6. Dynamic Lot Sizing with Market Selection

This chapter considers a seemingly innocuous change in the assumptions underlying the Demand Selection Problem (DSP) considered in the previous chapter, which severely complicates the problem analysis. Instead of a sequence of independent demands over a time horizon, in this variant of the problem, demands in successive periods may be related in the sense that if we satisfy a given demand in some period t, we must then satisfy a particular set of demands in other periods. That is, instead of selecting individual demands, we are now faced with the problem of selecting from a set of time-phased vectors of demands. In practical terms, this corresponds to determining whether we will satisfy all or none of a given customer’s or market’s demands over the time horizon. We refer to the resulting problem as the Market Selection Problem (MSP) and discuss the problem’s complexity and potential solution approaches throughout this chapter.