Title: Improving productive potential in the airline industry by exploring the productive limits of capacity

Authors: C.J. McNair, Ted Watts, Vicki Baard, Lidija Polutnik

Addresses: Department of Management, US Coast Guard Academy, New London, CT 06320, USA. ' School of Accounting and Finance, University of Wollongong, Wollongong NSW 2522, Australia. ' Department of Accounting and Finance, Macquarie University, North Ryde, NSW 2109, Australia. ' Division of Economics, Babson College, Babson Park, MA 02457-0310, USA

Abstract: This paper fills the gap between defining and measuring the productive limits of a service or system and the impact of various assumptions about the productive potential of the nature and informativeness of capacity cost management systems for the service industry. The focus rests on the various ways in which multidimensional limits (for example, time, space, volume and/or value-creating ability) can be used to define productive capacity. This research suggests that the limits used in establishing the capacity cost management system restricts the amount and nature of the information the system is capable of providing to management. The methodology used was a combination of analytics and qualitative field research. The outcome is the identification of capacity systems specifically suited for service operations. Such a framework allows the organisation to develop economies, make visible the drivers of waste and productivity and to identify the primary assumptions and implications of capacity limits.

Keywords: capacity management; capacity models; capacity measurement; service industry; airline industry; productive potential; productive limits; critical issues; capacity cost management; waste.

DOI: 10.1504/IJCA.2010.036177

International Journal of Critical Accounting, 2010 Vol.2 No.4, pp.372 - 398

Published online: 27 Oct 2010 *

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