Manufacturing newsvendors and inventory pooling with nonlinear production costs
by Yigal Gerchak
International Journal of Inventory Research (IJIR), Vol. 3, No. 1, 2016

Abstract: We discuss a manufacturing newsvendor problem with nonlinear production costs. We perform comparative statics with respect to the unit revenue, the production cost function and the demand distribution. We provide several specific examples. Then we analyse inventory pooling between manufacturing newsvendors with nonlinear production costs, which involves comparing joint production to individual production. We illustrate the findings by using examples with demands following i.i.d. uniform and normal distributions.

Online publication date: Thu, 30-Jun-2016

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