Preparation of Papers for IFAC Conferences & Symposia: Migration Planning for Global Production Networks using Markovian Decision Processes

Modern globalization leads companies into a changing environment with a highly uncertain future development of key drivers of change. Especially, global production networks are affected by uncertainty and dynamic changes. Reactiveness becomes of crucial importance, as the adaptation to environmental conditions is the key to maintain competitive advantages. This article presents an approach for flexible migration planning in global production networks. The focus is on the formulation of a Markovian Decision Process (MDP) that enables the identification of optimal reactions to stochastic changes of key drivers of change. The formulation includes the description of a multi-level modelling approach for global production networks. Furthermore the valuation model of the reward function of the MDP is discussed in detail. Finally, the paper provides a brief description of exemplary optimization results solving the MDP by backward induction.