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

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


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