Capacitated Production Planning with
Price-Sensitive Demand
and General
Concave Revenue Functions
Yasemin Merzifonluoğlu, Joseph Geunes, and H. Edwin Romeijn
Department of Industrial and Systems Engineering
We
develop a solution approach for discrete-time, finite-horizon production
planning problems with economies of scale in production, price-sensitive
demand, and time-invariant production capacities. Our model considers general
concave revenue functions in each period, and seeks to maximize total revenue
less production and inventory holding costs. We consider the case in which
prices may vary dynamically, as well the case in which a constant price is
required during the planning horizon.
Under mild conditions on the revenue function properties, we provide a polynomial-time
solution method for this problem class.