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Capacity Planning for Large Multilocation Systems: Approximate and Incomplete Dynamic Programming Approaches

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  • Donald Erlenkotter

    (University of California, Los Angeles)

Abstract

Methods for planning capacity expansion typically have been restricted to problems with many locations in a static environment or a few locations in a dynamic environment. Two approaches are developed here for dynamic capacity planning problems with many locations. The first is an approximate approach based on an equivalent annual cost measure, and the second is a procedure for systematic improvement of the approximate solution. The method for improvement is called "incomplete dynamic programming" since it consists of an approximation to the first cycle of the dynamic programming policy iteration approach. Computational results are reported for tests of the methods against dynamic programming solutions for small problems. Applications are made to two versions of a large-scale problem of planning capacity expansion for India's nitrogenous fertilizer industry, and results are compared with those for other approaches.

Suggested Citation

  • Donald Erlenkotter, 1975. "Capacity Planning for Large Multilocation Systems: Approximate and Incomplete Dynamic Programming Approaches," Management Science, INFORMS, vol. 22(3), pages 274-285, November.
    • Handle: RePEc:inm:ormnsc:v:22:y:1975:i:3:p:274-285
    DOI: 10.1287/mnsc.22.3.274
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    Cited by:

    1. Badri, Masood A., 1999. "Combining the analytic hierarchy process and goal programming for global facility location-allocation problem," International Journal of Production Economics, Elsevier, vol. 62(3), pages 237-248, September.
    2. Petersen, E. R. & Taylor, A. J., 2001. "An investment planning model for a new North-Central railway in Brazil," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(9), pages 847-862, November.
    3. A Dasci & G Laporte, 2005. "An analytical approach to the facility location and capacity acquisition problem under demand uncertainty," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(4), pages 397-405, April.

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