Congestion and Complexity Costs in a Plant with Fixed Resources that Strives to Make Schedule

In a firm that makes schedule, orders are always processed within a fixed time frame. In a congested facility, such a situation would be impossible using conventional queuing logic. We propose a conceptual model of a firm in which workers make schedule by rushing jobs, if necessary, with potential quality consequences. Hence, time and quality are substitutes, a feature that we recognize explicitly in our definition of the firm's capacity. Production yields are not exogenous parameters but endogenously determined by workers responding to schedule pressures. The plant manager can authorize overtime to relieve this pressure or live with the quality consequences of rushing. The model reveals the close relationships among the firm's workforce policies, the integrity of the inspection system, and the cost performance of the firmas its volume and/or product line expands. We consider pure congestion (driven by volume) and pure complexity (driven by product line breadth) effects in the context of our plant performance model. We consider two root causes of complexity costs: time and quality. The time effects of complexity will only have cost consequences in congested facilities, but quality effects are always present. Also in contrast to time effects, quality effects of complexity can be present in nonbottleneck workstations. Hence, the quality consequences of complexity can be as, or more important than the time consequences.