Budget Allocation for Permanent and Contingent Capacity under Stochastic Demand
Dellaert, Nico; Jeunet, Jully (2009), Budget Allocation for Permanent and Contingent Capacity under Stochastic Demand, 23rd European Conference on Operational Research, 2009-07, Bonn, Allemagne
TypeCommunication / Conférence
Conference title23rd European Conference on Operational Research
MetadataShow full item record
Abstract (EN)We model budgeted services with permanent and contingent capacity costs. We consider a stochastic demand of tasks to be performed. No backordering of tasks is allowed, capacity shortages are penalized in each week. We optimize the permanent capacity at the start of the year and the contingent capacity based on the weekly demand, several models are developed, with hard and soft budget constraints, and different capacity shortage penalty cost functions. We provide analytical results and perform numerical experiments, showing among others the optimal budget spending patterns.
Subjects / KeywordsStochastic; Optimization; Non-linear stochastic dynamic programming; Budget allocation; Contingent workers; Capacity planning
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