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A Newsvendor Model with Initial Inventory and Two Salvage Opportunities

Author

Listed:
  • Christian van Delft

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Ali Cheaitoua

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Zied Jemai

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Yves Dallery

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

Abstract

In this paper, we develop an extension of the newsvendor model with initial inventory. In addition to the usual quantity ordered at the beginning of the horizon and the usual quantity salvaged at the end of the horizon, we introduce a new decision variable: a salvage opportunity at the beginning of the horizon, which might be used in the case of high initial inventory level. We develop the expression of the optimal policy for this extended model, for a general demand distribution. The structure of this optimal policy is particular and is characterized by two threshold levels. Some managerial insights are given via numerical examples.

Suggested Citation

  • Christian van Delft & Ali Cheaitoua & Zied Jemai & Yves Dallery, 2011. "A Newsvendor Model with Initial Inventory and Two Salvage Opportunities," Post-Print hal-00588707, HAL.
    • Handle: RePEc:hal:journl:hal-00588707
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    Cited by:

    1. Cheaitou, Ali & Cheaytou, Rima, 2019. "A two-stage capacity reservation supply contract with risky supplier and forecast updating," International Journal of Production Economics, Elsevier, vol. 209(C), pages 42-60.

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