Article ID: | iaor20041903 |
Country: | United States |
Volume: | 49 |
Issue: | 07 |
Start Page Number: | 907 |
End Page Number: | 919 |
Publication Date: | Jul 2003 |
Journal: | Management Science |
Authors: | Graves Stephen C., Tomlin Brian T. |
Keywords: | decision: applications, decision theory |
Process flexibility, whereby a production facility can produce multiple products, is a critical design consideration in multiproduct supply chains facing uncertain demand. The challenge is to determine a cost-effective flexibility configuration that is able to meet the demand with high likelihood. In this paper, we present a framework for analyzing the benefits from flexibility in multistage supply chains. We find two phenomena, stage-spanning bottlenecks and floating bottlenecks, neither of which are present in single-stage supply chains, which reduce the effectiveness of a flexibility configuration. We develop a flexibility measure