The Distribution Free Newsboy Problem: Review and Extensions

Gallego, Guillermo; Moon, Ilkyeong

doi:10.1057/jors.1993.141

Cited by 652 publications

(130 citation statements)

References 6 publications

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“…The above model (3) reduces to the profit function of the classical newsvendor problem (Gallego & Moon, 1993) when K=l=l1=0 and q =1, reduces to the model considered in Moon and Choi (1995) when l1= l = 0, and reduces to the model considered in Liao et al (2011) when l1 = 0.…”

Section: Remarkmentioning

confidence: 99%

“…Suppose only a partial information about the distribution F of D is available in the sense that F  Ŧ, where Ŧ is a certain family of distributions with a finite mean m and standard deviation s. Since the distribution F of D is unknown we want to minimize (4) against the worst possible distribution in Ŧ. To this end, we need the following results cited by Moon and Choi (1995), which are attributed to Gallego and Moon (1993):…”

Section: Remarkmentioning

confidence: 99%

“…Scarf (Scarf, 1958), who pioneered this approach, applies it to develop a closed form expression for the order quantity that maximizes expected profit. Scarf's results are resurrected by Gallego and Moon (1993), who provide a simpler proof of optimality of Scarf's ordering rule and extend the analysis to the cases of random yields, fixed ordering cost, and constrained multiple products, as well as the recourse case where there is a second ordering opportunity. Vairaktarakis (2000) develops a minimax regret approach for the distribution-free multi-item newsvendor problem under a budgetary constraint and two types of uncertainty.…”

Section: Introductionmentioning

confidence: 99%

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A distribution-free newsvendor model with balking penalty and random yield

Lan¹,

Ji²,

Li³

2015

JIEM

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Abstract:Purpose: The purpose of this paper is to extend the analysis of the distribution-free newsvendor problem under the circumstance of customer balking, which usually occurs when customers are reluctant to buy products if the available inventory falls below a threshold level.Design/methodology/approach: A new tradeoff tool is provided as a replacement of the traditional one to weigh the holding cost and the goodwill costs segment: apart from the shortage penalty, the balking penalty is introduced. Furthermore, such research methodology is employed in the case of random yield. Findings:A model is presented for determining both an optimal order quantity and a lower bound of the profit under the worst possible distribution of the demand. We also study the effects of shortage penalty and the balking penalty on the bias of the optimal order quantity, which have been largely bypassed in the existing distribution-free single period models with balking. Numerical examples are presented to illustrate the result.-1051-Journal of Industrial Engineering and Management -http://dx.doi.org/10.3926/jiem.1365 Originality/value: The incorporation of balking penalty and random yield represents an important improvement in inventory policy performance for distribution-free newsvendor problem when customer balking occurs and the distributional form of demand is uncertain.

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Section: Remarkmentioning

confidence: 99%

Section: Remarkmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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A distribution-free newsvendor model with balking penalty and random yield

Lan¹,

Ji²,

Li³

2015

JIEM

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“…In order to solve this problem, [2] first established the solution of a distribution free newsboy problem with known mean and standard deviation of lead time demand. [3] derived an easy proof of Scarf's [2] ordering rule.…”

Section: Introductionmentioning

confidence: 99%

A Distribution-Free Model with Variable Setup Cost, Backorder Price Discount and Controllable Lead Time

Malik¹,

Sarkar²

2018

DJ JEAM

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The purpose of this study is to investigate an inventory model for variable setup cost under stochastic conditions, in which the order quantity, reorder point, lead time and backorder price-discount rate are decision variables. The lead time demand is stochastic and exact distribution is unknown. Therefore, the distributionfree approach for the lead time demand with known mean and standard deviation is discussed. The proposed method is validated based on the numerical example and sensitivity analysis, and the results are compared with the existing studies in literature. The numerical results demonstrate that the proposed distribution free approach is more economical and saves significant cost.

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“…The corresponding purchase quantities ( ) ( )( ) , derived for the standard n = 1 case; see [7] [12] [13].…”

mentioning

confidence: 99%

A Newsvendor with Priority Classes and Shortage Cost

Li¹,

Sundararaghavan²,

Nandkeolyar³

2015

AJOR

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We consider an extension of the standard newsvendor problem by allowing for multiple classes of customers. The product is first sold to customers with the highest priority, and the remaining units (if any) are sold at a discounted price to customers in decreasing order of priority until all classes of customers have been served, limited only by the available stock. Unsold items, if any, have a salvage value. The demands of different priority customers are independent random variables with known probability distributions. The problem is to find the purchase quantity that maximizes the expected profit. We show that this problem actually reduces to the standard newsvendor problem with the demand distribution being a mixture of the input demand distributions. Since this mixture of distributions is typically hard to handle analytically, we propose a simple general heuristic which can be implemented using different types of distributions. Some of these implementations produce near optimal solutions. We tested these implementations for the case of two demand classes of customers and found that they outperform previously published heuristics in almost all instances. We suggest applications for this model in the Chinese pharmaceutical industry, apparel industry, and perishable goods among others. We also propose an extension involving shortage cost.

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The Distribution Free Newsboy Problem: Review and Extensions

Cited by 652 publications

References 6 publications

A distribution-free newsvendor model with balking penalty and random yield

A distribution-free newsvendor model with balking penalty and random yield

A Distribution-Free Model with Variable Setup Cost, Backorder Price Discount and Controllable Lead Time

A Newsvendor with Priority Classes and Shortage Cost

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