ABSTRACT
This chapter examines issues related to investments in flexible technology in the context of a firm manufacturing two families of products. It describes the capacity planning problem in detail and discusses two alternative formulations. The chapter focuses on solution procedures and on the derivation of bounds on the performance of the heuristics. It discusses the scope of the model and its extensions to address related issues. The chapter also focuses on the MCP formulation and examines two related sub problems for generating approximate solutions. It deals with the choice of technology and additions of capacity to meet the demand for each family. The chapter develops a capacity expansion plan to satisfy the forecast demand over a finite planning horizon. In developing such a plan, the firm has to evaluate alternative technologies and specify the amount of capacity additions of each type in each period.
