Definition: A common question in network design is what size of facility do I require or conversely, I have a facility can I model its size as a constraint?
Discussion: All network design models rely on flow of material as its variable feature. Any type of facility size or inventory size must be related to this flow. The square root rule and others say that space and inventory increase with the number of facilities and the flow through a facility.
Modeling: The challenge to a modeler is to put this into a mathematical relationship for their business. An example would be:
[Space Required] = a + b * [FLOW]^c (where a, b, and c are coefficients that are derived from the business)
Lets say a facility for a business has a minimum required space of 50,000 square feet and the size (or inventory space) goes up by 10,000 square feet for every 100,000 units shipped.
a= 50,000
b=10,000 / 100,000 = 0.1
And lets say a particular facility only has 100,000 square feet.
[Space Required= 100,000 = 50,000 + 0.1 * [FLOW]
[FLOW] = 500,000 and therefore the constraint is 500,000 units/period
Read more about constraints: https://starboardcorp.freshdesk.com/a/solutions/articles/47001211890