IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v218y2012i2p426-434.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221711010289
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2011.10.053?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lau, Hon-Shiang & Hing-Ling Lau, Amy, 1996. "The newsstand problem: A capacitated multiple-product single-period inventory problem," European Journal of Operational Research, Elsevier, vol. 94(1), pages 29-42, October.
    2. Niederhoff, Julie A., 2007. "Using separable programming to solve the multi-product multiple ex-ante constraint newsvendor problem and extensions," European Journal of Operational Research, Elsevier, vol. 176(2), pages 941-955, January.
    3. Zhang, Bin, 2011. "Optimal policy for a mixed production system with multiple OEM and OBM products," International Journal of Production Economics, Elsevier, vol. 130(1), pages 27-32, March.
    4. Zhang, Guoqing, 2010. "The multi-product newsboy problem with supplier quantity discounts and a budget constraint," European Journal of Operational Research, Elsevier, vol. 206(2), pages 350-360, October.
    5. I Moon & E A Silver, 2000. "The multi-item newsvendor problem with a budget constraint and fixed ordering costs," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(5), pages 602-608, May.
    6. Vairaktarakis, George L., 2000. "Robust multi-item newsboy models with a budget constraint," International Journal of Production Economics, Elsevier, vol. 66(3), pages 213-226, July.
    7. Chung, Chia-Shin & Flynn, James & Kirca, Omer, 2008. "A multi-item newsvendor problem with preseason production and capacitated reactive production," European Journal of Operational Research, Elsevier, vol. 188(3), pages 775-792, August.
    8. Abdel-Malek, Layek & Montanari, Roberto & Morales, Libia Cristina, 2004. "Exact, approximate, and generic iterative models for the multi-product Newsboy problem with budget constraint," International Journal of Production Economics, Elsevier, vol. 91(2), pages 189-198, September.
    9. Zhang, Bin & Xu, Xiaoyan & Hua, Zhongsheng, 2009. "A binary solution method for the multi-product newsboy problem with budget constraint," International Journal of Production Economics, Elsevier, vol. 117(1), pages 136-141, January.
    10. Zhang, Bin & Hua, Zhongsheng, 2008. "A unified method for a class of convex separable nonlinear knapsack problems," European Journal of Operational Research, Elsevier, vol. 191(1), pages 1-6, November.
    11. C. E. Lemke, 1965. "Bimatrix Equilibrium Points and Mathematical Programming," Management Science, INFORMS, vol. 11(7), pages 681-689, May.
    12. Chen, Liang-Hsuan & Chen, Ying-Che, 2010. "A multiple-item budget-constraint newsboy problem with a reservation policy," Omega, Elsevier, vol. 38(6), pages 431-439, December.
    13. Shah, Janat & Avittathur, Balram, 2007. "The retailer multi-item inventory problem with demand cannibalization and substitution," International Journal of Production Economics, Elsevier, vol. 106(1), pages 104-114, March.
    14. Zhang, Bin & Du, Shaofu, 2010. "Multi-product newsboy problem with limited capacity and outsourcing," European Journal of Operational Research, Elsevier, vol. 202(1), pages 107-113, April.
    15. Choi, Sungyong & Ruszczynski, Andrzej, 2011. "A multi-product risk-averse newsvendor with exponential utility function," European Journal of Operational Research, Elsevier, vol. 214(1), pages 78-84, October.
    16. Abdel-Malek, Layek L. & Montanari, Roberto, 2005. "An analysis of the multi-product newsboy problem with a budget constraint," International Journal of Production Economics, Elsevier, vol. 97(3), pages 296-307, September.
    17. Abdel-Malek, Layek L. & Areeratchakul, Nathapol, 2007. "A quadratic programming approach to the multi-product newsvendor problem with side constraints," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1607-1619, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Serel, Doğan A., 2012. "Multi-item quick response system with budget constraint," International Journal of Production Economics, Elsevier, vol. 137(2), pages 235-249.
