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Determining optimal price and order size for a price setting newsvendor under cycle service level

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  • Abad, Prakash

Abstract

There has been significant interest in the single period newsvendor problem where, besides determining the order size, the decision maker has to set the selling price. The model is applicable when demand for the product is a stochastic function of the selling price. Although there have been several studies, the problem needs exploration given that retailers prefer using service level rather than the shortage cost to model the economic consequence of a stock out. We analyze the problem using a chance constrained formulation and provide a procedure for determining the optimal price and order size for a price-setting newsvendor.

Suggested Citation

  • Abad, Prakash, 2014. "Determining optimal price and order size for a price setting newsvendor under cycle service level," International Journal of Production Economics, Elsevier, vol. 158(C), pages 106-113.
    • Handle: RePEc:eee:proeco:v:158:y:2014:i:c:p:106-113
    DOI: 10.1016/j.ijpe.2014.07.008
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    References listed on IDEAS

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    Cited by:

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    2. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    3. Biswajit Sarkar & Bikash Koli Dey & Mitali Sarkar & Ali AlArjani, 2021. "A Sustainable Online-to-Offline (O2O) Retailing Strategy for a Supply Chain Management under Controllable Lead Time and Variable Demand," Sustainability, MDPI, vol. 13(4), pages 1-26, February.
    4. Shuyi Wang & Zhenhua Wu & Baochen Yang, 2018. "Decision and Performance Analysis of a Price-Setting Manufacturer with Options under a Flexible-Cap Emission Trading Scheme (ETS)," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
    5. Begen, Mehmet A. & Pun, Hubert & Yan, Xinghao, 2016. "Supply and demand uncertainty reduction efforts and cost comparison," International Journal of Production Economics, Elsevier, vol. 180(C), pages 125-134.
    6. Mehran Ullah & Irfanullah Khan & Biswajit Sarkar, 2019. "Dynamic Pricing in a Multi-Period Newsvendor Under Stochastic Price-Dependent Demand," Mathematics, MDPI, vol. 7(6), pages 1-15, June.
    7. Wang, Chong & Chen, Jing & Chen, Xu, 2017. "Pricing and order decisions with option contracts in the presence of customer returns," International Journal of Production Economics, Elsevier, vol. 193(C), pages 422-436.
    8. Mitra, Subrata, 2018. "Newsvendor problem with clearance pricing," European Journal of Operational Research, Elsevier, vol. 268(1), pages 193-202.
    9. Raza, Syed Asif & Rathinam, Sivakumar, 2017. "A risk tolerance analysis for a joint price differentiation and inventory decisions problem with demand leakage effect," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 129-145.
    10. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    11. Tran, Minh Tam & Rekik, Yacine & Hadj-Hamou, Khaled, 2024. "Optimal pricing for dual-channel retailing with stochastic attraction demand model," International Journal of Production Economics, Elsevier, vol. 268(C).

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