Timing of Demand Realization in an LP and Operations Strategies

Abstract

In a linear programming (LP), market demand is assumed to be

constant, but the demand is often random variable which is to be

realized as time lapses. We refined the previous work of Higle and

Wallace (2003) who studied an LP depending on the timing of market

demand realization. The motivation of this research is the need to

consider three operational strategies used for dealing with demand

uncertainty. We improved the previous work in the following aspects.

These are the strategy of speed, the strategy of forecasting, and the

strategy of outsourcing. Nine distinct LP examples are studied

depending on the velocity of supply chain process and the type of

operations strategy.