IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v153y2014icp66-85.html
   My bibliography  Save this article

A review of mathematical programming models for strategic capacity planning in manufacturing

Author

Listed:
  • Martínez-Costa, Carme
  • Mas-Machuca, Marta
  • Benedito, Ernest
  • Corominas, Albert

Abstract

This paper offers an up-to-date review on strategic capacity planning in manufacturing companies, with two main objectives: (1) to describe and analyze the strategic capacity planning problems; and (2) to review the mathematical programming models proposed in the literature for dealing with these problems. The main search was conducted in the Web of Science using critical keywords and was complemented by using other search engines. Cross checking of citations of all the articles was also carried out. Papers were selected that have formulated discrete time, finite horizon, multi-period models. The major decisions addressed and the main conditioning factors of the strategic capacity problem in the literature are identified and described. A structured overview of the main strategic capacity planning mathematical programming models is given. A classification of the models is proposed and their main characteristics, solution procedures and industrial applications are identified. Based on the review of the existing studies, a framework for capacity planning is presented, consisting of three main phases: problem definition (considering context, characteristics of the manufacturing system and specific factors that could influence the decision-making process), model design and solution procedure. Closing the paper, some future lines of research are suggested. The review should help both practitioners and academic researchers in developing useful models and processes to aid decision-making in strategic capacity planning.

