Framework to decide for an expansion strategy of a small scale continuously operated modular multi-product plant

Abstract

Continuously operated multi-product plants enable an efficient and flexible production of new products. As a future plant concept, a modular design allows the possibility of a stepwise capacity expansion when market demand is increasing. Choosing the right plant capacity combined with a suitable expansion strategy is a key challenge in this context. Therefore, additional costs for expansion have to be balanced against an achievable economic performance and a reduction of investment risk.In this work a framework to evaluate the production capacity of a continuously operated modular multi-product production line for a production line wise capacity expansion will be presented. As a result, a decision tree analysis integrating production planning by a capacitated lot sizing method is introduced to evaluate the economic performance of plants with different capacities in an uncertain market. The framework is applied for a case study considering a continuous production of a set of three different products. As a key result it can be said that the investment risk can be reduced by applying smaller scale modular production lines. However, the low scalability of investment costs of a small scale production line negatively affects an economic expansion strategy.