Customer allocation and production optimization under plant outages

We consider the allocation of customers and optimization of production planning over a single time period (e.g., 1 year). The problem consists of deciding customer allocation to production plants coupled to the decision on the production level for each plant in order to satisfy the customers´ demand. The decisions are taken under supply, production, distribution and contractual constraints. The main objective is to minimize the total estimated cost which includes production, distribution and contractual costs. The solution approach proposed is based on a stochastic programming with recourse formulation. We apply the proposed methodology to a real-world, large scale production and distribution problem under supply uncertainty occurring within the bulk supply chain of Air Liquide.