Capacity Management in the Chemical Supply Chain

Long term capacity planning involves locating and allocating the production capacities and inventory capacities, and short term capacity planning involves the production allocation and distribution of materials. Most existing literature deals with them individually and also consider only investments in capacities and do not consider disinvestment. Combining the above problems into one would give a holistic picture of the entire supply chain and allows in better planning, leading to greater efficiency in terms of reduced costs or increased profit. In this work, we present a new deterministic capacity management model, which considers facility location, (dis)investment in capacity, production allocation, distribution of materials and regulatory factors among others. Also, we have improved the formulation of existing literature by using fewer binary variables. Copyright © 2006 IFAC.