Per-unit cost minimisation of the newsvendor problem Online publication date: Mon, 29-Jun-2015
by M.A. Darwish; Abdulrahman R. Alenezi; Majid M. Aldaihani
International Journal of Industrial and Systems Engineering (IJISE), Vol. 20, No. 4, 2015
Abstract: Due to the advancements in technology, the newsvendor-type items become very common; this led to great interest in newsvendor model in recent years. In this paper, we model the newsvendor problem with the objective of minimising the per-unit cost where the holding cost, setup cost, underage cost as well as overage cost are included in the model. We establish the convexity of the cost function and we then devise easy solution methods to solve the proposed model. It turns out that the proposed solution methods are based on functions similar to the standard normal loss function that is well-known in the classical stochastic inventory model. These functions are tabulated so that the optimal solution can be found without difficulty. Moreover, numerical analysis is conducted on key parameters of the model.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Industrial and Systems Engineering (IJISE):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com