OPERATIONAL PLANNING UNDER UNCERTAINTY

This paper presents a novel approach for the incorporation of future p lan feasibility and potential economic risk in planning problems under uncertainty. It is based on the concepts of plan flexibility and regr et as measures of the impact of uncertainty on the future plan operati on and economics. For two-period linear planning models, analytical ex pressions of flexibility and regret as functions of the uncertain para meters are obtained with which an optimal plan can be determined that maximizes an expected profit while ensuring operability and monitoring financial risk. An important feature of this new planning framework i s that, in contrast to previous approaches, it neither requires discre tization of the uncertainty nor is centered on worst-case consideratio ns. An example is presented to illustrate the steps of the algorithmic procedure.