decision Theory, is presented for the capacity management problem in Reconfigurable Manufacturing Systems with stochastic market demand with a time delay between the time capacity change is ordered and the time it is delivered. The optimal policy in this paper is presented as optimal boundaries representing the optimal capacity expansion and reduction levels. The effects of change in the cost function parameters and the delay time on the optimal boundaries are presented for a capacity management scenario. The major differences between this research and the ones in inventory control lie in two folds. One is the fact that unlike inventory, capacity levels can be reduced according to the market demand. The other one is the novel approach presented in this paper to solve the delay problem which unlike the inventory control does not account for the cumulative unmet demand as a decision factor.