Approaches to four types of bilevel programming problems with nonconvex nonsmooth lower level programs and their applications to newsvendor problems (Q1683936)

Solving bilevel programming problems where the lower level programs are max-min optimization problems and the upper level programs have max-max or max-min objective functions is researched. The bilevel programming problems include nonconvex and nonsmooth lower level program problems. Under some assumptions, these problems are translated into general single level optimization problems or min-max optimization problems and a class of regularization methods which approximate the maximum function by using a family of maximum entropy functions is proposed. In addition, it is shown that the limit situations of the proposed regularization methods and any limit points of the global optimal solutions obtained by the approximation methods are the same as the ones of the original problems. Finally, the application to newsvendor problems and a numerical example are given.