A New Approach for Joint Demand Management and Production Planning

Demand management is one of the main subjects in marketing which affects the operations performance of an organization considerably. In the classic production planning approach, demand is considered as an exogenous factor in planning, while in the new approach, it is a factor that can be controlled. In this paper, we focus on a new approach in supply chain planning and present an integrated production planning and demand management model is formulated in which demand is controlled by price and market selection. We assume the firm faces a number of potential markets whose demands are price-dependent, and the firm desires to select the best portfolio of markets and the best supply size for each market with regard to his production capacity and markets constraints. An MINLP model is developed for this problem. This model is NP-hard, and so a hybrid heuristic algorithm is developed to solve the problem. A numerical example is also provided to show the applicability of the proposed model.