Planning for idle time: A rationale for underutilization of capacity

This paper presents an argument that since the proportion of product cost which represents direct labour is diminishing and the material content cost is increasing, western firms are shifting their production management paradigm from one of maximizing the utilization of capacity to one of minimizing the need for inventory. With this shift in management emphasis is coming the acceptance of unavoidable idle time at some work stations. This paper presents a mixed integer linear programming formulation which optimizes the sequence of jobs through a single facility and which places the correct amount of idle time between jobs to minimize the sum of earliness and tardimess penalties. Although this formulation reaches an optimal solution in every instance, the computation time required was found to grow in an exponential manner as the number of jobs considered increased. Given the cost of computing at present, there appears to be a need for more computationally efficient heuristics to solve this problem.