INTERDEPENDENT DEMAND IN THE TWO-PERIOD NEWSVENDOR PROBLEM

Creative Commons License

Lotfi R., Weber G., Sajadifar S. M., Mardani N.

JOURNAL OF INDUSTRIAL AND MANAGEMENT OPTIMIZATION, cilt.16, sa.1, ss.117-140, 2020 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 16 Sayı: 1
  • Basım Tarihi: 2020
  • Doi Numarası: 10.3934/jimo.2018143
  • Dergi Adı: JOURNAL OF INDUSTRIAL AND MANAGEMENT OPTIMIZATION
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus, ABI/INFORM, Applied Science & Technology Source, Business Source Elite, Business Source Premier, Computer & Applied Sciences, MathSciNet, zbMATH
  • Sayfa Sayıları: ss.117-140
  • Anahtar Kelimeler: Newsvendor problem, expected profit, unsatisfied demand, interdependent demand, optimization, uncertainty, FREE NEWSBOY PROBLEM, QUANTITY DISCOUNTS, POLICY
  • Orta Doğu Teknik Üniversitesi Adresli: Hayır

Özet

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.