Optimal pricing and production master planning in a multiperiod horizon considering capacity and inventory constraints (Q1036498)

Summary: We formulate and solve a single-item joint pricing and master planning optimization problem with capacity and inventory constraints. The objective is to maximize profits over a discrete-time multiperiod horizon. The solution process consists of two steps. First, we solve the single-period problem exactly. Second, using the exact solution of the single-period problem, we solve the multiperiod problem using a dynamic programming approach. The solution process and the importance of considering both capacity and inventory constraints are illustrated with numerical examples.