A distribution free approach to newsvendor problem with pricing

Raza, Syed Asif

doi:10.1007/s10288-013-0249-9

Cited by 34 publications

(22 citation statements)

References 19 publications

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“…The results obtained in this paper generalize a long series of work in the area of distributionfree newsvendor problem (initiated by Scarf (1958)), including the price optimization variant studied in Raza (2014). These results can also be used to check whether the outcomes (ordering decision, wholesale price) are consistent with a distributionally robust Stackelberg game model, and can be extended to handle price optimization when the mean demand is related to price through a factor model, and to deal with information asymmetry in case the supplier and retailer possess different beliefs on the moment conditions on demand and selling price.…”

Section: Resultssupporting

confidence: 66%

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Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach

Sim²,

Teo

2018

Operations Research

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How should decentralized supply chains set the profit sharing terms using minimal information on demand and selling price? We develop a distributionally robust Stackelberg game model to address this question. Our framework uses only the first and second moments of the price and demand attributes, and thus can be implemented using only a parsimonious set of parameters. More specifically, we derive the relationships among the optimal wholesale price set by the supplier, the order decision of the retailer, and the corresponding profit shares of each supply chain partner, based on the information available. Interestingly, in the distributionally robust setting, the correlation between demand and selling price has no bearing on the order decision of the retailer. This allows us to simplify the solution structure of the profit sharing agreement problem dramatically. Moreover, the result can be used to recover the optimal selling price when the mean demand is a linear function of the selling price (cf. Raza (2014)).

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Section: Resultssupporting

confidence: 66%

“…Since Σ 0 is positive semi-definite, it implies that Let g(Q) denote the objective function of Problem (30). We have…”

Section: Estimating Mean Demandmentioning

confidence: 99%

Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach

Sim²,

Teo

2018

Operations Research

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“…Zhu et al (2013) proposed a stochastically robust model for the newsvendor problem where distribution of the random demand is specified only by the mean and either of its standard deviation or its support. Raza (2014) presents a comprehensive analysis of the newsvendor problem with pricing using the distribution-free approach. In today's dynamic market, demand volume, even the underlying demand distribution, changes quickly and the existing methods requiring stationary demand distribution may not work well.…”

Section: Literature Reviewmentioning

confidence: 99%

Extended distribution‐free newsvendor models with demand updates using experts’ judgment

Nagare¹,

Dutta

Cheikhrouhou

2019

Int Trans Operational Res

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Retailers of short life cycle products, such as [life and style goods are required to commit an order with their suppliers far ahead of their selling seasons inclusive scant demand information. Most of the time, they practice preseason two-stage ordering (instants) that provide an opportunity to modify an initial order based on updated demand forecast obtained at a later stage. The present paper utilizes expert judgment to assess potential impact(s) of contextual information acquired between two instants, in order to revise demand forecast. Additionally, the scant demand information available may not reveal the underlying demand distribution. In this context, we develop inventory models under distribution free newsvendor framework to determine optimal order quantity and weight factor considering also the revised demand forecast. The models consider bidirectional changes in demand and three cases of demand variability: a constant variance case ("CVC"), a constant coefficient of variation case ("CCVC"), and General Case ("GC"). The models developed in the first instance without constraints are subsequently extended by enforcing constraints for practical consideration such as limited storage space or maintenance of pre-defined service level. Moreover, these single-item models are extended to multi-items case to improve their practical utility. The closed form expressions are obtained for decision variables and lower bound of expected profit and their results are discussed using numerical examples. Results show economic benefits in revising the demand forecast using expert judgment and/or negative impact of constraints and/or negative role of demand variability. In addition, a case study is presented to illustrate the potential demand impact assessment and the application of the proposed models within real life circumstances.

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“…Under these circumstances, alternatively, one can choose the robust approach to formulate the model with partial information of the demand, which can be easily characterized or will stay the same at a relatively long period (i.e., mean, variance, or support). Therefore, some works applied the robust optimization to the newsvendor problems (Scarf 1957, Vairaktarakis 2000,Özler et al 2009, Lin and Ng 2011, Raza 2014, Hanasusanto et al 2015, Carrizosa et al 2016, Chen and Zhang 2009, Ardestani-Jaafari and Delage 2016. Especially, Scarf (1957) was the pioneer to introduce the robust idea to analyze single-product newsvendor problem with known mean and variance of the demand.…”

Section: Relevant Literaturementioning

confidence: 99%

Robust Multi-Product Newsvendor Model With Substitution Under Cardinality-Constrained Uncertainty Set

2018

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A distribution free approach to newsvendor problem with pricing

Cited by 34 publications

References 19 publications

Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach

Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach

Extended distribution‐free newsvendor models with demand updates using experts’ judgment

Robust Multi-Product Newsvendor Model With Substitution Under Cardinality-Constrained Uncertainty Set

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