The multi-product newsboy problem with service level constraint

Author

Jiangtao, Mo ; Ting, Fan ; Guimei, Chen ; Hong, Mao

Author_Institution

Coll. of Math. & Inf. Sci., Guangxi Univ., Nanning, China

Volume

2

fYear

2011

fDate

13-15 May 2011

Firstpage

555

Lastpage

558

Abstract

Service level plays an essential role in inventory management due to the fierce competition. In this paper, a multi-product newsboy problem model with service level constraint is developed. The aim is to maximize the expected profit of the inventory system which satisfy a given total service level. The existence and uniqueness of the optimal solution are discussed and, using bisection approach, the method for finding optimal strategy is proposed. Numerical examples show the effectiveness of the model and the algorithm. Sensitivity analysis is provided for reflecting the relationship between service level and expected profit, which leads to managerial insights about inventory management.

Keywords

inventory management; profitability; bisection approach; inventory management; multiproduct newsboy problem; profit maximization; sensitivity analysis; service level constraint; Analytical models; Industrial economics; Inventory management; Numerical models; Optimization; Search methods; Sensitivity analysis; KKT condition; bisection approach; multi-product newsboy problem (MPNP); service level;

fLanguage

English

Publisher

ieee

Conference_Titel

Business Management and Electronic Information (BMEI), 2011 International Conference on

Conference_Location

Guangzhou

Print_ISBN

978-1-61284-108-3

Type

conf

DOI

10.1109/ICBMEI.2011.5917971

Filename

5917971