Capacitated requirements planning with pricing flexibility and general cost and revenue functions

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January 2007, 3(1): 87-98. doi: 10.3934/jimo.2007.3.87

Capacitated requirements planning with pricing flexibility and general cost and revenue functions

F. Zeyenp Sargut ^1, and H. Edwin Romeijn ^1,

1.	Department of Industrial and Systems Engineering, University of Florida, Gainesville, Florida 32611, United States, United States

Received June 2005 Published January 2007

Abstract
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The requirements problem with pricing flexibility generalizes the standard economic lot-sizing problem by recognizing that the demand for a good can often be influenced by adjusting its price level. This naturally leads to a profit maximization model that integrates price setting as well as production and inventory management. In this paper, we consider the NP-hard problem that arises in the presence of general cost functions as well as time-varying production capacities. We study a reformulation of the problem as an economic lot-sizing problem and use this reformulation to derive running times for dynamic programming and approximation algorithms for the requirements planning problem.

Keywords: dynamic programming, approximation scheme., Pricing, lot-sizing.

Mathematics Subject Classification: Primary: 90B30; Secondary: 90.

Citation: F. Zeyenp Sargut, H. Edwin Romeijn. Capacitated requirements planning with pricing flexibility and general cost and revenue functions. Journal of Industrial & Management Optimization, 2007, 3 (1) : 87-98. doi: 10.3934/jimo.2007.3.87

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