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Stochastic Modeling And Optimization Of Multi-Plant Capacity Planning Problem, Anoop Verma, Nagesh Shukla, S.K Tyagi, Nishikant Mishra

Nagesh Shukla

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.