Entropy as a measure of operational flexibility

As competition among firms is being based more and more on the level of service, there is a great interest in using a measure of flexibility to indicate a firm's capability to respond to customer demands. Entropy is proposed as a measure of flexibility for manufacturing operations. The properties of entropy that make it a suitable measure of flexibility are outlined. A computer simulation of a job shop was used to test the measure through a number of different scenarios using a discrete-event stochastic simulator. Results showed that entropy succeeded in measuring flexibility when the relative demand for the fabrication of products changed. Entropy was also used to monitor process flexibility as time progressed.