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A Multi-Product Newsvendor Problem with Budget and Loss Constraints

Author

Listed:
  • Yanju Zhou

    (School of Business, Central South University, Hunan, Changsha 410083, China)

  • Xiaohong Chen

    (School of Business, Central South University, Hunan, Changsha 410083, China)

  • Xuanhua Xu

    (School of Business, Central South University, Hunan, Changsha 410083, China)

  • Changjun Yu

    (Department of Mathematics and Statistics, Curtin University, West Australia, Perth 6845, Australia)

Abstract

The solution space of a multi-product newsvendor problem (MPNP) with two constraints is analyzed and divided by four cases. One constraint is a loss constraint, which is nonlinear and has the integral symbol, while the other is a budget constraint. The threshold values of different solution regions are calculated and the corresponding solving methods for each case are provided, reducing the complexity of problem solving. The paper suggests the loss-based marginal utility deleting method solves non-negative constraint problems, and the linear approximate approach deals with nonlinear constraint optimal problems with an integral symbol in the model. Numerical examples are given, showing that the solving approach is more effective.

Suggested Citation

  • Yanju Zhou & Xiaohong Chen & Xuanhua Xu & Changjun Yu, 2015. "A Multi-Product Newsvendor Problem with Budget and Loss Constraints," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 14(05), pages 1093-1110.
  • Handle: RePEc:wsi:ijitdm:v:14:y:2015:i:05:n:s0219622014500448
    DOI: 10.1142/S0219622014500448
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    Cited by:

    1. Mohammad A.M. Abdel-Aal & Mujahid N. Syed & Shokri Z. Selim, 2017. "Multi-product selective newsvendor problem with service level constraints and market selection flexibility," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 96-117, January.

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