Issue: 2021/Vol.31/No.4, Pages 117-127
STOCHASTIC PROGRAMMING MODEL FOR PRODUCTION PLANNING WITH STOCHASTIC AGGREGATE DEMAND AND SPREADSHEET-BASED SOLUTION HEURISTICS
Nasreddine Saadouli
Cite as: N. Saadouli. Stochastic programming model for production planning with stochastic aggregate demand and spreadsheet-based solution heuristics. Operations Research and Decisions 2021: 31(4), 117-127. DOI 10.37190/ord210406
Abstract
By discretising the stochastic demand, a deterministic nonlinear programming formulation is developed. Then, a hybrid simulation-optimisation heuristic that capitalises on the nature of the problem is designed. The outcome is an evaluation problem that is efficiently solved using a spreadsheet model. The main contribution of the paper is providing production managers with a tractable formulation of the production planning problem in a stochastic environment and an efficient solution scheme. A key benefit of this approach is that it provides quick near-optimal solutions without requiring in-depth knowledge or significant investments in optimisation techniques and software.
Keywords: production planning, stochastic programming, efficient algorithm, decision-making
Received: 4 March 2021 Accepted: 14 October 2021