Robust capacity allocation in dynamic production networks

Production networks are complex dynamical systems, which are subject to unexpected perturbations and trends of key parameters. As a consequence planned capacity levels might no longer be sufficient to handle the workload. This paper presents a new approach to capacity allocation that ensures robustness of a production network with respect to trends of key parameters describing customer demand and production processes. The robustness is measured by the stability radius, which quantifies the smallest shift of key parameters that destabilizes the network. Based on results concerning this measure an optimization problem for the capacity allocation at each location is formulated.