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Quadratic Approximation of the Newsvendor Problem with Imperfect Quality

Author

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  • Natapat Areerakulkan

    (Department of Engineering Management, College of Innovative Technology and Engineering, Dhurakij Pundit University, Bangkok, Thailand)

Abstract

The paper presents a newsvendor problem in a fuzzy environment by introducing product quality as a fuzzy variable, and product demand as a probability distribution in an economic and supply chain management environment. In order to determine the optimal order quantity, a methodology is developed where the solution is achieved using a fuzzy ranking method combined with a quadratic programming problem approximation. Numerical examples are provided and compared in both situations, namely fuzzy and crisp. The results of these numerical examples show that the decision maker has to order a higher quantity when product quality is a fuzzy variable. The model can be useful for real world problems when historical data are not available.

Suggested Citation

  • Natapat Areerakulkan, 2017. "Quadratic Approximation of the Newsvendor Problem with Imperfect Quality," Journal of Reviews on Global Economics, Lifescience Global, vol. 6, pages 335-341.
    • Handle: RePEc:lif:jrgelg:v:6:y:2017:p:335-341
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    File URL: http://www.lifescienceglobal.com/independent-journals/journal-of-reviews-on-global-economics/volume-6/85-abstract/jrge/2820-abstract-quadratic-approximation-of-the-newsvendor-problem-with-imperfect-quality
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    Citations

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    Cited by:

    1. 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.

    More about this item

    Keywords

    Imperfect quality items; Newsvendor problem; Quadratic programming.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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