    2. Shi, Jianmai & Zhang, Guoqing, 2010. "Multi-product budget-constrained acquisition and pricing with uncertain demand and supplier quantity discounts," International Journal of Production Economics, Elsevier, vol. 128(1), pages 322-331, November.
    3. Zhang, Bin & Du, Shaofu, 2010. "Multi-product newsboy problem with limited capacity and outsourcing," European Journal of Operational Research, Elsevier, vol. 202(1), pages 107-113, April.
    4. Zhang, Guoqing & Shi, Jianmai & Chaudhry, Sohail S. & Li, Xindan, 2019. "Multi-period multi-product acquisition planning with uncertain demands and supplier quantity discounts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 132(C), pages 117-140.
    5. Zhang, Guoqing, 2010. "The multi-product newsboy problem with supplier quantity discounts and a budget constraint," European Journal of Operational Research, Elsevier, vol. 206(2), pages 350-360, October.
    6. Zhang, Bin, 2011. "Optimal policy for a mixed production system with multiple OEM and OBM products," International Journal of Production Economics, Elsevier, vol. 130(1), pages 27-32, March.
    7. Zhang, Bin & Xu, Xiaoyan & Hua, Zhongsheng, 2009. "A binary solution method for the multi-product newsboy problem with budget constraint," International Journal of Production Economics, Elsevier, vol. 117(1), pages 136-141, January.
    8. Murray, Chase C. & Gosavi, Abhijit & Talukdar, Debabrata, 2012. "The multi-product price-setting newsvendor with resource capacity constraints," International Journal of Production Economics, Elsevier, vol. 138(1), pages 148-158.
    9. Chernonog, Tatyana & Goldberg, Noam, 2018. "On the multi-product newsvendor with bounded demand distributions," International Journal of Production Economics, Elsevier, vol. 203(C), pages 38-47.
    10. Felix Papier, 2016. "Supply Allocation Under Sequential Advance Demand Information," Operations Research, INFORMS, vol. 64(2), pages 341-361, April.
    11. 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.
    12. Wang, Daao & Dimitrov, Stanko & Jian, Lirong, 2020. "Optimal inventory decisions for a risk-averse retailer when offering layaway," European Journal of Operational Research, Elsevier, vol. 284(1), pages 108-120.
    13. Abdel-Malek, Layek & Montanari, Roberto & Meneghetti, Diego, 2008. "The capacitated newsboy problem with random yield: The Gardener Problem," International Journal of Production Economics, Elsevier, vol. 115(1), pages 113-127, September.
    14. De Schrijver, Steven K. & Aghezzaf, El-Houssaine & Vanmaele, Hendrik, 2013. "Aggregate constrained inventory systems with independent multi-product demand: Control practices and theoretical limitations," International Journal of Production Economics, Elsevier, vol. 143(2), pages 416-423.
    15. Hu, Chaoming & Wan, Zhao Man & Zhu, Saihua & Wan, Zhong, 2022. "An integrated stochastic model and algorithm for constrained multi-item newsvendor problems by two-stage decision-making approach," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 193(C), pages 280-300.
    16. Christopher Dance & Alexei Gaivoronski, 2012. "Stochastic optimization for real time service capacity allocation under random service demand," Annals of Operations Research, Springer, vol. 193(1), pages 221-253, March.
    17. Layek Abdel-Malek & Pinyuan Shan & Roberto Montanari, 2020. "A Constructive Methodology to Solving the Capacitated Newsvendor Problem: an Approximate Approach," SN Operations Research Forum, Springer, vol. 1(2), pages 1-16, June.
    18. 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.
    19. Zhou, Yan-ju & Chen, Xiao-hong & Wang, Zong-run, 2008. "Optimal ordering quantities for multi-products with stochastic demand: Return-CVaR model," International Journal of Production Economics, Elsevier, vol. 112(2), pages 782-795, April.
    20. Chen, Junlin & Feng, Xiaojing & Kou, Gang & Mu, Mengting, 2023. "Multiproduct newsvendor with cross-selling and narrow-bracketing behavior using data mining methods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 169(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:218:y:2012:i:2:p:426-434. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.