There is a probability p strike that workers go on strike during production, changing the capacity from
Question:
There is a probability pstrike that workers go on strike during production, changing the capacity from 6000 in the no-strike scenario, to a combined maximum of 4000 hours. In addition, labor requirements for Product 2 will also if a strike takes place according to the data in the table below.
Product | Max. | |
1 2 3 4 | ||
Start-up cost, $ | 50,000 40,000 70,000 60,000 | |
Marginal revenue, $ | 70 60 90 80 | |
Labor per unit, hours | 5 3 6 4 | 6,000 |
Labor per unit during strike, hours | 5 8 6 4 | 4,000 |
Formulate a two-stage stochastic program based on this information to maximize the expected net revenue. The decisions to manufacture a product have to be taken at the present time when set-up costs must be incurred. On the other hand, the decisions related to how much to manufacture have to be made during production (second-stage) at what time the uncertainty of strike has been resolved.
a) Formulate this problem as a stochastic program. For each scenario s ∈ {Strike,No Strike} define a set of production variables x1,s, x2,s, x3,s, x4,s
b) Replace the labor capacity constraint from the previous section with two new labor capacity constraints, one for each scenario.
c) Solve this problem in matlab for pstrike=0.3
d) Solve this problem in matlab for pstrike=0.9
Probability and Statistics for Engineers and Scientists
ISBN: 978-0495107576
3rd edition
Authors: Anthony Hayter