Multi-Plant Configuration With Component Commonality

We compare the benefits and costs of two alternative manufacturing network configurations inthe presence of component commonality. We evaluate the trade-off between the decreasedlogistics costs and loss of risk-pooling benefits in plant networks which consolidate allcomponent manufacturing within one plant (Product Network) as compared to those that do not(Process Network). We examine conditions when a Product Network may be chosen over aProcess Network and vice- versa. We find that the risk pooling benefit provided by consolidatingcommon subassembly production under one roof is reduced when the cost of acquiring commoncomponent capacity is sufficiently high or low.[...]