This paper shows how branch -and -bound methods can be used to reduce storage and, possibly, computational requirements in discrete dynamic programs. Relaxations and fathoming cjriteria are used to identify and to eliminate states whose corresponding subpolicies could not lead to optimal policies. The general dynamic programming/branchand-bound approach is applied to the traveling -salesman problem and the nonlinear knapsack problem. The reported computational experience demonstrates the dramatic savings in both computer storage and computational requirements which were effected utilizing the hybrid approach.Consider the following functional equation of dynamic programming for additive costs: f(y) = min {TT(y',d) + f (y ') lT(y ' ,d) = y] , y € (P. -y.)with the boundary condition f(yo) = ko (2) in which, Q is the finite nonempty state space; y-€ fi is the initial state; d € D is a decision, where D is the finite nonempty set of decisions;T: n X D -n is the transition mapping, where T(y ',d) TT(y',d) is the incremental cost that is incurred when de-cision d is applied at state y'; k_ 6 IR is the initial cost incurred in the initial state y_; and in (2) we make the convenient but unnecessary assumption that return to the initial state is not possible. The functional equation (1) In 3 3 we show that our results extend immediately to general separable cost functions and discuss the alternative viewpoint of using dynamic programming within a branch -and -bound framcwi^rk.-3- (1) represents the discrete optimization problem 9, so that we can employ (1) and (2) Prior to discussing lower bounds and our results, it will be useful to define the policy space and some of its subsets and to define the trans i'tion mapping and cost function on the policy space. [6 @i lT(y^,6)= y'}, let A"(y')^A(y') denote the set of optimal subpolicies (policies if y' € fip) for state y'. i.e., A*(y') = {6^A(y')|f(y') = k" +'rT(y ,6)}, and let x(y') denote the completion set of feasible subpolicies which when applied at state y' result in a final state, i.e., For each state y' € n we define a lower bound mapping^: Q -• IR with the property that ay')^n(y',6) V6 € x(y').Then it is easily established thatthen 6 '6^A * for an^6 ' € A*(y') and all. 6 € x(y')« Proof .Substitute (3) and (4) i€(S-j)^J with the boundary condition f(0,-) =0. (9) Notice that (8) and (9) are equivalent to (1) and (2) The major roadblocks to solving even moderate size (N > 20) traveling -salesman problems by the dynamic programming algorithm, (8) and (9) Furthermore, even though the search over permutations in (7) has essentially been reduced to a recursive search over combinations in (8) and N-1 (9), the computational effort is still on the order of N2 (the exact number being E^" J n(n-l)f^'-^^+ (N-1) = (N-l)(l + (N-2)(l + (N-2)2^'^). An upper bound on (7) is easily obtained as the weight of any tour t €^. For example, we could take the minimum of the weights of i) the tour (1,2,..., N-1, N,l) and ii) the N nearest -neighbor tours constructed by starti...