Manufacturing Capacity as a Commodity


Excess capacity in an automobile plant at Ford, Chrysler, Toyota, GM, and Honda is a commodity and those who study finite capacity scheduling modules can readily see the possibilities for increased production and that means profit. Einstein said time is relative, that is true, time is relative, manipulating commodity theoretical models allows companies to see thru time and keep costs and purchases on an even keel without the problems of relative time. Thus the commodity can be simplified to price/cost models. The commodity is still relative to fluctuations in currency, weather, and supply and demand. There is no reason a company like Ford cannot take those plants, which have closed and use them to make something else. Instead, they ran their plants at maximum capacity or close to it, and built lots of cars, which are now in the dealers or on their way to the dealers and there is no need to run the plants now sense there are enough cars built. If the cars become scarce, then the price goes up. As with anything; supply and demand. Are cars a commodity? It appears they are, but more so the time in the excess capacity in the factories is the real commodity although from a purely conceptual standpoint, both the time and the cars are commodities.

Excess capacity also occurs in many other industries, such as electricity, water, oil, mainframe time, bandwidth, etc. When deregulation came to the California energy market we saw an interesting thing occur. People would buy blocks of kilowatt-hours from the existing energy companies who made electricity. They had to make this available to anyone. So entrepreneurs Bought lots of it and then they sold it to others wishing to buy it. Commodity theory is fun to study, because it is everywhere in our civilization, think about it.

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs