First Elements of Production Portfolio Theory: A New Industrial Engineering Scientific Method

Abstract

In this paper, we give for the first time a general approach for implementing risk in production, adapted from economic Portfolio Theory, in a new theory, which we will then refer to as Production Portfolio Theory and use it with basic illustrative examples of the non-mathematical type. By this, we can measure risk, optimise it concerning production goals, and compare it with extrinsic optimisation. A follow-up work shall give then mathematical applications.