# How to : Deterministic equivalent

 2 Hello. I have a 4-stage scenario tree. At each stage , i have two branches. So in total I have 15 nodes. I solve this problem in its node-variable formulation and it takes a lot of time. Also the scenario-variable formulation takes time. My question is: The deterministic equivalent of a problem is always a 2-stage stochastic problem with decision variables only in the first stage ? If not, can you please describe how it will look like ? The theory is not helpful unfortunately for me. asked 24 May '14, 07:25 spyimp 41●1●9 accept rate: 0%

 2 The DEP is not always a two-stage SP as you might have multiple planning stages (i.e., decisions and random parameters are determined over the course of time), in which case you have a multi-stage SP. A simple example is a stochastic multi-period production planning problem. If you don't take any decision in a subsequent stage (i.e., you cannot fix your decision after realization of random parameters), you would have no recourse. The drawback is that you might violate some constraints or incur too much cost. One way to deal with this to consider a penalty for risks and violating constraints. This is called simple recourse. You might also consider some recourse actions to deal with randomness. An example is to re-route vehicle in VRP in case of failing to satisfy customers' stochastic demands. Please see here for a brief introduction to strategies for dealing with stochastic problems. answered 25 May '14, 03:06 Ehsan ♦ 4.8k●3●12●24 accept rate: 16%
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