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Risk-Based Integration of Strategic and Tactical Capacity Planning

Author

Listed:
  • Sunder Kekre
  • Uday Rao
  • Samarth Sarthi
  • Jinxin Yi

Abstract

We consider capacity management with a long-term strategic choice, such as the number of production lines to install before demand is known, and short-term tactical decisions relating to production, inventory, and subcontracting (recourse actions made after demand is known). We present an integrated scenario-based mathematical modeling and solution framework. For a single-product environment, we examine properties of total profit as a function of demand and the long-term capacity z. We investigate two measures of risk (profit variance and mean downside risk) and their corresponding profit-risk frontiers. Computational experiments are used to illustrate parameter sensitivity results obtained from the model. Copyright Kluwer Academic Publishers 2004

Suggested Citation

  • Sunder Kekre & Uday Rao & Samarth Sarthi & Jinxin Yi, 2004. "Risk-Based Integration of Strategic and Tactical Capacity Planning," Annals of Operations Research, Springer, vol. 132(1), pages 85-108, November.
    • Handle: RePEc:spr:annopr:v:132:y:2004:i:1:p:85-108:10.1023/b:anor.0000045278.94269.1b
    DOI: 10.1023/B:ANOR.0000045278.94269.1b
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    Cited by:

    1. Patanjal Kumar & Sachin Kumar Mangla & Yigit Kazancoglu & Ali Emrouznejad, 2023. "A decision framework for incorporating the coordination and behavioural issues in sustainable supply chains in digital economy," Annals of Operations Research, Springer, vol. 326(2), pages 721-749, July.

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