Main Article Content
Abstract
This research addresses the problem of capacity expansion, i.e, to formuate a long term capacity expansion model that considered inventory policy to anticipate the capacity shortage. The model covers the quantity of added capacity and the inventory policy. In the model, the quantity of added capacity was represented by time interval of demand fulfillment, while the inventory policy was represented by inventory parameter. The model was optimized by first derivative. Optimal condition and the behaviour of the model are compared with both Hayes and Wheelwright [1984] and Siregar [1997] models.
Key words: long term capacity expansion, model, inventory policy.