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Some general properties for the newsboy problem with an extraordinary order

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  • V. Pando
  • L. San-José
  • J. García-Laguna
  • J. Sicilia

Abstract

In this paper, an extension of the standard newsboy problem is presented, involving an extraordinary order and a variable mixture of backorders and lost sales. The backlogged demand ratio is given by a nonincreasing function of the quantity of shortage. Some general properties for the expected cost are derived under weak assumptions about the backorder rate function. When the backorder rate is a linear function, some sufficient conditions for the global convexity of the expected cost are derived. A sufficient condition for the local concavity of this function is also provided. Numerical examples are presented to illustrate the theoretical results and a specific practical case is proposed and solved. Moreover, a sensitivity analysis of the optimal solution with respect to the parameters of the backorder rate function is included. Finally, some extensions of the proposed model are suggested as possible directions for future research. Copyright Sociedad de Estadística e Investigación Operativa 2014

Suggested Citation

  • V. Pando & L. San-José & J. García-Laguna & J. Sicilia, 2014. "Some general properties for the newsboy problem with an extraordinary order," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 22(2), pages 674-693, July.
    • Handle: RePEc:spr:topjnl:v:22:y:2014:i:2:p:674-693
    DOI: 10.1007/s11750-013-0287-7
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    References listed on IDEAS

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    10. Jammernegg, Werner & Kischka, Peter, 2013. "The price-setting newsvendor with service and loss constraints," Omega, Elsevier, vol. 41(2), pages 326-335.
    11. Brito, Anderson J. & de Almeida, Adiel T., 2012. "Modeling a multi-attribute utility newsvendor with partial backlogging," European Journal of Operational Research, Elsevier, vol. 220(3), pages 820-830.
    12. Abdel-Malek, Layek & Montanari, Roberto & Morales, Libia Cristina, 2004. "Exact, approximate, and generic iterative models for the multi-product Newsboy problem with budget constraint," International Journal of Production Economics, Elsevier, vol. 91(2), pages 189-198, September.
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    3. Serel, Doğan A., 2015. "Production and pricing policies in dual sourcing supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 1-12.

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