Technical Note—Capacity Expansion in Convex Cost Networks with Uncertain Demand

Cornelius T. Leondes and Ranjit K. Nandi
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Cornelius T. Leondes: University of California, Los Angeles, California
Ranjit K. Nandi: University of California, Los Angeles, California

Operations Research, 1975, vol. 23, issue 6, 1172-1178

Abstract: The purpose of this investigation is to suggest a simple algorithm for solving capacity expansion problems in networks with uncertain demand. We assume that the cost of expanding the capacity of each arc is a convex function and that there is a concave salvage value each arc is a convex function and that there is a concave salvage value associated with excess capacity. We adopt the two-stage programming approach but with the essential difference that our independent variable is an assumed first-stage demand. We show that the objective function of the equivalent convex program is a convex function of the assumed first-stage demand and use this fact to propose an algorithm.

Date: 1975
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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:23:y:1975:i:6:p:1172-1178

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