5. Adding Capacity to the Model

In the previous models, we did not consider capacity. Each facility could be as large as it needed to be to service the demand assigned to it. This may not always be a good assumption. In this chapter, we want to consider how capacity impacts our network design models.

Even though every facility in a supply chain has capacity limitations, you often do not need to include those limitations in the model. The main reason to omit capacity from your model is that it doesn’t impact the decision you are trying to make. The following are reasons that capacity may not impact your decision.

First, when you ask the model to open multiple facilities, it will naturally tend to balance the demand across the facilities to minimize ...

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