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Robust newsvendor problems: effect of discrete demands

Author

Listed:
  • Anh Ninh

    (College of William and Mary)

  • Honggang Hu

    (University of Florida)

  • David Allen

    (College of William and Mary)

Abstract

Distribution-free newsvendor models often assume continuous demand distributions to facilitate analysis and computation. However, in practice, discrete demand is a natural phenomenon. So far, there exists no analytical and computational results in the literature under this setting. Thus, the goal of this paper is to investigate the newsvendor problems with partial information when the demand is discrete and solve them using the so-called discrete moment problems. Numerical results are presented to illustrate the value of discrete information.

Suggested Citation

  • Anh Ninh & Honggang Hu & David Allen, 2019. "Robust newsvendor problems: effect of discrete demands," Annals of Operations Research, Springer, vol. 275(2), pages 607-621, April.
    • Handle: RePEc:spr:annopr:v:275:y:2019:i:2:d:10.1007_s10479-018-3016-7
    DOI: 10.1007/s10479-018-3016-7
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    References listed on IDEAS

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    1. Andersson, Jonas & Jörnsten, Kurt & Nonås, Sigrid Lise & Sandal, Leif & Ubøe, Jan, 2013. "A maximum entropy approach to the newsvendor problem with partial information," European Journal of Operational Research, Elsevier, vol. 228(1), pages 190-200.
    2. Karthik Natarajan & Melvyn Sim & Joline Uichanco, 2018. "Asymmetry and Ambiguity in Newsvendor Models," Management Science, INFORMS, vol. 64(7), pages 3146-3167, July.
    3. András Prékopa & Anh Ninh & Gabriela Alexe, 2016. "On the relationship between the discrete and continuous bounding moment problems and their numerical solutions," Annals of Operations Research, Springer, vol. 238(1), pages 521-575, March.
    4. Georgia Perakis & Guillaume Roels, 2008. "Regret in the Newsvendor Model with Partial Information," Operations Research, INFORMS, vol. 56(1), pages 188-203, February.
    5. András Prékopa & Anh Ninh & Gabriela Alexe, 2016. "On the relationship between the discrete and continuous bounding moment problems and their numerical solutions," Annals of Operations Research, Springer, vol. 238(1), pages 521-575, March.
    6. C. E. Lemke, 1954. "The dual method of solving the linear programming problem," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 1(1), pages 36-47, March.
    7. Cindy Courtois & Michel Denuit, 2009. "Moment Bounds on Discrete Expected Stop-Loss Transforms, with Applications," Methodology and Computing in Applied Probability, Springer, vol. 11(3), pages 307-338, September.
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    Citations

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    Cited by:

    1. Anh Ninh, 2021. "Robust newsvendor problems with compound Poisson demands," Annals of Operations Research, Springer, vol. 302(1), pages 327-338, July.
    2. Andrew Butters, R., 2019. "On demand uncertainty in the newsvendor model," Economics Letters, Elsevier, vol. 185(C).
    3. Rung-Hung Su & Dong-Yuh Yang & He-Jhen Lin & Yu-Cheng Yang, 2023. "Estimating conservative profitability of a newsboy-type product with exponentially distributed demand based on multiple samples," Annals of Operations Research, Springer, vol. 322(2), pages 967-989, March.
    4. Talal Alharbi & Anh Ninh & Ersoy Subasi & Munevver Mine Subasi, 2022. "The value of shape constraints in discrete moment problems: a review and extension," Annals of Operations Research, Springer, vol. 318(1), pages 1-31, November.
    5. Anh Ninh & Zuo‐Jun Max Shen & Martin A. Lariviere, 2020. "Concavity and Unimodality of Expected Revenue Under Discrete Willingness to Pay Distributions," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 788-796, March.
    6. Qingguo Bai & Jianteng Xu & Yuzhong Zhang, 2022. "The distributionally robust optimization model for a remanufacturing system under cap-and-trade policy: a newsvendor approach," Annals of Operations Research, Springer, vol. 309(2), pages 731-760, February.

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