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Multi-tier binary solution method for multi-product newsvendor problem with multiple constraints

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  • Zhang, Bin

Abstract

This paper considers a multi-product newsvendor problem with multiple constraints. Multiple constraints in the problem make it more challenging to solve. Previous research has attempted to solve the problem by considering two-constraint case or/and using approximation techniques or active sets methods. The solution methods in literature for solving multi-constraint problem are limited or cumbersome. In this paper, by analyzing structural properties of the multi-constraint multi-product newsvendor problem, we develop a multi-tier binary solution method for yielding the optimal solution to the problem. The proposed method is applicable to the problem with any continuous demand distribution and more than two constraints, and its computational complexity is polynomial in the number of products. Numerical results are presented for showing the effectiveness of our method.

Suggested Citation

  • Zhang, Bin, 2012. "Multi-tier binary solution method for multi-product newsvendor problem with multiple constraints," European Journal of Operational Research, Elsevier, vol. 218(2), pages 426-434.
    • Handle: RePEc:eee:ejores:v:218:y:2012:i:2:p:426-434
    DOI: 10.1016/j.ejor.2011.10.053
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    Cited by:

    1. Bin Zhang & Zekai Lai & Qiangqiang Wang, 2021. "Multi-product dual sourcing problem with limited capacities," Operational Research, Springer, vol. 21(3), pages 2055-2075, September.
    2. Zhang, Bin & Duan, Dongxia & Ma, Yurui, 2018. "Multi-product expedited ordering with demand forecast updates," International Journal of Production Economics, Elsevier, vol. 206(C), pages 196-208.
    3. Zhang, Bin & Xu, Liang, 2013. "Multi-item production planning with carbon cap and trade mechanism," International Journal of Production Economics, Elsevier, vol. 144(1), pages 118-127.
    4. Olivares-Nadal, Alba V., 2024. "Constructing decision rules for multiproduct newsvendors: An integrated estimation-and-optimization framework," European Journal of Operational Research, Elsevier, vol. 315(3), pages 1021-1037.
    5. Bozorgi, Ali, 2016. "Multi-product inventory model for cold items with cost and emission consideration," International Journal of Production Economics, Elsevier, vol. 176(C), pages 123-142.
    6. Chun-Chin Wei & Liang-Tu Chen, 2021. "Supply Chain Replenishment Decision for Newsvendor Products with Multiple Periods and a Short Life Cycle," Sustainability, MDPI, vol. 13(22), pages 1-13, November.
    7. Yang, Cheng-Hu & Wang, Hai-Tang & Ma, Xin & Talluri, Srinivas, 2023. "A data-driven newsvendor problem: A high-dimensional and mixed-frequency method," International Journal of Production Economics, Elsevier, vol. 266(C).
    8. Sillanpää, Ville & Liesiö, Juuso & Käki, Anssi, 2021. "Procurement decisions over multiple periods under piecewise-linear shortage costs and fixed capacity commitments," Omega, Elsevier, vol. 100(C).
    9. Castañeda, Jaime Andrés & Gonçalves, Paulo, 2018. "Ordering behavior in a newsstand experiment," International Journal of Production Economics, Elsevier, vol. 197(C), pages 186-196.

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