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This algorithm arose out of the necessity to handle setup effects in production scheduling, hence - inevitably - the acronym, "setup algorithm". However, the technique can be applied to a number of prevalent problems such as (certain) capital budgeting, media selection, plant/warehouse location, seasonal manpower leveling, lockbox, and others. The general model employs zero-one fixed cost (or setup) variables each of which dominates a set of continuous variables. Thus, if a fixed cost variable is at value one, the sum of the dominated set may take on any value up to a stated maximum. On the other hand, if the fixed cost variable is at value zero, all the dominated set is constrained to zero.

Solving large scale mixed integer programs of the fixed cost type