Scenario Approach to Capacity Planning for the Production of a New Product
The decision about the production of a new product is an important strategic decision which affects the future production scheduling decisions and it requires large amounts of capital for the new equipment as well as for the development and promotion of the new product. The scenario approach is used so that the actions of competition, which affect the part of demand to be satisfied with the new product, can be taken into account too (Dembro). In this problem, where large amounts of capital are involved, the expected profit as well as the risk is the greatest management’s concern. Considering all that the simple recourse model with stochastic risk constraints, in which the decision maker’s attitude toward risk is considered, can be used.
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