I’ve heard “just under $1B” thrown around as the ballpark figure for the minimum standalone paper towel plant – that’s of course penny pinching private sector figures, I can hardly imagine a Massachusetts town attempting to procure one. – To give an order of magnitude, a paper machine runs ~$500M, the plant and utilities around it add another 250M. printer paper plants can’t really be converted to absorbent paper plants) since the whole machine is designed for one kind of paper – Paper making is incredibly capital intensive, and most of the assets can’t be repurposed easily (i.e. Since I feel like this blog might attract the kind of reader interested in the longer version, here it is: – Knowing that the installed capacity actually far exceeds the typical needs, the best guess is that something upstream in the supply chain is constraining it – It’s actually surisingly hard to add meaningful paper making capacity in a short time What likely happened in this case is that the management got so greedy that they intentionally eliminated the extra process capacity to increase short-term profits. I can readily agree that the finished good inventory buffer couldn’t handle the unexpected level of customer demand, but the process should never have been designed to operate at 100% capacity.
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You also create a buffer of finished inventory to deal with variability in customer demand. You intentionally build-in process surge capacity to meet variability in demand and/or handle unexpected process downtime due to issues such as unplanned equipment failures, etc. One of the very basic principles of lean manufacturing is that you NEVER operate a process at 100% capacity.
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I saw it done incorrectly all the time by self- serving management. The article should have be titled… “Blame incompetently implemented lean manufacturing” or more likely “Blame greed.” The reporter that wrote that article was an idiot.