A multiple-item budget-constraint newsboy problem with a reservation policy
In contrast to the classical newsboy-style problem, this paper develops a model for the multiple-item budget-constraint newsboy problem considering a reservation policy to meet marketing needs. A discount rate is provided to those customers who are willing to make a reservation. In addition to the demand from the original customers, extra demand is also included in the model due to the motivation of the discount rate. A solution algorithm, namely the MCR algorithm, is proposed to solve the problem. The proposed algorithm can actually be considered as a generalization of the classical newsboy-style problem. The MCR algorithm not only provides a business unit with the optimal order quantity, but also the discount rate necessary to achieve the maximal total expected profit under a limited budget. From the illustrated example, it is shown that the expected profit from the proposed model is greater than that from the classical model, due to the consideration of reservations, even though the budget constraint is tight. The increase in the expected profit could be treated as an information value from the willingness function. Although the proposed model is developed for multiple-item problems, it also can be applied to single-item ones. From the sensitivity analysis, the application of the single-item problem to the proposed model can still obtain greater expected profit than the classical model under different budgetary levels.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 38 (2010)
Issue (Month): 6 (December)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Khouja, Moutaz & Robbins, Stephanie S., 2003. "Linking advertising and quantity decisions in the single-period inventory model," International Journal of Production Economics, Elsevier, vol. 86(2), pages 93-105, November.
- Mostard, Julien & Teunter, Ruud, 2006. "The newsboy problem with resalable returns: A single period model and case study," European Journal of Operational Research, Elsevier, vol. 169(1), pages 81-96, February.
- Lau, Hon-Shiang & Hing-Ling Lau, Amy, 1996. "The newsstand problem: A capacitated multiple-product single-period inventory problem," European Journal of Operational Research, Elsevier, vol. 94(1), pages 29-42, October.
- Robert L. Winkler & Gary M. Roodman & Robert R. Britney, 1972. "The Determination of Partial Moments," Management Science, INFORMS, vol. 19(3), pages 290-296, November.
- Keren, Baruch, 2009. "The single-period inventory problem: Extension to random yield from the perspective of the supply chain," Omega, Elsevier, vol. 37(4), pages 801-810, August.
- Lai, Guoming & Debo, Laurens G. & Sycara, Katia, 2009. "Sharing inventory risk in supply chain: The implication of financial constraint," Omega, Elsevier, vol. 37(4), pages 811-825, August.
- Weatherford, LR & Pfeifer, PE, 1994. "The economic value of using advance booking of orders," Omega, Elsevier, vol. 22(1), pages 105-111, January.
- Wu, Jun & Li, Jian & Wang, Shouyang & Cheng, T.C.E., 2009. "Mean-variance analysis of the newsvendor model with stockout cost," Omega, Elsevier, vol. 37(3), pages 724-730, June.
- Mostard, Julien & de Koster, Rene & Teunter, Ruud, 2005. "The distribution-free newsboy problem with resalable returns," International Journal of Production Economics, Elsevier, vol. 97(3), pages 329-342, September.
- James D. Dana & Jr., 1998. "Advance-Purchase Discounts and Price Discrimination in Competitive Markets," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 395-422, April.
- Abdel-Malek, Layek L. & Montanari, Roberto, 2005. "An analysis of the multi-product newsboy problem with a budget constraint," International Journal of Production Economics, Elsevier, vol. 97(3), pages 296-307, September.
- Arcelus, F.J. & Kumar, Satyendra & Srinivasan, G., 2008. "Evaluating manufacturer's buyback policies in a single-period two-echelon framework under price-dependent stochastic demand," Omega, Elsevier, vol. 36(5), pages 808-824, October.
- Wang, Charles X. & Webster, Scott, 2009. "The loss-averse newsvendor problem," Omega, Elsevier, vol. 37(1), pages 93-105, February.
- 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.
When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:38:y:2010:i:6:p:431-439. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.