A modeling approach for evaluating capacity flexibilities in uncertain markets

The flexibility of production capacities is a means for coping with the challenges in today's market environment, especially when dealing with strong fluctuations in customers' demands. The reliable planning and evaluation of these capacities and their inherent flexibilities are considered an important task for many companies. This paper presents a capacity/cost model that considers the impact of market uncertainties and the corresponding capacity flexibilities. It proposes a demand forecasting method, a modeling approach for capacity-related flexibilities and the analysis of the economical correlation between available and required capacities. Based on this, capacity planning can be optimized using this model. The different steps of applying this modeling approach are illustrated with the aid of an example.