Suggested Citation

  • Martínez-Costa, Carme & Mas-Machuca, Marta & Benedito, Ernest & Corominas, Albert, 2014. "A review of mathematical programming models for strategic capacity planning in manufacturing," International Journal of Production Economics, Elsevier, vol. 153(C), pages 66-85.
    • Handle: RePEc:eee:proeco:v:153:y:2014:i:c:p:66-85
    DOI: 10.1016/j.ijpe.2014.03.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527314000917
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2014.03.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shabbir Ahmed & Renan Garcia, 2003. "Dynamic Capacity Acquisition and Assignment under Uncertainty," Annals of Operations Research, Springer, vol. 124(1), pages 267-283, November.
    2. N. V. Sahinidis & I. E. Grossmann, 1992. "Reformulation of the Multiperiod MILP Model for Capacity Expansion of Chemical Processes," Operations Research, INFORMS, vol. 40(1-supplem), pages 127-144, February.
    3. Wang, S.M. & Chen, J.C. & Wang, K.-J., 2007. "Resource portfolio planning of make-to-stock products using a constraint programming-based genetic algorithm," Omega, Elsevier, vol. 35(2), pages 237-246, April.
    4. Daniel Bienstock & Jeremy F. Shapiro, 1988. "Optimizing Resource Acquisition Decisions by Stochastic Programming," Management Science, INFORMS, vol. 34(2), pages 215-229, February.
    5. Verter, Vedat & Cemal Dincer, M., 1992. "An integrated evaluation of facility location, capacity acquisition, and technology selection for designing global manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 60(1), pages 1-18, July.
    6. Sampath Rajagopalan & Medini R. Singh & Thomas E. Morton, 1998. "Capacity Expansion and Replacement in Growing Markets with Uncertain Technological Breakthroughs," Management Science, INFORMS, vol. 44(1), pages 12-30, January.
    7. Alexandar Angelus & Evan L. Porteus, 2002. "Simultaneous Capacity and Production Management of Short-Life-Cycle, Produce-to-Stock Goods Under Stochastic Demand," Management Science, INFORMS, vol. 48(3), pages 399-413, March.
    8. Nina Linn Ulstein & Marielle Christiansen & Roar Grønhaug & Nick Magnussen & Marius M. Solomon, 2006. "Elkem Uses Optimization in Redesigning Its Supply Chain," Interfaces, INFORMS, vol. 36(4), pages 314-325, August.
    9. Alexander Shulman, 1991. "An Algorithm for Solving Dynamic Capacitated Plant Location Problems with Discrete Expansion Sizes," Operations Research, INFORMS, vol. 39(3), pages 423-436, June.
    10. James R. Bradley & Peter W. Glynn, 2002. "Managing Capacity and Inventory Jointly in Manufacturing Systems," Management Science, INFORMS, vol. 48(2), pages 273-288, February.
    11. Rastogi, Aditya P. & Fowler, John W. & Matthew Carlyle, W. & Araz, Ozgur M. & Maltz, Arnold & Büke, Burak, 2011. "Supply network capacity planning for semiconductor manufacturing with uncertain demand and correlation in demand considerations," International Journal of Production Economics, Elsevier, vol. 134(2), pages 322-332, December.
    12. Bex George Thomas & Srinivas Bollapragada, 2010. "General Electric Uses an Integrated Framework for Product Costing, Demand Forecasting, and Capacity Planning of New Photovoltaic Technology Products," Interfaces, INFORMS, vol. 40(5), pages 353-367, October.
    13. S. Rajagopalan, 1998. "Capacity Expansion and Equipment Replacement: A Unified Approach," Operations Research, INFORMS, vol. 46(6), pages 846-857, December.
    14. Luss, Hanan, 1984. "Capacity expansion planning for a single facility product line," European Journal of Operational Research, Elsevier, vol. 18(1), pages 27-34, October.
    15. Sampath Rajagopalan & Jayashankar M. Swaminathan, 2001. "A Coordinated Production Planning Model with Capacity Expansion and Inventory Management," Management Science, INFORMS, vol. 47(11), pages 1562-1580, November.
    16. S. Rajagopalan, 1992. "Deterministic Capacity Expansion Under Deterioration," Management Science, INFORMS, vol. 38(4), pages 525-539, April.
    17. Chand, Suresh & McClurg, Tim & Ward, Jim, 2000. "A model for parallel machine replacement with capacity expansion," European Journal of Operational Research, Elsevier, vol. 121(3), pages 519-531, March.
    18. Wu, Cheng-Hung & Chuang, Ya-Tang, 2010. "An innovative approach for strategic capacity portfolio planning under uncertainties," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1002-1013, December.
    19. Nima Safaei & Ali Zuashkiani, 2012. "Manufacturing system design by considering multiple machine replacements under discounted costs," IISE Transactions, Taylor & Francis Journals, vol. 44(12), pages 1100-1114.
    20. Geng, Na & Jiang, Zhibin & Chen, Feng, 2009. "Stochastic programming based capacity planning for semiconductor wafer fab with uncertain demand and capacity," European Journal of Operational Research, Elsevier, vol. 198(3), pages 899-908, November.
    21. Julka, Nirupam & Baines, Tim & Tjahjono, Benny & Lendermann, Peter & Vitanov, Val, 2007. "A review of multi-factor capacity expansion models for manufacturing plants: Searching for a holistic decision aid," International Journal of Production Economics, Elsevier, vol. 106(2), pages 607-621, April.
    22. Suleyman Karabuk & S. David Wu, 2003. "Coordinating Strategic Capacity Planning in the Semiconductor Industry," Operations Research, INFORMS, vol. 51(6), pages 839-849, December.
    23. Stuart Bermon & Sarah Jean Hood, 1999. "Capacity Optimization Planning System (CAPS)," Interfaces, INFORMS, vol. 29(5), pages 31-50, October.
    24. Chou, Yon-Chun & Cheng, C.-T. & Yang, Feng-Cheng & Liang, Yi-Yu, 2007. "Evaluating alternative capacity strategies in semiconductor manufacturing under uncertain demand and price scenarios," International Journal of Production Economics, Elsevier, vol. 105(2), pages 591-606, February.
    25. Dimitris Paraskevopoulos & Elias Karakitsos & Berc Rustem, 1991. "Robust Capacity Planning Under Uncertainty," Management Science, INFORMS, vol. 37(7), pages 787-800, July.
    26. Sang-Bum Lee & Hanan Luss, 1987. "Multifacility-Type Capacity Expansion Planning: Algorithms and Complexities," Operations Research, INFORMS, vol. 35(2), pages 249-253, April.
    27. Wang, K.-J. & Wang, S.-M. & Yang, S.-J., 2007. "A resource portfolio model for equipment investment and allocation of semiconductor testing industry," European Journal of Operational Research, Elsevier, vol. 179(2), pages 390-403, June.
