Inventory management with substitution and unreliable supplier

The newsvendor problem is about how to make optimal ordering decisions for short-life cycle product with demand uncertainty. Few papers study inventory problem with unreliable suppliers, even for those who consider unreliable suppliers, very few are concerned with demand lost. In this paper, we model the newsvendor decision making behavior, which takes the unreliable suppliers and demand lost into consideration. We get optimal ordering quantity and find that substitutions affect the ordering quantity.