Random Yield and Random Demand in a Production System with Downward Substitution
Operations Research · 1999 · Volume 47 · Issue 2
Abstract
In this paper, we present and solve a single-period, multiproduct, downward substitution model. Our model has one raw material as the production input and produces N different products as outputs. The demands and yields for the products are random. We determine the optimal production input and allocation of the N products to satisfy demands. The problem is modeled as a two-stage stochastic program, which we show can be decomposed into a parameterized network flow problem. We present and compare three different solution methods: a stochastic linear program, a decomposition resulting in a series of network flow subproblems, and a decomposition where the same network flow subproblems are solved by a new greedy algorithm.
Keywords
inventory: uncertainty, random yield, inventory: multi-item, substitution, programming, stochastic, algorithms, greedy
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