Production reengineering and risk

This paper examines random production yields and rigid demand orders. Several production runs may be required to satisfy the demand and no penalties are allowed. Studies usually examine objective functions that are associated with the minimization of expected costs. Nevertheless, in some instances the manufacturer may consider other production policies that deviate from the optimal cost-minimizing process. If risk is an important factor, then this deviation can dramatically reduce costs. This scenario rises in a utility theory context. We present a technique that calculates the cost's variance for general production processes when considering a single stage production.