The one-shot decision theory based production planning models

Abstract

This paper considers that a company is planning to produce innovative products in an uncertain market environment. We build production planning models with the one-shot decision theory (OSDT) where the optimal production plan is obtained to correspond to some special scenarios. Since the OSDT based production planning model is a bi-level programming problem with a non-smooth lower level program which is difficult to be solved, we propose an efficient method with considering a smooth approximation function to solve it.