A stochastic programming approach for multi-site aggregate production planning

Production planning problems play a vital role in the supply chain management area, by which decision makers can determine the production loading plan—consisting of the quantity of production and the workforce level at each production plant—to fulfil market demand. This paper addresses the production planning problem with additional constraints, such as production plant preference selection. To deal with the uncertain demand data, a stochastic programming approach is proposed to determine optimal medium-term production loading plans under an uncertain environment. A set of data from a multinational lingerie company in Hong Kong is used to demonstrate the robustness and effectiveness of the proposed model. An analysis of the probability distribution of economic demand assumptions is performed. The impact of unit shortage costs on the total cost is also analysed.