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Requirements Planning with Pricing and Order Selection Flexibility

Department of Industrial and Systems Engineering, University of Florida, Gainesville, Florida 32611-6595
Department of Industrial and Systems Engineering, University of Florida, Gainesville, Florida 32611-6595
Department of Industrial Engineering, Clemson University, Clemson, South Carolina 29634-0920
geunes{at}ise.ufl.edu
romeijn{at}ise.ufl.edu
taaffe{at}clemson.edu

Past requirements-planning research has typically assumed that the firm’s demands are determined prior to production planning. In contrast, we explore a single-stage planning model that implicitly decides, through pricing decisions, the demand levels the firm should satisfy in order to maximize contribution to profit. We briefly discuss solution methods and properties for these problems when production capacities are unlimited. The key result of this work is a polynomial-time solution approach to the problem under time-invariant finite production capacities and piecewise-linear and concave revenue functions in price.

Subject classifications: production/scheduling; planning; inventory/production; policies; marketing/pricing; programming; integer; applications.
History: Received November 2003; revision received December 2004; accepted December 2004.