Capacity Expansion with Two Producing Regions and Concave Costs

C. O. Fong and M. R. Rao
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C. O. Fong: The University of Rochester
M. R. Rao: The University of Rochester

Management Science, 1975, vol. 22, issue 3, 331-339

Abstract: A deterministic capacity expansion and shipment planning problem is considered for a single commodity that can be produced in two regions. Demand in each region is nondecreasing over a finite time horizon. Demand in a region in a time period must be satisfied, either by the current production capacity there or by a shipment from the other region. Capacity expansion and shipment costs are assumed to be concave and no inventory of stock is allowed. The problem is to find a schedule of capacity expansion in each region and a schedule of shipment between the two regions, such that the total cost over the time horizon is minimized. To solve this problem a dynamic programming algorithm is devised that is more efficient than known conventional procedures.

Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:22:y:1975:i:3:p:331-339

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