Decision biases in the capacity expansion problems with product importance perceptions Online publication date: Tue, 04-Jul-2023
by Giteak Roh; Seongam Moon; Kyunghwan Choi
International Journal of Applied Decision Sciences (IJADS), Vol. 16, No. 4, 2023
Abstract: Capacity expansion is one of the vital areas of decision-making in production management and its sustainability. Most quantitative studies on capacity expansion have been focused on computing the optimal times or sizes. In this paper, we investigate the effect of substantial and nominal importance on the capacity expansion decision-making through online experiments. We provide three results for capacity expansion decision-making. First, both substantial and nominal importance perceptions have an effect on capacity expansion decision-making. Second, capacity expansion experiments also show the analogical results of Schweitzer and Cachon's (2000) study, the pull-to-centre effect regardless of high or low margins. Third, the nominal importance effect at low margins affects capacity expansion decision-making, but not at high margins. Our study gives implications that bounded rationality also occurs in capacity expansion decisions, so it must be analysed with mathematical models to ensure more reasonable results.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Applied Decision Sciences (IJADS):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook