Abstract
Traditionally, a fixed unit price is applied in examining capacity planning. However, using a fixed price to predict capacity requirements may not be appropriate for practical problems. The unit price will be varied due to the difference between quantity supplied and demanded, the market competition, and the consumer’s behavior. Also, different unit prices will affect the quantity demanded since increasing the unit price will decrease the quantity demanded. In this research, we examine the capacity requirements in multiple periods with Walrasian price adjustment constraints. A mathematical model is presented and the results indicate that industries might increase the unit price to reduce machine and inventory costs.
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