Robust Production Planning: An Alternative to Scenario-Based Optimization Models

Abstract

Robust planning approaches, which specifically address the issue of uncertainty in production systems, are becoming more and more popular among managers. Production planning models which incorporate some of the system’s uncertainty, at earlier stages in the planning process, are capable of generating ‘stable’ plans that are robust to the variability resulting from some critical planning parameter. In this paper we review some models for robust planning and their solution approaches. We then propose and discuss a new alternative model for aggregate production planning when periodic demands are uncertain. The objective of the model is to provide cost effective production plans while maintaining the targeted service levels. The performance of the proposed alternative model is compared with that of the scenario-based optimization models, and the obtained results are thoroughly discussed.