Using separable programming to solve the multi-product multiple ex-ante constraint newsvendor problem and extensions

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

This paper provides an approximating programming technique to solve the multi-product newsvendor model in which product demands are independent and stocking quantities are subject to two or more ex-ante linear contraints, such as budget or volume constraints. Previous research has attempted to solve this problem with Lagrange relaxation techniques or by limiting the distribution of demand. However, by taking advantage of the separable nature of the problem, a close approximation of the optimal solution can be found using convex separable programming for any demand distribution in the traditional newsvendor model and extensions. Sensitivity analysis of the linear program provides managerial insight into the effects of parameters of the problem on the optimal solution and future decisions.

Original languageEnglish (US)
Pages (from-to)941-955
Number of pages15
JournalEuropean Journal of Operational Research
Volume176
Issue number2
DOIs
StatePublished - Jan 16 2007
Externally publishedYes

Keywords

  • Constraint satisfaction
  • Convex programming
  • Inventory
  • Newsvendor problem
  • Production

ASJC Scopus subject areas

  • Computer Science(all)
  • Modeling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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