Realizing risk: A shift from classic optimization in production processes

When production yields are random and orders need to be satisfied in full, several production runs may need to be initiated until an order is met. The universal objective function usually used in conjunction with this process is the minimization of expected costs. However, sometimes the manufacturer may want to consider a deviation from the ‘optimal’ cost-minimizing process, if the risk of requiring additional production runs could be dramatically reduced, i.e., the manufacturer might not always be risk neutral. We present a method of calculating the cost's variance for single stage production processes.