Exact, approximate, and generic iterative models for the multi-product Newsboy problem with budget constraint

Abdel‐Malek, Layek; Montanari, Roberto; Morales, L.C.

doi:10.1016/j.ijpe.2003.09.004

Cited by 77 publications

(33 citation statements)

References 5 publications

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“…They note that this approach can become computationally intensive if the number of products or the budget are large, and propose two heuristic approaches to address large-scale problems. Abdel-Malek et al (2004), Abdel-Malek and Montanari (2005a), and Abdel-Malek and Montanari (2005b) consider a multi-product newsvendor whose objective is to minimize expected costs related to procurement and salvage/disposal, while maximizing revenue. A budget constraint is incorporated via Lagrangian relaxation.…”

Section: Related Literature and Our Contributionsmentioning

confidence: 99%

The multi-product price-setting newsvendor with resource capacity constraints

Murray

Gosavi

Talukdar

2012

International Journal of Production Economics

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In this paper, we consider a newsvendor problem commonly encountered in retail stores that cater to budgetsensitive shoppers. The newsvendor sells multiple products, and in addition to determining order quantities must also determine the selling price of each product sold. The demand for each product is of a stochastic nature and depends on the demands of other products, i.e., is cross-elastic. We transform the objective function into a form that is amenable to developing integer-programming solutions and then develop a numeric optimization procedure rooted in the Nelder-Mead search technique. We obtain encouraging numerical results on some small-scale and large-scale problems. To the best of our knowledge, this is the first work that produces implementable solutions for a scenario that is particularly relevant to retailers catering to budget-sensitive customers who are abundant in the current economy.

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Section: Related Literature and Our Contributionsmentioning

confidence: 99%

The multi-product price-setting newsvendor with resource capacity constraints

Murray

Gosavi

Talukdar

2012

International Journal of Production Economics

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“…Nahmias and Schmidt (1984), Lau and Lau (1996), Erlebacher (2000), Moon and Silver (2000). More recently Abdel-Malek et al (2004) develop an iterative method for solving the multi-item newsvendor problem with budget constraint. Abdel-Malek and Montanari (2005) develop a method for solving the problem with two constraints.…”

Section: Literature Reviewmentioning

confidence: 99%

Multi-item quick response system with budget constraint

Serel

2012

International Journal of Production Economics

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a b s t r a c tQuick response mechanisms based on effective use of up-to-date demand information help retailers to reduce their inventory management costs. We formulate a single-period inventory model for multiple products with dependent (multivariate normal) demand distributions and a given overall procurement budget. After placing orders based on an initial demand forecast, new market information is gathered and demand forecast is updated. Using this more accurate second forecast, the retailer decides the total stocking level for the selling season. The second order is based on an improved demand forecast, but it also involves a higher unit supply cost. To determine the optimal ordering policy, we use a computational procedure that entails solving capacitated multi-item newsboy problems embedded within a dynamic programming model. Various numerical examples illustrate the effects of demand variability and financial constraint on the optimal policy. It is found that existence of a budget constraint may lead to an increase in the initial order size. It is also observed that as the budget available decreases, the products with more predictable demand make up a larger share of the procurement expenditure.

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“…., k i . Constraints (12) are nonnegative constraints for the selling prices. Constraints (13) are restrictions for the value of z i .…”

Section: Modelmentioning

confidence: 99%

“…In the following, we use function LRp ij to represent the objective function (17), and subproblem LRp ij for the problem formulated by (17), (18), (12) and (13).…”

Section: Maxmentioning

confidence: 99%

Jointly pricing and ordering for a multi-product multi-constraint newsvendor problem with supplier quantity discounts

Shi

Zhang

Jiang

2011

Applied Mathematical Modelling

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a b s t r a c tWe present an extension to the multi-product newsvendor problem by incorporating the retailer's pricing decision as well as considering supplier quantity discount. The objective is to maximize the expected profit of the retailer through jointly determining the ordering quantities and selling prices for the products, subject to multiple capacity constraints. We formulate the problem as a Generalized Disjunctive Programming (GDP) model and develop a Lagrangian heuristic approach for its solution. Randomly produced instances involving up to 1000 products are used to test the proposed approach. Computational results show that the Lagrangian heuristic approach can present very good solutions to all instances in reasonable time.

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Exact, approximate, and generic iterative models for the multi-product Newsboy problem with budget constraint

Cited by 77 publications

References 5 publications

The multi-product price-setting newsvendor with resource capacity constraints

The multi-product price-setting newsvendor with resource capacity constraints

Multi-item quick response system with budget constraint

Jointly pricing and ordering for a multi-product multi-constraint newsvendor problem with supplier quantity discounts

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