A two-level interior-point decomposition algorithm for multi-stage stochastic capacity planning and technology acquisition

Abstract

Listen

Translate article

Manufacturing flexibility is recognised as one of the key strategies to address uncertain future products demand. Therefore, a growing need exists to investigate the strategic aspect of flexibility. To capture the different aspects of market flexibility in the face of this dynamic demand, this paper focuses on the role of product, volume, and expansion flexibility in the context of the multi-stage stochastic program. Moreover, we implement a two-level, interior-point decomposition algorithm based on the Analytic Center Cutting Plane Method (ACCPM) to solve the model. The central prices obtained by the ACCPM provides a fast convergence and promising computational results in terms of the number of iterations.