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Mathematical Programming

, Volume 134, Issue 2, pp 395–424 | Cite as

Integrated market selection and production planning: complexity and solution approaches

  • Wilco Van den Heuvel
  • O. Erhun Kundakcioglu
  • Joseph Geunes
  • H. Edwin Romeijn
  • Thomas C. Sharkey
  • Albert P. M. Wagelmans
Open Access
Full Length Paper Series A

Abstract

Emphasis on effective demand management is becoming increasingly recognized as an important factor in operations performance. Operations models that account for supply costs and constraints as well as a supplier’s ability to influence demand characteristics can lead to an improved match between supply and demand. This paper presents a class of optimization models that allow a supplier to select, from a set of potential markets, those markets that provide maximum profit when production/procurement economies of scale exist in the supply process. The resulting optimization problem we study possesses an interesting structure and we show that although the general problem is \({\mathcal{NP}}\)-complete, a number of relevant and practical special cases can be solved in polynomial time. We also provide a computationally very efficient and intuitively attractive heuristic solution procedure that performs extremely well on a large number of test instances.

Keywords

Lot-sizing Market selection Complexity 

Mathematics Subject Classification (2000)

68Q25 90B30 90C39 90C59 

Notes

Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

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Copyright information

© The Author(s) 2011

Authors and Affiliations

  • Wilco Van den Heuvel
    • 1
  • O. Erhun Kundakcioglu
    • 2
  • Joseph Geunes
    • 3
  • H. Edwin Romeijn
    • 4
  • Thomas C. Sharkey
    • 5
  • Albert P. M. Wagelmans
    • 1
  1. 1.Econometric InstituteErasmus University RotterdamRotterdamThe Netherlands
  2. 2.Department of Industrial EngineeringUniversity of HoustonHoustonUSA
  3. 3.Department of Industrial and Systems EngineeringUniversity of FloridaGainesvilleUSA
  4. 4.Department of Industrial and Operations EngineeringThe University of MichiganAnn ArborUSA
  5. 5.Center for Industrial InnovationRensselaer Polytechnic InstituteTroyUSA

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