Integrated market selection and production planning: complexity and solution approaches

Wilco van den Heuvel, OE Kundakcioglu, J Geunes, HE Romeijn, TC Sharkey, Albert Wagelmans

Research output: Contribution to journalArticleAcademicpeer-review

12 Citations (Scopus)
2 Downloads (Pure)

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 {Mathematical expression}-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.
Original languageEnglish
Pages (from-to)395-424
Number of pages30
JournalMathematical Programming
Volume134
Issue number2
DOIs
Publication statusPublished - 24 Feb 2011

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