Design of multiproduct batch plants under demand uncertainty with staged capacity expansions

Abstract

This paper addresses the staged capacity expansion of multiproduct batch plants operating in single product campaign (SPC) mode and in the presence of product demand uncertainty. This extends previous work by the authors on the design problem. Staged capacity expansions are modeled as additions of extra units of equal size at each stage at the end of each time period. The normality assumption is employed for the uncertain product demands. The problem formulation involves an inner stage which identifies the optimum production levels and an outer stage which establishes the design/capacity expansion decisions by maximizing the net present value (NPV) of the plant. This two-stage stochastic optimization problem for capacity expansion is equivalently recast as a deterministic mixed-integer nonlinear programming (MINLP) problem. Finally, the proposed formulation and solution strategy are illustrated with an example problem.