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Technical Note—Capacity Expansion in Convex Cost Networks with Uncertain Demand

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  • Cornelius T. Leondes

    (University of California, Los Angeles, California)

  • Ranjit K. Nandi

    (University of California, Los Angeles, California)

Abstract

The purpose of this investigation is to suggest a simple algorithm for solving capacity expansion problems in networks with uncertain demand. We assume that the cost of expanding the capacity of each arc is a convex function and that there is a concave salvage value each arc is a convex function and that there is a concave salvage value associated with excess capacity. We adopt the two-stage programming approach but with the essential difference that our independent variable is an assumed first-stage demand. We show that the objective function of the equivalent convex program is a convex function of the assumed first-stage demand and use this fact to propose an algorithm.

Suggested Citation

  • Cornelius T. Leondes & Ranjit K. Nandi, 1975. "Technical Note—Capacity Expansion in Convex Cost Networks with Uncertain Demand," Operations Research, INFORMS, vol. 23(6), pages 1172-1178, December.
    • Handle: RePEc:inm:oropre:v:23:y:1975:i:6:p:1172-1178
    DOI: 10.1287/opre.23.6.1172
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