On the transportation problem with market choice

We study a variant of the classical transportation problem in which suppliers with limited capacities have a choice of which demands (markets) to satisfy. We refer to this problem as the transportation problem with market choice (TPMC). While the classical transportation problem is known to be strongly polynomial-time solvable, we show that its market choice counterpart is strongly NP-complete. For the special case when all potential demands are no greater than two, we show that the problem reduces in polynomial time to minimum weight perfect matching in a general graph, and thus can be solved in polynomial time. We give valid inequalities and coefficient update schemes for general mixed-integer sets that are substructures of TPMC. Finally, we give conditions under which these inequalities define facets, and report our preliminary computational experiments with using them in a branch-and-cut algorithm.