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A note on: “The effect of optimal advertising on the distribution-free newsboy problem”

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  • Güler, M. Güray

Abstract

Recently, Lee and Hsu (2011) study the advertising effect on the distribution-free newsboy problem. In one of their results, they show that the optimal expenditure on advertising, the optimal order quantity and the optimal lower bound on the expected profit increase with the advertising effect parameters. Although this result holds in general, it requires additional assumptions. In this note we provide the necessary and sufficient conditions under which the statements of Lee and Hsu (2011) hold. These conditions are shown to be violated if the advertising expenditure is too low or there is a very small difference between the optimal profit and the profit without advertising.

Suggested Citation

  • Güler, M. Güray, 2014. "A note on: “The effect of optimal advertising on the distribution-free newsboy problem”," International Journal of Production Economics, Elsevier, vol. 148(C), pages 90-92.
    • Handle: RePEc:eee:proeco:v:148:y:2014:i:c:p:90-92
    DOI: 10.1016/j.ijpe.2013.11.021
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    References listed on IDEAS

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    1. Khouja, Moutaz & Robbins, Stephanie S., 2003. "Linking advertising and quantity decisions in the single-period inventory model," International Journal of Production Economics, Elsevier, vol. 86(2), pages 93-105, November.
    2. Lee, Chih-Ming & Hsu, Shu-Lu, 2011. "The effect of advertising on the distribution-free newsboy problem," International Journal of Production Economics, Elsevier, vol. 129(1), pages 217-224, January.
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    Cited by:

    1. Yong-Wu Zhou & Bin Cao & Yuanguang Zhong & Yongzhong Wu, 2017. "Optimal advertising/ordering policy and finance mode selection for a capital-constrained retailer with stochastic demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(12), pages 1620-1632, December.
    2. Lee, Yun Shin, 2014. "Management of a periodic-review inventory system using Bayesian model averaging when new marketing efforts are made," International Journal of Production Economics, Elsevier, vol. 158(C), pages 278-289.

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