• Journal of the Korean Operations Research and Management Science Society
• /
• v.37 no.1
• /
• pp.1-18
• /
• 2012

The present study provides some extensions over a recent work in Won (2011) which investigates properties of the static newsvendor problem under a schedule involving progressive multiple discounts under the assumption that demand is given exogenously. Khouja (1995, 1996) formulated the extended versions over the classical newsvendor model with various discount policies including all-units discount and/or multiple discounts and found that the extended newsvendor models with discount schedules yield higher optimal expected profits than the classical newsvendor model with no-discounts. In this study, we establish a robust conjecture as a stronger statement than Khouja's findings with regard to the general relationship among the expected profits of newsvendor models in the sense that the conjecture holds for every order quantity as well as the optimal order quantity. The conjecture encourages the newsvendor facing quantity discounts to safely implement her own discounts policy to customer or accept quantity discounts offered by the supplier even if the optimal order quantity cannot be ordered due to additional restrictions such as budget or warehouse capacity constraints because the newsvendor models with quantity discounts always yield higher expected profit than the classic newsvendor model without quantity discounts regardless of the order quantity. Results from wide experiments with various probability distributions of demand strongly support our conjecture.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.37 no.3
• /
• pp.13-21
• /
• 2012

In this note, a recent work in Won (2011) which investigates properties of the newsvendor model under progressive multiple discounts is revisited and a complete proof is provided for the conjecture on the consistent advantage of progressive multiple discounts over no-discounts in terms of the expected profit. The proof considers the generalized newsvendor model under progressive multiple discounts extended with positive shortage cost and salvage value which have not been considered in the previous newsvendor models under progressive multiple discounts. Without relying on derivatives, we prove that the expected profit under progressive multiple discounts are consistently greater than or equal to the one under no-discounts for every order quantity as far as her multiple discounts do not decrease customer demand, and therefore, the optimal expected profit under progressive multiple discounts is always greater than or equal to the one under no-discounts. As by-products from the proof, some interesting features of the generalized newsvendor model under progressive multiple discounts are revealed.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.36 no.3
• /
• pp.27-43
• /
• 2011

This paper investigates properties of the newsvendor problem under a schedule involving progressive multiple discounts compared with the standard newsvendor problem under a no-discounts schedule. Unlike most conventional approaches using the criticial fractile to analyze the retailer and/or supplier behavior(s) in the newsvendor problem, our approach uses riskless profit. From the properties revealed through a series of computational experiments, two conjectures regarding the relationship between the expected profits of both newsvendor problems as a generalization over Khouja's argument (1995) are raised. Those conjectures encourage newsvendors who may face budget or warehouse capacity restriction to use the extended model under a multiple-discounts schedule rather than the standard model with no-discounts schedule because they apply for every order quantity as well as the optimal order quantity. In addition to the conjectures, some insightful results are found to justify the implementation of a multiple-discounts schedule from the computational experiments and a new interpretation for implementation of a multiple-discounts schedule that has not been addressed in Khouja is provided.

• International Journal of Advanced Culture Technology
• /
• v.8 no.4
• /
• pp.110-118
• /
• 2020

It is important to have an appropriate amount of inventory for effective operations. This study seeks to develop a sustainable newsvendor model by incorporating environment-related costs into the existing well-known (single-period) newsvendor model. Since leftovers do more harm to environments than stockouts, the optimal order amount tends to be lower than the traditional quantity. However, this is not the case when a second buy is allowed. A second order opportunity is prevalent in industries where it improves demand forecast despite incurring extra costs. In this study, we conduct an extensive numerical analysis for a newsvendor situation with a permitted second buy. The results show that we can reduce inventory costs by considering sustainability concerns. The research idea of including sustainability considerations into existing inventory models can be extended to a more general case and provides managerial insights for better inventory decisions.

• Proceedings of the Korean Operations and Management Science Society Conference
• /
• 2006.05a
• /
• pp.187-192
• /
• 2006

In the absence of a clear command and control structure, a key challenge in supply chain management is the coordination and alignment of the supply chain members who pursue divergent and often conflicting goals. The newsvendor model is typically used as a framework to quantify the cost of misalignment and to assess the impact of coordination initiatives. This paper considers a fuzzy approach for the newsvendor problem which includes a single manufacturer and a single retailer. We use several fuzzy parameters in the model such as the demand, the wholesale price, and the market sales price. We apply a coordination policy, referred to as buyback, to solve the fuzzy newsvendor problem. Based on the buyback policy, the optimal order quantity of the retailer can be computed, and the possible profits of the members in the supply chain can be calculated with minimum sharing of private information. Focusing on the fuzzy model with buyback policy for the newsvendor problem, we illustrate exemplary fuzzy models. We also illustrate an integration model, which extends a single-manufacturer-single-retailer model to the single-manufacturer-multiple-retailer setting. In the extended model, we consider three coordination policies including quantity discount, profit sharing, and buyback, as well as non-coordination case.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.42 no.1
• /
• pp.41-54
• /
• 2019

