Modelling capacity-based economies and diseconomies of scope in production planning

In this dissertation we consider capacity-based economies and diseconomies of scope, which are relevant to strategic, tactical, and operational decisions that concern operations managers. Drawing from the operations management and economics literature, we extend some well-known operations models and develop two generalized models that capture (dis)economies of scope with nonlinear 0-1 functions. These models can be used to investigate (dis)economies of scope arising from interactions among product types such as an analysis of the loading of tools for a combination of different product types to be produced in a flexible-manufacturing cell. We further develop a specialized model that captures the economies and diseconomies of scope that arise as a function of the number of different items produced at a facility. This latter model is appropriate, for example, in the study of the effects of focused manufacturing.; The presentation of each model includes a review of the relevant literature, mathematical programming formulations, a discussion of the model's theoretical properties, solution techniques, and a computational study. We use the theoretical properties of the models to develop and enhance the solution procedures for each model. Each of the models presented in this dissertation has a tabu-search heuristic procedure and a branch-and-bound exact solution algorithm. These solution procedures exploit the structure of each model and utilize innovative techniques to find solutions with modest computational effort. The computational studies are designed to examine the difficulty of problem instances across a set of varying problem parameters. The studies also show the effectiveness of the solution techniques as they are applied to several classes of problem instances. In particular, we see the tabu-search heuristics for each model find high-quality solutions across the different problem classes, and the branch-and-bound algorithms are effective in solving reasonably-sized problems to optimality.