Trade‐offs between multiskilling and inventory in assembly line operations under demand variability

Abstract

The demand variability in case of assembly line operations can be absorbed either by multi‐skilling of operators on the line, empowering them to handle a wider mix of work‐elements or by holding finished goods inventory. This paper examines trade‐offs between these two groups of policies by developing a simulation‐based model. Four policies are evaluated and their cost implications examined to enable decision makers to choose the best policy depending upon the situation specific parameters. A case study to illustrate the proposed model is presented and results are found to be insightful. A methodology to identify training needs in case of multi‐skilling is also developed.

Two perspectives on multiskilling and product-market volatility

“…Garg, et al (2002) come closest to our interpretation of the benefits of multiskilling by arguing that the practice gives firms increased flexibility in responding to demand variability. In Garg, et al, firms…”

Strategic Shirking: A Theoretical Analysis of Multitasking and Specialization

“…6 In the definitions provided in Lazear (1998) on page 445, multiskilling means that workers are capable of doing multiple tasks, even if they are not called upon regularly to execute those tasks, whereas multitasking means the workers are called upon to perform the tasks with some regularity. 7 Although these productivity advantages are well known, the literature often considers the main return to specialization to be lower training costs (e.g., Carmichael and MacLeod, 1993;Garg et al, 2002;Morita, 2005). Studies that incorporate productivity gains to specialization are Cosgel and Miceli (1999), Lindbeck and Snower (2000), Dessein and Santos (2006), Boucekkine and Crifo (2008), and DeVaro and Farnham (2011).…”

“…In period 1, it equals 1. In 9 Other advantages of multiskilling and broad job design that have been discussed in the literature include flexibility in labor allocation to respond to changing production requirements or product demand (e.g., Garg et al, 2002;DeVaro and Farnham, 2011), increased coordination within the firm (e.g., Hart and Moore, 2005;Dessein and Santos, 2006;Kato and Owan, 2011), improved communication within the firm (e.g., Aoki, 1986;Morita, 2001Morita, , 2005, and productivity gains from task complementarities and contributions to training (e.g., Boucekkine and Crifo, 2008). 10 MacDonald and Marx (2001) explicitly assume a complementarity, whereby output is produced only when the agent achieves success on both tasks.…”

Capacity planning with working time accounts in services

“…In deterministic cases, we assume perfect knowledge of demand, whose values are used to determine the capacity required over the course of the chosen planning horizon. Stochastic cases allow us to draw a distinction: (i) we assume that future demand may correspond to a finite number of scenarios with a known probability (Garg et al, 2002;Lusa et al, 2006); and (ii) we assume that the law of probability of demand is known for each period in the planning horizon (Pinker and Larson, 2003). Since inventories cannot be stored in the service industry, it would seem that capacity and demand should ideally coincide at all times.…”