Measurable economic consequences of investments in flexible capacity

Investments in flexible capacities are large. It is not surprising that a solid economic infrastructure is a precondition. From the strategic prospective the structural support will rest on qualitative grounds. Yet, the central problem posed in the present article is how the economic consequences of investments in flexible capacities can actually be measured. It is worked out in three steps. To begin with, the Just-In-Time concept is placed in an integral framework of goods-flow control. This is essential because it will be found that, without this analysis, there is a danger that the estimate of the positive effects will be too optimistic. Subsequently, a concrete production situation is introduced. Lastly, for the selected production situation, the concrete economic consequences of a flexible capacity investment will be examined. The present starting point is that the investment will in fact lead to an adjustment of the logistics concept. For that reason, the maximum Just-In-Time advantages can be realised. At the same time the possible misrepresentation resulting from ‘traditional’ costs calculation will be examined.