Stochastic analysis of flexible process choices

In this paper the authors develop a stochastic linear programming model to evaluate process choice decisions for discrete part manufacturing. They consider both the flexible and dedicated manufacturing processes as well as multiple products at various stages of their life cycles. The model determines the optimal investment schedule in each process alternative that maximizes the expected net present value over different demand scenarios. The authors compute the economic value of flexibility and examine the impact of demand variability on net present value.