AGGREGATE INDUSTRIAL CAPACITY EXPANSION: A MULTIPLE CRITERIA APPROACH.

In this paper, the problem that will be considered is the capacity expansion of an industrial firm producing multiple products in several economic regions over a multiple period horizon. The capacity expansion plan of the firm involves both the expansion of existing production facilities and the development of new industrial production sites. There are many interdependent operational and economic factors to be considered in such a decision making process. They include market demand for products, cost of capital, labor, production facilities and the product distribution system. In order to capture the product and regional interdependence over time, a multi-regional input-output model is used to describe the flows of products through the regions over time.