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Sequencing Capacity Expansion Projects in Continuous Time

Author

Listed:
  • A. W. Neebe

    (Graduate School of Business Administration and Curriculum in Operations Research and Systems Analysis, University of North Carolina, Chapel Hill, North Carolina 27514)

  • M. R. Rao

    (Graduate School of Business Administration, New York University, New York, New York 10006 and Indian Institute of Management, Bangalore, India)

Abstract

We consider a problem of sequencing capacity expansion projects with a continuous demand function specified over a given time horizon. Each type of expansion project has a specified integer capacity and an associated cost which is nonincreasing with respect to the time at which the project is brought on stream. The problem is to determine the sequence of expansions to provide sufficient capacity to meet demand at minimum cost. A formulation is presented and its relaxation leads to a shortest route problem. The sequencing problem is solved using a branch and bound procedure with Lagrangean relaxation providing bounds. A particularly effective heuristic is also developed. Computational results are given.

Suggested Citation

  • A. W. Neebe & M. R. Rao, 1986. "Sequencing Capacity Expansion Projects in Continuous Time," Management Science, INFORMS, vol. 32(11), pages 1467-1479, November.
    • Handle: RePEc:inm:ormnsc:v:32:y:1986:i:11:p:1467-1479
    DOI: 10.1287/mnsc.32.11.1467
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    Cited by:

    1. Cantamessa, Marco & Valentini, Carlo, 2000. "Planning and managing manufacturing capacity when demand is subject to diffusion effects," International Journal of Production Economics, Elsevier, vol. 66(3), pages 227-240, July.
    2. Metin Çakanyıldırım & Robin O. Roundy & Samuel C. Wood, 2004. "Optimal machine capacity expansions with nested limitations under stochastic demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(2), pages 217-241, March.
    3. Yang, Qing & Zhang, Lei & Zou, Shaohui & Zhang, Jinsuo, 2020. "Intertemporal optimization of the coal production capacity in China in terms of uncertain demand, economy, environment, and energy security," Energy Policy, Elsevier, vol. 139(C).

    More about this item

    Keywords

    capacity expansion; Lagrangean relaxation;

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