Robust network design

Abstract

As an equipment manufacturer for the mining and construction industries, Caterpillar's business is heavily impacted by the cyclicality of these two industries. To be competitive in the market while investing prudently to ensure shareholders' value, Caterpillar needs to make capacity decisions with peaks and troughs of the cycles in mind. Through the peaks and troughs of business cycles, the perceptions change from not enough capacity to under-utilization of asset constrained capacity respectively. The purpose of this thesis is to establish a framework that enhances robustness in investment decision-making within the 2-6 year capacity planning horizon. This entails the ability to balance risk and return for the company and account for the cyclical nature of business and other strategic considerations. The project also aims to enhance consistency across stakeholders and introduce an aggregate risk perspective under corporate capital constraint.