A Model for Cost-Benefit Analysis of Production Ramp-up Strategies

Abstract

Production ramp-up is a critical step in product life cycle as it could lead to either success or failure of product introduction into the market. The criticality of this step is owed to several factors including the uncertainty underlying this step regarding both expected costs and benefits, and thus to the complexity of decision-making. In order to enlighten decision makers particularly in multi-variant production contexts, this paper elaborates on an analytical model supporting cost-benefit analysis of production ramp-up strategies. The model takes into account capacity planning decisions and learning curves in determining cost-benefit estimates. The model is illustrated and discussed through a keyrings manufacturing process.