    28. Olhager, Jan & Rudberg, Martin & Wikner, Joakim, 2001. "Long-term capacity management: Linking the perspectives from manufacturing strategy and sales and operations planning," International Journal of Production Economics, Elsevier, vol. 69(2), pages 215-225, January.
    29. C. O. Fong & V. Srinivasan, 1986. "The Multiregion Dynamic Capacity Expansion Problem: An Improved Heuristic," Management Science, INFORMS, vol. 32(9), pages 1140-1152, September.
    30. Shanling Li & Devanath Tirupati, 1994. "Dynamic Capacity Expansion Problem with Multiple Products: Technology Selection and Timing of Capacity Additions," Operations Research, INFORMS, vol. 42(5), pages 958-976, October.
    31. Shabbir Ahmed & Nikolaos V. Sahinidis, 2003. "An Approximation Scheme for Stochastic Integer Programs Arising in Capacity Expansion," Operations Research, INFORMS, vol. 51(3), pages 461-471, June.
    32. Jan A. Van Mieghem, 2003. "Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 269-302, July.
    33. S. Rajagopalan & Andreas C. Soteriou, 1994. "Capacity Acquisition and Disposal with Discrete Facility Sizes," Management Science, INFORMS, vol. 40(7), pages 903-917, July.
    34. Lin, James T. & Chen, Tzu-Li & Chu, Hsiao-Ching, 2014. "A stochastic dynamic programming approach for multi-site capacity planning in TFT-LCD manufacturing under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 148(C), pages 21-36.
    35. Randall S. Hiller & Jeremy F. Shapiro, 1986. "Optimal Capacity Expansion Planning When There are Learning Effects," Management Science, INFORMS, vol. 32(9), pages 1153-1163, September.
    36. Bhutta, Khurrum S. & Huq, Faizul & Frazier, Greg & Mohamed, Zubair, 2003. "An integrated location, production, distribution and investment model for a multinational corporation," International Journal of Production Economics, Elsevier, vol. 86(3), pages 201-216, December.
    37. Alper Atamtürk & Dorit S. Hochbaum, 2001. "Capacity Acquisition, Subcontracting, and Lot Sizing," Management Science, INFORMS, vol. 47(8), pages 1081-1100, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan A. Van Mieghem, 2003. "Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 269-302, July.
    2. Hahn, G.J. & Kuhn, H., 2012. "Simultaneous investment, operations, and financial planning in supply chains: A value-based optimization approach," International Journal of Production Economics, Elsevier, vol. 140(2), pages 559-569.
    3. Smirnov, Dina & van Jaarsveld, Willem & Atan, Zümbül & de Kok, Ton, 2021. "Long-term resource planning in the high-tech industry: Capacity or inventory?," European Journal of Operational Research, Elsevier, vol. 293(3), pages 926-940.
    4. Hongmin Li & Stephen C. Graves & Woonghee Tim Huh, 2014. "Optimal Capacity Conversion for Product Transitions Under High Service Requirements," Manufacturing & Service Operations Management, INFORMS, vol. 16(1), pages 46-60, February.
    5. Georgiadis, Patroklos & Athanasiou, Efstratios, 2013. "Flexible long-term capacity planning in closed-loop supply chains with remanufacturing," European Journal of Operational Research, Elsevier, vol. 225(1), pages 44-58.
    6. Vernon Ning Hsu, 2002. "Dynamic Capacity Expansion Problem with Deferred Expansion and Age-Dependent Shortage Cost," Manufacturing & Service Operations Management, INFORMS, vol. 4(1), pages 44-54, June.
    7. Sabet, Ehsan & Yazdani, Baback & Kian, Ramez & Galanakis, Kostas, 2020. "A strategic and global manufacturing capacity management optimisation model: A Scenario-based multi-stage stochastic programming approach," Omega, Elsevier, vol. 93(C).
    8. Lijian Lu & Xiaoming Yan, 2016. "Capacity investment decisions under risk aversion," Naval Research Logistics (NRL), John Wiley & Sons, vol. 63(3), pages 218-235, April.
    9. Lin, James T. & Chen, Tzu-Li & Chu, Hsiao-Ching, 2014. "A stochastic dynamic programming approach for multi-site capacity planning in TFT-LCD manufacturing under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 148(C), pages 21-36.
    10. Van-Anh Truong & Robin O. Roundy, 2011. "Multidimensional Approximation Algorithms for Capacity-Expansion Problems," Operations Research, INFORMS, vol. 59(2), pages 313-327, April.
    11. Metin Çakanyıldırım & Robin O. Roundy & Samuel C. Wood, 2004. "Optimal machine capacity expansions with nested limitations under stochastic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(2), pages 217-241, March.
    12. Woonghee Tim Huh & Robin O. Roundy, 2005. "A continuous‐time strategic capacity planning model," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(4), pages 329-343, June.
    13. James Luedtke & George L. Nemhauser, 2009. "Strategic Planning with Start-Time Dependent Variable Costs," Operations Research, INFORMS, vol. 57(5), pages 1250-1261, October.
    14. Lee, Chia-Yen & Charles, Vincent, 2022. "A robust capacity expansion integrating the perspectives of marginal productivity and capacity regret," European Journal of Operational Research, Elsevier, vol. 296(2), pages 557-569.
    15. Jakubovskis, Aldis, 2017. "Flexible production resources and capacity utilization rates: A robust optimization perspective," International Journal of Production Economics, Elsevier, vol. 189(C), pages 77-85.
    16. Giovanni Pantuso & Kjetil Fagerholt & Stein W. Wallace, 2016. "Uncertainty in Fleet Renewal: A Case from Maritime Transportation," Transportation Science, INFORMS, vol. 50(2), pages 390-407, May.
    17. Jodlbauer, Herbert & Altendorfer, Klaus, 2010. "Trade-off between capacity invested and inventory needed," European Journal of Operational Research, Elsevier, vol. 203(1), pages 118-133, May.
    18. Bricha, Naji & Nourelfath, Mustapha, 2014. "Extra-capacity versus protection for supply networks under attack," Reliability Engineering and System Safety, Elsevier, vol. 131(C), pages 185-196.
    19. Bennett, Derek P. & Yano, Candace A., 2004. "A decomposition approach for an equipment selection and multiple product routing problem incorporating environmental factors," European Journal of Operational Research, Elsevier, vol. 156(3), pages 643-664, August.
    20. Julka, Nirupam & Baines, Tim & Tjahjono, Benny & Lendermann, Peter & Vitanov, Val, 2007. "A review of multi-factor capacity expansion models for manufacturing plants: Searching for a holistic decision aid," International Journal of Production Economics, Elsevier, vol. 106(2), pages 607-621, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:153:y:2014:i:c:p:66-85. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.