Stochastic modeling and optimization of multi-plant capacity planning problem

Authors

Anoop Verma, Wayne State UniversityFollow
Nagesh Shukla, University of WollongongFollow
S.K Tyagi, The Hong Kong Polytechnic University
Nishikant Mishra, Aberystwyth University

RIS ID

95913

Publication Details

Verma, A., Shuklal, N., Tyagi, S. & Mishra, N. (2014). Stochastic modeling and optimization of multi-plant capacity planning problem. International Journal of Intelligent Engineering Informatics, 2 (2 & 3), 139-165.

Abstract

n this paper the problem of capacity planning under risk from demand and price/cost uncertainty of the finished products is addressed. The deterministic model is extended into a two-stage stochastic model with fixed recourse by means of various expected levels of demand as random. A recourse penalty is also included in the objective for both shortage and surplus in the finished products. The model is analyzed to quantify the risk using Markowitz mean-variance model.