Stochastic Programming Model
Key: Maximize the Added Value with Installed Capacity
- Must choose best mix of models assigned to plants
- Maximize Expected Value[?i,t e-rtProfit (i) Production(i,t)
- - CapCost(i at j,t)Capacity (i at j,t)]
- subject to: MaxSales(i,t) ? j Production(i at j,t)
- ? i Production(i at j,t) e(r-rf)t Capacity (i,t) ?
- ??Production(i at j,t) e(r-rf)t Capacity (i at j,t)
- Production(i at j,t) 0
Need MaxSales(i,t) - random
- Capacity(i at j,0) - Decision in First Stage (now)
FIRST: Construct sales scenarios