| Abstract: | ![]()
We test the situational impact of two types of resource flexibility, machine flexibility and labor flexibility, in a material requirements planning (MRP)-driven production system. Machine flexibility has not been treated in prior multistage research, only labor flexibility. Machine flexibility is closely related to a plant's positioning strategy. A process-focused plant opts for considerable machine flexibility by choosing general-purpose equipment. Resource flexibility, if effective, can be an attractive alternative to two other types of buffers, inflated inventories and costly capacity cushions. Our simulation results, using factor settings established earlier by a panel of managers, show that resource flexibility is indeed an effective buffer against uncertainties such as end-item demand variability, capacity bottlenecks, equipment failures, and yield losses. Machine flexibility is especially helpful in environments characterized by high uncertainties, tight capacities, and large lot sizes. Worker flexibility has a similar, but less dramatic, impact. Benefits are most striking with customer service, rather than with inventory or labor productivity. Finally, we show that simultaneous introduction of both machine and labor flexibility yields only marginal improvements over either kind of flexibility alone. |
