Robust Production Planning in Fashion Apparel Industry under Demand Uncertainty via Conditional Value at Risk

Abstract

This paper presents a mathematical model for robust production planning. The model helps fashion apparel suppliers in making decisions concerning allocation of production orders to different production plants characterized by different lead times and production costs, and in proper time scheduling and sequencing of these production orders. The model aims at optimizing these decisions concerning objectives of minimal production costs and minimal tardiness. It considers several factors such as the stochastic nature of customer demand, differences in production and transport costs and transport times between production plants in different regions. Finally, the model is applied to a case study. The results of numerical computations are presented. The implications of the model results on different fashion related product types and delivery strategies, as well as the model’s limitations and potentials for expansion, are discussed. Results indicate that the production planning model using conditional value at risk (CVaR) as the risk measure performs robustly and provides flexibility in decision analysis between different scenarios.