A Two‐Product Newsvendor Problem with Partial Demand Substitution

2021 ◽  
Author(s):  
Lei Lei ◽  
Jun Ru ◽  
Ruixia Shi ◽  
Jun Zhang
Keyword(s):  
Newsvendor Problem ◽  
Demand Substitution

Multiproduct Newsvendor Problem with Customer-Driven Demand Substitution: A Stochastic Integer Program Perspective

2020 ◽  
Author(s):  
Jie Zhang ◽  
Weijun Xie ◽  
Subhash C. Sarin
Keyword(s):  
Necessary Optimality Conditions ◽  
Integer Program ◽  
Newsvendor Problem ◽  
Sensitivity Analyses ◽  
Quadratic Program ◽  
Optimal Order ◽  
Demand Substitution ◽  
Performance Guarantees ◽  
Optimal Value ◽  
Stochastic Integer Program

This paper studies a multiproduct newsvendor problem with customer-driven demand substitution, where each product, once run out of stock, can be proportionally substituted by the others. This problem has been widely studied in the literature; however, because of nonconvexity and intractability, only limited analytical properties have been reported and no efficient approaches have been proposed. This paper first completely characterizes the optimal order policy when the demand is known and reformulates this nonconvex problem as a binary quadratic program. When the demand is random, we formulate the problem as a two-stage stochastic integer program, derive several necessary optimality conditions, prove the submodularity of the profit function, and also develop polynomial-time approximation algorithms and show their performance guarantees. We further propose a tight upper bound via nonanticipativity dual, which is proven to be very close to the optimal value and can yield a good-quality feasible solution under a mild condition. Our numerical investigation demonstrates effectiveness of the proposed algorithms. Moreover, several useful findings and managerial insights are revealed from a series of sensitivity analyses.

Capacitated strategic assortment planning under explicit demand substitution

2021 ◽  
Author(s):  
Nagihan Çömez-Dolgan ◽  
Nilgun Fescioglu-Unver ◽  
Ecem Cephe ◽  
Alper Şen
Keyword(s):  
Assortment Planning ◽  
Demand Substitution

Loss-averse newsvendor problem with supply risk

2016 ◽  
Vol 67 (2) ◽  
pp. 214-228 ◽  
Author(s):  
Lijun Ma ◽  
Weili Xue ◽  
Yingxue Zhao ◽  
Qinghua Zeng
Keyword(s):  
Newsvendor Problem ◽  
Supply Risk

The risk-averse newsvendor problem with random capacity

2013 ◽  
Vol 231 (2) ◽  
pp. 328-336 ◽  
Author(s):  
Meng Wu ◽  
Stuart X. Zhu ◽  
Ruud H. Teunter
Keyword(s):  
Newsvendor Problem ◽  
Risk Averse ◽  
Random Capacity

Bicriteria optimization in the newsvendor problem with uniformly distributed demand

4OR ◽  
2012 ◽  
Vol 10 (3) ◽  
pp. 267-286 ◽  
Author(s):  
F. J. Arcelus ◽  
Satyendra Kumar ◽  
G. Srinivasan
Keyword(s):  
Newsvendor Problem ◽  
Bicriteria Optimization ◽  
Uniformly Distributed Demand
Sign in / Sign up

Export Citation Format

Share Document