A review of mathematical programming models for strategic capacity planning in manufacturing

Martinez-Costa, Carme; Mas‐Machuca, Marta; Benedito, Ernest; Corominas, Albert

doi:10.1016/j.ijpe.2014.03.011

Cited by 103 publications

(62 citation statements)

References 74 publications

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“…Martínez-Costa et al (2014) review the strategic models related to capacity expansion and describe the main decisions and factors involved in strategic planning. Their reviewed models involve tactical decisions, such as those related to production and demand allocation.…”

Section: Modeling Of Strategic Decisionsmentioning

confidence: 99%

Perspectives in multilevel decision-making in the process industry

Brunaud¹,

Grossmann²

2017

Front. Eng

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Decisions in supply chains are hierarchically organized. Strategic decisions involve the long-term planning of the structure of the supply chain network. Tactical decisions are mid-term plans to allocate the production and distribution of materials, while operational decisions are related to the daily planning of the execution of manufacturing operations. These planning processes are conducted independently with minimal exchange of information between them. Achieving a better coordination between these processes allows companies to capture benefits that are currently out of their reach and improve the communication among their functional areas. We propose a network representation for the multilevel decision structure and analyze the components that are involved in finding integrated solutions that maximize the sum of the benefits of all nodes of the decision network. Although such task is very challenging, significant research progress has been made in each component of this structure. An overview of strategic models, mid-term planning models, and scheduling models is presented to address the solution of each node in the decision network. Coordination mechanisms for converging the integrated solutions are also analyzed, including solving large-scale models, multiobjective optimization, bi-level programming, and decomposition. We conclude by summarizing the challenges that hinder the full integration of multilevel decision making in supply chain management.

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Section: Modeling Of Strategic Decisionsmentioning

confidence: 99%

Perspectives in multilevel decision-making in the process industry

Brunaud¹,

Grossmann²

2017

Front. Eng

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“…Van Mieghem (2003), Wu et al (2005), Julka et al (2007) and also provided literature reviews on this topic. The most recent review is Martínez-Costa et al (2014), which describes the major decisions and conditioning factors involved in strategic capacity planning, and outlines the mathematical programming models proposed in the literature to deal with the above problems.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Investment and financial decisions have an impact on cash flow, operating income, costs and taxes (Martínez-Costa et al, 2014). Corporate taxes should be included in the cash flow formulation while studying a capacity planning problem because they represent a real significant expenditure for the company.…”

Section: /28mentioning

confidence: 99%

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Single-site strategic capacity planning considering renewal, maintenance, inventory, taxes and cash flow management

Benedito

Corominas

Martínez

et al. 2016

Journal of the Operational Research Society

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This paper deals with strategic capacity planning of a single-site manufacturing system.We propose a MILP model that includes relevant business aspects and possibilities, some of which are only partially or not at all found in the literature. Specifically, we consider decisions on expansion, reduction and renewal of production capacity, and acquisition of storage capacity. In addition, we model aspects such as a) maintenance costs and unit variable costs depending, respectively, on age and characteristics of facilities, b) seasonality of the demand, and c) cash flow management, including taxes and, therefore, depreciation of assets. The model maximises the after-tax cash balance at the end of the planning horizon. We also present a computational experiment with 54 instances to show that the model can be solved for a wide range of sizes in a reasonable computing time using comercial software.

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“…Capacity portfolio planning refers to determination of the volumes, types and scheduling of installation of an operational system, and studies of this are widely presented in the related literature [3][4][5]. Such strategic planning plays an important role in the development of power systems.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of Loss-Averse Behaviour on Capacity Portfolio Planning for Power Systems

Bao¹,

Jiang²

2015

Int. j. simul. model.

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A decision maker seldom behaves completely rationally when deciding on the investment in capacity portfolio for a power system. Thus his decision will certainly show some bias when compared with a truly risk-neutral one. In order to provide an in-depth analysis of such bias, this paper studies the issues influencing capacity portfolio planning for a power system when the decision maker is lossaverse. The investment decision is the result of the decision maker aiming to maximize utility, and the effect of this is investigated using a modified newsvendor model, in which the probability of abnormal electricity demand is considered. Theoretical proofs and numerical simulations are also presented to provide explanations of some counterintuitive findings. We find that bias in the capacity portfolio occurs whenever underage losses are greater than overage losses. Even where significant flexibility is installed, the loss-averse decision maker values dedicated capacity to a greater extent when building redundancy into the system capacity, and all of his decision bias will go towards building-in dedicated capacity rather than flexibility. The most interesting finding is that the probability and variance of abnormal demand are likely to be overestimated, and this will result in investing more dedicated capacity, not only for providing higher service levels in abnormal situations, but also for delivering greater operational profit.

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A review of mathematical programming models for strategic capacity planning in manufacturing

Cited by 103 publications

References 74 publications

Perspectives in multilevel decision-making in the process industry

Perspectives in multilevel decision-making in the process industry

Single-site strategic capacity planning considering renewal, maintenance, inventory, taxes and cash flow management

The Effect of Loss-Averse Behaviour on Capacity Portfolio Planning for Power Systems

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