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Case from journal
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Reference no. OMER1-1LA1
Authors:
Published by:
NeilsonJournals Publishing (2005)
 
in "Operations Management Education Review"
Length:
9 pages
Data source:
Published sources

Abstract

A key contribution of OR (operations research) / MS (management sciences) models is to gain insights into trade-offs facing operations managers. One such trade-off involves capacity, inventory, and variability: while the firm would like to tolerate high levels of variability and run at full capacity utilisation with virtually no inventory, this is not plausible. The standard G/G/1 queueing model is used to illustrate and gain insight into the trade-off between these three competing goals. In cases where better information can be used to reduce the variability in services or in arrivals, this insight can be expressed as an inter-relationship between capacity, inventory, and the third parameter of information (rather than variability). Adopting the terminology of Lovejoy (1998), this inter-relationship is referred to as the OM triangle. As discussed herein, it is the manager?s job to find her firm?s optimal position with regard to the OM triangle. This paper has been peer reviewed by the editorial board of the Operations Management Education Review - OMER.

Topics

Queueing theory; Capacity; Inventory; Waiting time; Lead time; Information; Trade-off

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