Abstract
This paper presents a theoretical approach to optimum capacity planning under growing demand condition.It is assumed that all demand growth should be fulfilled by increased production capaciry, which acquiring cost contains a scale economy factor. A larger capacity accompanies a lower investment cost per unit as well as longer intervals between the subsequent investments required to cover the growing demand. On the other hand, a larger capacity requires a longer time before reaching its full capacity utilization. This paper explains the structure of this trade-off problem and shows how to find the optimum solution through a mathematical analysis of the problem.
