IDEAS home Printed from https://ideas.repec.org/a/spr/snopef/v1y2020i2d10.1007_s43069-020-0008-7.html
   My bibliography  Save this article

A Constructive Methodology to Solving the Capacitated Newsvendor Problem: an Approximate Approach

Author

Listed:
  • Layek Abdel-Malek

    (New Jersey Institute of Technology)

  • Pinyuan Shan

    (New Jersey Institute of Technology)

  • Roberto Montanari

    (Università di Parma)

Abstract

The applications of the capacitated newsvendor problem are numerous. They range from inventory control, supply chain management, and airlines seat reservation to stock market applications. While several solution methodologies exist for this problem, most of them require advanced mathematical programming techniques or specifically developed iterative models. To complement these solution approaches and facilitate wider dissemination of this model particularly to upper-undergraduate and first-year graduate students as well as practitioners in related fields, in this paper, we develop an approximate solution methodology that is based on constructive approaches. These approaches already exist in standard textbooks of operations research, management science, and other similar disciplines. The two models utilized in the development are the classical newsvendor and the network flow model. Numerical comparisons are drawn between existing solution methodologies and the developed ones. Also, an example is presented to show the steps of the developed methodology.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:snopef:v:1:y:2020:i:2:d:10.1007_s43069-020-0008-7
    DOI: 10.1007/s43069-020-0008-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43069-020-0008-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43069-020-0008-7?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. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. 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.
    3. Khouja, Moutaz & Liu, Xin & Zhou, Jing, 2020. "To sell or not to sell to an off-price retailer in the presence of strategic consumers," Omega, Elsevier, vol. 90(C).
    4. 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.
    5. 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.
    6. 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.
    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. Wang, Dan & Qin, Zhongfeng & Kar, Samarjit, 2015. "A novel single-period inventory problem with uncertain random demand and its application," Applied Mathematics and Computation, Elsevier, vol. 269(C), pages 133-145.
    9. 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.
    10. 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)

    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. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Serel, Doğan A., 2012. "Multi-item quick response system with budget constraint," International Journal of Production Economics, Elsevier, vol. 137(2), pages 235-249.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Baloch, Gohram & Gzara, Fatma, 2020. "Capacity and assortment planning under one-way supplier-driven substitution for pharmacy kiosks with low drug demand," European Journal of Operational Research, Elsevier, vol. 282(1), pages 108-128.
    14. Mohammad A.M. Abdel-Aal & Mujahid N. Syed & Shokri Z. Selim, 2017. "Multi-product selective newsvendor problem with service level constraints and market selection flexibility," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 96-117, January.
    15. 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.
    16. Hübner, Alexander & Kuhn, Heinrich & Kühn, Sandro, 2016. "An efficient algorithm for capacitated assortment planning with stochastic demand and substitution," European Journal of Operational Research, Elsevier, vol. 250(2), pages 505-520.
    17. 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).
    18. Felix Papier, 2016. "Supply Allocation Under Sequential Advance Demand Information," Operations Research, INFORMS, vol. 64(2), pages 341-361, April.
    19. 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.
    20. 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.

    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:spr:snopef:v:1:y:2020:i:2:d:10.1007_s43069-020-0008-7. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.