Abstract
The decision problem of the capacity and location of plants was studied, where forecasted demand has uncertainty and its probability distribution is unknown. In this paper, a new criterion called the index of allowance was introduced, representing allowable difference between realized and forecasted demand insuring nonnegative profit. The problem was formulated as a multi-objective programming problem with two criteria, the index of allowance and profit to be gained on condition that realized demand is equal to forecast. Calculation procedure was developed to get Pareto optimum solution, and the significance of the model and effectiveness of the calculation procedure were shown through a sample numerical example.
