Title: A scenario approach for a capacity planning problem with stochastic demands

Authors: Aman Isaac Ettien, Nejib Ben Hadj-Alouane, Atidel Boubaker Hadj-Alouane

Addresses: National School of Engineers of Tunis, B.P. 37 Le Belvedere, 1002, Tunis, Tunisia. ' National School of Information Sciences, University of Manouba, 2010 Manouba, Tunisia. ' National School of Engineers of Tunis, B.P. 37 Le Belvedere, 1002, Tunis, Tunisia

Abstract: A scenario-based approach to solving a multiproduct and stochastic capacity-planning problem, is presented. This approach is a flexible management tool for strategic decision-makers to optimise, over a given planning horizon, and under uncertain demand, capacity-planning strategies. It is applicable in situations where different products can be produced, stored, and distributed to different sites having flexible capacities, and with multiple technological choices. It works by attempting to strike a compromise between profit and risk, and by analysing a set of feasible strategies, derived under specific demand scenarios, using the notion of confidence intervals.

Keywords: capacity planning; scenario; stochastic demands; risk; profit; logistics; optimisation; strategic decision making; flexible capacities; multiple technological choices; confidence intervals.

DOI: 10.1504/IJLSM.2007.011820

International Journal of Logistics Systems and Management, 2007 Vol.3 No.2, pp.158 - 173

Available online: 24 Dec 2006 *

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