Using Shadow Prices in a Chance Constrained Programming Model: A Case Study for Production System
Journal Title: Scholars Journal of Economics, Business and Management - Year 2017, Vol 4, Issue 11
Abstract
Abstract:Businessesshouldmakeproduction plans to continue theircommercial lifeand to improvetheirprofitability. Linear programmingis one of thebasicapproaches usedin solvingproductionplanning problems. However, deterministic structure of linearprogramming cannotexpresstherandomnessofvariablecoefficients that existsin manyrealproduction problems. In production planning, coefficients of variablesandconstraints such asprices or demandmay notbe in deterministicstructure. In such cases, linearprogramming modelgivesinadequateresults forthe problem. Under uncertainty,stochasticprogramming approach comes to theforeasa methodfor solvingproduction planningproblems. Itis possible to adduncertainty into to the modelindecision-making process by using stochastic programmingmodels. In solving phase ofstochastic programmingthe basic approachis, convertingthe probabilisticstructure of the probleminto deterministic form and solving by mathematicalmethods. Chanceconstrainedprogramming approach which is one of the stochastic programmingtechniques, offersthe opportunityto examine random constraints in deterministicstructure,according to specificstatisticaldistributions. The studywas conductedin the productionsystem ofan officeproductsoperating in Izmir. Firstly, thedeterministicmodelof theproduction systemis obtained. Thenstochasticvariables were definedin the modeland the chance constrained programming was used for production planningof an officeproducts manufacturingsystemwhich is stillin operation. Deterministicandstochasticmodelswere compared. It was found out, using proposed chance constrained model in production planning is valuable in terms of profit in long term. Keywords:StochasticProgramming, Chance Constrained Programming, Manufacturing System.
Authors and Affiliations
Dr. Mehmet Aksaraylı, Osman Pala, Mehmet Akif Aksoy
Keywords
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