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Robust optimization in simulation: Taguchi and Response Surface Methodology

  • Dellino, Gabriella
  • Kleijnen, Jack P.C.
  • Meloni, Carlo

Optimization of simulated systems is tackled by many methods, but most methods assume known environments. This article, however, develops a 'robust' methodology for uncertain environments. This methodology uses Taguchi's view of the uncertain world, but replaces his statistical techniques by Response Surface Methodology (RSM). George Box originated RSM, and Douglas Montgomery recently extended RSM to robust optimization of real (non-simulated) systems. We combine Taguchi's view with RSM for simulated systems. We illustrate the resulting methodology through classic Economic Order Quantity (EOQ) inventory models, which demonstrate that robust optimization may require order quantities that differ from the classic EOQ.

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Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 125 (2010)
Issue (Month): 1 (May)
Pages: 52-59

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Handle: RePEc:eee:proeco:v:125:y:2010:i:1:p:52-59
Contact details of provider: Web page: http://www.elsevier.com/locate/ijpe

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  1. Teng, Jinn-Tsair, 2009. "A simple method to compute economic order quantities," European Journal of Operational Research, Elsevier, vol. 198(1), pages 351-353, October.
  2. Dellino, G. & Kleijnen, Jack P.C. & Meloni, C., 2010. "Robust optimization in simulation : Taguchi and Response Surface Methodology," Other publications TiSEM 6a101dae-10b0-40af-815f-0, School of Economics and Management.
  3. Wu, Jun & Li, Jian & Wang, Shouyang & Cheng, T.C.E., 2009. "Mean-variance analysis of the newsvendor model with stockout cost," Omega, Elsevier, vol. 37(3), pages 724-730, June.
  4. repec:ner:tilbur:urn:nbn:nl:ui:12-4379049 is not listed on IDEAS
  5. Yu, Gang, 1997. "Robust economic order quantity models," European Journal of Operational Research, Elsevier, vol. 100(3), pages 482-493, August.
  6. repec:dgr:kubcen:200869 is not listed on IDEAS
  7. Borgonovo, E. & Peccati, L., 2007. "Global sensitivity analysis in inventory management," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 302-313, July.
  8. Darwish, M.A., 2008. "EPQ models with varying setup cost," International Journal of Production Economics, Elsevier, vol. 113(1), pages 297-306, May.
  9. S. Illeris & G. Akehurst, 2001. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 21(1), pages 1-4, January.
  10. Pentico, David W. & Drake, Matthew J. & Toews, Carl, 2009. "The deterministic EPQ with partial backordering: A new approach," Omega, Elsevier, vol. 37(3), pages 624-636, June.
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