Optimal system design with MC2 linear programming: A dual contingency plan appproach

Given a system design problem with multiple criteria and multiple resource availability levels, we use the multiple-criteria and multiple-constraint level (MC²) simplex method to identify a set of potentially good systems as candidates for the optimal system. Each potentially good system is a subset of a given opportunity set and optimizes the design model under some changes of resource availability levels and the unit contribution of selected opportunities. As the contribution of an opportunity can fluctuate and lead to a non-optimal solution, the optimal dual contingency plans must be constructed to cope with the fluctuation. In this paper, we present a method of effectively and systematically constructing optimal dual contingency plans for given potentially good systems by adjusting the unit contribution of the selected opportunities. International transfer pricing is used to exemplify the method.