Models for optimal utilization of production resources under demand selection flexibility

Optimal demand selection applies to contexts in which an organization has some discretion in deciding the set of demands it will use its resources to satisfy. In such cases, the decision maker wishes to determine the set of downstream demands that provides the best match for its resource capabilities. This steps away from traditional streams of research that ignore the selection decision and assume all demand sources must be satisfied. We focus on developing new models and solution methods for problems that integrate demand selection with the planning and utilization of production resources, for both unlimited and limited production capacities. Capacity limits often restrict the total amount of demand that an organization can satisfy. When total demand for resources exceeds capacity limits, selecting the optimal subset of demand sources is a challenging optimization problem. Even in contexts where capacity limits are typically not a constraining factor, the problem remains difficult due to economies of scale in production and the attractiveness and timing of individual demands. Given a set of heterogeneous downstream demand sources, which may be deterministic or stochastic in nature, along with nonlinear capacity usage costs in volume, we propose models that provide optimal demand source selections that achieve maximum profitability. In this dissertation, we specifically address demand selection flexibility for the applications areas of general production and inventory planning problems and airport ground holding problems.