Order selection on a single machine with high set-up costs

We study the problem of allocating a limited quantity of a single manufacturing resource to produce a subset of possible part-types. Customer orders require one or more part-types. We assume that revenue is received for an order only if it is completely filled, and that set-up costs and order revenues dominate the variable costs of production. We present a heuristic for the solution of our problem, as well as families of cutting-planes for an integer programming formulation. Computational results on a set of random test problems indicate that the heuristic is quite effective in producing near optimal solutions. The cutting-planes appear to be quite useful in reducing the number of linear programming solutions required by branch-and-bound.