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Short- and Long-run Plant Capacity Notions: Definitions and Comparison

Author

Listed:
  • Giovanni Cesaroni

    (Department for local development, Prime Minister’s Office, Rome, Italy)

  • Kristiaan Kerstens

    (CNRS-LEM and IESEG School of Management)

  • Ignace Van de Woestyne

    (KU Leuven, Belgium)

Abstract

Starting from the existing input- and output-oriented plant capacity measures, this contribution proposes new long-run input- and output-oriented plant capacity measures. While the former leave fixed inputs unchanged, the latter allow for changes in all input dimensions to gauge either a maximal plant capacity output or a minimal input combination at which non-zero production starts. We also establish a formal relation between the existing short-run and the new long-run plant capacity measures. Furthermore, for a standard nonparametric frontier technology, all linear programs as well as their variations are specified to compute all efficiency measures defining these short- and long-run plant capacity concepts. Furthermore, it is shown how the new long run plant capacity measures are identical to existing models of a variable returns to scale technology without inputs or without outputs (see Lovell and Pastor (1999)): thus, we offer an interesting production economic justification for these models. Finally, we numerically illustrate this basic relationship between these short-run and long-run technical concepts of capacity utilization

Suggested Citation

  • Giovanni Cesaroni & Kristiaan Kerstens & Ignace Van de Woestyne, 2017. "Short- and Long-run Plant Capacity Notions: Definitions and Comparison," Working Papers 2017-EQM-04, IESEG School of Management.
    • Handle: RePEc:ies:wpaper:e201704
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    Cited by:

    1. Yao-yao Song & Xian-tong Ren & Guo-liang Yang, 2023. "Capacity utilization change over time," Journal of Productivity Analysis, Springer, vol. 59(1), pages 61-78, February.
    2. Kristiaan Kerstens & Jafar Sadeghi & Ignace Van de Woestyne, 2020. "Plant capacity notions in a non-parametric framework: a brief review and new graph or non-oriented plant capacities," Annals of Operations Research, Springer, vol. 288(2), pages 837-860, May.
    3. Kristiaan Kerstens & Jafar Sadeghi & Ignace Van de Woestyne, 2019. "Plant Capacity and Attainability: Exploration and Remedies," Operations Research, INFORMS, vol. 67(4), pages 1135-1149, July.
    4. Chen, Zhenling & Zhang, Xiaoling & Ni, Guohua, 2020. "Decomposing capacity utilization under carbon dioxide emissions reduction constraints in data envelopment analysis: An application to Chinese regions," Energy Policy, Elsevier, vol. 139(C).
    5. Tao, Xiangyang & An, Qingxian & Goh, Mark, 2024. "Plant capacity utilization with piecewise Cobb-Douglas technology: Definition and interpretation," European Journal of Operational Research, Elsevier, vol. 316(3), pages 1034-1043.
    6. Yang, Jiawei & Li, Yuanyu & Fang, Lei, 2023. "Financing capacity planning with environmental considerations: A non-parametric analysis," Omega, Elsevier, vol. 118(C).
    7. Kristiaan Kerstens & Jafar Sadeghi & Ignace Woestyne & Linjia Zhang, 2024. "Correction to: Malmquist productivity indices and plant capacity utilisation: new proposals and empirical application," Annals of Operations Research, Springer, vol. 332(1), pages 1187-1187, January.
    8. Zhuo-wan Liu & Tomas Balezentis & Yao-yao Song & Guo-liang Yang, 2019. "Estimating Capacity Utilization of Chinese State Farms," Sustainability, MDPI, vol. 11(18), pages 1-29, September.
    9. Joseph Alfred M. Reyroso & Venus C. Ibarra, 2023. "The Influence Of Contextual Factors Of Management Accounting Practices: Evidence From Sme’S In The Philippines," Malaysian E Commerce Journal (MECJ), Zibeline International Publishing, vol. 7(2), pages 123-127, December.
    10. Song, Malin & Zhou, Wenzhuo & Upadhyay, Arvind & Shen, Zhiyang, 2023. "Evaluating hospital performance with plant capacity utilization and machine learning," Journal of Business Research, Elsevier, vol. 159(C).
    11. Cui, Yuan & Ren, Xian-tong & He, Xi-jie & Yang, Guo-liang, 2023. "Is human and financial investment in Chinese universities effective?," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    12. Kristiaan Kerstens & Jafar Sadeghi, 2021. "Plant Capacity Notions: Existence Results at Firm and Industry Levels," Working Papers 2021-EQM-04, IESEG School of Management.
    13. Kerstens, Kristiaan & Sadeghi, Jafar & Van de Woestyne, Ignace, 2019. "Convex and nonconvex input-oriented technical and economic capacity measures: An empirical comparison," European Journal of Operational Research, Elsevier, vol. 276(2), pages 699-709.
    14. Kristiaan KERSTENS & Xiaoqing CHEN, 2022. "Evaluating Horizontal Mergers in Swedish District Courts Using Plant Capacity Concepts: With a Focus on Nonconvexity," Working Papers 2022-EQM-02, IESEG School of Management.
    15. Kristiaan Kerstens & Jafar Sadeghi & Ignace Woestyne & John Walden, 2024. "Short-run Johansen frontier-based industry models: methodological refinements and empirical illustration on fisheries," Journal of Productivity Analysis, Springer, vol. 61(1), pages 47-62, February.
    16. Kristiaan Kerstens & Jafar Sadeghi & Xiangyang Tao, 2025. "Nonradial plant capacity concepts: proposals and attainability," Annals of Operations Research, Springer, vol. 345(1), pages 169-205, February.
    17. Kerstens, Kristiaan & Shen, Zhiyang, 2021. "Using COVID-19 mortality to select among hospital plant capacity models: An exploratory empirical application to Hubei province," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    18. Fukuyama, Hirofumi & Song, Yao-yao & Ren, Xian-tong & Yang, Guo-liang, 2022. "Using a novel DEA-based model to investigate capacity utilization of Chinese firms," Omega, Elsevier, vol. 106(C).
    19. Mohieddine Rahmouni, 2021. "Determinants of capacity utilisation by firms in developing countries: evidence from Tunisia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 13(3), pages 212-245.
    20. Ray, Subhash C. & Walden, John & Chen, Lei, 2021. "Economic measures of capacity utilization: A nonparametric short-run cost function analysis," European Journal of Operational Research, Elsevier, vol. 293(1), pages 375-387.
    21. Kristiaan Kerstens & Jafar Sadeghi, 2024. "Plant capacity notions: review, new definitions, and existence results at firm and industry levels," International Journal of Production Research, Taylor & Francis Journals, vol. 62(3), pages 1017-1040, February.

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