Zero-order production planning models with stochastic demand and workload-dependent lead times

Abstract

We present three different formulations of a simple production planning problem that treat workload-dependent lead times, limited capacity and stochastic demand in an integrated fashion. We compare chance-constrained models, two-stage stochastic programming and robust optimisation using computational experiments. Our results show that the robust optimisation approach is promising, but all the different models face different but challenging issues in addressing this complex problem. We also conclude that successful approximations to this difficult problem with the potential for practical implementation can be developed.

Keywords:

• production planning
• clearing functions
• workload-dependent lead times
• stochastic programming
• chance constraints
• robust optimisation

Acknowledgements

The opinions expressed in the paper are those of the authors and do not represent the views of the National Science Foundation.

Funding

The research of Reha Uzsoy was supported by the National Science Foundation under grant number [1029706].