Long-term Capacity Planning in Die Manufacturing Using the Estimated Product Cost: An Exploratory Research

The tool manufacturing industry is constantly facing the challenge of producing qualitative products while reducing costs. The challenge is increased partly due to the uniqueness of the products and partly due to the architecture of the production facilities. Nowadays tools and dies are still being produced in job-shop environments due to the complexity and high variance of the products. In such a production facility capacity planning is of vital importance as scarce resources need to be cleverly managed in order to obtain a high utilization. However, with unique parts all required processes cannot be fully determined in advance and consequently, in practice, only the estimated cost of the products is used in order to determine the amount of work required to produce them. As a result, the earlier the cost of production for the product can be determined, the better can the long-term investments in production capacity be planned in the job-shop. For this purpose numerous cost estimation techniques have been developed during the past years. From simple parametric methods to complex feature- and case-based cost estimation techniques, the literature is rich with theoretical information intended to address this problem. However, researchers’ access to real cost data is almost inexistent as companies are understandably reluctant to release cost information externally. This article aims at revealing the connection between long term capacity planning and the estimated product cost. A secondary aim is investigating to what extent developed cost estimation methods have-been tested with real cost information and furthermore review how accurate they have been established to be. First, an overview of cost estimation as well as a description of various methods will be presented along with an insight into the accuracy of such methods in practice. Secondly, the basics of long-term capacity planning are approached by the paper followed by a discussion of the connection between the two different research foci based on interviews with industry experts.