Scope versus focus: Issues of flexibility, capacity, and number of production facilities

How should a multi-product manufacturing firm design production facilities? How many facilities should it have? How many and which products should be assigned to each facility? What batch sizes/scheduling rules are appropriate for facilities making more than one product? These are questions that have become more relevant now as advances in manufacturing technologies offer an increasing array of equipment choices. In this article, we introduce models that can help operations managers answer the above questions. For a specific product mix, these models lead to explicit expressions for the number of facilities, the number of products assigned to each facility and their corresponding capacities. We evaluate the effect of different operating parameters and scheduling policies on the optimality of different configurations. In particular, we show that the choice of the scheduling and batch sizing policies can have a significant effect on the nature of the optimal mix of flexible and dedicated facilities as well the size of these facilities.