Production planning and Order Acceptance: an Integrated Model with Flexible Due Dates

We study a tactical problem integrating production planning with order acceptance decisions. We explicitly consider the dependency between the workload (and work-in-process inventory) and lead times. In the new model, orders are accepted/rejected and their processing period is determined. This problem is formulated as a mixed integer linear program for which two relax-and-fix heuristic solution methods are proposed. The first one decomposes the problem based on time periods while the second decomposes it based on orders. The performances of these heuristics are compared with the performance of a commercial solver. The numerical results show that the time-based relax-and-fix heuristic outperforms the order-based relax-and-fix heuristic and the solver solution as it yields better integrality gaps for much less CPU time.