Polynomial-time algorithms for single resource stochastic capacity expansion models with lost sales

Abstract

Abstract In this paper, we consider multi-period single resource stochastic capacity expansion problems with lost sales. We study two models. The first model does not consider fixed-charge for capacity purchases, while the second one incorporates fixed-charges. We use multi-stage stochastic integer programs to present both models and show how adding the fixed-charge cost changes the structure of the mathematical models. For both models, we study their structures and design polynomial-time algorithms to solve them. We present computational results to show the performance of the designed algorithms.