Global optimization of mixed-integer bilevel programming problems

Two approaches that solve the mixed-integer nonlinear bilevel programming problem to global optimality are introduced. The first addresses problems mixed-integer nonlinear in outer variables and C <Superscript>2</Superscript>-nonlinear in inner variables. The second adresses problems with general mixed-integer nonlinear functions in outer level. Inner level functions may be mixed-integer nonlinear in outer variables, linear, polynomial, or multilinear in inner integer variables, and linear in inner continuous variables. This second approach is based on reformulating the mixed-integer inner problem as continuous via its vertex polyheral convex hull representation and solving the resulting nonlinear bilevel optimization problem by a novel deterministic global optimization framework. Computational studies illustrate proposed approaches. Copyright Springer-Verlag Berlin/Heidelberg 2005