Although retailers deals with a large number of single-term inventory items, but few cases have been considered in the areas of practical decision making. However, recent moves to strengthen fair trade have created a real need for single-period inventory decision-making problems. This study addresses the problem of ordering quantity decisions that are expected to maximize profits using classical newsvendor models. The research target is data on seasonal and perishable products from retail. We also use data from retailers to actually apply the newsvendor model and calculate the results to compare performance. It also suggests solutions for estimating demand for products sold in order to apply newsvendor models that utilize actual demand ratio versus forecast demand. This study would like to examine the effectiveness of this research through data analysis and make some suggestions for applying it to reality.

• Korean Management Science Review
• /
• v.28 no.2
• /
• pp.17-29
• /
• 2011

The purpose of this paper is to schedule elective surgery patients using a stochastic programming approach and to illustrate how operating room utilization behaves when a decision-maker varies costs associated with utilization. Because of the uncertainty in surgery durations, the underage and overage costs that a decision-maker considers plays an important role in allocating surgery cases into available operating room capacity. We formulate the problem as a stochastic mixed integer programming and propose a sampling-based approximation method for a computational purpose. Newsvendor model is employed to explain the results from numerical experiments that are conducted with the actual data from a hospital. The results show that the operating room utilization is more sensitive when the unit overtime cost is relatively larger than the unit cost for underutilized time.

• Journal of Korean Society for Quality Management
• /
• v.40 no.4
• /
• pp.441-452
• /
• 2012

Purpose: In this paper, we have considered a problem of newsvendor model in an environment of random yields in quality and customer balking behavior, in which only the mean and the variance of the demand are known. In practice, the distributional information of the demand is very limited and only the mean and variance are guessed by experience. In addition, due to the customers balking behavior occurring when the available inventory level decreases, the product's demand becomes a function of inventory level so that the classical newsvendor's optimal order quantity is no longer optimal. Methods: We have developed an optimal order quantity model that enables us to incorporate the random yield of a product and the customer balking information such as a threshold inventory level of balking and the corresponding probability of a sale during the balking. Results: We illustrated the concepts developed here through simple numerical examples and showed the robustness of our model in a various setting of parameters. Conclusion: This paper provides a useful analysis showing that our distribution-specific and distribution-free approach to the optimal order quantity in the newsboy model can act as an effective tools to match supply with demand for these product lines.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.38 no.3
• /
• pp.39-48
• /
• 2015

In this study, granting the optimal loan limit on SME (Small and Medium Enterprise) loans of financial institutions was proposed using the traditional newsvendor model. This study was the first domestic case study that applied the newsvendor model that was mainly used to calculate the optimum order quantity under some uncertain demands to the calculation of the loan limit (debt ceiling) of institutions. The method presented in this study made it possible to calculate the loan limit (debt ceiling) to maximize the revenue of a financial institution using probability functions, applied the newsvendor model setting the order volume of merchandise goods as the loan product order volume of the financial institution, and proposed, through the analysis of empirical data, the availability of additional loan to the borrower and the reduction of the debt ceiling and a management method for the recovery of the borrower who could not generate profit. In addition, the profit based loan money management model presented in this study also demonstrated that it also contributed to some extent to the prediction of the bankruptcy of the borrowing SME (Small and Medium Enterprise), as well as the calculation of the loan limit based on profit, by deriving the result values that the borrowing SME (Small and Medium Enterprise) actually went through bankruptcy at later times once the model had generated a signal of loan recovery for them during the validation of empirical data. accordingly, The method presented in this study suggested a methodology to generated a signal of loan recovery to reduce the losses by the bankruptcy.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.36 no.1
• /
• pp.36-43
• /
• 2013

Many retailer store managers are experiencing the situation where some customers balk at purchasing products if the stock is low. In this paper, we extend the single period newsvendor model in an environment of customer balking behavior occurring at double threshold inventory levels assuming the chance of sales during balking is a discrete function of inventory level. Our analysis is based on the assumption that only the mean and the variance of demand are known, without assuming any specific distributional form. We derive the explicit general expression of optimal order quantity with unknown distribution of demand with double threshold inventory levels of customer balking. Then, we illustrate the concepts developed here through simple numerical examples and conclude the future research topics under balking situation.