Abstract
In this paper the multi-period strategic planning problem for a consumer product manufacturing chain is considered. Our discussion is focused on investment decisions which are economically optimal over the whole planning horizon T, while meeting customer demands and conforming to technological requirements. In strategic planning, time and uncertainty play important roles. The uncertainties in the model are due to different levels of forecast demands, cost estimates and equipment behaviour.
The main aim of this paper is to develop and analyse a multiperiod stochastic model representing the entire manufacturing chain, from the acquisitions of raw material to the delivering of final products.The resulting optimization problem is computationally intractable because of the enormous, and some time unrealistic, number of scenarios that must be considered in order to identify the optimal planning strategy. We have developed an approximate multilevel optimization approach which can be assumed as a starting point for a subsequent refinement procedure.The strategic LP/ILP model is used to identify suboptimal asset allocation strategies whose risk is analysed by a refinement procedure in order to obtain hedging strategies in an uncertain environment.
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© 1997 Springer-Verlag Berlin Heidelberg
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Lucas, C., Messina, E., Mitra, G. (1997). Risk and Return Analysis of a Multi-Period Strategic Planning Problem. In: Christer, A.H., Osaki, S., Thomas, L.C. (eds) Stochastic Modelling in Innovative Manufacturing. Lecture Notes in Economics and Mathematical Systems, vol 445. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-59105-1_7
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DOI: https://doi.org/10.1007/978-3-642-59105-1_7
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