On range and response : dimensions of process flexibility

• Main Authors: Chou, Mabel C., Chua, Geoffrey Ang, Teo, Chung-Piaw
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Operations management
• Online Access: https://hdl.handle.net/10356/79410; http://hdl.handle.net/10220/25588
• Institution: Nanyang Technological University

There are two dimensions to process flexibility: range versus response. Range is the extent to which a system can adapt, while response is the rate at which the system can adapt. Although both dimensions are important, the existing literature does not analytically examine the response dimension vis-a-vis the range dimension. In this paper, we model the response dimension in terms of uniformity of production cost. We distinguish between primary and secondary production where the latter is more expensive. We examine how the range and response dimension interact to affect the performance of the process flexible structure. We provide analytical lower bounds to show that under all scenarios on response flexibility, moderate form of range flexibility (via chaining structure) still manages to accrue non-negligible benefits vis-a-vis the fully flexible structure (the bound is 29.29% when demand is normally distributed). We show further that given limited resources, upgrading system response dimension outperforms upgrading system range dimension in most cases. This confirms what most managers believe in intuitively. We observe also that improving system response can provide even more benefits when coupled with initiatives to reduce demand variability. This is in direct contrast with range flexibility, which is more valuable when the system has higher variability.