Mathematical Problems in Engineering
Volume 1 (1995), Issue 4, Pages 341-363
doi:10.1155/S1024123X95000202

Economic analysis of production bottlenecks

Stephen R. Lawrence1 and Arnold H. Buss2

1College of Business and Administration, University of Colorado, Boulder 80309-0419, CO, USA
2Operations Research Department, Naval Postgraduate School, Monterey 93943-5000, CA, USA

Received 7 February 1995

Copyright © 1995 Stephen R. Lawrence and Arnold H. Buss. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The management of bottlenecks has become a central topic in the planning and control of production systems. In this paper, we critically analyze bottlenecks from an economic perspective. Using a queueing network model, we demonstrate that bottlenecks are inevitable when there are differences in job arrival rates, processing rates, or costs of productive resources. These differences naturally lead to the creation of bottlenecks both for facilities design and demand planning problems. To evaluate bottlenecks from an economic perspective, we develop the notion of an “economic bottleneck,” which defines resources as bottlenecks based on economic, rather than physical, characteristics.