Capacity Restrictions

  Several studies have reported that capacitated supply chains may benefit from an improved dynamic performance as compared to unconstrained ones. This occurs as a consequence of the capacity limit acting as a production smoothing filter.Under these circumstances, the experiments show that there is a negative effect of capacity constraints on supply chain performance, both in terms of process efficiency (internal) and customer satisfaction (external). Nonetheless, the magnitude of this impact greatly depends on the responsiveness of the firm, market conditions and adopted policies for inventory management. More specifically, the combination of tight capacity restrictions and low responsiveness significantly contributes to decrease supply chain performance, which may be very damaging for the dynamic behavior of the system.