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Approximate solution of a profit maximization constrained virtual business planning problem

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  • Dolgui, Alexandre
  • Kovalev, Sergey
  • Pesch, Erwin

Abstract

A virtual business problem is studied, in which a company-contractor outsources production to specialized subcontractors. Finances of the contractor and resource capacities of subcontractors are limited. The objective is to select subcontractors and distribute a part of the demanded production among them so that the profit of the contractor is maximized. A generalization of the knapsack problem, called Knapsack-of-Knapsacks (K-of-K), is used to model this situation, in which items have to be packed into small knapsacks and small knapsacks have to be packed into a large knapsack. A fully polynomial time approximation scheme is developed to solve the problem K-of-K.

Suggested Citation

  • Dolgui, Alexandre & Kovalev, Sergey & Pesch, Erwin, 2015. "Approximate solution of a profit maximization constrained virtual business planning problem," Omega, Elsevier, vol. 57(PB), pages 212-216.
    • Handle: RePEc:eee:jomega:v:57:y:2015:i:pb:p:212-216
    DOI: 10.1016/j.omega.2015.05.001
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    Cited by:

    1. Dolgui, Alexandre & Hashemi-Petroodi, S. Ehsan & Kovalev, Sergey & Kovalyov, Mikhail Y., 2021. "Profitability of a multi-model manufacturing line versus multiple dedicated lines," International Journal of Production Economics, Elsevier, vol. 236(C).
    2. Banda, Juan & Velasco, Jonás & Berrones, Arturo, 2017. "Dual mean field search for large scale linear and quadratic knapsack problems," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 478(C), pages 158-167.
    3. Caserta, Marco & Voß, Stefan, 2019. "The robust multiple-choice multidimensional knapsack problem," Omega, Elsevier, vol. 86(C), pages 16-27.

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