A stochastic approach for evaluating production planning efficiency under uncertainty

Abstract

Planning production is an essential component of the decision-making process, which has a direct bearing on the effectiveness of production systems. This study’s objective is to investigate the efficiency performance of decision-making units (DMU) in relation to production planning issues. However, the production system in a manufacturing environment is frequently subject to uncertain situations, such as demand and labor, and this can have an effect not only on production but also on profit. The robust stochastic data envelopment analysis model was proposed in this study with maximizing the number of outputs as the objective function thus means of handling uncertainty in input and output in production planning problems. This model, which is based on stochastic data envelopment analysis and a method of robust optimization, was proposed with the intention of providing an efficient plan of production for each DMU of stage production. The model is applied to small and medium-sized businesses (SMEs), with inputs consisting of the cost of labor, the number of customers, and the quantity of raw materials, and the output consisting of profit and revenue. It has been demonstrated through implementation that the proposed model is both efficient and effective.