The Value of Multistage Stochastic Programming in Capacity Planning Under Uncertainty

This paper addresses a general class of capacity planning problems under uncertainty, which arises, for example, in semiconductor tool purchase planning. Using a scenario tree to model the evolution of the uncertainties, we develop a multistage stochastic integer programming formulation for the problem. In contrast to earlier two-stage approaches, the multistage model allows for revision of the capacity expansion plan as more information …