Integrated market selection and production planning: complexity and solution approaches.
Emphasis on effective demand management is becoming increasingly recognized as an important factor in operations
performance. Operations models that account for supply costs and constraints as well as a supplier's ability to
influence demand characteristics can lead to an improved match between supply and demand. This paper presents
a new class of optimization models that allow a supplier to select, from a set of potential markets, those markets
that provide maximum profit when production/procurement econcomies of scale exist in the supply process. The resulting
optimization problem we study possesses an interesting structure and we show that although the general problem is NP-complete,
a number of relevant and practical special cases can be solved in polynomial time. We also provide a computationally very efficient
and intuitively attractive heuristic solution procedure that performs extremely well on a large number of
test instances.