On flexible dynamic strategies for long-term resource allocation problems in an uncertain environment

Long-term resource allocation problems may be regarded as multiperiod processes where the future decision environment is generally uncertain. The authors first propose a mathematically tractable measure of flexibility which is based on the size of the uncertain parameter space. Next, a two objective-maximization of the expected value of the system´s performance and maximization of the flexibility level-optimization problem is solved to find a flexible initial decision. Finally, a production planning problem is discussed as an illustrative example