Handling Uncertainties in Production Network Design

Abstract

Decision making in production network design is complex due to a large number of influencing factors, options and uncertainties. Furthermore, the agility in production networks and therefore the decision demand increases while made decisions are often hard to revise. Hence, a fast yet holistic decision-making process is key for sustainable production network development. While many existing approaches target the overall network optimization, few of them include a systematic approach to cover uncertainty and barely any approaches cover the uncertainty of information and models used for the decision-making. In praxis, these approaches result in unsystematic and time-consuming decision-making processes. This paper presents an approach to take uncertainty systematically into consideration and splits it into internal uncertainty, which can be reduced by the decision maker, and external uncertainty, which has to be considered in the sensitivity analysis. The method was applied for the site selection of an automotive supplier.