Robust Optimization for Bilevel Production Planning Problems under Customer's Uncertainties

In recent years, a form of production known as high-mix low-volume production has attracted attention. Mass customization is a production strategy that manufactures produce products to meet diverse customer demands while maintaining production efficiency close to mass production. Modular production is one of the production methods to achieve mass customization, and products are manufactured by combining modules. This production method allows a manufacturer to increase its total profit by manufacturing products suited to individual customers while reducing costs. In actual production planning, production costs and customer demands are uncertain. By considering these uncertainties, robust production planning can be achieved. Various robust production planning methods have been proposed in previous studies, however, no previous studies have reported cases of modular production that reflect customer decisions. Therefore, in this study, the production planning problem is formulated as a bilevel production planning problem consisting of customers and a manufacturer, and robust optimization is applied. Finally, we verify the usefulness of the proposed method for customer demand uncertainty by comparing the conventional model with the robust optimization model.