The Multi-product Newsvendor Problem: Review, Extensions, and Directions for Future Research

Turken, Nazli; Tan, Yinliang; Vakharia, Asoo J.; Wang, Lan; Wang, Ruoxuan; Yenipazarli, Arda

doi:10.1007/978-1-4614-3600-3_1

Cited by 28 publications

(14 citation statements)

References 47 publications

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“…Developing an effective and efficient heuristic search algorithm with rigorous performance evaluation can also be valuable. In particular, as an overbooking problem is to determine the capacity level facing uncertain demand, it shares the same characteristics with the well-known newsvendor model in the operations management literature [ 34 , 35 ]. 1 While the set-resource relationship, integer constraints, and nonlinearity make the closed-form critical ratio formula cannot be directly applied, when a good heuristic algorithm is needed, algorithms solving variants of newsvendor problems are certainly great references.…”

Section: Discussionmentioning

confidence: 99%

Overbooking for physical examination considering late cancellation and set-resource relationship

Kung

Huang

et al. 2021

BMC Health Serv Res

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Background Late cancellations of physical examination has severe impact on the operations of a physical examination center since it is often too late to fill vacancy. A booking control policy that considers overbooking is then one natural solution. Unlike appointment scheduling problems for clinics and hospitals, in which treating a patient mostly requires only one type of resource, a physical examination set typically requires multiple types of resources. Traditional methods that do not consider set-resource relationship thus may be inapplicable. Methods We formulate a stochastic mathematical programming model that maximizes the expected net reward, which is the examination revenue minus overage cost. A complete search algorithm and a greedy search algorithm are designed to search for optimal booking limits for all examination sets. To estimate the late cancellation probability for each individual consumer, we apply logistic regression to identify significant factors affecting the probability. After clustering is used to estimate individual probabilities, Monte Carlo simulation is conducted to generate probability distributions for the number of consumers without late cancellations. A discrete-event simulation is performance to evaluate the effectiveness of our proposed solution. Results We collaborate with a leading physical examination center to collect real data to evaluate our proposed overbooking policies. We show that the proposed overbooking policy may significantly increase the expected net reward. Our simulation results also help us understand the impact of overbooking on the expected number of customers and expected overage. A sensitivity analysis is conducted to demonstrate that the benefit of overbooking is insensitive to the accuracy of cost estimation. A Pareto efficiency analysis gives practitioners suggestions regarding policy determination considering multiple performance indications. Conclusions Our proposed overbooking policies may greatly enhance the overall performance of a physical examination center.

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Section: Discussionmentioning

confidence: 99%

Overbooking for physical examination considering late cancellation and set-resource relationship

Kung

Huang

et al. 2021

BMC Health Serv Res

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“…The literature on multiproduct or multimarket newsvendor problems (e.g., Burke et al, 2009;Ozler et al, 2009;Turken et al, 2012) studies the horizontal multiple newsvendors at one layer of supply chains. In contrast, our study focuses on multiple vertically related newsvendors at successive stages of supply chains.…”

Section: Related Literaturementioning

confidence: 99%

Does uncertainty spread vertically? A theory of multilayer newsvendors under asymmetric information

Yang

Liu

Lamb

2019

Int Trans Operational Res

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Using a vertically related multilayer newsvendors framework, this paper analyzes the impacts of market uncertainties and asymmetric information between firms at successive stages of a supply chain on their optimal stocking (and/or pricing) decisions. The asymmetric information along the supply chain effectively transmits the downstream uncertainty backward to the preceding stages of the supply chain. Our results imply that for industries in which there are lead times and asymmetric information in multiple successive stages along the supply chain, it is essentially important for the upstream firms to study the market conditions facing the vertically related downstream firms, and it is important for them to design incentive-compatible mechanisms to facilitate efficient information sharing among vertically related entities. In these industries, the entities might also have stronger incentives to invest in lead time reduction and in information acquisition, if such options exist. Our framework offers a good starting point for a more comprehensive study in the future on the interactions among and the impact of differential lead times across successive stages in supply chains.

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“…Other notable extensions include the consideration of preseason production (Chung, Flynn, and Kirca, 2008), consideration of outsourcing and salvaging (Zhang and Du 2010) and the separable programming based approximation method of Niederhoff (2007). For an extensive review, we refer the reader to Turken et al (2012).…”

Section: Multi-item Newsvendor Problemmentioning

confidence: 99%

Augmented nested sampling for stochastic programs with recourse and endogenous uncertainty

Ekin¹,

Polson

Soyer

2017

Naval Research Logistics

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We propose a novel simulation‐based approach for solving two‐stage stochastic programs with recourse and endogenous (decision dependent) uncertainty. The proposed augmented nested sampling approach recasts the stochastic optimization problem as a simulation problem by treating the decision variables as random. The optimal decision is obtained via the mode of the augmented probability model. We illustrate our methodology on a newsvendor problem with stock‐dependent uncertain demand both in single and multi‐item (news‐stand) cases. We provide performance comparisons with Markov chain Monte Carlo and traditional Monte Carlo simulation‐based optimization schemes. Finally, we conclude with directions for future research.

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The Multi-product Newsvendor Problem: Review, Extensions, and Directions for Future Research

Cited by 28 publications

References 47 publications

Overbooking for physical examination considering late cancellation and set-resource relationship

Overbooking for physical examination considering late cancellation and set-resource relationship

Does uncertainty spread vertically? A theory of multilayer newsvendors under asymmetric information

Augmented nested sampling for stochastic programs with recourse and endogenous uncertainty

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