Integrated market selection and production planning: complexity and solution approaches

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 supp...

Full description

Saved in:
Bibliographic Details
Published in:Mathematical programming 2012-09, Vol.134 (2), p.395-424
Main Authors: Van den Heuvel, Wilco, Kundakcioglu, O. Erhun, Geunes, Joseph, Romeijn, H. Edwin, Sharkey, Thomas C., Wagelmans, Albert P. M.
Format: Article
Language:English
Subjects:
Algorithms
Analysis
Applied sciences
Approximation
Calculus of Variations and Optimal Control
Optimization
Combinatorics
Computational efficiency
Costs
Demand
Economic theory
Economies of scale
Engineering
Exact sciences and technology
Firm modelling
Full Length Paper
Heuristic
Inventory control, production control. Distribution
Logistics
Market strategy
Marketing
Markets
Mathematical and Computational Physics
Mathematical Methods in Physics
Mathematical models
Mathematical programming
Mathematics
Mathematics and Statistics
Mathematics of Computing
Numerical Analysis
Operational research and scientific management
Operational research. Management science
Operations management
Optimization
Production planning
Studies
Suppliers
Supply & demand
Theoretical
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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 -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.
ISSN:0025-5610
1436-4646
DOI:10.1007/s10107-011-0441-7