Modeling and Illustrative Numerical Examples

In this chapter, we present numerical examples of stochastic programming instances to illustrate the different models presented in Chap. 2 . Doing so provides concrete examples for the reader to allow them to see how the different models can be implemented numerically and how their solutions can be interpreted. In particular, we introduce a simplified version of a production planning problem, which we term “abc-Production Planning Problem.” Because this numerical example embodies the basic elements needed to illustrate how to model the key elements of the problem and how to solve the problem, we also use it in later chapters of the book. In this chapter, we begin with illustrations of deterministic models applied to the numerical example and then move on to risk-neutral stochastic models. We end the chapter with illustrations of risk-averse models introduced in the previous chapter.