Quotation Francas, David, Löhndorf, Nils, Minner, Stefan. 2011. Machine and Labor Flexibility in Manufacturing Networks. International Journal of Production Economics 131 (1): 165-174.




Many industrial companies today operate under strict employment legislation and work agreements. Since flexible capacity has been widely recognized as an important hedge against uncertain demand, there exist strong efforts to introduce more flexible workforce models. In this paper, we investigate the benefits of such labor flexibility and its interplay with machine flexibility from a network capacity investment perspective. We consider a firm that has to invest simultaneously in labor and machine capacity under uncertain demand and a given network configuration while anticipating the deployment of labor flexibility after demand has been realized. Instruments of labor flexibility range from temporary employment to personnel transfers between plants. The underlying decision problem is formulated as a two-stage stochastic program with recourse. Based on numerical studies and the analysis of a stylized model, we demonstrate the impact of labor flexibility on the optimal levels of machine and labor capacity. We compare the benefits obtained by personnel transfers with those of temporary workers and find that temporary employment always decreases the number of permanent workers, while personnel transfers may even allow for a larger workforce. Our results further indicate that personnel transfers are more effective in larger manufacturing networks although these benefits are decreasing when most plants in the network are capable of producing more than one product (machine flexibility). Finally, we present evidence for the efficiency of a combined usage of personnel transfers and temporary workers.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal International Journal of Production Economics
Citation Index SCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, STRAT-B, VW-B, WH-B
Language English
Title Machine and Labor Flexibility in Manufacturing Networks
Volume 131
Number 1
Year 2011
Page from 165
Page to 174
Reviewed? Y
URL http://dx.doi.org/10.1016/j.ijpe.2010.03.014


Löhndorf, Nils (Former researcher)
Francas, David (Universität Mannheim, Germany)
Minner, Stefan (Technische Universität München, Germany)
Institute for Production Management (Taudes) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
1121 Operations research (Details)
5300 Economics (Details)
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