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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

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