Interdependent demand in the two-period newsvendor problem

Download

index.pdf

Date

2020-01-01

Author

Lotfi, Reza
Weber, Gerhard Wilhelm
Sajadifar, S. Mehdi
Mardani, Nooshin

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

76
views

0
downloads

The newsvendor problem is a classical task in inventory management. The present paper considers a two-period newsvendor problem where demand of different periods is interdependent (not independent), and seeks to follow this approach to develop a two-period newsvendor problem with unsatisfied demand or unsold quantity. Concerning the complexity of solution of multiple integrals, the problem is assessed for only two periods. In the course of a numerical solution, the probability distribution function of demand pertaining to each period is assumed to be given (in the form of a bivariate normal distribution). The optimal solution is presented in the form of the initial inventory level that maximizes the expected profit. Finally, all model parameters are subjected to a sensitivity analysis. This model can be used in a number of applications, such as procurement of raw materials in projects (e.g., construction, bridge-building and molding) where demand of different periods is interdependent. Proposed model takes into account interdependent demand oughts to provide a better solution than a model based on independent demand.

Subject Keywords

Strategy and Management, Business and International Management, Control and Optimization, Applied Mathematics

URI

https://hdl.handle.net/11511/57419

Journal

JOURNAL OF INDUSTRIAL AND MANAGEMENT OPTIMIZATION

DOI

https://doi.org/10.3934/jimo.2018143

Collections

Graduate School of Applied Mathematics, Article

Suggestions

OpenMETU
Core

Decision Making and the Price Setting Newsvendor: Experimental Evidence KOCABIYIKOĞLU, AYŞE; GÖĞÜŞ, CELİLE ITIR; Gönül, Mustafa Sinan (Wiley, 2016-02-01) We present an experimental study of the price-setting newsvendor problem, which extends the traditional framework by allowing the decision maker to determine both the selling price and the order quantity of a given item. We compare behavior under this model with two benchmark conditions where subjects have a single decision to make (price or quantity). We observe that subjects deviate from the theoretical benchmarks when they are tasked with a single decision. They also exhibit anchoring behavior, where the...
Rebalancing the assembly lines with total squared workload and total replacement distance objectives Girit, Utku; Azizoğlu, Meral (Informa UK Limited, 2020-01-01) Assembly line balancing is an important and well recognised operations research problem. The current line balance may not stay optimal, even feasible, due to the disruptions in one or more workstations. In this study, after the disruption, we aim to rebalance the assembly line by considering the trade-off between workload balancing (fairness measure) and total replacement distance for the tasks assigned to the different workstations (stability measure). We try to generate all non-dominated objective functio...
Integrated demand and procurement portfolio management with spot market volatility and option contracts Merzifonluoglu, Yasemin (2017-04-01) The newsvendor problem aims to optimally choose a level of order quantity to respond to a known demand distribution with the objective of maximizing expected return. In practice, the decision maker is often challenged with more complex settings involving multiple decisions and uncertainties. For instance, firms may benefit from choosing the set of customer orders to satisfy. It may also be worthwhile for many firms to select a supply portfolio instead of relying on a single procurement mode. This paper prov...
Interactive evolutionary approaches to multiobjective feature selection ÖZMEN, müberra; Karakaya, Gülşah; KÖKSALAN, MUSTAFA MURAT (Wiley, 2018-05-01) In feature selection problems, the aim is to select a subset of features to characterize an output of interest. In characterizing an output, we may want to consider multiple objectives such as maximizing classification performance, minimizing number of selected features or cost, etc. We develop a preference-based approach for multiobjective feature selection problems. Finding all Pareto-optimal subsets may turn out to be a computationally demanding problem and we still would need to select a solution. There...
JOINT PRICING AND REPLENISHMENT DECISIONS FOR NON-INSTANTANEOUS DETERIORATING ITEMS WITH PARTIAL BACKLOGGING, INFLATION- AND SELLING PRICE-DEPENDENT DEMAND AND CUSTOMER RETURNS Ghoreishi, Maryam; Mirzazadeh, Abolfazl; Weber, Gerhard Wilhelm; Nakhai-Kamalabadi, Isa (American Institute of Mathematical Sciences (AIMS), 2015-07-01) This paper develops an Economic Order Quantity (EOQ) model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation and customer returns. The customer returns are assumed as a function of demand and price. Shortages are allowed and partially backlogged. The effects of time value of money are studied using the Discounted Cash Flow approach. The main objective is to determine the optimal selling price, the optimal length of time in which there is...

Citation Formats

R. Lotfi, G. W. Weber, S. M. Sajadifar, and N. Mardani, “Interdependent demand in the two-period newsvendor problem ,” JOURNAL OF INDUSTRIAL AND MANAGEMENT OPTIMIZATION, pp. 117–140, 2020, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/57419.