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ROBUST OPTIMIZATION OF MULTI-PERIOD PRODUCTION PLANNING UNDER DEMAND UNCERTAINTY

Real-world production planning problems are modeled as inventory control problems over a finite horizon. Here we address a multi-period production planning under demand uncertainty which is only known to drift around a nominal demand trajectory. We employ the robust optimization (RO) methodology, and compare our solutions to those obtained employing alternative methods. The results show that the dynamic version of the RO method yields on one hand a guaranteed lower bound on the optimal profit, but on the other hand provides better average profit than the non-robust methods.