Stochastic Optimization

Tuesday, September 10, 2002 - 9:30am - 10:15am
Keller 3-180
John Birge (Northwestern University)
Supply chain and logistics problems inevitably involve the consideration of random quantities such as uncertain demands, supplies, travel times,costs, and prices. This tutorial will present some fundamental stochastic optimization models to include such random events. The models will include decisions for network design, capacity, vehicle flows, and contract terms. We will then present a general framework for these stochastic optimization problems, their basic properties, algorithms, and solutions. The discussion will focus on discrete-time models but will also introduce continuous-time models and real-option approaches to deal with financial issues in supply chains and logistics.