A multistage stochastic programming model for the New Zealand dairy industry

Z. Guan and A.B. Philpott

International Journal of Production Economics, 2011, vol. 134, issue 2, 289-299

Abstract: This paper presents an application of multistage stochastic programming to a production planning problem for Fonterra, a leading company in the New Zealand dairy industry, taking into account uncertain milk supply, priceâdemand curves and contracting. We describe a model for Fonterra's supply chain, and a model for uncertain milk supply. We then present a multistage stochastic quadratic programming model and a decomposition algorithm to compute an optimal sales policy, which is tested in simulation against a deterministic policy.

Keywords: Multistage; stochastic; quadratic; programming; Price-demand; curve; Sampling; Uncertain; supply; Decomposition (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:134:y:2011:i:2:p:289-299

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